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As filed with the Securities and Exchange Commission on May 20, 2004.
Registration No. 333-113162


UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


AMENDMENT NO. 4

TO
Form S-1
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933
Alnylam Pharmaceuticals, Inc.
(Exact name of registrant as specified in its charter)


         
Delaware   2834   77-0602661
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

300 Third Street

Cambridge, Massachusetts 02142
(617) 551-8200
(Address Including Zip Code, and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices)


John M. Maraganore, Ph.D.

President and Chief Executive Officer
Alnylam Pharmaceuticals, Inc.
300 Third Street
Cambridge, Massachusetts 02142
(617) 551-8200
(Name, Address Including Zip Code and Telephone Number, Including Area Code, of Agent for Service)


Copies to:

     
Steven D. Singer, Esq.
Peter N. Handrinos, Esq.
Hale and Dorr LLP
60 State Street
Boston, Massachusetts 02109
(617) 526-6000
  Danielle Carbone, Esq.
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
(212) 848-4000

     Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date hereof.

     If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act, check the following box.    o

     If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o 


     If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o 


     If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.    o 


     If delivery of the Prospectus is expected to be made pursuant to Rule 434, please check the following box.    o 



     The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.




 

EXPLANATORY NOTE

      This Amendment No. 4 to the Registrant’s Registration Statement on Form S-1 (File No. 333-113162) is being filed solely for the purpose of filing exhibits, and no changes or additions are being made hereby to the prospectus that forms a part of the Registration Statement. Accordingly, the prospectus has been omitted from this filing.


 

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

Item 13.     Other Expenses of Issuance and Distribution.

      The following table indicates the expenses to be incurred in connection with the offering described in this Registration Statement, other than underwriting discounts and commissions, all of which will be paid by Alnylam. All amounts are estimates, other than the SEC registration fee, the NASD filing fee and the NASDAQ National Market listing fee.

           
SEC registration fee
  $ 10,928  
NASD Filing fee
    9,125  
NASDAQ National Market listing fee
    100,000  
Printing and engraving expenses
    250,000  
Legal fees and expenses
    900,000  
Accounting fees and expenses
    450,000  
Blue Sky fees and expenses
    20,000  
Transfer agent and registrar fees and expenses
    5,000  
Miscellaneous
    154,947  
     
 
 
Total
  $ 1,900,000  
     
 

Item 14.     Indemnification of Directors and Officers.

      Section 102 of the Delaware General Corporation Law allows a corporation to eliminate the personal liability of directors of a corporation to the corporation or its stockholders for monetary damages for a breach of fiduciary duty as a director, except where the director breached his duty of loyalty, failed to act in good faith, engaged in intentional misconduct or knowingly violated a law, authorized the payment of a dividend or approved a stock repurchase in violation of Delaware corporate law or obtained an improper personal benefit. Alnylam has included such a provision in its Certificate of Incorporation.

      Section 145 of the General Corporation Law of Delaware provides that a corporation has the power to indemnify a director, officer, employee or agent of the corporation and certain other persons serving at the request of the corporation in related capacities against amounts paid and expenses incurred in connection with an action or proceeding to which he is or is threatened to be made a party by reason of such position, if such person shall have acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the corporation, and, in any criminal proceeding, if such person had no reasonable cause to believe his conduct was unlawful; provided that, in the case of actions brought by or in the right of the corporation, no indemnification shall be made with respect to any matter as to which such person shall have been adjudged to be liable to the corporation unless and only to the extent that the adjudicating court determines that such indemnification is proper under the circumstances.

      Our Restated Certificate of Incorporation includes a provision that eliminates the personal liability of its directors for monetary damages for breach of fiduciary duty as a director, except for liability:

  •  for any breach of the director’s duty of loyalty to Alnylam or its stockholders;
 
  •  for acts or omissions not in good faith or that involve intentional misconduct or a knowing violation of law;
 
  •  under section 174 of the Delaware General Corporation Law regarding unlawful dividends and stock purchases; or
 
  •  for any transaction from which the director derived an improper personal benefit.

II-1


 

      These provisions are permitted under Delaware law. Our Restated Certificate of Incorporation provides that:

  •  we must indemnify our directors and officers to the fullest extent permitted by Delaware law;
 
  •  we may indemnify our other employees and agents to the same extent that we indemnified our officers and directors, unless otherwise determined by our Board of Directors; and
 
  •  we must advance expenses, as incurred, to our directors and executive officers in connection with a legal proceeding to the fullest extent permitted by Delaware law.

      The indemnification provisions contained in our Restated Certificate of Incorporation and Amended and Restated Bylaws are not exclusive of any other rights to which a person may be entitled by law, agreement, vote of stockholders or disinterested directors or otherwise.

      In addition, we maintain insurance on behalf of our directors and executive officers insuring them against any liability asserted against them in their capacities as directors or officers or arising out of such status.

Item 15.     Recent Sales of Unregistered Securities.

      Set forth below is information regarding shares of common stock and preferred stock issued, and options and warrants granted, by the Registrant within the past three years. Also included is the consideration, if any, received by the Registrant for such shares, options and warrants and information relating to the section of the Securities Act, or rule of the Securities and Exchange Commission under which exemption from registration was claimed.

    (1)  In July 2003, in connection with its acquisition of Alnylam Europe, AG, the Registrant issued an aggregate of 815,376 shares of its common stock to the former stockholders of Ribopharma AG in exchange for the outstanding shares of common stock of Alnylam Europe, AG and issued 49,496 shares of its common stock to former holders of Alnylam Europe, AG debt upon settlement of Alnylam Europe, AG accrued interest.
 
    (2)  In July 2003, the Registrant issued and sold an aggregate of 3,000,010 shares of its Series A Preferred Stock to a group of eight investors at a price per share of $1.00. Upon the closing of this offering, these shares will convert into 1,578,949 shares of common stock. These investors consisted of Polaris Venture Partners III, Polaris Entrepreneurs Fund III, Polaris Founders Fund III, Abingworth BioVentures III A, Abingworth BioVentures III B, Abingworth BioVentures III C, Abingworth BioVentures Executives III and CHP II, L.P.
 
    (3)  In July 2003, the Registrant issued and sold an aggregate of 16,561,845 shares of its Series B Preferred Stock to a group of 25 investors at a price per share of $2.50. Upon the closing of this offering, these shares will convert into 8,716,743 shares of common stock. These investors consisted of Polaris Venture Partners III, Polaris Entrepreneurs Fund III, Polaris Founders Fund III, Atlas Venture Fund V, Atlas Venture Parallel Fund V-A, Atlas Venture Parallel Fund V-B, Atlas Venture Entrepreneurs Fund V, Atlas Venture Fund VI, Atlas Venture Entrepreneur Fund VI, Atlas Venture Fund VI GmbH, Arch Venture Fund V, Arch Entrepreneurs Fund L.P., Arch V Entrepreneurs Fund, L.P., Abingworth BioVentures III A, Abingworth BioVentures III B, Abingworth BioVentures III C, Abingworth BioVentures Executives III, Cambridge Science Equities, CHP II, L.P., Phillip A. Sharp, Ph.D., Paul R. Schimmel, Ph.D. and John G. Conley.
 
    (4)  In July 2003, the Registrant issued an aggregate of 881,845 shares of Series B Preferred Stock to a group of three institutions in connection with a certain license agreement. Upon the closing of this offering, these shares will convert into 464,128 shares of common stock. These institutions consisted of the Massachusetts Institute of Technology, the Whitehead Institute for Biomedical Research and Max Planck-Gesellschaft zur Förderung der Wissenschaften e.V.
 
    (5)  In July 2003, the Registrant assumed the obligations of Alnylam U.S., Inc. under a warrant issued to Silicon Valley Bank to purchase 25,000 shares of Series B Preferred Stock at an exercise price

II-2


 

  of $2.50 per share. Upon the closing of this offering, this warrant will become exercisable for 13,157 shares of common stock at an exercise price of $4.75.
 
    (6)  In September 2003, the Registrant issued and sold an aggregate of 1,000,000 shares of its Series C Preferred Stock to Merck & Co., Inc. at a price per share of $5.00. Upon the closing of this offering, these shares will convert into 526,315 shares of common stock.
 
    (7)  In October 2003, the Registrant issued and sold an aggregate of 504,825 shares of its Series C Preferred Stock to a group of 17 investors at a price per share of $5.00. Upon the closing of this offering, these shares will convert into 265,697 shares of common stock. These investors included Polaris Venture Partners III, Polaris Entrepreneurs Fund III, Polaris Founders Fund III, Atlas Venture Fund V, Atlas Venture Parallel Fund V-A, Atlas Venture Parallel Fund V-B, Atlas Venture Entrepreneurs Fund V, Atlas Venture Fund VI, Atlas Venture Entrepreneur Fund VI, Atlas Venture Fund VI GmbH, Arch Venture Fund V, Arch V Entrepreneurs Fund, Abingworth BioVentures III A, Abingworth BioVentures III B, Abingworth BioVentures III C and Abingworth BioVentures Executives III.
 
    (8)  On March 11, 2004, the Registrant issued and sold 1,666,667 shares of Series D Preferred Stock to Isis Pharmaceuticals, Inc. at a price per share of $6.00. Upon the closing of this offering, these shares will convert into 877,193 shares of common stock.
 
    (9)  On March 30, 2004, the Registrant issued and sold warrants to purchase an aggregate of 100,000 shares of Series C Preferred Stock at an exercise price of $5.00 per share to Lighthouse Capital Partners V, L.P. and Lighthouse Capital Partners IV, L.P. Upon the closing of this offering, these shares will convert into 52,630 shares of common stock at an exercise price of $9.50.

  (10)  Through April 30, 2004, the Registrant has granted stock options under its stock option plans for an aggregate of 1,987,167 shares of Common Stock (net of exercises, expirations and cancellations) at exercise prices of $.19 to $0.95 per share. Options to purchase 196,463 shares of Common Stock have been exercised for an aggregate purchase price of $133,987.

      No underwriters were involved in the foregoing sales of securities. The securities described in paragraph 1 of Item 15 were issued to a combination of foreign and U.S. investors in reliance upon exemptions from the registration provisions of the Securities Act set forth in Section 3(b) and Regulation S. The securities described in paragraphs 2 through 9 of Item 15 were issued to a combination of foreign and U.S. investors in reliance upon exemptions from the registration provisions of the Securities Act set forth in Section 4(2) or Regulation S thereof relative to sales by an issuer not involving any public offering, to the extent an exemption from such registration was required. All purchasers of shares of our convertible preferred stock described above represented to us in connection with their purchase that they were accredited investors and were acquiring the shares for investment and not distribution, that they could bear the risks of the investment and could hold the securities for an indefinite period of time. Such purchasers received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration or an available exemption from such registration.

      The issuance of stock options and the common stock issuable upon the exercise of such options as described in paragraph 10 of Item 15 were issued pursuant to written compensatory plans or arrangements with our employees, directors and consultants, in reliance on the exemption provided by Rule 701 promulgated under the Securities Act.

      All of the foregoing securities are deemed restricted securities for purposes of the Securities Act. All certificates representing the issued shares of common stock described in this Item 15 included appropriate legends setting forth that the securities had not been registered and the applicable restrictions on transfer.

II-3


 

Item 16.     Exhibits and Financial Statement Schedules.

      (a) Exhibits

         
Exhibit
No. Description


  1.1*     Form of Underwriting Agreement
  3.1     Certificate of Incorporation of the Registrant, as amended
  3.2*     Bylaws of the Registrant
  3.3*     Restated Certificate of Incorporation of the Registrant to be effective upon closing of the offering
  3.4*     Amended and Restated Bylaws of the Registrant to be effective upon closing of the offering
  4.1*     Specimen certificate evidencing shares of common stock
  5.1*     Opinion of Hale and Dorr LLP
  10.1*     2002 Employee, Director and Consultant Stock Plan, as amended, together with forms of Incentive Stock Option Agreement, Non-qualified Stock Option Agreement and Restricted Stock Agreement
  10.2*     2003 Employee, Director and Consultant Stock Plan, as amended, together with forms of Incentive Stock Option Agreement, Non-qualified Stock Option Agreement and Restricted Stock Agreement
  10.3*     2004 Stock Incentive Plan, together with forms of Incentive Stock Option Agreement and Nonstatutory Stock Option Agreement
  10.4*     2004 Employee Stock Purchase Plan
  10.5*     Registration Rights Agreement dated as of July 31, 2003 and amended as of October 9, 2003 and February 26, 2004 by and among the Registrant and the parties listed on Schedule A thereto
  10.6*     Investor Rights Agreement dated as of September 8, 2003 and amended on February 26, 2004 by and between the Registrant and Merck & Co., Inc.
  10.7*     Letter Agreement between the Registrant and John M. Maraganore, Ph.D. dated October 30, 2002
  10.8*     Letter Agreement between the Registrant and Vincent J. Miles, Ph.D. dated June 16, 2003
  10.9*     Letter Agreement between the Registrant and Thomas R. Ulich, M.D. dated June 15, 2003
  10.10*     Letter Agreement between the Registrant and Barry E. Greene dated September 29, 2003
  10.11*     Loan and Security Agreement by and between Lighthouse Capital Partners V, L.P. and the Registrant dated as of March 26, 2004, together with the Negative Pledge Agreement by and between Lighthouse Capital Partners V, L.P. and the Registrant dated as of March 26, 2004.
  10.12*     Warrants to Purchase Preferred Stock effective as of March 30, 2004 issued to Lighthouse Capital Partners V, L.P. and Lighthouse Capital Partners IV, L.P.
  10.13*     Warrant to Purchase Stock dated December 18, 2002 issued to Silicon Valley Bank
  10.14*     Lease, dated as of August 5, 2003, between the Registrant and ARE-770/784/790 Memorial Drive, LLC, as amended
  10.15*     Lease, dated as of September 26, 2003 by and between the Registrant and Three Hundred Third Street LLC
  10.16†     License Agreement between Cancer Research Technology Limited and Alnylam U.S., Inc. dated July 18, 2003
  10.17†*     License Agreement between the Carnegie Institution of Washington and Alnylam Europe, AG, effective March 1, 2002, as amended by letter agreements dated September 2, 2002 and October 28, 2003.
  10.18†     License Agreement by and between the Cold Spring Harbor Laboratory and Alnylam U.S., Inc. dated December 30, 2003
  10.19†     Co-exclusive License Agreement between Garching Innovation GmbH and Alnylam U.S., Inc. dated December 20, 2002, as amended by Amendment dated July 8, 2003, together with Indemnification Agreement by and between Garching Innovation GmbH and Alnylam Pharmaceuticals, Inc. effective as of April 1, 2004
  10.20†     Co-exclusive License Agreement between Garching Innovation GmbH and Alnylam Europe, AG dated July 30, 2003

II-4


 

         
Exhibit
No. Description


  10.21†     Agreement between The Board of Trustees of the Leland Stanford Junior University and Alnylam U.S., Inc. effective as of September 17, 2003
  10.22†     Research Collaboration and License Agreement by and among Merck & Co., Inc., Alnylam U.S., Inc. and Registrant dated September 8, 2003
  10.23†     Sponsored Research Agreement among Mayo Foundation for Medical Education and Research, Mayo Clinic Jacksonville and Alnylam Pharmaceuticals, Inc. effective as of October 1, 2003
  10.24†     Strategic Collaboration and License Agreement effective as of March 11, 2004 between Isis Pharmaceuticals, Inc. and the Registrant
  10.25*     Investor Rights Agreement entered into as of March 11, 2004 by and between the Registrant and Isis Pharmaceuticals, Inc.
  10.26*     Agreement between the Registrant and Perini Building Company, Inc. effective as of March 26, 2004
  21.1*     Subsidiaries of the Registrant
  23.1*     Consent of PricewaterhouseCoopers LLP, Independent Auditors
  23.2*     Consent of PricewaterhouseCoopers Gesellschaft mit beschränkter Haftung Wirtschaftsprüfungsgesellschaft, Independent Auditors
  23.3*     Consent of Hale and Dorr LLP (included in Exhibit 5.1)
  24.1*     Power of Attorney

* Previously filed.

Confidential treatment requested as to certain portions, which portions have been filed separately with the Securities and Exchange Commission.

     (b) Financial Statement Schedules.

      None

 
Item 17. Undertakings.

      The undersigned registrant hereby undertakes to provide to the underwriters at the closing specified in the underwriting agreement certificates in such denominations and registered in such names as required by the underwriters to permit prompt delivery to each purchaser.

      Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers, and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable. In the event that a claim for indemnification by the registrant against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer, or controlling person of the registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

      The undersigned registrant hereby undertakes that:

        (1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b) (1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

II-5


 

        (2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-6


 

SIGNATURES

      Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Cambridge, Commonwealth of Massachusetts on this 20th day of May, 2004.

  ALNYLAM PHARMACEUTICALS, INC.

  By:  /s/ JOHN M. MARAGANORE
 
  John M. Maraganore, Ph.D.
  President and Chief Executive Officer

     Pursuant to the requirements of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
             
Signature Title Date



 
/s/ JOHN M. MARAGANORE

JOHN M. MARAGANORE, PH.D.
  President, Chief Executive Officer and Director
(Principal Executive Officer)
  May 20, 2004
 
/s/ BARRY E. GREENE

BARRY E. GREENE
  Chief Operating Officer and Treasurer (Principal Financial and Accounting Officer)   May 20, 2004
 
*

PETER BARRETT, PH.D.
  Director   May 20, 2004
 
*

JOHN BERRIMAN
  Director   May 20, 2004
 
*

JOHN CLARKE
  Director   May 20, 2004
 
*

PAUL SCHIMMEL, PH.D.
  Director   May 20, 2004
 
*

PHILLIP A. SHARP, PH.D.
  Director   May 20, 2004
 
*

KEVIN STARR
  Director   May 20, 2004
 
*

CHRISTOPH H. WESTPHAL, M.D., PH.D.
  Director   May 20, 2004
 
*By:   /s/ JOHN M. MARAGANORE

JOHN M. MARAGANORE, PH.D.
Attorney-in-fact
       

II-7


 

EXHIBIT INDEX

         
Exhibit
No. Description


  1.1*     Form of Underwriting Agreement
  3.1     Certificate of Incorporation of the Registrant, as amended
  3.2*     Bylaws of the Registrant
  3.3*     Restated Certificate of Incorporation of the Registrant to be effective upon closing of the offering
  3.4*     Amended and Restated Bylaws of the Registrant to be effective upon closing of the offering
  4.1*     Specimen certificate evidencing shares of common stock
  5.1*     Opinion of Hale and Dorr LLP
  10.1*     2002 Employee, Director and Consultant Stock Plan, as amended, together with forms of Incentive Stock Option Agreement, Non-qualified Stock Option Agreement and Restricted Stock Agreement
  10.2*     2003 Employee, Director and Consultant Stock Plan, as amended, together with forms of Incentive Stock Option Agreement, Non-qualified Stock Option Agreement and Restricted Stock Agreement
  10.3*     2004 Stock Incentive Plan, together with forms of Incentive Stock Option Agreement and Nonstatutory Stock Option Agreement
  10.4*     2004 Employee Stock Purchase Plan
  10.5*     Registration Rights Agreement dated as of July 31, 2003 and amended as of October 9, 2003 and February 26, 2004 by and among the Registrant and the parties listed on Schedule A thereto
  10.6*     Investor Rights Agreement dated as of September 8, 2003 and amended on February 26, 2004 by and between the Registrant and Merck & Co., Inc.
  10.7*     Letter Agreement between the Registrant and John M. Maraganore, Ph.D. dated October 30, 2002
  10.8*     Letter Agreement between the Registrant and Vincent J. Miles, Ph.D. dated June 16, 2003
  10.9*     Letter Agreement between the Registrant and Thomas R. Ulich, M.D. dated June 15, 2003
  10.10*     Letter Agreement between the Registrant and Barry E. Greene dated September 29, 2003
  10.11*     Loan and Security Agreement by and between Lighthouse Capital Partners V, L.P. and the Registrant dated as of March 26, 2004, together with the Negative Pledge Agreement by and between Lighthouse Capital Partners V, L.P. and the Registrant dated as of March 26, 2004.
  10.12*     Warrants to Purchase Preferred Stock effective as of March 30, 2004 issued to Lighthouse Capital Partners V, L.P. and Lighthouse Capital Partners IV, L.P.
  10.13*     Warrant to Purchase Stock dated December 18, 2002 issued to Silicon Valley Bank
  10.14*     Lease, dated as of August 5, 2003, between the Registrant and ARE-770/784/790 Memorial Drive, LLC, as amended
  10.15*     Lease, dated as of September 26, 2003 by and between the Registrant and Three Hundred Third Street LLC
  10.16†     License Agreement between Cancer Research Technology Limited and Alnylam U.S., Inc. dated July 18, 2003
  10.17†*     License Agreement between the Carnegie Institution of Washington and Alnylam Europe, AG, effective March 1, 2002, as amended by letter agreements dated September 2, 2002 and October 28, 2003.
  10.18†     License Agreement by and between the Cold Spring Harbor Laboratory and Alnylam U.S., Inc. dated December 30, 2003
  10.19†     Co-exclusive License Agreement between Garching Innovation GmbH and Alnylam U.S., Inc. dated December 20, 2002, as amended by Amendment dated July 8, 2003 together with Indemnification Agreement by and between Garching Innovation GmbH and Alnylam Pharmaceuticals, Inc. effective April 1, 2004


 

         
Exhibit
No. Description


  10.20†     Co-exclusive License Agreement between Garching Innovation GmbH and Alnylam Europe, AG dated July 30, 2003
  10.21†     Agreement between The Board of Trustees of the Leland Stanford Junior University and Alnylam U.S., Inc. effective as of September 17, 2003
  10.22†     Research Collaboration and License Agreement by and among Merck & Co., Inc., Alnylam U.S., Inc. and Registrant dated September 8, 2003
  10.23†     Sponsored Research Agreement among Mayo Foundation for Medical Education and Research, Mayo Clinic Jacksonville and Alnylam Pharmaceuticals, Inc. effective as of October 1, 2003
  10.24†     Strategic Collaboration and License Agreement effective as of March 11, 2004 between Isis Pharmaceuticals, Inc. and the Registrant
  10.25*     Investor Rights Agreement entered into as of March 11, 2004 by and between the Registrant and Isis Pharmaceuticals, Inc.
  10.26*     Agreement between the Registrant and Perini Building Company, Inc. effective as of March 26, 2004
  21.1*     Subsidiaries of the Registrant
  23.1*     Consent of PricewaterhouseCoopers LLP, Independent Auditors
  23.2*     Consent of PricewaterhouseCoopers Gesellschaft mit beschränkter Haftung Wirtschaftsprüfungsgesellschaft, Independent Auditors
  23.3*     Consent of Hale and Dorr LLP (included in Exhibit 5.1)
  24.1*     Power of Attorney

* Previously filed.

Confidential treatment requested as to certain portions, which portions have been filed separately with the Securities and Exchange Commission.
<PAGE>
                                                                     EXHIBIT 3.1


                          CERTIFICATE OF INCORPORATION

                                       OF

                               ALNYLAM HOLDING CO.

         FIRST: The name of the Corporation is Alnylam Holding Co.

         SECOND: The address of its registered office in the State of Delaware
is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
County of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.

         THIRD: The nature of the business or purposes to be conducted or
promoted by the Corporation is as follows:

         To engage in any lawful act or activity for which corporations may be
organized under the General Corporation Law of Delaware.

         FOURTH: The total number of shares of stock which the Corporation shall
have authority to issue is 3,000 shares of Common Stock, $0.01 par value per
share.

         The number of authorized shares of Common Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the
affirmative vote of the holders of a majority of the stock of the Corporation
entitled to vote, irrespective of the provisions of Section 242(b)(2) of the
General Corporation Law of Delaware.

         FIFTH: The name and mailing address of the sole incorporator are as
follows:


<TABLE>
<CAPTION>
NAME                                          MAILING ADDRESS
----                                          ---------------
<S>                                           <C>
John Conley
                                   790 Memorial Drive
                                              Cambridge, MA 02139
</TABLE>


         SIXTH: In furtherance of and not in limitation of powers conferred by
statute, it is further provided:

                1.       Election of directors need not be by written ballot.

                2.       The Board of Directors is expressly authorized to
adopt, amend or repeal the By-Laws of the Corporation.

         SEVENTH: Except to the extent that the General Corporation Law of
Delaware prohibits the elimination or limitation of liability of directors for
breaches of fiduciary duty, no director of the Corporation shall be personally
liable to the Corporation or its stockholders for


<PAGE>

monetary damages for any breach of fiduciary duty as a director, notwithstanding
any provision of law imposing such liability. No amendment to or repeal of this
provision shall apply to or have any effect on the liability or alleged
liability of any director of the Corporation for or with respect to any acts or
omissions of such director occurring prior to such amendment.

         EIGHTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of Delaware, as amended from time to
time, indemnify each person who was or is a party or is threatened to be made a
party to any threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative, by reason of the fact
that he or she is or was, or has agreed to become, a director or officer of the
Corporation, or is or was serving, or has agreed to serve, at the request of the
Corporation, as a director, officer, partner, employee or trustee of, or in a
similar capacity with, another corporation, partnership, joint venture, trust or
other enterprise (including any employee benefit plan) (all such persons being
referred to hereafter as an "Indemnitee"), or by reason of any action alleged to
have been taken or omitted in such capacity, against all expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by or on behalf of an Indemnitee in connection with such
action, suit or proceeding and any appeal therefrom.

         As a condition precedent to an Indemnitee's right to be indemnified,
the Indemnitee must notify the Corporation in writing as soon as practicable of
any action, suit, proceeding or investigation involving such Indemnitee for
which indemnity will or could be sought. With respect to any action, suit,
proceeding or investigation of which the Corporation is so notified, the
Corporation will be entitled to participate therein at its own expense and/or to
assume the defense thereof at its own expense, with legal counsel reasonably
acceptable to the Indemnitee.

         In the event that the Corporation does not assume the defense of any
action, suit, proceeding or investigation of which the Corporation receives
notice under this Article, the Corporation shall pay in advance of the final
disposition of such matter any expenses (including attorneys' fees) incurred by
an Indemnitee in defending a civil or criminal action, suit, proceeding or
investigation or any appeal therefrom; provided, however, that the payment of
such expenses incurred by an Indemnitee in advance of the final disposition of
such matter shall be made only upon receipt of an undertaking by or on behalf of
the Indemnitee to repay all amounts so advanced in the event that it shall
ultimately be determined that the Indemnitee is not entitled to be indemnified
by the Corporation as authorized in this Article, which undertaking shall be
accepted without reference to the financial ability of the Indemnitee to make
such repayment; and further provided that no such advancement of expenses shall
be made under this Article if it is determined that (i) the Indemnitee did not
act in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Corporation, or (ii) with respect to any
criminal action or proceeding, the Indemnitee had reasonable cause to believe
his conduct was unlawful.

         The Corporation shall not indemnify an Indemnitee pursuant to this
Article in connection with a proceeding (or part thereof) initiated by such
Indemnitee unless the initiation thereof was approved by the Board of Directors
of the Corporation. In addition, the Corporation shall not indemnify an
Indemnitee to the extent such Indemnitee is reimbursed from the proceeds of
insurance, and in the event the Corporation makes any indemnification payments
to an

                                     - 2 -

<PAGE>

Indemnitee and such Indemnitee is subsequently reimbursed from the proceeds of
insurance, such Indemnitee shall promptly refund such indemnification payments
to the Corporation to the extent of such insurance reimbursement.

         All determinations hereunder as to the entitlement of an Indemnitee to
indemnification or advancement of expenses shall be made in each instance (a) by
a majority vote of the directors of the Corporation consisting of persons who
are not at that time parties to the action, suit or proceeding in question
("disinterested directors"), whether or not a quorum, (b) by a committee of
disinterested directors designated by majority vote of disinterested directors,
whether or not a quorum, (c) if there are no disinterested directors, or if the
disinterested directors so direct, by independent legal counsel (who may, to the
extent permitted by law, be regular legal counsel to the Corporation) in a
written opinion, or (d) by the stockholders of the Corporation.

         The rights provided in this Article (i) shall not be deemed exclusive
of any other rights to which an Indemnitee may be entitled under any law,
agreement or vote of stockholders or disinterested directors or otherwise, and
(ii) shall inure to the benefit of the heirs, executors and administrators of
the Indemnitees. The Corporation may, to the extent authorized from time to time
by its Board of Directors, grant indemnification rights to other employees or
agents of the Corporation or other persons serving the Corporation and such
rights may be equivalent to, or greater or less than, those set forth in this
Article.

         NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation, in the
manner now or hereafter prescribed by statute and this Certificate of
Incorporation, and all rights conferred upon stockholders herein are granted
subject to this reservation.


                          [SIGNATURE ON FOLLOWING PAGE]

                                     - 3 -


<PAGE>

         EXECUTED at Cambridge, Massachusetts, on May 5, 2003.

                                                    /s/ John Conley
                                                    ----------------------------
                                                           John Conley
                                                           Incorporator

                                     - 4 -

<PAGE>


                            CERTIFICATE OF AMENDMENT

                                       OF

                          CERTIFICATE OF INCORPORATION

                                       OF

                               ALNYLAM HOLDING CO.

                             Pursuant to Section 242
                        of the General Corporation Law of
                              the State of Delaware

         ALNYLAM HOLDING CO. (the "Corporation"), a corporation organized and
existing under and by virtue of the General Corporation Law of the State of
Delaware (the "General Corporation Law"), hereby certifies as follows:

         The Board of Directors of the Corporation duly adopted, pursuant to
Sections 141(f) and 242 of the General Corporation Law of Delaware, resolutions
setting forth an amendment to the Certificate of Incorporation of the
Corporation and declaring said amendment to be advisable. The Stockholders of
the Corporation duly approved said proposed amendment by written consent in
accordance with Sections 228 and 242 of the General Corporation Law of Delaware.
The resolutions setting forth the amendment are as follows:

         RESOLVED: That Article FOURTH of the Certificate of Incorporation be
and hereby is deleted in its entirety and the following Article FOURTH is
inserted in lieu thereof:

         FOURTH: The total number of shares of all classes of stock which the
Corporation has authority to issue is 51,911,480 shares, consisting of
32,239,392 shares of Common Stock, par value $.0001 per share (the "Common
Stock"), 3,000,010 shares of Series A Convertible Preferred Stock, par value
$.0001 per share (the "Series A Preferred Stock"), and 16,672,078 shares of
Series B Convertible Preferred Stock, $.0001 par value per share (the "Series B
Preferred Stock"). The Series A Preferred Stock and Series B Preferred Stock are
sometimes hereinafter collectively referred to as the "Preferred Stock."

         The powers, preferences and rights, and the qualifications, limitations
or restrictions thereof, in respect of each class or series of stock of the
Corporation shall be as follows:

                  Section 1. Liquidation Rights.

                  (a)      Liquidation Payments.

                           (i)      In the event of any liquidation, dissolution
or winding up of the affairs of the Corporation, whether voluntary or
involuntary, the holders of the then outstanding shares of Preferred Stock shall
be entitled to be paid first out of the assets of the


<PAGE>

Corporation available for distribution to holders of the Corporation's capital
stock of all classes an amount equal to (a) in the case of the Series A
Preferred Stock, $1.00 per share (subject to equitable adjustment whenever there
shall occur a stock dividend, stock split, combination of shares,
reclassification or other similar event with respect to such series of Preferred
Stock) and (b) in the case of the Series B Preferred Stock, $2.50 per share
(subject to equitable adjustment whenever there shall occur a stock dividend,
stock split, combination of shares, reclassification or other similar event with
respect to such series of Preferred Stock), plus (in the case of all series of
Preferred Stock) all dividends declared thereon but unpaid and any and all other
amounts owing with respect to such shares, as of and including the date full
payment shall be tendered to the holders of the Preferred Stock with respect to
such liquidation, dissolution or winding up. Such amount is sometimes
hereinafter referred to as the "Preference Amount."

         If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of the Preferred Stock of the entire Preference
Amount so distributable to them, then the entire assets of the Corporation
available for such distribution shall be distributed ratably among the holders
of the Preferred Stock in proportion to the full Preference Amount each such
holder is otherwise entitled to receive under this Section 1(a)(i).

         No payment shall be made with respect to the Common Stock unless and
until full payment has been made to the holders of the Preferred Stock of the
full Preference Amount.

                           (ii)     After all payments shall have been made in
full to the holders of the Preferred Stock as contemplated by Section 1(a)(i)
above, or funds necessary for such payments shall have been set aside by the
Corporation in trust for the account of holders of Preferred Stock so as to be
available for such payments, the remaining assets available for distribution
shall be distributed among the holders of the Common Stock ratably in proportion
to the number of shares of Common Stock then held by them.

                           (iii)    Upon any such liquidation, dissolution or
winding up, any holder of Preferred Stock may elect to receive, in lieu of the
Preference Amount otherwise payable to it pursuant to Section 1.1(a)(i), an
amount per share of Preferred Stock as would have been payable had such share
been converted to Common Stock immediately prior to such liquidation,
dissolution or winding up, plus all dividends declared but unpaid on each such
share of Preferred Stock to and including the date full payment shall be
tendered to the holders of the Preferred Stock with respect to such liquidation,
dissolution or winding up.

                           (iv)     Upon conversion of shares of Preferred Stock
into shares of Common Stock pursuant to Section 2 below, the holder of such
Common Stock shall not be entitled to any preferential payment or distribution
in case of any liquidation, dissolution or winding up, but shall share ratably
in any distribution of the assets of the Corporation to all the holders of
Common Stock.

                           (v)      The amounts payable with respect to shares
of Preferred Stock under this Section 1(a) are sometimes hereinafter referred to
as "Liquidation Payments."

                                     - 2 -

<PAGE>

                  (b)      Distributions Other than Cash. The amount deemed
distributed to the holders of Preferred Stock upon any liquidation, dissolution,
or winding-up (including any transaction treated as such pursuant to Section
1(c)), and the value of the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock (as defined below), if
distributed or received, as the case may be, in any form of property (tangible
or intangible) other than cash shall be the fair market value of such property.
The term "fair market value" or "fair value" means, with respect to any
security, its Market Price (as defined below), and with respect to any property
or assets other than cash or securities, the fair value thereof determined in
good faith jointly by the Corporation (including the approval of a director
nominated by holders of Common Stock) and the Requisite Holders (as defined
below); provided, however, that if the parties are not able to agree within a
reasonable period of time (not to exceed thirty (30) days) what amount
constitutes fair value, then the fair value will be determined pursuant to the
Arbitration Procedure (as defined below). The term "Requisite Holders" means the
holders of at least two-thirds in voting power of the then outstanding Preferred
Stock. The term "Market Price" means, as to any security, the average of the
closing prices of such security's sales on all United States securities
exchanges on which such security may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day such security is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, on
such day, or, if on any day such security is not quoted in the NASDAQ System,
the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization, in each such case
averaged over a period of 30 days consisting of the thirty day period ending
three days prior to the date as of which Market Price is being determined. If at
any time such security is not listed on any domestic securities exchange or
quoted in the NASDAQ System or the domestic over-the-counter market, the Market
Price of such security shall be the fair value thereof as determined in good
faith jointly by the Corporation (including the approval of a director nominated
by holders of Common Stock) and the Requisite Holders; provided, however, that
if such parties are not able to agree within a reasonable period of time (not to
exceed ten (10) days) what amount constitutes the Market Price, then the Market
Price shall be determined pursuant to the Arbitration Procedure. The term
"Arbitration Procedure" means the following procedure to determine the fair
value or the Market Price, as applicable (the "valuation amount"). The valuation
amount shall be determined by an investment banking firm of national
recognition, which firm shall be reasonably acceptable to the Corporation and
the Requisite Holders. If the Corporation and the Requisite Holders are unable
to agree upon an acceptable investment banking firm within ten (10) days after
the date either party proposed that one be selected, the investment banking firm
will be selected by an arbitrator located in the City of Boston, Massachusetts,
selected by the American Arbitration Association (or if such organization ceases
to exist, the arbitrator shall be chosen by a court of competent jurisdiction).
The arbitrator shall select the investment banking firm (within ten (10) days of
his appointment) from a list, jointly prepared by the Corporation and the
Requisite Holders, of not more than six investment banking firms of national
standing in the United States, of which no more than three may be named by the
Corporation and no more than three may be named by the Requisite Holders. The
arbitrator may consider, within the ten-day period allotted, arguments from the
parties regarding which investment banking firm to choose, but the selection by
the

                                     - 3 -

<PAGE>

arbitrator shall be made in its sole discretion from the list of six. The
determination of the final valuation amount by such investment banking firm
shall be final and binding upon the parties. The Corporation shall pay one-half
of the fees and expenses of the investment banking firm and arbitrator (if any)
used to determine the valuation amount and the holders of the Preferred Stock
shall pay the other half of such fees and expenses (allocated among them pro
rata based on the number of shares of Preferred Stock, on an as-converted basis,
then held by each of them). If required by any such investment banking firm or
arbitrator, the Corporation and the holders of the Preferred Stock shall execute
a retainer and engagement letter containing reasonable terms and conditions,
including customary provisions concerning the rights of indemnification and
contribution by the Corporation and the holders of the Preferred Stock in favor
of such investment banking firm or arbitrator and its officers, directors,
partners, employees, agents and affiliates.

                  (c)      Merger as Liquidation, etc. The merger or
consolidation of the Corporation into or with another corporation (except one in
which the holders of capital stock of the Corporation immediately prior to such
merger or consolidation continue to hold a majority in voting power of the
capital stock of the surviving corporation, in which case the provisions of
Section 2(h) shall apply), or the sale of all or substantially all of the assets
of the Corporation, shall be deemed to be a liquidation, dissolution or winding
up of the affairs of the Corporation for purposes of this Section 1 with respect
to the Preferred Stock, unless the holders of at least two-thirds in voting
power of the then outstanding shares of Preferred Stock elect to the contrary;
such election to be made by giving notice thereof to the Corporation at least
three days before the effective date of such event. If such notice is given with
respect to the Preferred Stock, the provisions of Section 2(h) shall apply.
Unless such election is made with respect to the Preferred Stock, any amounts
received by the holders of Preferred Stock as a result of such merger or
consolidation shall be deemed to be applied toward, and all consideration
received by the Corporation in such asset sale together with all other available
assets of the Corporation shall be distributed toward, the Liquidation Payments.

                  (d)      Notice. In the event the Corporation shall propose to
undertake any liquidation, dissolution or winding up of the affairs of the
Corporation (including any merger, consolidation or sale of assets which may be
deemed to be a liquidation, dissolution or winding up of the affairs of the
Corporation under Section 1(c)), the Corporation shall, within ten (10) days
after the date the Board of Directors approves such action or twenty (20) days
prior to any stockholders' meeting called to approve such action, whichever is
earlier, give each holder of Preferred Stock initial written notice of the
proposed action. Such initial written notice shall describe the material terms
and conditions of such proposed action, including a description of the stock,
cash and property to be received by the holders of the Preferred Stock and of
Common Stock upon consummation of the proposed action and the proposed date of
delivery thereof. If any material change in the facts set forth in the initial
notice shall occur, the Corporation shall promptly give each holder of Preferred
Stock written notice of such material change. The Corporation shall not
consummate any such proposed liquidation, dissolution or winding up before the
expiration of thirty (30) days after the mailing of the initial notice or twenty
(20) days after the mailing of any subsequent written notice, whichever is
later, provided that any such 30-day or 20-day period may be shortened or waived
upon the written consent of the holders of at least two-thirds in voting power
of the outstanding shares of Preferred Stock. Any holder of

                                     - 4 -

<PAGE>

outstanding shares of Preferred Stock may waive any notice required by this
Section by a written instrument specifically indicating such waiver.

                  Section 2. Conversion. The holders of Preferred Stock shall
have conversion rights as follows (the "Conversion Rights"):

                  (a)      Right to Convert; Conversion Price. Each share of
Preferred Stock shall be convertible, without the payment of any additional
consideration by the holder thereof and at the option of the holder thereof, at
any time after the date of issuance of such share, at the office of the
Corporation or any transfer agent for the Preferred Stock, into such number of
fully paid and nonassessable shares of Common Stock as is determined in
accordance with the following:

                           (i)      in the case of the Series A Preferred Stock,
by dividing $1.00 by the Series A Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. The Conversion Price at which
shares of Common Stock shall be deliverable upon conversion of Series A
Preferred Stock without the payment of any additional consideration by the
holder thereof (the "Series A Conversion Price") shall initially be $1.00 per
share of Common Stock. Such initial Series A Conversion Price shall be subject
to adjustment, in order to adjust the number of shares of Common Stock into
which the Series A Preferred Stock is convertible, as hereinafter provided.

                           (ii)     in the case of the Series B Preferred Stock,
by dividing $2.50 by the Series B Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. The Conversion Price at which
shares of Common Stock shall be deliverable upon conversion of Series B
Preferred Stock without the payment of any additional consideration by the
holder thereof (the "Series B Conversion Price") shall initially be $2.50 per
share of Common Stock. Such initial Series B Conversion Price shall be subject
to adjustment, in order to adjust the number of shares of Common Stock into
which the Series B Preferred Stock is convertible, as hereinafter provided.

         Each of the Series A Conversion Price and the Series B Conversion is
sometimes hereinafter referred to as a "Conversion Price."

         The right of conversion with respect to any shares of Preferred Stock
which shall have been called for redemption under Section 6 hereof shall
terminate at the close of business on the day fixed for redemption unless the
Corporation shall default in the payment of the redemption price, in which case
the right of conversion with respect to such shares shall continue unless and
until such redemption price is paid in full.

                  (b)      Automatic Conversion.

                           (i)      Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the applicable
Conversion Price then in effect upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of
Common Stock for the account of the Corporation to the public at an offering
price per share

                                     - 5 -

<PAGE>

(prior to underwriters' discounts and commissions) of not less than $7.50 (as
adjusted to reflect any stock dividends, distributions, combinations,
reclassifications or other like transactions effected by the Corporation in
respect of its Common Stock) and with gross proceeds to the Corporation of not
less than $25,000,000 (a "Qualified Public Offering"), in the event of which
offering the person(s) entitled to receive the Common Stock issuable upon such
conversion of the Preferred Stock shall not be deemed to have converted such
Preferred Stock until the closing of such offering.

                           (ii)     Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the applicable
Conversion Price then in effect upon the written election of the holders of not
less than two-thirds in voting power of the then outstanding shares of Preferred
Stock to require such mandatory conversion.

                  (c)      Mechanics of Automatic Conversions. Upon the
occurrence of an event specified in Section 2(b), the Preferred Stock of the
applicable series shall be converted automatically without any further action by
the holders of such shares and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent; provided,
however, that all holders of shares of Preferred Stock being converted shall be
given written notice of the occurrence of the event specified in Section 2(b)
triggering such conversion, including the date such event occurred (the
"Mandatory Conversion Date"), and the Corporation shall not be obligated to
issue certificates evidencing the shares of Common Stock issuable upon such
conversion unless certificates evidencing such shares of Preferred Stock being
converted are either delivered to the Corporation or its transfer agent, or the
holder notifies the Corporation or any transfer agent that such certificates
have been lost, stolen, or destroyed and executes an agreement satisfactory to
the Corporation (which agreement will not require a bond) to indemnify the
Corporation from any loss incurred by it in connection therewith. On the
Mandatory Conversion Date, all rights with respect to the Preferred Stock so
converted shall terminate, except any of the rights of the holder thereof, upon
surrender of the holder's certificate or certificates therefor, to receive
certificates for the number of shares of Common Stock into which such Preferred
Stock has been converted, together with cash in an amount equal to all dividends
declared but unpaid on, and any and all other amounts owing with respect to, the
shares of Preferred Stock converted to and including the time of conversion.
Upon the automatic conversion of the Preferred Stock, the holders of such
Preferred Stock shall surrender the certificates representing such shares at the
office of the Corporation or of its transfer agent. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or by
the holder's attorney duly authorized in writing. Upon surrender of such
certificates there shall be issued and delivered to such holder, or to such
holder's nominee or nominees promptly at such office, a certificate or
certificates for the number of shares of Common Stock into which the shares of
Preferred Stock surrendered were convertible on the date on which such automatic
conversion occurred, together with cash in an amount equal to all dividends
declared but unpaid on, and any and all other amounts owing with respect to, the
shares of Preferred Stock converted to and including the time of conversion.
Upon the automatic conversion of the Preferred Stock, all shares of Preferred
Stock being converted by any holder thereof shall be aggregated for the purpose
of determining the number of shares of Common Stock to which such holder shall
be entitled, and no fractional share of

                                     - 6 -

<PAGE>

Common Stock shall be issued. In lieu of any fractional share to which the
holder would otherwise be entitled, the Corporation shall pay cash equal to such
fraction multiplied by the fair market value of the Common Stock on the
Mandatory Conversion Date, as reasonably determined by the Board of Directors in
good faith (notwithstanding the provisions of Section 1(b)).

                  (d)      Mechanics of Optional Conversions. Before any holder
of Preferred Stock shall be entitled to convert the same into shares of Common
Stock, the holder shall surrender the certificate or certificates therefor at
the office of the Corporation or of any transfer agent for the Preferred Stock,
and shall give written notice to the Corporation at such office that the holder
elects to convert the same and shall state therein the holder's name or the name
or names of the holder's nominees in which the holder wishes the certificate or
certificates for shares of Common Stock to be issued. On the date of conversion,
all rights with respect to the Preferred Stock so converted shall terminate,
except any of the rights of the holder thereof, upon surrender of the holder's
certificate or certificates therefor, to receive certificates for the number of
shares of Common Stock into which such Preferred Stock has been converted and
cash in an amount equal to all dividends declared but unpaid on, and any and all
other amounts owing with respect to, the shares of Preferred Stock being
converted to and including the time of conversion. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or by
the holder's attorney duly authorized in writing. Upon the optional conversion
of the Preferred Stock of any series, all shares of Preferred Stock being
converted by any holder thereof shall be aggregated for the purpose of
determining the number of shares of Common Stock to which such holder shall be
entitled, and no fractional share of Common Stock shall be issued. In lieu of
any fractional share to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of the Common Stock on the date of conversion, as reasonably determined by
the Board of Directors in good faith (notwithstanding the provisions of Section
1(b)). The Corporation shall, promptly after surrender of the certificate or
certificates for conversion, issue and deliver at such office to such holder of
Preferred Stock, or to the holder's nominee or nominees, a certificate or
certificates for the number of shares of Common Stock to which the holder shall
be entitled as aforesaid, together with cash in lieu of any fraction of a share
and cash in an amount equal to all dividends declared but unpaid thereon and any
and all other amounts owing with respect thereto at such time. Unless otherwise
specified by the holder in the written notice of conversion, such conversion
shall be deemed to have been made immediately prior to the close of business on
the date of such surrender of the shares of Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock on such date.

                  (e)      Adjustments to Conversion Price for Diluting Issues.

                           (i)      Special Definitions. For purposes of this
Section 2(e), the following definitions shall apply:

                                     - 7 -

<PAGE>

                                    (1)  "Option" shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities.

                                    (2)  "Original Issue Date" shall mean
with respect to any series of Preferred Stock the first date on which a share of
Preferred Stock of such series was issued.

                                    (3)  "Convertible Securities" shall mean
any evidences of indebtedness, shares of capital stock (other than Common Stock)
or other securities directly or indirectly convertible into or exchangeable for
Common Stock.

                                    (4)  "Additional Shares of Common Stock"
shall mean all shares of Common Stock issued (or, pursuant to Section 2(e)(iii),
deemed to be issued) by the Corporation after the Original Issue Date, other
than:

                                         (A)   shares of Common Stock issued or
issuable upon conversion of shares of Preferred Stock;

                                         (B)   up to 3,250,000 shares of Common
Stock issued or issuable to employees, consultants or directors of the
Corporation pursuant to a stock purchase or stock option plan or other employee
stock bonus arrangement approved by a majority of the Corporation's Board of
Directors, which majority includes at least two of the Preferred Stock Directors
(as hereinafter defined) (such vote, a "Majority Directors Vote"); and provided
that such number may be adjusted upward by a Majority Directors Vote;

                                         (C)   securities issued in connection
with capital leases, bank financing or other similar transactions with a
non-equity financing purpose, in each case as approved by a Majority Directors
Vote;

                                         (D)   securities issued in connection
with licensing or strategic alliance transactions, in each case as approved by a
Majority Directors Vote;

                                         (E)   securities issued pursuant to the
acquisition of another corporation or other entity by the Corporation by merger,
purchase of substantially all of the assets, or other reorganization whereby the
Corporation acquires not less than 51% of the voting power of such corporation
or other entity in a transaction approved by a Majority Directors Vote;

                                         (F)   up to 1,000,000 shares of Series
A Preferred Stock issued or issuable at a price not less than $1.00 per share
pursuant to a Series A and Series B Convertible Preferred Stock Purchase
Agreement to be entered into, and performed by, the Corporation with certain
existing investors of the Corporation and Abingworth Management Limited;

                                         (G)   shares of Common Stock issued or
issuable at any time to holders of capital stock of Ribopharma AG ("Ribopharma")
pursuant to the Share

                                     - 8 -

<PAGE>

Exchange Agreement dated July 3, 2003 among the Corporation, Alnylam
Pharmaceuticals, Inc. ("Alnylam"), Ribopharma and the stockholders of Ribopharma
(the "Share Exchange Agreement");

                                         (H)   up to 898,173 shares of Series B
Preferred Stock issued to Garching Innovation GmbH ("Garching"), Massachusetts
Institute of Technology ("MIT"), Whitehead Institute for Biomedical Research
("Whitehead Institute") and Max-Planck-Gesellschaft zur Foerderung der
Wissenschaften e.V ("Max-Planck") pursuant to license agreements between such
entities and Alnylam;

                                         (I)   shares of capital stock of the
Corporation issued to University of Massachusetts Medical School ("UMASS")
pursuant to license agreements between the Corporation and UMASS, in each case
as approved by a Majority Directors Vote;

                                         (J)   shares of Common Stock issued in
connection with a Qualified Public Offering; and

                                         (K)   up to 94,044 shares of Common
Stock issued to Abingworth Bioventures III A LP, Abingworth Bioventures III B
LP, Abingworth Bioventures III C LP and Abingworth Bioventures III Executives LP
(the "Lenders") pursuant to Section 8.2 of the Loan Agreement, dated April 4,
2003, between the Lenders and Ribopharma and the Assignment of Loan among
Ribopharma, the Corporation and the Lenders dated on or about the date hereof.

                           (ii)     No Adjustment of Conversion Price. Except as
set forth in Section 2(e)(vi), no adjustment in the number of shares of Common
Stock into which any series of Preferred Stock is convertible shall be made, by
adjustment in the applicable Conversion Price for such series in respect of the
issuance of Additional Shares of Common Stock, (a) unless the consideration per
share for an Additional Share of Common Stock (determined pursuant to Section
2(e)(v)) issued or deemed to be issued by the Corporation is less than the
applicable Conversion Price for such series in effect on the date of, and
immediately prior to, the issue of such Additional Shares of Common Stock or (b)
if prior to such issuance or within twenty (20) days thereafter the Corporation
receives notice from the holders of at least two-thirds of the outstanding
shares of such series of Preferred Stock that no such adjustment in the
Conversion Price for such series shall be made.

                           (iii)    Issue of Securities Deemed Issue of
Additional Shares of Common Stock

                                    (1)  Options and Convertible Securities.
In the event the Corporation at any time or from time to time after the Original
Issue Date for any series of Preferred Stock shall issue any Options (excluding
for all purposes of this Section 2(e)(iii)(1) Options excluded from the
definition of Additional Shares of Common Stock in Section 2(e)(i)(4)(B)) or
Convertible Securities or shall fix a record date for the determination of
holders of any class of securities entitled to receive any such Options or
Convertible Securities, then the

                                     - 9 -

<PAGE>

maximum number of shares (as set forth in the instrument relating thereto
without regard to any provisions contained therein for a subsequent adjustment
of such number) of Common Stock issuable upon the exercise of such Options or,
in the case of Convertible Securities and Options therefor, the conversion or
exchange of such Convertible Securities, shall be deemed to be Additional Shares
of Common Stock issued as of the time of such issue or, in case such a record
date shall have been fixed, as of the close of business on such record date, and
the Conversion Price of any such series of Preferred Stock shall be adjusted
accordingly, provided that in any such case in which Additional Shares of Common
Stock are deemed to be issued:

                                         (A)   no further adjustment in the
Conversion Price of any such series of Preferred Stock shall be made upon the
subsequent issue of Convertible Securities or shares of Common Stock upon the
exercise of such Options or conversion or exchange of such Convertible
Securities;

                                         (B)   if such Options or Convertible
Securities by their terms provide, with the passage of time or otherwise, for
any increase in the consideration payable to the Corporation, or decrease in the
number of shares of Common Stock issuable, upon the exercise, conversion or
exchange thereof, the Conversion Price of any such series of Preferred Stock
computed upon the original issue thereof (or upon the occurrence of a record
date with respect thereto), and any subsequent adjustments based thereon, shall,
upon any such increase or decrease becoming effective, be recomputed to reflect
such increase or decrease insofar as it affects such Options or the rights of
conversion or exchange under such Convertible Securities;

                                         (C)   upon the expiration of any such
Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Conversion Price of any such
series of Preferred Stock computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed as if:

                                               (I)    In the case of Convertible
         Securities or Options for Common Stock the only Additional Shares of
         Common Stock issued were the shares of Common Stock, if any, actually
         issued upon the exercise of such Options or the conversion or exchange
         of such Convertible Securities and the consideration received therefor
         was the consideration actually received by the Corporation for the
         issue of all such Options, whether or not exercised, plus the
         consideration actually received by the Corporation upon such exercise,
         or for the issue of all such Convertible Securities which were actually
         converted or exchanged, plus the additional consideration, if any,
         actually received by the Corporation upon such conversion or exchange;
         and

                                               (II)   in the case of Options for
         Convertible Securities only the Convertible Securities, if any,
         actually issued upon the exercise thereof were issued at the time of
         issue of such Options, and the consideration received by the
         Corporation for the Additional Shares of Common Stock deemed to have
         been then issued was the consideration actually received by the
         Corporation for the issue of all such Options, whether or not
         exercised, plus the consideration deemed to have been

                                     - 10 -

<PAGE>

         received by the Corporation (determined pursuant to Section 2(e)(v))
         upon the issue of the Convertible Securities with respect to which such
         Options were actually exercised;

                                         (D)  no readjustment pursuant to clause
(B) or (C) above shall have the effect of increasing the Conversion Price of any
such series of Preferred Stock to an amount which exceeds the lower of (i) the
Conversion Price of any such series of Preferred Stock immediately prior to
adjustment on the original adjustment date, or (ii) the Conversion Price of any
such series of Preferred Stock that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date;

                                         (E)   if such record date shall have
been fixed and such Options or Convertible Securities are not issued on the date
fixed therefor, the adjustment previously made in the Conversion Price of any
such series of Preferred Stock which became effective on such record date shall
be canceled as of the close of business on such record date, and thereafter the
Conversion Price of any such series of Preferred Stock shall be adjusted
pursuant to this Section 2(e)(iii) as of the actual date of their issuance.

                                    (2)  Stock Dividends, Stock Distributions
and Subdivisions. In the event the Corporation at any time or from time to time
after the Original Issue Date for any series of Preferred Stock shall declare or
pay any dividend or make any other distribution on the Common Stock payable in
Common Stock or effect a subdivision of the outstanding shares of Common Stock
(by reclassification or otherwise than by payment of a dividend in Common
Stock), then and in any such event, Additional Shares of Common Stock shall be
deemed to have been issued with respect to such series of Preferred Stock:

                                         (A)   in the case of any such dividend
or distribution, immediately after the close of business on the record date for
the determination of holders of any class of securities entitled to receive such
dividend or distribution, or

                                         (B)   in the case of any such
subdivision, at the close of business on the date immediately prior to the date
upon which such corporate action becomes effective.

If such record date shall have been fixed and no part of such dividend or
distribution shall have been paid on the date fixed therefor, the adjustment
previously made in the Conversion Price of any such series of Preferred Stock
which became effective on such record date shall be canceled as of the close of
business on such record date, and thereafter the Conversion Price of such series
of Preferred Stock shall be adjusted pursuant to this Section 2(e)(iii) as of
the time of actual payment of such dividend or distribution.

                           (iv)     Adjustment of Conversion Price Upon Issuance
of Additional Shares of Common Stock. In the event that at any time or from time
to time after the Original Issue Date for the Series A Preferred Stock or Series
B Preferred Stock the Corporation shall issue Additional Shares of Common Stock
(including, without limitation, Additional Shares of Common Stock deemed to be
issued pursuant to Section 2(e)(iii)(1) but excluding Additional

                                     - 11 -

<PAGE>

Shares of Common Stock deemed to be issued pursuant to Section 2(e)(iii)(2),
which event is dealt with in Section 2(e)(vi)(1)), without consideration or for
a consideration per share less than the Series A Conversion Price or the Series
B Conversion Price in effect on the date of and immediately prior to such issue,
then and in such event, such Series A Conversion Price or Series B Conversion
Price, as the case may be, shall be reduced, concurrently with such issue, to a
price (calculated to the nearest one tenth of one cent) determined in accordance
with the following formula:

                          (P(1)) (Q(1)) + (P(2)) (Q(2))
                  NCP  =  -----------------------------
                                    Q(1) + Q(2)

         where:

                  NCP  =   New Series A Conversion Price or Series B Conversion
                           Price, as applicable;

                  P(1) =   Series A Conversion Price or Series B Conversion
                           Price, as applicable, in effect immediately prior to
                           new issue;

                  Q(1) =   Number of shares of Common Stock outstanding, or
                           deemed to be outstanding as set forth below,
                           immediately prior to such issue;

                  P(2) =   Price per share received by the Corporation upon
                           such issue;

                  Q(2) =   Number of shares of Common Stock issued, or deemed
                           to have been issued, in the subject transaction;

provided that for the purpose of this Section 2(e)(iv), all shares of Common
Stock issuable upon conversion or exercise of Options or Convertible Securities
(including without limitation shares of Preferred Stock) outstanding immediately
prior to such issue shall be deemed to be outstanding, and immediately after any
Additional Shares of Common Stock are deemed issued pursuant to Section
2(e)(iii), such Additional Shares of Common Stock shall be deemed to be
outstanding.

                           (v)      Determination of Consideration. For purposes
of this Section 2(e), the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as follows:

                                    (1)  Cash and Property: Such consideration
shall:

                                         (A)  insofar as it consists of cash, be
computed at the aggregate amounts of cash received by the Corporation excluding
amounts paid or payable for accrued interest or accrued dividends;

                                     - 12 -

<PAGE>

                                         (B)  insofar as it consists of property
other than cash, be computed at the fair value thereof at the time of such
issue, as determined in accordance with Section 1(b); and

                                         (C)   in the event Additional Shares of
Common Stock are issued together with other shares or securities or other assets
of the Corporation for consideration which covers both, be the proportion of
such consideration so received, computed as provided in clauses (A) and (B)
above, as determined in good faith by the Board of Directors.

                                    (2)  Options and Convertible Securities.
The consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 2(e)(iii)(1),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable by the Corporation as
consideration for the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the Corporation
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities, by (y) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.

                           (vi)     Adjustment for Dividends, Distributions,
Subdivisions, Combinations or Consolidations of Common Stock.

                                    (1)  Stock Dividends, Distributions or
Subdivisions. In the event the Corporation shall be deemed to issue Additional
Shares of Common Stock pursuant to Section 2(e)(iii)(2) in a stock dividend,
stock distribution or subdivision, the Conversion Price of each series of
Preferred Stock in effect immediately before such deemed issuance shall,
concurrently with the effectiveness of such deemed issuance, be proportionately
decreased.

                                    (2)  Combinations or Consolidations. In
the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, the Conversion Price of each series of Preferred Stock in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.

                  (f)      Adjustments for Certain Dividends and Distributions.
In the event that at any time or from time to time after the Original Issue Date
for any series of Preferred Stock the Corporation shall make or issue, or fix a
record date for the determination of holders of Common Stock entitled to
receive, a dividend or other distribution payable in securities of the
Corporation other than shares of Common Stock or securities the issuance of
which are deemed to be issuances of Common Stock under Section 2(e)(iii), then
and in each such event provision

                                     - 13 -

<PAGE>

shall be made so that the holders of Preferred Stock of such series shall
receive upon conversion thereof in addition to the number of shares of Common
Stock receivable thereupon, the amount of securities of the Corporation that
they would have received had their Preferred Stock been converted into Common
Stock immediately prior to such event and had they thereafter, during the period
from the date of such event to and including the conversion date, retained such
securities receivable by them as aforesaid during such period, giving
application during such period to all adjustments called for herein.

                  (g)      Adjustment for Reclassification, Exchange, or
Substitution. In the event that at any time or from time to time after the
Original Issue Date for any series of Preferred Stock, the Common Stock issuable
upon the conversion of such series of Preferred Stock shall be changed into the
same or a different number of shares of any class or series of stock or other
securities or property, whether by capital reorganization, reclassification,
recapitalization or otherwise (other than a subdivision or combination of shares
or stock dividend provided for above, or a merger, consolidation, or sale of
assets provided for below), then and in each such event the holder of any shares
of such series of Preferred Stock shall have the right thereafter to convert
such shares into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, recapitalization
or other change by the holder of a number of shares of Common Stock equal to the
number of shares of Common Stock into which such shares of such series of
Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, recapitalization or change, all subject to
further adjustment as provided herein.

                  (h)      Adjustment for Merger, Consolidation or Sale of
Assets. In the event that at any time or from time to time the Corporation shall
merge or consolidate with or into another entity or sell all or substantially
all of its assets, and such consolidation, merger or sale is not treated as a
liquidation under Section 1(c), each share of Preferred Stock shall thereafter
be convertible into the kind and amount of shares of stock or other securities
or property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such Preferred Stock would have been
entitled to receive upon such consolidation, merger or sale; and, in such case,
appropriate adjustment (as determined in good faith by the Board of Directors)
shall be made in the application of the provisions set forth in this Section 2
with respect to the rights and interest thereafter of the holders of shares of
such Preferred Stock, to the end that the provisions set forth in this Section 2
(including provisions with respect to changes in and other adjustments of the
Conversion Prices) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other securities or property
thereafter deliverable upon the conversion of such Preferred Stock.

                  (i)      Special Mandatory Conversion.

                           (i)      Mandatory Conversion Upon Failure to
Participate in Equity Financing.

                                    (1)  When any holder of shares of Series
A Preferred Stock is entitled to exercise its right of first refusal (the "Right
of First Refusal") as set forth in Section 3 of that certain Investor Rights
Agreement, dated on or about the date hereof, by and

                                     - 14 -

<PAGE>

among the Corporation and certain of its stockholders (the "Rights Agreement")
with respect to any issuance or sale by the Corporation of any equity securities
(but not options, warrants or debt securities convertible into equity
securities) of the Corporation without consideration or for a consideration per
share less than the Series A Conversion Price in effect immediately prior to
such issue or sale (a "Series A Dilutive Issuance") and (x) the Corporation has
complied in all material respects with its obligations pursuant to Section 3 of
the Rights Agreement in respect thereof and (y) the provisions of the Right of
First Refusal applicable to the particular Series A Dilutive Issuance involved
have not been waived by the Corporation or eliminated in accordance with the
terms of the Rights Agreement, if such holder (either alone or with or through
its partners, stockholders or affiliates) does not, by exercise of such holder's
Right of First Refusal, acquire at least such holder's Basic Amount (as defined
in and calculated in accordance with Section 3.1 of the Rights Agreement) of New
Securities (as defined in Section 3.2 of the Rights Agreement) in such Series A
Dilutive Issuance, then each Non-Participating Series A Share (as defined below)
held by such holder shall automatically and without further action on the part
of such holder be converted, effective subject to and concurrently with
consummation of the Series A Dilutive Issuance, into shares of Common Stock at
the time of the first closing of such Series A Dilutive Issuance, at the Series
A Conversion Price in effect immediately prior to such closing. Each holder
whose shares of Series A Preferred Stock are converted into shares of Common
Stock in accordance with this Section 2(i)(i)(1) shall be deemed to have waived
with respect to each Non-Participating Series A Share (A) the reduction in the
Series A Conversion Price of such Non-Participating Series A Share that would
have otherwise resulted pursuant to Section 2(e) from such Series A Dilutive
Issuance and (B) the right to receive, upon conversion of such Non-Participating
Series A Share pursuant to this Section 2(i)(i)(1), any additional shares of
Common Stock that would have been issuable as a result of such reduction in the
Conversion Price. The term "Non-Participating Series A Shares" shall mean such
number of shares of Series A Preferred Stock of a holder that is determined by
multiplying the total number of shares of Series A Preferred Stock held by such
holder by a fraction, the numerator of which is such holder's Basic Amount in
such Series A Dilutive Issuance minus the number of New Securities purchased by
such holder (and any assignee of such holder pursuant to Section 3.9 of the
Rights Agreement) in the Series A Dilutive Issuance, and the denominator of
which is such holder's Basic Amount.

                                    (2)  When any holder of shares of Series
B Preferred Stock is entitled to exercise its Right of First Refusal as set
forth in Section 3 of the Rights Agreement with respect to any issuance or sale
by the Corporation of any equity securities (but not options, warrants or debt
securities convertible into equity securities) of the Corporation without
consideration or for a consideration per share less than the Series B Conversion
Price in effect immediately prior to such issue or sale (a "Series B Dilutive
Issuance") and (x) the Corporation has complied in all material respects with
its obligations pursuant to Section 3 of the Rights Agreement in respect thereof
and (y) the provisions of the Right of First Refusal applicable to the
particular Series B Dilutive Issuance involved have not been waived by the
Corporation or eliminated in accordance with the terms of the Rights Agreement,
if such holder (either alone or with or through its partners, stockholders or
affiliates) does not by exercise of such holder's Right of First Refusal,
acquire at least such holder's Basic Amount of New Securities in such Series B
Dilutive Issuance, then each Non-Participating Series B Share (as defined below)
held by such holder shall automatically and without further action on the part
of

                                     - 15 -

<PAGE>

such holder be converted, effective subject to and concurrently with
consummation of the Series B Dilutive Issuance, into shares of Common Stock at
the time of the first closing of such Series B dilutive Issuance, at the Series
B Conversion Price in effect immediately prior to such closing. Each holder
whose shares of Series B Preferred Stock are converted into shares of Common
Stock in accordance with this Section 2(i)(i)(2) shall be deemed to have waived
with respect to each Non-Participating Series B Share (A) the reduction in the
Series B Conversion Price of such Non-Participating Series B Share that would
have otherwise resulted pursuant to Section 2(e) from such Series B Dilutive
Issuance and (B) the right to receive, upon conversion of such Non-Participating
Series B Share pursuant to this Section 2(i)(i)(2), any additional shares of
Common Stock that would have been issuable as a result of such reduction in the
Conversion Price. The term "Non-Participating Series B Shares" shall mean such
number of shares of Series B Preferred Stock of a holder that is determined by
multiplying the total number of shares of Series B Preferred Stock held by such
holder by a fraction, the numerator of which is such holder's Basic Amount in
such Series B Dilutive Issuance minus the number of new Securities purchased by
such holder (and any assignee of such holder pursuant to Section 3.9 of the
Rights Agreement) in the Series B Dilutive Issuance, and the denominator of
which is such holder's Basic Amount.

                           (ii)     Notwithstanding the foregoing, in the event
that the Corporation issues equity securities in a transaction that is both a
Series A Dilutive Issuance and a Series B Dilutive Issuance (the "Series A/B
Dilutive Issuance") and a holder of both Series A Preferred Stock and Series B
Preferred Stock does not acquire at least such holder's Basic Amount of New
Securities, then the shares of Preferred Stock of such holder that shall be
converted into shares of Common Stock in accordance with this Section 2(i) shall
be allocated pro rata to such holder's Series A Preferred Stock and Series B
Preferred Stock. For purposes of clarity, in the event of a Series A/B Dilutive
Issuance, (A) the term "Non-Participating Series A Shares" shall mean such
number of shares of Series A Preferred Stock of a holder that is determined by
multiplying the total number of shares of Series A Preferred Stock held by such
holder by a fraction, the numerator of which is such holder's Basic Amount in
such Series A/B Dilutive Issuance minus the number of new Securities purchased
by such holder (and any assignee of such holder pursuant to Section 3.9 of the
Rights Agreement) in the Series A/B Dilutive Issuance, and the denominator of
which is such holder's Basic Amount and (B) the term "Non-Participating Series B
Shares" shall mean such number of shares of Series B Preferred Stock of a holder
that is determined by multiplying the total number of shares of Series B
Preferred Stock held by such holder by a fraction, the numerator of which is
such holder's Basic Amount in such Series A/B Dilutive Issuance minus the number
of new Securities purchased by such holder (and any assignee of such holder
pursuant to Section 3.9 of the Rights Agreement) in the Series A/B Dilutive
Issuance, and the denominator of which is such holder's Basic Amount.

                           (iii)    Mechanics of Special Mandatory Conversion.
The holder of any shares of Series A Preferred Stock or Series B Preferred Stock
converted pursuant to this Section 2(i) shall surrender the certificate or
certificates of such shares, duly endorsed for transfer or with duly executed
stock transfer powers sufficient to permit transfers attached, at the office of
the Corporation or any transfer agent for such Preferred Stock (or such holder
shall notify the Corporation or any transfer agent that such certificates have
been lost, stolen or destroyed and shall execute an agreement reasonably
satisfactory to the Corporation (which

                                     - 16 -

<PAGE>

agreement will not require a bond) to indemnify the Corporation from any loss
incurred by it in connection therewith). The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Preferred Stock, or to such holder's nominee or nominees, a certificate or
certificates for the number of full shares of Common Stock to which such holder
shall be entitled as aforesaid. Such conversion shall be deemed to have been
made immediately prior to the consummation of the Series A Dilutive Issuance or
Series B Dilutive Issuance, as the case may be, unless the transfer books of the
Corporation are closed on that date, in which event such holder shall be deemed
to have become a holder of record of Common Stock on the next succeeding date on
which the transfer books are open.

                  (j)      No Impairment. The Corporation shall not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation but shall at all times in good faith assist in the carrying out of
all the provisions of this Section 2 and in the taking of all such action as may
be necessary or appropriate in order to protect the Conversion Rights of the
holders of Preferred Stock against impairment.

                  (k)      Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Price for a particular series
of Preferred Stock pursuant to this Section 2, the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of shares of such series of Preferred
Stock a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of shares
of a particular series of Preferred Stock, furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price for such series at the time in effect,
and (iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of each share
of such series of Preferred Stock.

                  (l)      Notices of Record Date. In the event of any taking by
the Corporation of a record of the holders of any class or series of securities
for the purpose of determining the holders thereof who are entitled to receive
any dividend or other distribution, the Corporation shall mail to each holder of
Preferred Stock at least ten (10) days prior to such record date a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend or distribution.

                  (m)      Common Stock Reserved. The Corporation shall reserve
and keep available, free from pre-emptive rights, out of its authorized but
unissued Common Stock, solely for the purpose of effecting the conversion of
Preferred Stock, such number of shares of Common Stock as shall from time to
time be sufficient to effect conversion of the Preferred Stock. If at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all the then outstanding shares of
Preferred Stock, the Corporation shall promptly take such corporate action as
may, in the opinion of its counsel, be

                                     - 17 -

<PAGE>

necessary to increase its authorized but unissued shares of Common Stock to such
number of shares as shall be sufficient for such purpose.

                  (n)      Certain Taxes. The Corporation shall pay any issue or
transfer taxes payable in connection with the conversion of Preferred Stock,
provided, however, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer to a name other than that of the
holder of the Preferred Stock.

                  (o)      Closing of Books. The Corporation shall at no time
close its transfer books against the transfer of any Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Preferred Stock in any manner which interferes with the timely conversion or
transfer of such Preferred Stock or Common Stock.

                  (p)      Validity of Shares. The Corporation agrees that it
will from time to time take all such actions as may be required to assure that
all shares of Common Stock which may be issued upon conversion of any Preferred
Stock will, upon issuance, be legally and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.

                  Section 3. Restrictions.

                  (a)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least 60% in voting power of the then
outstanding shares of Series A Preferred Stock, the Corporation will not:

                           (i)      amend the preferences, rights or privileges
of the Series A Preferred Stock;

                           (ii)     amend or repeal any provision of, or add any
provision to, the Corporation's Certificate of Incorporation or By-laws or
permit any corporation or other entity in which it holds, directly or
indirectly, an equity interest representing more than 50% of the voting power of
all outstanding capital stock of such entity (any such entity, a "Subsidiary")
to amend or repeal any provision of or add any provision to, the Certificate of
Incorporation (or other equivalent organizational document) or By-Laws (or other
equivalent document) of such Subsidiary that would adversely affect the
preferences, rights or privileges of the Series A Preferred Stock or increase or
decrease the number of authorized shares of Series A Preferred Stock;

                           (iii)    authorize or designate any class or series
of capital stock having rights senior to or on a parity with either the Series A
Preferred Stock as to dividends, liquidation or otherwise.

                  (b)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least 66 2/3% in voting power of the then
outstanding shares of Series B Preferred Stock, the Corporation will not:

                                     - 18 -

<PAGE>

                           (i)      amend the preferences, rights or privileges
of the Series B Preferred Stock;

                           (ii)     amend or repeal any provision of or add any
provision to, the Corporation's Certificate of Incorporation or By-laws or
permit any Subsidiary to amend or repeal any provision of, or add any provision
to, the Certificate of Incorporation (or other equivalent organizational
document) or By-laws (or other equivalent document) of such Subsidiary that
would adversely affect the preferences, rights or privileges of the Series B
Preferred Stock or increase or decrease the number of authorized shares of
Series B Preferred Stock;

                           (iii)    authorize or designate any class or series
of capital stock having rights senior to or on a parity with either the Series B
Preferred Stock as to dividends, liquidation or otherwise.

                  (c)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least 662/3% in voting power of the then
outstanding shares of all series of Preferred Stock, voting together as a single
class, the Corporation will not:

                           (i)      pay or declare any dividend or distribution
on any shares of its capital stock (except dividends payable solely in shares of
Common Stock), or apply any of its assets to the redemption, retirement,
purchase or acquisition, directly or indirectly, through subsidiaries or
otherwise, of any shares of the Corporation's capital stock except (a) as
expressly set forth herein or (b) for repurchases of Common Stock upon
termination of employment or service pursuant to written agreements in effect on
the date hereof or written agreements approved by the Corporation's Board of
Directors or a committee thereof);

                           (ii)     sell, lease or otherwise dispose of all or
substantially all of the assets of the Corporation, or permit any Subsidiary to
sell, lease or otherwise dispose of all or substantially all of the assets of
such Subsidiary;

                           (iii)    voluntarily liquidate or dissolve or permit
any Subsidiary to voluntarily liquidate or dissolve;

                           (iv)     enter into any merger, consolidation or
capital reorganization, or permit any Subsidiary to enter into any merger,
consolidation or capital reorganization, except as contemplated by the Share
Exchange Agreement;

                           (v)      effect any acquisition of the capital stock
of another entity that results in the consolidation of that entity into the
results of operations of the Corporation, except as contemplated by the Share
Exchange Agreement;

                           (vi)     increase the number of seats on the Board of
Directors above nine;

                                     - 19 -

<PAGE>

                           (vii)    acquire all or substantially all of the
assets of another entity, except as contemplated by the Share Exchange
Agreement;

                           (viii)   incur indebtedness for borrowed funds, in a
single or related series of transactions, in principal amount at any time
outstanding in excess of $500,000 (except in connection with the transactions
contemplated by the Share Exchange Agreement, including the assumption of
indebtedness owed by Ribopharma to Abingworth Bioventures III A LP, Abingworth
Bioventures III B LP, Abingworth Bioventures III C LP and Abingworth Bioventures
Executives LP.)

                           (ix)     create a new plan or arrangement for the
grant of stock options, stock appreciation rights, restricted stock or other
similar stock-based compensation, or increase the number of shares or other
rights available under such existing plan or arrangement, except for increases
in the number of shares approved in the manner provided in Section
2(e)(i)(4)(B); or

                           (x)      any provision of the By-Laws of the
Corporation to the contrary notwithstanding, increase the number of directors
constituting the entire Board of Directors, except as necessary to add
independent outside directors whose election is subject to the approval of all
of the Preferred Stock Directors then in office (as defined below).

                  (d)      Notwithstanding any other provision of this
Certificate of Incorporation or the Corporation's By-Laws to the contrary,
written notice of any action specified in Section 3(a), 3(b) or 3(c) shall be
given by the Corporation to each holder of outstanding shares of Preferred Stock
at least twenty (20) days before the date on which the books of the Corporation
shall close or a record shall be taken with respect to such proposed action, or,
if there shall be no such date, at least twenty (20) days before the date when
such proposed action is scheduled to take place. Any holder of outstanding
shares of Preferred Stock may waive any notice required by this Section by a
written document specifically indicating such waiver, and the holders of
two-thirds in voting power of all series of Preferred Stock, voting together as
a single class, may waive any such notice on behalf of all holders of the
Preferred Stock.

                  Section 4. Voting Rights.

                  (a)      Except as otherwise required by law or set forth in
this Certificate of Incorporation, the holders of Preferred Stock shall be
entitled to notice of any meeting of stockholders and shall vote together with
the holders of Common Stock as a single class upon any matter submitted to the
stockholders for a vote. With respect to all questions as to which, under law,
stockholders are required to vote by classes or series, the Preferred Stock
shall vote separately as a single class and series apart from the Common Stock.
Shares of Common Stock and Preferred Stock shall entitle the holders thereof to
the following number of votes on any matter as to which they are entitled to
vote:

                           (i)      Holders of Common Stock shall have one vote
per share; and

                                     - 20 -

<PAGE>

                           (ii)     Holders of Preferred Stock shall have that
number of votes per share as is equal to the number of shares of Common Stock
(including fractions of a share) into which each such share of Preferred Stock
held by such holder could be converted on the date for determination of
stockholders entitled to vote at the meeting or on the date of any written
consent.

                  (b)      Except as contemplated by the Rights Agreement, the
Board of Directors shall not delegate any of its powers or duties to any
committee of the Board of Directors without the consent of all of the Preferred
Stock Directors then in office.

                  (c)      In addition to any other vote required by law or by
this Certificate of Incorporation, the Corporation shall not amend this
Certificate of Incorporation, whether by merger, consolidation or otherwise, so
as to amend, alter or repeal the powers, preferences or special rights of the
Preferred Stock in a manner that affects them adversely, without the written
consent or affirmative vote of the holders of a majority of the then outstanding
shares of Preferred Stock, given in writing or by vote at a meeting, consenting
or voting (as the case may be) separately as a class.

                  (d)      At all times during which the number of outstanding
shares of Series A Preferred Stock equals or exceeds 1,000,000 (such minimum
number of shares to be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event), the holders of the outstanding shares of Series A
Preferred Stock shall have the exclusive right, separately from the Common Stock
and the other series of Preferred Stock, to elect two directors of the
Corporation. Any such director is sometimes hereinafter referred to as a "Series
A Preferred Stock Director." At all times during which the number of outstanding
shares of Series B Preferred Stock equals or exceeds 1,000,000 (such minimum
number of shares to be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event), the holders of the outstanding shares of Series B
Preferred Stock shall have the exclusive right, separately from the Common Stock
and the other series of Preferred Stock, to elect one director of the
Corporation. Such director is sometimes hereinafter referred to as a "Series B
Preferred Stock Director." At all times during which the number of outstanding
shares of Preferred Stock equals or exceeds 2,000,000 (such minimum number of
shares to be subject to equitable adjustment whenever there shall occur a stock
dividend, stock split, combination of shares, reclassification or other similar
event), the holders of the outstanding shares of Preferred Stock, voting
together as a single class, shall have the exclusive right, separately from the
Common Stock, to elect one director of the Corporation. Such director is
sometimes hereinafter referred to as a "Series A/B Preferred Stock Director" and
each of the Series A Preferred Stock Directors, the Series B Preferred Stock
Director and the Series A/B Director is sometimes hereinafter referred to as a
"Preferred Stock Director." Each Preferred Stock Director shall be elected by
the vote or written consent of the holders of a plurality in voting power of the
series of Preferred Stock entitled to elect such Preferred Stock Director. If a
Preferred Stock Director shall cease to serve as a director for any reason,
another director elected by the holders of the series of Preferred Stock
entitled to elect such Preferred Stock Director shall replace such director. Any
Preferred Stock Director may be removed, with or without cause, and a
replacement Preferred Stock Director may be elected in his stead, at any time by
the

                                     - 21 -

<PAGE>

affirmative vote at a meeting duly called for the purpose, or by written
consent, of the holders of a plurality in voting power of the outstanding series
of Preferred Stock entitled to elect such director.

                  (e)      At all times during which shares of Common Stock
remain outstanding, the holders of the outstanding shares of Common Stock shall
have the exclusive right, separately from the Preferred Stock, to elect two
directors of the Corporation (the "Common Stock Directors"). Each Common Stock
Director shall be elected by the vote or written consent of the holders of a
plurality in voting power of the outstanding Common Stock. If a Common Stock
Director shall cease to serve as a director for any reason, another director
elected by the holders of the Common Stock shall replace such director. Any
Common Stock Director may be removed, with or without cause, and a replacement
Common Stock Director may be elected in his stead, at any time by the
affirmative vote at a meeting duly called for the purpose, or by written
consent, of the holders of a plurality in voting power of the outstanding Common
Stock.

                  (f)      All other directors of the Corporation shall be
elected by the holders of the Common Stock and Preferred Stock voting together
as a single class, with the holders of Preferred Stock to have that number of
votes as is determined in accordance with Section 4(a)(ii).

                  (g)      In addition to any rights which may be available
under the Corporation's By-Laws or otherwise under law, the holders of not less
than twenty percent (20%) in voting power of the outstanding Preferred Stock
shall be entitled to call meetings of the stockholders of the Corporation.
Within five (5) business days after written application by the holders of not
less than twenty percent (20%) in voting power of the outstanding Preferred
Stock, the President or Secretary, or such other officer of the Corporation as
may be authorized in the By-Laws of the Corporation to give notice of meetings
of stockholders of the Corporation, shall notify each stockholder of the
Corporation entitled to such notice of the date, time, place and purpose of such
meeting.

                  Section 5. Dividends.

                  (a)      Dividends may be declared and paid on Common Stock
and Preferred Stock from funds lawfully available therefor as and when
determined by the Board of Directors of the Corporation.

                  (b)      No dividends shall be declared or paid on the Common
Stock or Preferred Stock except as set forth in this Section 5.

                  Section 6. Redemption

                  (a)      At the written election of holders of at least
66 2/3% in voting power of the outstanding shares of Preferred Stock made at any
time on or after July 25, 2007 (the "Redemption Election"), the Corporation
shall be required to redeem all, but not less than all, of the outstanding
shares of Preferred Stock in three equal annual installments, upon the terms set
forth in this Section 6. The first installment of such redemption (the "First
Redemption Date")

                                      - 22 -

<PAGE>

shall occur on a date specified in the Redemption Election, which shall be not
less than ninety (90) days after the date of the Redemption Election, and the
second and third installments of such redemption shall occur on the first and
second anniversaries, respectively, of the First Redemption Date. The
Corporation shall redeem one-third of the outstanding shares of Preferred Stock
held by each holder on the First Redemption Date, one half of the outstanding
shares of Preferred Stock then held by each holder on the first anniversary
thereof and the remaining shares on the second anniversary thereof. On each such
redemption date, the holders shall surrender the certificate or certificates for
the shares to be redeemed duly endorsed for transfer or with duly executed stock
transfer powers sufficient to permit transfer attached, at the offices of the
Corporation or of any transfer agent for the Preferred Stock. The Corporation
shall, as soon as practicable thereafter, issue and deliver to each holder a
certificate or certificates for the balance of the shares not being redeemed.
The redemption price of each share of Series A Preferred Stock shall be equal to
(i) $1.00 (as adjusted for any stock dividend, stock split, combination of
shares, reclassification or other similar event with respect to such Preferred
Stock) plus all dividends declared but unpaid on such share on the applicable
redemption date (the "Series A Redemption Amount") plus (ii) an additional
amount computed like interest payable on the Series A Redemption Amount at the
rate equal to simple interest of ten percent (10%) per annum from the date of
issuance of such share of Preferred Stock. The redemption price of each share of
Series B Preferred Stock shall be equal to (i) $2.50 (as adjusted for any stock
dividend, stock split, combination of shares, reclassification or other similar
event with respect to such Preferred Stock) plus all dividends declared but
unpaid on such share on the applicable redemption date (the "Series B Redemption
Amount," each of the Series A Redemption Amount and the Series B Redemption
Amount being sometimes hereinafter referred to as a "Redemption Amount") plus
(ii) an additional amount computed like interest payable on the Series B
Redemption Amount at the rate equal to simple interest of ten percent (10%) per
annum from the date of issuance of such share of Preferred Stock.

                  (b)      Notice of redemption shall be sent by first class
mail, postage prepaid, to each holder of record of the Preferred Stock, not less
than thirty days nor more than sixty days prior to the First Redemption Date, at
the address of such holder as it appears on the books of the Corporation. Such
notice shall set forth (i) the First Redemption Date, the dates of the second
and third installments of such redemption, and the place of redemption; and (ii)
the number of shares to be redeemed on each date of redemption and the
redemption price calculated in accordance with Section 6(a) above, on each such
date. The Corporation shall be obligated to redeem the Preferred Stock on the
dates and in the amounts set forth in the notice; provided, however, that any
holder of Preferred Stock who is not party to a Redemption Election may convert
any or all of the shares owned by such holder into Common Stock in accordance
with Section 2(d) at any time prior to the date of redemption of such shares.
The Corporation, if advised before the close of business on the relevant
redemption date by written notice from any holder of record of Preferred Stock
to be redeemed, shall credit against the number of shares of Preferred Stock
required to be redeemed from such holder, and shall not redeem, the number of
shares of Preferred Stock which shall have been converted by such holder on or
before such date and which shall not previously have been credited against any
redemption.

                  (c)      If, on or before a redemption date, the funds
necessary for such redemption shall have been set aside by the Corporation and
deposited with a bank or trust

                                     - 23 -

<PAGE>

company, in trust for the pro rata benefit of the holders of the Preferred Stock
that has been called for redemption, then, notwithstanding that any certificates
for shares that have been called for redemption shall not have been surrendered
for cancellation, the shares represented thereby shall no longer be deemed
outstanding from and after such redemption date, and all rights of holders of
such shares so called for redemption shall forthwith, after such redemption
date, cease and terminate with respect to such shares, excepting only the right
to receive the redemption funds therefor to which they are entitled. Any
interest accrued on funds so deposited and unclaimed by stockholders entitled
thereto shall be paid to such stockholders at the time their respective shares
are redeemed or to the Corporation at the time unclaimed amounts are paid to it.
In case the holders of Preferred Stock which shall have been called for
redemption shall not, within one year after the final redemption date, claim the
amounts so deposited with respect to the redemption thereof, any such bank or
trust company shall, upon demand, pay over to the Corporation such unclaimed
amounts and thereupon such bank or trust company shall be relieved of all
responsibility in respect thereof to such holder and such holder shall look only
to the Corporation for the payment thereof. Any funds so deposited with a bank
or trust company which shall not be required for such redemption by reason of
the exercise subsequent to the date of such deposit of the right of conversion
of any shares or otherwise shall be returned to the Corporation forthwith.

                  (d)      If the Corporation for any reason fails to redeem any
of the shares of Preferred Stock in accordance with Section 6(a) on or prior to
the redemption dates determined in accordance with this Section 6, then, the
Corporation shall become obligated to pay, in addition to the redemption price
specified in Section 6(a), interest on the unpaid balance of such price, which
shall accrue at a rate equal to the lesser of (i) one percent (1%) per month or
(ii) the maximum interest rate allowable under applicable law, until such price
is paid in full.

                  (e)      If the funds of the Corporation legally available for
redemption of shares of Preferred Stock on a redemption date are insufficient to
redeem the total number of shares of Preferred Stock submitted for redemption,
those funds which are legally available will be used to redeem the maximum
possible number of whole shares ratably among the holders of such shares based
on the total Redemption Amounts owed to such holders. The shares of Preferred
Stock not redeemed shall remain outstanding and entitled to all rights and
preferences provided herein. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of such shares of Preferred
Stock, such funds will be used, at the end of the next succeeding fiscal
quarter, to redeem the balance of such shares, or such portion thereof for which
funds are then legally available.

                  Section 7. No Reissuance of Preferred Stock. No shares of
Preferred Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue.

                  Section 8. Residual Rights. All rights accruing to the
outstanding shares of the Corporation not expressly provided for to the contrary
herein shall be vested in the Common Stock.

                                     - 24 -

<PAGE>

                           Section 9. Notices. All notices required or permitted
to be sent pursuant to this Article FOURTH shall be deemed sufficient if
contained in a written instrument and delivered in person or duly sent by
first-class mail postage prepaid (other than in the case of notices to or from
any non-U.S. resident) or by fax or DHL, Federal Express or other recognized
express international courier service, addressed to the intended recipient at
the recipient's address as it appears on the books of the Corporation.

         RESOLVED: That Article SIXTH of the Certificate of Incorporation be and
hereby is deleted in its entirety and the following Article SIXTH is inserted in
lieu thereof:

         SIXTH: In furtherance of and not in limitation of powers conferred by
statute, it is further provided:

         1.       Election of directors need not be by written ballot.

         2.       Subject to the limitations and exceptions, if any, contained
in the By-Laws of the Corporation or this Certificate of Incorporation, the
By-Laws may be adopted, amended or repealed by the Board of Directors of the
Corporation with, and only with, a Majority Directors Vote.

         3.       Subject to any applicable requirements of law, the books of
the Corporation may be kept outside the State of Delaware at such locations as
may be designated by the Board of Directors or in the Bylaws of the Corporation;
and

         4.       Except as provided to the contrary in the provisions
establishing a class or series of stock, the number of authorized shares of such
class or series may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote or written consent of a
majority in voting power of the stock of the Corporation entitled to vote,
voting together as a single class.

                                     - 25 -


<PAGE>

         IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its Chief Executive Officer this 24th day of July,
2003.

                                                    ALNYLAM HOLDING CO.


                                                    By: /s/ John Maraganore
                                                        ------------------------
                                                        Name: John Maraganore
                                                        Title: President and CEO

                                     - 26 -

<PAGE>

                                                         State of Delaware
                                                        Secretary of State
                                                     Division of Corporations
                                                   Delivered 04:31 PM 09/08/2003
                                                    FILED 04:31  PM 09/08/2003
                                                   SRV 030578313 - 3651907 FILE


                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION
                                       OF
                               ALNYLAM HOLDING CO.

         Alnylam Holding Co., a Delaware corporation (hereinafter, the
"CORPORATION"), hereby certifies as follows:

         1.       The name of the Corporation is Alnylam Holding Co. The date of
filing of its original Certificate of Incorporation with the Delaware Secretary
of State was May 8, 2003.

         2.       The Certificate of Incorporation of the Corporation, as filed
on May 8, 2003, as amended by the Certificate of Amendment, as filed on July 24,
2003 (collectively, the "CERTIFICATE OF INCORPORATION"), is hereby further
amended by deleting Article FOURTH thereof in its entirety and by substituting
in lieu of said Article FOURTH the following new Article FOURTH:

         "FOURTH: The total number of shares of all classes of stock which the
Corporation has authority to issue is 56,911,480 shares, consisting of
34,739,392 shares of Common Stock, par value $.0001 per share (the "COMMON
STOCK"), 3,000,010 shares of Series A Convertible Preferred Stock, par value
$.0001 per share (the "SERIES A PREFERRED STOCK"), 16,672,078 shares of Series B
Convertible Preferred Stock, $.0001 par value per share (the "SERIES B PREFERRED
STOCK"), and 2,500,000 shares of Series C Convertible Preferred Stock, $.0001
par value per share (the "SERIES C PREFERRED STOCK"). The Series A Preferred
Stock and Series B Preferred Stock are sometimes hereinafter collectively
referred to as the "SENIOR PREFERRED STOCK." The Senior Preferred Stock and the
Series C Preferred Stock are sometimes hereinafter collectively referred to as
the "PREFERRED STOCK."

         The powers, preferences and rights, and the qualifications, limitations
or restrictions thereof, in respect of each class or series of stock of the
Corporation shall be as follows:

                  Section 1. Liquidation Rights.

                           (a)      Liquidation Payments.

                                    (i)  In the event of any liquidation,
dissolution or winding up of the affairs of the Corporation, whether voluntary
or involuntary, the holders of the then outstanding shares of Senior Preferred
Stock shall be entitled to be paid first out of the assets of the Corporation
available for distribution to holders of the Corporation's capital stock of all
classes an amount equal to (a) in the case of the Series A Preferred Stock,
$1.00 per share


<PAGE>

(subject to equitable adjustment whenever there shall occur a stock dividend,
stock split, combination of shares, reclassification or other similar event with
respect to such series of Senior Preferred Stock) and (b) in the case of the
Series B Preferred Stock, $2.50 per share (subject to equitable adjustment
whenever there shall occur a stock dividend, stock split, combination of shares,
reclassification or other similar event with respect to such series of Senior
Preferred Stock), plus (in the case of all series of Senior Preferred Stock) all
dividends declared thereon but unpaid and any and all other amounts owing with
respect to such shares, as of and including the date full payment shall be
tendered to the holders of the Senior Preferred Stock with respect to such
liquidation, dissolution or winding up. Such amount is sometimes hereinafter
referred to as the "SENIOR PREFERENCE AMOUNT."

         If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of the Senior Preferred Stock of the entire
Senior Preference Amount so distributable to them, then the entire assets of the
Corporation available for such distribution shall be distributed ratably among
the holders of the Senior Preferred Stock in proportion to the full Senior
Preference Amount each such holder is otherwise entitled to receive under this
Section l(a)(i).

         No payment shall be made with respect to the Series C Preferred Stock
or Common Stock unless and until fall payment has been made to the holders of
the Senior Preferred Stock of the full Senior Preference Amount.

                                    (ii) After all payments shall have been made
in full to both the holders of the Senior Preferred Stock as contemplated by
Section l(a)(i) above and to the holders of any class of equity securities that
is senior to or pari passu with the Senior Preferred Stock (the "ADDITIONAL
SENIOR PREFERRED STOCK"), or funds necessary for such payments shall have been
set aside by the Corporation in trust for the account of holders of Senior
Preferred Stock and Additional Senior Preferred Stock so as to be available for
such payments, the holders of the then outstanding shares of Series C Preferred
Stock shall be entitled to receive out of the remaining assets available for
distribution an amount equal to the price per share paid for the Series C
Preferred Stock (subject to equitable adjustment whenever there shall occur a
stock dividend, stock split, combination of shares, reclassification or other
similar event with respect to such series of Preferred Stock), plus all
dividends declared thereon but unpaid and any and all other amounts owing with
respect to such shares, as of and including the date full payment shall be
tendered to the holders of the Series C Preferred Stock with respect to such
liquidation, dissolution or winding up. Such amount is sometimes hereinafter
referred to as the "SERIES C PREFERENCE AMOUNT," together with the Senior
Preference Amount and the preference amount payable with respect to the
Additional Senior Preferred Stock, the "PREFERENCE AMOUNT."

                                    (iii) After all payments shall have been
made in full to the holders of the Senior Preferred Stock, the Additional Senior
Preferred Stock and the Series C Preferred Stock as contemplated by Section
1(a)(i) above and Section 1(a)(ii) above, respectively, or funds necessary for
such payments shall have been set aside by the Corporation in trust for the
account of holders of Senior Preferred Stock, the Additional Senior Preferred
Stock and the Series C Preferred Stock so as to be available for such payments,
remaining assets available for distribution shall be distributed among the
holders of the Common Stock ratably in proportion to the number of shares of
Common Stock then held by them.

                                     - 2 -

<PAGE>

                                    (iv) Upon any such liquidation, dissolution
or winding up, any holder of Preferred Stock may elect to receive, in lieu of
the Preference Amount otherwise payable to it pursuant to Section 1.1(a)(i) or
Section 1(a)(ii), an amount per share of Preferred Stock as would have been
payable had such share been converted to Common Stock immediately prior to such
liquidation, dissolution or winding up, plus all dividends declared but unpaid
on each such share of Preferred Stock to and including the date full payment
shall be tendered to the holders of the Preferred Stock with respect to such
liquidation, dissolution or winding up.

                                    (v)  Upon conversion of shares of Preferred
Stock into shares of Common Stock pursuant to Section 2 below, the holder of
such Common Stock shall not be entitled to any preferential payment or
distribution in case of any liquidation, dissolution or winding up, but shall
share ratably in any distribution of the assets of the Corporation to all the
holders of Common Stock.

                                    (vi) The amounts payable with respect to
shares of Preferred Stock under this Section 1(a) are sometimes hereinafter
referred to as "LIQUIDATION PAYMENTS."

                           (b)      Distributions Other than Cash. The amount
deemed distributed to the holders of Preferred Stock upon any liquidation,
dissolution, or winding-up (including any transaction treated as such pursuant
to Section 1(c)), and the value of the consideration received by the
Corporation for the issue of any Additional Shares of Common Stock (as defined
below), if distributed or received, as the case may be, in any form of property
(tangible or intangible) other than cash shall be the fair market value of such
property. The term "FAIR MARKET VALUE" or "FAIR VALUE" means, with respect to
any security, its Market Price (as defined below), and with respect to any
property or assets other than cash or securities, the fair value thereof
determined in good faith jointly by the Corporation (including the approval of a
director nominated by holders of Common Stock) and the Requisite Holders (as
defined below); provided, however, that if the parties are not able to agree
within a reasonable period of time (not to exceed thirty (30) days) what amount
constitutes fair value, then the fair value will be determined pursuant to the
Arbitration Procedure (as defined below). The term "REQUISITE HOLDERS" means the
holders of at least two-thirds in voting power of the then outstanding Preferred
Stock. The term "MARKET PRICE" means, as to any security, the average of the
closing prices of such security's sales on all United States securities
exchanges on which such security may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day such security is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P. M., New York time, on
such day, or, if on any day such security is not quoted in the NASDAQ System,
the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization, in each such case
averaged over a period of 30 days consisting of the thirty day period ending
three days prior to the date as of which Market Price is being determined. If at
any time such security is not listed on any domestic securities exchange or
quoted in the NASDAQ System or the domestic over-the-counter market, the Market
Price of such security shall be the fair value thereof as determined in good
faith jointly by the Corporation (including the approval of a director nominated
by holders of Common Stock) and the Requisite Holders; provided, however, that
if such parties are not able to agree within a

                                     - 3 -


<PAGE>

reasonable period of time (not to exceed ten (10) days) what amount constitutes
the Market Price, then the Market Price shall be determined pursuant to the
Arbitration Procedure. The term "ARBITRATION PROCEDURE" means the following
procedure to determine the fair value or the Market Price, as applicable (the
VALUATION AMOUNT"). The valuation amount shall be determined by an investment
banking firm of national recognition, which firm shall be reasonably acceptable
to the Corporation and the Requisite Holders. If the Corporation and the
Requisite Holders are unable to agree upon an acceptable investment banking firm
within ten (10) days after the date either party proposed that one be selected,
the investment banking firm will be selected by an arbitrator located in the
City of Boston, Massachusetts, selected by the American Arbitration Association
(or if such organization ceases to exist, the arbitrator shall be chosen by a
court of competent jurisdiction). The arbitrator shall select the investment
banking firm (within ten (10) days of his appointment) from a list, jointly
prepared by the Corporation and the Requisite Holders, of not more than six
investment banking firms of national standing in the United States, of which no
more than three may be named by the Corporation and no more than three may be
named by the Requisite Holders. The arbitrator may consider, within the ten-day
period allotted, arguments from the parties regarding which investment banking
firm to choose, but the selection by the arbitrator shall be made in its sole
discretion from the list of six. The determination of the final valuation amount
by such investment banking firm shall be final and binding upon the parties. The
Corporation shall pay one-half of the fees and expenses of the investment
banking firm and arbitrator (if any) used to determine the valuation amount and
the holders of the Preferred Stock shall pay the other half of such fees and
expenses (allocated among them pro rata based on the number of shares of
Preferred Stock, on an as-converted basis, then held by each of them). If
required by any such investment banking firm or arbitrator, the Corporation and
the holders of the Preferred Stock shall execute a retainer and engagement
letter containing reasonable terms and conditions, including customary
provisions concerning the rights of indemnification and contribution by the
Corporation and the holders of the Preferred Stock in favor of such investment
banking firm or arbitrator and its officers, directors, partners, employees,
agents and affiliates.

                           (c)      Merger as Liquidation, etc. The merger or
consolidation of the Corporation into or with another corporation (except one in
which the holders of capital stock of the Corporation immediately prior to such
merger or consolidation continue to hold a majority in voting power of the
capital stock of the surviving corporation, in which case the provisions of
Section 2(h) shall apply), or the sale of all or substantially all of the assets
of the Corporation, shall be deemed to be a liquidation, dissolution or winding
up of the affairs of the Corporation for purposes of this Section 1 with respect
to the Preferred Stock, unless the holders of at least two-thirds in voting
power of the then outstanding shares of Preferred Stock elect to the contrary;
such election to be made by giving notice thereof to the Corporation at least
three days before the effective date of such event. If such notice is given with
respect to the Preferred Stock, the provisions of Section 2(h) shall apply.
Unless such election is made with respect to the Preferred Stock, any amounts
received by the holders of Preferred Stock as a result of such merger or
consolidation shall be deemed to be applied toward, and all consideration
received by the Corporation in such asset sale together with all other available
assets of the Corporation shall be distributed toward, the Liquidation Payments.

                                     - 4 -

<PAGE>

                           (d)      Notice. In the event the Corporation shall
propose to undertake any liquidation, dissolution or winding up of the affairs
of the Corporation (including any merger, consolidation or sale of assets which
may be deemed to be a liquidation, dissolution or winding up of the affairs of
the Corporation under Section 1(c)), the Corporation shall, within ten (10) days
after the date the Board of Directors approves such action or twenty (20) days
prior to any stockholders' meeting called to approve such action, whichever is
earlier, give each holder of Preferred Stock initial written notice of the
proposed action. Such initial written notice shall describe the material terms
and conditions of such proposed action, including a description of the stock,
cash and property to be received by the holders of the Preferred Stock and of
Common Stock upon consummation of the proposed action and the proposed date of
delivery thereof. If any material change in the facts set forth in the initial
notice shall occur, the Corporation shall promptly give each holder of Preferred
Stock written notice of such material change. The Corporation shall not
consummate any such proposed liquidation, dissolution or winding up before the
expiration of thirty (30) days after the mailing of the initial notice or twenty
(20) days after the mailing of any subsequent written notice, whichever is
later, provided, that any such 30-day or 20-day period may be shortened or
waived upon the written consent of the holders of at least two-thirds in voting
power of the outstanding shares of Preferred Stock. Any holder of outstanding
shares of Preferred Stock may waive any notice required by this Section by a
written instrument specifically indicating such waiver.

                           Section 2. Conversion. The holders of Preferred Stock
shall have conversion rights as follows (the "CONVERSION RIGHTS"):

                           (a)      Right to Convert; Conversion Price. Each
share of Preferred Stock shall be convertible, without the payment of any
additional consideration by the holder thereof and at the option of the bolder
thereof, at any time after the date of issuance of such share, at the office of
the Corporation or any transfer agent for the Preferred Stock, into such number
of fully paid and nonassessable shares of Common Stock as is determined in
accordance with the following:

                                    (i)  in the case of the Series A Preferred
Stock, by dividing $1.00 by the Series A Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. The Conversion Price
at which shares of Common Stock shall be deliverable upon conversion of Series A
Preferred Stock without the payment of any additional consideration by the
holder thereof (the "SERIES A CONVERSION PRICE") shall initially be $1.00 per
share of Common Stock. Such initial Series A Conversion Price shall be subject
to adjustment, in order to adjust the number of shares of Common Stock into
which the Series A Preferred Stock is convertible, as hereinafter provided.

                                    (ii) in the case of the Series B Preferred
Stock, by dividing $2.50 by the Series B Conversion Price, determined as
hereinafter provided, in effect at the time of conversion. The Conversion Price
at which shares of Common Stock shall be deliverable upon conversion of Series B
Preferred Stock without the payment of any additional consideration by the
holder thereof (the "SERIES B CONVERSION PRICE") shall initially be $2.50 per
share of Common Stock. Such initial Series B Conversion Price shall be subject
to adjustment, in order

                                     - 5 -

<PAGE>

to adjust the number of shares of Common Stock into which the Series B Preferred
Stock is convertible, as hereinafter provided.

                                    (iii) in the case of the Series C Preferred
Stock, by dividing the price per share paid for the Series C Preferred Stock by
the Series C Conversion Price, determined as hereinafter provided, in effect at
the time of conversion. The Conversion Price at which shares of Common Stock
shall be deliverable upon conversion of Series C Preferred Stock without the
payment of any additional consideration by the holder thereof (the "SERIES C
CONVERSION PRICE") shall initially be the price per share paid for the Series C
Preferred Stock per share of Common Stock. Such initial Series C Conversion
Price shall be subject to adjustment, in order to adjust the number of shares
of Common Stock into which the Series C Preferred Stock is convertible, as
hereinafter provided.

         Each of the Series A Conversion Price, the Series B Conversion Price
and the Series C Conversion Price is sometimes hereinafter referred to as a
"CONVERSION PRICE."

         The right of conversion with respect to any shares of Senior Preferred
Stock which shall have been called for redemption under Section 6 hereof shall
terminate at the close of business on the day fixed for redemption unless the
Corporation shall default in the payment of the redemption price, in which case
the right of conversion with respect to such shares shall continue unless and
until such redemption price is paid in full.

                           (b)      Automatic Conversion.

                                    (i)  Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the applicable
Conversion Price then in effect upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of
Common Stock for the account of the Corporation to the public at an offering
price per share (prior to underwriters' discounts and commissions) of not less
than $7.50 (as adjusted to reflect any stock dividends, distributions,
combinations, reclassifications or other like transactions effected by the
Corporation in respect of its Common Stock) and with gross proceeds to the
Corporation of not less than $25,000,000 (a "QUALIFIED PUBLIC OFFERING"), in the
event of which offering the person(s) entitled to receive the Common Stock
issuable upon such conversion of the Preferred Stock shall not be deemed to have
converted such Preferred Stock until the closing of such offering.

                                    (ii) Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the applicable
Conversion Price then in effect upon the written election of the holders of not
less than two-thirds in voting power of the then outstanding shares of Preferred
Stock to require such mandatory conversion.

                           (c)      Mechanics of Automatic Conversions. Upon
the occurrence of an event specified in Section 2(b), the Preferred Stock of the
applicable series shall be converted automatically without any further action by
the holders of such shares and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent;

                                     - 6 -

<PAGE>

provided, however, that all holders of shares of Preferred Stock being converted
shall be given written notice of the occurrence of the event specified in
Section 2(b) triggering such conversion, including the date such event occurred
(the "MANDATORY CONVERSION DATE"), and the Corporation shall not be obligated to
issue certificates evidencing the shares of Common Stock issuable upon such
conversion unless certificates evidencing such shares of Preferred Stock being
converted are either delivered to the Corporation or its transfer agent, or the
holder notifies the Corporation or any transfer agent that such certificates
have been lost, stolen, or destroyed and executes an agreement satisfactory to
the Corporation (which agreement will not require a bond) to indemnify the
Corporation from any loss incurred by it in connection therewith. On the
Mandatory Conversion Date, all rights with respect to the Preferred Stock so
converted shall terminate, except any of the rights of the holder thereof, upon
surrender of the holder's certificate or certificates therefor, to receive
certificates for the number of shares of Common Stock into which such Preferred
Stock has been converted, together with cash in an amount equal to all dividends
declared but unpaid on, and any and all other amounts owing with respect to, the
shares of Preferred Stock converted to and including the time of conversion.
Upon the automatic conversion of the Preferred Stock, the holders of such
Preferred Stock shall surrender the certificates representing such shares at the
office of the Corporation or of its transfer agent. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or by
the holder's attorney duly authorized in writing. Upon surrender of such
certificates there shall be issued and delivered to such holder, or to such
holder's nominee or nominees promptly at such office, a certificate or
certificates for the number of shares of Common Stock into which the shares of
Preferred Stock surrendered were convertible on the date on which such automatic
conversion occurred, together with cash in an amount equal to all dividends
declared but unpaid on, and any and all other amounts owing with respect to, the
shares of Preferred Stock converted to and including the time of conversion.
Upon the automatic conversion of the Preferred Stock, all shares of Preferred
Stock being converted by any holder thereof shall be aggregated for the purpose
of determining the number of shares of Common Stock to which such holder shall
be entitled, and no fractional share of Common Stock shall be issued. In lieu of
any fractional share to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of the Common Stock on the Mandatory Conversion Date, as reasonably
determined by the Board of Directors in good faith (notwithstanding the
provisions of Section 1(b)).

                           (d)      Mechanics of Optional Conversions. Before
any holder of Preferred Stock shall be entitled to convert the same into shares
of Common Stock, the holder shall surrender the certificate or certificates
therefor at the office of the Corporation or of any transfer agent for the
Preferred Stock, and shall give written notice to the Corporation at such office
that the bolder elects to convert the same and shall state therein the holder's
name or the name or names of the holder's nominees in which the holder wishes
the certificate or certificates for shares of Common Stock to be issued. On the
date of conversion, all rights with respect to the Preferred Stock so converted
shall terminate, except any of the rights of the holder thereof, upon surrender
of the holder's certificate or certificates therefor, to receive certificates
for the number of shares of Common Stock into which such Preferred Stock has
been converted and

                                     - 7 -

<PAGE>

cash in an amount equal to all dividends declared but unpaid on, and any and all
other amounts owing with respect to, the shares of Preferred Stock being
converted to and including the time of conversion, If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly-executed by the registered holder or by
the holder's attorney duly-authorized in writing. Upon the optional conversion
of the Preferred Stock of any series, all shares of Preferred Stock being
converted by any holder thereof shall be aggregated for the purpose of
determining the number of shares of Common Stock to which such holder shall be
entitled, and no fractional share of Common Stock shall be issued. In lieu of
any fractional share to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of the Common Stock on the date of conversion, as reasonably determined by
the Board of Directors in good faith (notwithstanding the provisions of Section
1(b)). The Corporation shall, promptly after surrender of the certificate or
certificates for conversion, issue and deliver at such office to such holder of
Preferred Stock, or to the holder's nominee or nominees, a certificate or
certificates for the number of shares of Common Stock to which the holder shall
be entitled as aforesaid, together with cash in lieu of any fraction of a share
and cash in an amount equal to all dividends declared but unpaid thereon and
any and all other amounts owing with respect thereto at such time. Unless
otherwise specified by the holder in the written notice of conversion, such
conversion shall be deemed to have been made immediately prior to the close of
business on the date of such surrender of the shares of Preferred Stock to be
converted, and the person or persons entitled to receive the shares of Common
Stock issuable upon conversion shall be treated for all purposes as the record
holder or holders of such shares of Common Stock on such date.

                           (e)      Adjustments to Conversion Price for Diluting
Issues.

                                    (i)  Special Definitions For purposes of
this Section 2(e), the following definitions shall apply:

                                         (1)  "OPTION" shall mean rights,
options or warrants to subscribe for, purchase or otherwise acquire either
Common Stock or Convertible Securities.

                                         (2)  "ORIGINAL ISSUE DATE" shall mean
with respect to any series of Preferred Stock the first date on which a share of
Preferred Stock of such series was issued.

                                         (3)  "CONVERTIBLE SECURITIES" shall
mean any evidences of indebtedness, shares of capital stock (other than Common
Stock) or other securities directly or indirectly convertible into or
exchangeable for Common Stock.

                                         (4)  "ADDITIONAL SHARES OF COMMON
STOCK" shall mean all shares of Common Stock issued (or, pursuant to Section
2(e)(iii), deemed to be issued) by the Corporation after the Original Issue
Date, other than:

                                              (A)  shares of Common Stock issued
or issuable upon conversion of shares of Preferred Stock;

                                     - 8 -

<PAGE>

                                              (B)  up to 3,250,000 shares of
Common Stock issued or issuable to employees, consultants or directors of the
Corporation pursuant to a stock purchase or stock option plan or other employee
stock bonus arrangement approved by a majority of the Corporation's Board of
Directors, which majority includes at least two of the Preferred Stock Directors
(as hereinafter defined) (such vote, a "MAJORITY DIRECTORS VOTE"); and provided
that such number may be adjusted upward by a Majority Directors Vote;

                                              (C)  securities issued in
connection with capital leases, bank financing or other similar transactions
with a non-equity financing purpose, in each case as approved by a Majority
Directors Vote;

                                              (D)  securities issued in
connection with licensing or strategic alliance transactions, in each case as
approved by a Majority Directors Vote;

                                              (E)  securities issued pursuant to
the acquisition of another corporation or other entity by the Corporation by
merger, purchase of substantially all of the assets, or other reorganization
whereby the Corporation acquires not less than 51% of the voting power of such
corporation or other entity in a transaction approved by a Majority Directors
Vote;

                                              (F)  up to 1,000,000 shares of
Series A Preferred Stock issued or issuable at a price not less than $1.00 per
share pursuant to a Series A and Series B Convertible Preferred Stock Purchase
Agreement to be entered into, and performed by, the Corporation with certain
existing investors of the Corporation and Abingworth Management Limited;

                                              (G)  shares of Common Stock issued
or issuable at any time to holders of capital stock of Ribopharma AG
("RIBOPHARMA") pursuant to the Share Exchange Agreement dated July 3, 2003 among
the Corporation, Alnylam Pharmaceuticals, Inc. ("ALNYLAM"), Ribopharma and the
stockholders of Ribopharma (the "SHARE EXCHANGE AGREEMENT");

                                              (H)  up to 898,173 shares of
Series B Preferred Stock issued to Garching Innovation GmbH ("GARCHING"),
Massachusetts Institute of Technology ("MIT"), Whitehead Institute for
Biomedical Research ("WHITEHEAD INSTITUTE") and Max-Planck-Gesellschaft zur
Foerderung der Wissenschaften e.V ("MAX-PLANCK") pursuant to license agreements
between such entities and Alnylam;

                                              (I)  shares of capital stock of
the Corporation issued to University of Massachusetts Medical School ("UMASS")
pursuant to license agreements between the Corporation and UMASS, in each case
as approved by a Majority Directors Vote;

                                              (J)  shares of Common Stock issued
in connection with a Qualified Public Offering;

                                     - 9 -

<PAGE>

                                              (K)  up to 94,044 shares of Common
Stock issued to Abingworth Bioventures III A LP, Abingworth Bioventures III B
LP, Abingworth Bioventures III C LP and Abingworth Bioventures III Executives LP
(the "LENDERS") pursuant to Section 8.2 of the Loan Agreement, dated April 4,
2003, between the Lenders and Ribopharma and the Assignment of Loan among
Ribopharma, the Corporation and the Lenders dated on or about the date hereof;
and

                                              (L)  shares of Series C Preferred
Stock and Common Stock issued to Merck & Co., Inc. ("MERCK") pursuant to a
Securities Purchase Agreement to be entered into, and performed by, the
Corporation and Merck.

                                    (ii) No Adjustment of Conversion Price.
Except as set forth in Section 2(e)(vi), no adjustment in the number of shares
of Common Stock into which any series of Preferred Stock is convertible shall be
made, by adjustment in the applicable Conversion Price for such series in
respect of the issuance of Additional Shares of Common Stock, (a) unless the
consideration per share for an Additional Share of Common Stock (determined
pursuant to Section 2(e)(v)) issued or deemed to be issued by the Corporation is
less than the applicable Conversion Price for such series in effect on the date
of, and immediately prior to, the issue of such Additional Shares of Common
Stock or (b) if prior to such issuance or within twenty (20) days thereafter the
Corporation receives notice from the holders of at least two-thirds of the
outstanding shares of such series of Preferred Stock that no such adjustment in
the Conversion Price for such series shall be made.

                                    (iii) Issue of Securities Deemed Issue of
Additional Shares of Common Stock.

                                         (1)  Options and Convertible
Securities. In the event the Corporation at any time or from time to time after
the Original Issue Date for any series of Preferred Stock shall issue any
Options (excluding for all purposes of this Section 2(e)(iii)(1) Options
excluded from the definition of Additional Shares of Common Stock in Section
2(e)(i)(4)(B)) or Convertible Securities or shall fix a record date for the
determination of holders of any class of securities entitled to receive any such
Options or Convertible Securities, then the maximum number of shares (as set
forth in the instrument relating thereto without regard to any provisions
contained therein for a subsequent adjustment of such number) of Common Stock
issuable upon the exercise of such Options or, in the case of Convertible
Securities and Options therefor, the conversion or exchange of such Convertible
Securities, shall be deemed to be Additional Shares of Common Stock issued as of
the time of such issue or, in case such a record, date shall have been fixed, as
of the close of business on such record date, and the Conversion Price of any
such series of Preferred Stock shall be adjusted accordingly, provided, that in
any such case in which Additional Shares of Common Stock are deemed to be
issued:

                                              (A)  no further adjustment in the
Conversion Price of any such series of Preferred Stock shall be made upon the
subsequent issue of Convertible Securities or shares of Common Stock upon the
exercise of such Options or conversion or exchange of such Convertible
Securities;

                                     - 10 -

<PAGE>

                                              (B)  if such Options or
Convertible Securities by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable to the Corporation, or
decrease in the number of shares of Common Stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price of any such series of
Preferred Stock computed upon the original issue thereof (or upon the occurrence
of a record date with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects such
Options or the rights of conversion or exchange under such Convertible
Securities;

                                              (C)  upon the expiration of any
such Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Conversion Price of any such
series of Preferred Stock computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed as if:

                                                   (I)  In the case of
         Convertible Securities or Options for Common Stock the only Additional
         Shares of Common Stock issued were the shares of Common Stock, if any,
         actually issued upon the exercise of such Options or the conversion or
         exchange of such Convertible Securities and the consideration received
         therefor was the consideration actually received by the Corporation for
         the issue of all such Options, whether or not exercised, plus the
         consideration actually received by the Corporation upon such exercise,
         or for the issue of all such Convertible Securities which were actually
         converted or exchanged, plus the additional consideration, if any,
         actually received by the Corporation upon such conversion or exchange;
         and

                                                   (II) in the case of Options
         for Convertible Securities only the Convertible Securities, if any,
         actually issued upon the exercise thereof were issued at the time of
         issue of such Options, and the consideration received by the
         Corporation for the Additional Shares of Common Stock deemed to have
         been then issued was the consideration actually received by the
         Corporation for the issue of all such Options, whether or not
         exercised, plus the consideration deemed to have been received by the
         Corporation (determined pursuant to Section 2(e)(v)) upon the issue of
         the Convertible Securities with respect to which such Options were
         actually exercised;

                                              (D)  no readjustment pursuant to
clause (B) or (C) above shall have the effect of increasing the Conversion Price
of any such series of Preferred Stock to an amount which exceeds the lower of
(1) the Conversion Price of any such series of Preferred Stock immediately prior
to adjustment on the original adjustment date, or (ii) the Conversion Price of
any such series of Preferred Stock that would have resulted from any issuance of
Additional Shares of Common Stock between the original adjustment date and such
readjustment date;

                                              (E)  if such record date shall
have been fixed and such Options or Convertible Securities are not issued on the
date fixed therefor, the adjustment previously made in the Conversion Price of
any such series of Preferred Stock which became

                                     - 11 -

<PAGE>

effective on such record date shall be canceled as of the close of business on
such record date, and thereafter the Conversion Price of any such series of
Preferred Stock shall be adjusted pursuant to this Section 2(e)(iii) as of the
actual date of their issuance.

                                         (2)  Stock Dividends, Stock
Distributions and Subdivisions. In the event the Corporation at any time or from
time to time after the Original Issue Date for any series of Preferred Stock
shall declare or pay any dividend or make any other distribution on the Common
Stock payable in Common Stock or effect a subdivision of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in Common Stock), then and in any such event, Additional Shares of Common Stock
shall be deemed to have been issued with respect to such series of Preferred
Stock:

                                              (A)  in the case of any such
dividend or distribution, immediately after the close of business on the record
date for the determination of holders of any class of securities entitled to
receive such dividend or distribution, or

                                              (B)  in the case of any such
subdivision, at the close of business on the date immediately prior to the date
upon which such corporate action becomes effective.

If such record date shall have been fixed and no part of such dividend or
distribution shall have been paid on the date fixed therefor, the adjustment
previously made in the Conversion Price of any such series of Preferred Stock
which became effective on such record date shall be canceled as of the close of
business on such record date, and thereafter the Conversion Price of such series
of Preferred Stock shall be adjusted pursuant to this Section 2(e)(iii) as of
the time of actual payment of such dividend or distribution.

                                    (iv) Adjustment of Conversion Price Upon
Issuance of Additional Shares of Common Stock.

                                         (1)  Series A Preferred Stock and
Series B Preferred Stock: In the event that at anytime or from time to time
after the Original Issue Date for the Series A Preferred Stock or Series B
Preferred Stock the Corporation shall issue Additional Shares of Common Stock
(including, without limitation, Additional Shares of Common Stock deemed to be
issued pursuant to Section 2(e)(iii)(1) but excluding Additional Shares of
Common Stock deemed to be issued pursuant to Section 2(e)(iii)(2), which event
is dealt with in Section 2(e)(vi)(1)), without consideration or for a
consideration per share less than the Series A Conversion Price or the Series B
Conversion Price in effect on the date of and immediately prior to such issue,
then and in such event, such Series A Conversion Price or Series B Conversion
Price, as the case may be, shall be reduced, concurrently with such issue, to a
price (calculated to the nearest one tenth of one cent) determined in accordance
with the following formula:

                    NCP=(P(1))(Q(1))+(P(2))(Q(2))/Q(1)+Q(2)

                                     - 12 -

<PAGE>

        where:

                 NCP  =    New Series A Conversion Price or Series B Conversion
                           Price, as applicable;

                 P(1) =    Series A Conversion Price or Series B Conversion
                           Price, as applicable, in effect immediately prior to
                           new issue;

                 Q(1) =    Number of shares of Common Stock outstanding, or
                           deemed to be outstanding as set forth below,
                           immediately prior to such issue;

                 P(2) =    Price per share received by the Corporation upon such
                           issue;

                 Q(2) =    Number of shares of Common Stock issued, or deemed to
                           have been issued, in the subject transaction;

Provided, that for the purpose of this Section 2(e)(iv), all shares of Common
Stock issuable upon conversion or exercise of Options or Convertible Securities
(including without limitation shares of Preferred Stock) outstanding immediately
prior to such issue shall be deemed to be outstanding, and immediately after any
Additional Shares of Common Stock are deemed issued pursuant to Section
2(e)(iii), such Additional Shares of Common Stock shall be deemed to be
outstanding.

                                         (2)  Series C Preferred Stock: If there
shall occur any adjustment in the Series B Conversion Price pursuant to Section
2(e)(iv)(1) above, then and in such event, the Series C Conversion Price shall
be automatically adjusted (rounded down to the nearest cent) by the same
percentage as the percentage of the adjustment to the Series B Conversion Price.

                                    (v)  Determination of Consideration. For
purposes of this Section 2(e), the consideration received by the Corporation for
the issue of any Additional Shares of Common Stock shall be computed as follows:

                                         (1)  Cash and Property. Such
consideration shall:

                                              (A)  insofar as it consists of
cash, be computed at the aggregate amounts of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;

                                              (B)  insofar as it consists of
property other than cash, be computed at the fair value thereof at the time of
such issue, as determined in accordance with Section 1(b); and

                                              (C)  in the event Additional
Shares of Common Stock are issued together with other shares or securities or
other assets of the Corporation for

                                     - 13 -

<PAGE>

consideration which covers both, be the proportion of such consideration so
received, computed as provided in clauses (A) and (B) above, as determined in
good faith by the Board of Directors.

                                         (2)  Options and Convertible
Securities. The consideration per share received by the Corporation for
Additional Shares of Common Stock deemed to have been issued pursuant to Section
2(e)(iii)(1), relating to Options and Convertible Securities, shall be
determined by dividing (x) the total amount, if any, received or receivable by
the Corporation as consideration for the issue of such Options or Convertible
Securities, plus the minimum aggregate amount of additional consideration (as
set forth in the instruments relating thereto, without regard to any provision
contained therein for a subsequent adjustment of such consideration) payable to
the Corporation upon the exercise of such Options or the conversion or exchange
of such Convertible Securities, or in the case of Options for Convertible
Securities, the exercise of such Options for Convertible Securities and the
conversion or exchange of such Convertible Securities, by (y) the maximum number
of shares of Common Stock (as set forth in the instruments relating thereto,
without regard to any provision contained therein for a subsequent adjustment of
such number) issuable upon the exercise of such Options or the conversion or
exchange of such Convertible Securities.

                                    (vi) Adjustment for Dividends,
Distributions, Subdivisions, Combinations or Consolidations of Common Stock.

                                         (1)  Stock Dividends, Distributions or
Subdivisions. In the event the Corporation shall be deemed to issue Additional
Shares of Common Stock pursuant to Section 2(e)(iii)(2) in a stock dividend,
stock distribution or subdivision, the Conversion Price of each series of
Preferred Stock in effect immediately before such deemed issuance shall,
concurrently with the effectiveness of such deemed issuance, be proportionately
decreased.

                                         (2)  Combinations or Consolidations. In
the event the outstanding shares of Common Stock shall be combined or
consolidated, by reclassification or otherwise, into a lesser number of shares
of Common Stock, the Conversion Price of each series of Preferred Stock in
effect immediately prior to such combination or consolidation shall,
concurrently with the effectiveness of such combination or consolidation, be
proportionately increased.

                           (f)      Adjustments for Certain Dividends and
Distributions. In the event that at any time or from time to time after the
Original Issue Date for any series of Preferred Stock the Corporation shall make
or issue, or fix a record date for the determination of holders of Common Stock
entitled to receive, a dividend or other distribution payable in securities of
the Corporation other than shares of Common Stock or securities the issuance of
which are deemed to be issuances of Common Stock under Section 2(e)(iii), then
and in each such event provision shall be made so that the holders of Preferred
Stock of such series shall receive upon conversion thereof in addition to the
number of shares of Common Stock receivable thereupon, the amount of securities
of the Corporation that they would have received had their Preferred Stock been
converted into Common Stock immediately prior to such event and had they
thereafter, during the period from the date of such event to and including the
conversion date, retained such

                                     - 14 -

<PAGE>

securities receivable by them as aforesaid during such period, giving
application during such period to all adjustments called for herein.

                           (g)      Adjustment for Reclassification, Exchange,
or Substitution. In the event that at any time or from time to time after the
Original Issue Date for any series of Preferred Stock, the Common Stock issuable
upon the conversion of such series of Preferred Stock shall be changed into the
same or a different number of shares of any class or series of stock or other
securities or property, whether by capital reorganization, reclassification,
recapitalization or otherwise (other than a subdivision or combination of shares
or stock dividend provided for above, or a merger, consolidation, or sale of
assets provided for below), then and in each such event the holder of any shares
of such series of Preferred Stock shall have the right thereafter to convert
such shares into the kind and amount of shares of stock and other securities and
property receivable upon such reorganization, reclassification, recapitalization
or other change by the holder of a number of shares of Common Stock equal to the
number of shares of Common Stock into which such shares of such series of
Preferred Stock might have been converted immediately prior to such
reorganization, reclassification, recapitalization or change, all subject to
further adjustment as provided herein.

                           (h)      Adjustment for Merger, Consolidation or Sale
of Assets. In the event that at any time or from time to time the Corporation
shall merge or consolidate with or into another entity or sell all or
substantially all of its assets, and such consolidation, merger or sale is not
treated as a liquidation under Section 1(c), each share of Preferred Stock shall
thereafter be convertible into the kind and amount of shares of stock or other
securities or property to which a holder of the number of shares of Common Stock
of the Corporation deliverable upon conversion of such Preferred Stock would
have been entitled to receive upon such consolidation, merger or sale; and, in
such case, appropriate adjustment (as determined in good faith by the Board of
Directors) shall be made in the application of the provisions set forth in this
Section 2 with respect to the rights and interest thereafter of the holders of
shares of such Preferred Stock, to the end that the provisions set forth in this
Section 2 (including provisions with respect to changes in and other adjustments
of the Conversion Prices) shall thereafter be applicable, as nearly as
reasonably may be, in relation to any shares of stock or other securities or
property thereafter deliverable upon the conversion of such Preferred Stock.

                           (i)      Special Mandatory Conversion.

                                    (i)  Mandatory Conversion Upon Failure to
Participate in Equity Financing.

                                         (1)  When any holder of shares of
Series A Preferred Stock is entitled to exercise its right of first refusal (the
"RIGHT OF FIRST REFUSAL") as set forth in Section 3 of that certain Investor
Rights Agreement, dated as of July 31, 2003, by and among the Corporation and
certain of its stockholders (the "RIGHTS AGREEMENT") with respect to any
issuance or sale by the Corporation of any equity securities (but not options,
warrants or debt securities convertible into equity securities) of the
Corporation without consideration or for a consideration per share less than the
Series A Conversion Price in effect immediately prior to such issue or sale (a
"SERIES A DILUTIVE ISSUANCE") and (x) the Corporation has complied in all

                                     - 15 -

<PAGE>

material respects with its obligations pursuant to Section 3 of the Rights
Agreement in respect thereof and (y) the provisions of the Right of First
Refusal applicable to the particular Series A Dilutive Issuance involved have
not been waived by the Corporation or eliminated in accordance with the terms of
the Rights Agreement, if such holder (either alone or with or through its
partners, stockholders or affiliates) does not, by exercise of such holder's
Right of First Refusal, acquire at least such holder's Basic Amount (as defined
in and calculated in accordance with Section 3.1 of the Rights Agreement) of New
Securities (as defined in Section 3.2 of the Rights Agreement) in such Series A
Dilutive Issuance, then each Non-Participating Series A Share (as defined below)
held by such holder shall automatically and without further action on the part
of such holder be converted, effective subject to and concurrently with
consummation of the Series A Dilutive Issuance, into shares of Common Stock at
the time of the first closing of such Series A Dilutive Issuance, at the Series
A Conversion Price in effect immediately prior to such closing. Each holder
whose shares of Series A Preferred Stock are converted into shares of Common
Stock in accordance with this Section 2(i)(i)(1) shall be deemed to have waived
with respect to each Non-Participating Series A Share (A) the reduction in the
Series A Conversion Price of such Non-Participating Series A Share that would
have otherwise resulted pursuant to Section 2(e) from such Series A Dilutive
Issuance and (B) the right to receive, upon conversion of such Non-Participating
Series A Share pursuant to this Section 2(i)(i)(1), any additional shares of
Common Stock that would have been issuable as a result of such reduction in the
Conversion Price. The term "NON-PARTICIPATING SERIES A SHARES" shall mean such
number of shares of Series A Preferred Stock of a holder that is determined by
multiplying the total number of shares of Series A Preferred Stock held by such
holder by a fraction, the numerator of which is such holder's Basic Amount in
such Series A Dilutive Issuance minus the number of New Securities purchased by
such holder (and any assignee of such holder pursuant to Section 3.9 of the
Rights Agreement) in the Series A Dilutive Issuance, and the denominator of
which is such holder's Basic Amount.

                                         (2)  When any holder of shares of
Series B Preferred Stock is entitled to exercise its Right of First Refusal as
set forth in Section 3 of the Rights Agreement with respect to any issuance or
sale by the Corporation of any equity securities (but not options, warrants or
debt securities convertible into equity securities) of the Corporation without
consideration or for a consideration per share less than the Series B Conversion
Price in effect immediately prior to such issue or sale (a "SERIES B DILUTIVE
ISSUANCE") and (x) the Corporation has complied in all material respects with
its obligations pursuant to Section 3 of the Rights Agreement in respect thereof
and (y) the provisions of the Right of First Refusal applicable to the
particular Series B Dilutive Issuance involved have not been waived by the
Corporation or eliminated in accordance with the terms of the Rights Agreement,
if such holder (either alone or with or through its partners, stockholders or
affiliates) does not by exercise of such holder's Right of First Refusal,
acquire at least such holder's Basic Amount of New Securities in such Series B
Dilutive Issuance, then each Non-Participating Series B Share (as defined below)
held by such holder shall automatically and without further action on the part
of such holder be converted, effective subject to and concurrently with
consummation of the Series B Dilutive Issuance, into shares of Common Stock at
the time of the first closing of such Series B Dilutive Issuance, at the Series
B Conversion Price in effect immediately prior to such closing. Each holder
whose shares of Series B Preferred Stock are converted into shares of Common

                                     - 16 -

<PAGE>

Stock in accordance with this Section 2(i)(i)(2) shall be deemed to have waived
with respect to each Non-Participating Series B Share (A) the reduction in the
Series B Conversion Price of such Non-Participating Series B Share that would
have otherwise resulted pursuant to Section 2(e) from such Series B Dilutive
Issuance and (B) the right to receive, upon conversion of such Non-Participating
Series B Share pursuant to this Section 2(i)(i)(2), any additional shares of
Common Stock that would have been issuable as a result of such reduction in the
Conversion Price. The term "NON-PARTICIPATING SERIES B SHARES" shall mean such
number of shares of Series B Preferred Stock of a holder that is determined by
multiplying the total number of shares of Series B Preferred Stock held by such
holder by a fraction, the numerator of which is such holder's Basic Amount in
such Series B Dilutive Issuance minus the number of new Securities purchased by
such holder (and any assignee of such holder pursuant to Section 3.9 of the
Rights Agreement) in the Series B Dilutive Issuance, and the denominator of
which is such holder's Basic Amount.

(3)  When any holder of shares of Series C Preferred Stock is entitled to
exercise its right of first refusal (the "SERIES C RIGHT OF FIRST REFUSAL") as
set forth in Section 16 of that certain Investor Rights Agreement, dated as of
September 8,2003, by and between the Corporation and Merck & Co.,Inc. (the
"SERIES C RIGHTS AGREEMENT") with respect to any issuance or sale by the
Corporation of any equity securities (but not options, warrants or debt
securities convertible into equity securities) of the Corporation without
consideration or for a consideration per share less than the Series C Conversion
Price in effect immediately prior to such issue or sale (a "SERIES C DILUTIVE
ISSUANCE") and (x) the Corporation has complied in all material respects with
its obligations pursuant to Section 16 of the Series C Rights Agreement in
respect thereof and (y) the provisions of the Series C Right of First Refusal
applicable to the particular Series C Dilutive Issuance involved have not been
waived by the Corporation or eliminated in accordance with the terms of the
Series C Rights Agreement, if such holder (either alone or with or through its
partners, stockholders or affiliates) does not, by exercise of such holder's
Series C Right of First Refusal, acquire at least such holder's Basic Amount (as
defined in and calculated in accordance with Section 16(a) of the Series C
Rights Agreement) of New Securities (as defined in Section 16(b) of the Series C
Rights Agreement) in such Series C Dilutive Issuance, then each
Non-Participating Series C Share (as defined below) held by such holder shall
automatically and without further action on the part of such holder be
converted, effective subject to and concurrently with consummation of the Series
C Dilutive Issuance, into shares of Common Stock at the time of the first
closing of such Series C Dilutive Issuance, at the Series C Conversion Price in
effect immediately prior to such closing. Each holder whose shares of Series C
Preferred Stock are converted into shares of Common Stock in accordance with
this Section 2(i)(i)(3) shall be deemed to have waived with respect to each
Non-Participating Series C Share (A) the reduction in the Series C Conversion
Price of such Non-Participating Series C Share that would have otherwise
resulted pursuant to Section 2(e) from such Series C Dilutive Issuance and (B)
the right to receive, upon conversion of such Non-Participating Series C Share
pursuant to this Section 2(i)(i)(3), any additional shares of Common Stock that
would have been issuable as a result of such reduction in the Conversion Price.
The term "NON-PARTICIPATING SERIES C SHARES" shall mean such number of shares of
Series C Preferred Stock of a holder that is determined by multiplying the total
number of shares of Series C Preferred Stock held by such holder by a fraction,
the numerator of which is such holder's

                                     - 17 -

<PAGE>

Basic Amount in such Series C Dilutive Issuance minus the number of New
Securities purchased by such holder (and any assignee of such holder pursuant to
Section 16(i) of the series C Rights Agreement) in the Series C Dilutive
Issuance, and the denominator of which is such holder's Basic Amount.

                                    (ii) Notwithstanding the foregoing, in the
event that the Corporation issues equity securities in a transaction that is
both a Series A Dilutive Issuance and a Series B Dilutive Issuance (the "SERIES
A/B DILUTIVE ISSUANCE") and a holder of both Series A Preferred Stock and Series
B Preferred Stock does not acquire at least such holder's Basic Amount of New
Securities, then the shares of Senior Preferred Stock of such holder that shall
be converted into shares of Common Stock in accordance with this Section 2(i)
shall bo allocated pro rata to such holder's Series A Preferred Stock and Series
B Preferred Stock. For purposes of clarity, in the event of a Series A/B
Dilutive Issuance, (A) the term "NON-PARTICIPATING SERIES A SHARES" shall mean
such number of shares of Series A Preferred Stock of a holder that is determined
by multiplying the total number of shares of Series A Preferred Stock held by
such holder by a fraction, the numerator of which is such holder's Basic Amount
in such Series A/B Dilutive Issuance minus the number of new Securities
purchased by such holder (and any assignee of such holder pursuant to Section
3.9 of the Rights Agreement) in the Series A/B Dilutive Issuance and the
denominator of which is such holder's Basic Amount and (B) the term
"NON-PARTICIPATING SERIES B SHARES" shall mean such number of shares of Series
B Preferred Stock of a holder that is determined by multiplying the total
number of shares of Series B Preferred Stock held by such holder by a fraction,
the numerator of which is such holder's Basic Amount in such Series A/B Dilutive
Issuance minus the number of new Securities purchased by such holder (and any
assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the
Series A/B Dilutive Issuance, and the denominator of which is such holder's
Basic Amount.

                                    (iii) Mechanics of Special Mandatory
Conversion. The holder of any shares of Series A Preferred Stock, Series B
Preferred Stock or Series C Preferred Stock converted pursuant to this Section
2(i) shall surrender the certificate or certificates of such shares, duly
endorsed for transfer or with duly executed stock transfer powers sufficient to
permit transfers attached, at the office of the Corporation or any transfer
agent for such Preferred Stock (or such holder shall notify the Corporation or
any transfer agent that such certificates have been lost, stolen or destroyed
and shall execute an agreement reasonably satisfactory to the Corporation (which
agreement will not require a bond) to indemnify the Corporation from any loss
incurred by it in connection therewith). The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Preferred Stock, or to such holder's nominee or nominees, a certificate or
certificates for the number of full shares of Common Stock to which such holder
shall be entitled as aforesaid. Such conversion shall be deemed to have been
made immediately prior to the consummation of the Series A Dilutive Issuance,
Series B Dilutive Issuance or Series C Dilutive Issuance, as the case may be,
unless the transfer books of the Corporation are closed on that date, in which
event such holder shall be deemed to have become a holder of record of Common
Stock on the next succeeding date on which the transfer books are open.

                           (j)      No Impairment. The Corporation shall not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation,

                                     - 18 -

<PAGE>

merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation but shall at all times in
good faith assist in the carrying out of all the provisions of this Section 2
and in the taking of all such action as may be necessary or appropriate in order
to protect the Conversion Eights of the holders of Preferred Stock against
impairment.

                  (k)      Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Price for a particular series
of Preferred Stock pursuant to this Section 2, the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of shares of such series of Preferred
Stock a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of shares
of a particular series of Preferred Stock, furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price for such series at the time in effect,
and (iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of each share
of such series of Preferred Stock.

                  (l)      Notices of Record Date. In the event of any taking by
the Corporation of a record of the holders of any class or series of securities
for the purpose of determining the holders thereof who are entitled to receive
any dividend or other distribution, the Corporation shall mail to each holder of
Preferred Stock at least ten (10) days prior to such record date a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend or distribution.

                  (m)      Common Stock Reserved. The Corporation shall reserve
and keep available, free from pre-emptive rights, out of its authorized but
unissued Common Stock, solely for the purpose of effecting the conversion of
Preferred Stock, such number of shares of Common Stock as shall from time to
time be sufficient to effect conversion of the Preferred Stock. If at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all the then outstanding shares of
Preferred Stock, the Corporation shall promptly take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.

                  (n)      Certain Taxes. The Corporation shall pay any issue or
transfer taxes payable in connection with the conversion of Preferred Stock,
provided, however, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer to a name other than that of the
holder of the Preferred Stock.

                  (o)      Closing of Books. The Corporation shall at no time
close its transfer books against the transfer of any Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Preferred Stock in any manner which interferes with the timely conversion or
transfer of such Preferred Stock or Common Stock.

                                     - 19 -


<PAGE>

                  (p)      Validity of Shares. The Corporation agrees that it
will from time to time take all such actions as may be required to assure that
all shares of Common Stock which may be issued upon conversion of any Preferred
Stock will, upon issuance, be legally and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.

                  Section 3. Restrictions.

                  (a)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least 60% in voting power of the then
outstanding shares of Series A Preferred Stock, the Corporation will not:

                           (i)      amend the preferences, rights or privileges
of the Series A Preferred Stock;

                           (ii)     amend or repeal any provision of, or add any
provision to, the Corporation's Certificate of Incorporation or By-laws or
permit any corporation or other entity in which it holds, directly or
indirectly, an equity interest representing more than 50% of the voting power
of all outstanding capital stock of such entity (any such entity, a
"SUBSIDIARY") to amend or repeal any provision of or add any provision to, the
Certificate of Incorporation (or other equivalent organizational document) or
By-Laws (or other equivalent document) of such Subsidiary that would adversely
affect the preferences, rights or privileges of the Series A Preferred Stock or
increase or decrease the number of authorized shares of Series A Preferred
Stock; or

                           (iii)    authorize or designate any class or series
of capital stock having rights senior to or on a parity with the Series A
Preferred Stock as to dividends, liquidation or otherwise.

                  (b)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least 66 2/3% in voting power of the then
outstanding shares of Series B Preferred Stock, the Corporation will not:

                           (i)      amend the preferences, rights or privileges
of the Series B Preferred Stock;

                           (ii)     amend or repeal any provision of or add any
provision to, the Corporation's Certificate of Incorporation or By-laws or
permit any Subsidiary to amend or repeal any provision of, or add any provision
to, the Certificate of Incorporation (or other equivalent organizational
document) or By-laws (or other equivalent document) of such Subsidiary that
would adversely affect the preferences, rights or privileges of the Series B
Preferred Stock or increase or decrease the number of authorized shares of
Series B Preferred Stock; or

                                     - 20 -


<PAGE>

                           (iii)    authorize or designate any class or series
of capital stock having rights senior to or on a parity with the Series B
Preferred Stock as to dividends, liquidation or otherwise.

                  (c)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least a majority of the voting power of the
then outstanding shares of Series C Preferred Stock, the Corporation will not:

                           (i)      amend the preferences, rights or privileges
of the Series C Preferred Stock; or

                           (ii)     amend or repeal any provision of or add any
provision to, the Corporation's Certificate of Incorporation or By-laws or
permit any Subsidiary to amend or repeal any provision of, or add any provision
to, the Certificate of Incorporation (or other equivalent organizational
document) or By-laws (or other equivalent document) of such Subsidiary that
would adversely affect the preferences, rights or privileges of the Series C
Preferred Stock or increase or decrease the number of authorized shares of
Series C Preferred Stock.

                  (d)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least 66 2/3% in voting power of the then
outstanding shares of all series of Senior Preferred Stock, voting together as a
single class, the Corporation will not:

                           (i)      pay or declare any dividend or distribution
on any shares of its capital stock (except dividends payable solely in shares of
Common Stock), or apply any of its assets to the redemption, retirement,
purchase or acquisition, directly or indirectly, through Subsidiaries or
otherwise, of any shares of the Corporation's capital stock except (a) as
expressly set forth herein or (b) for repurchases of Common Stock upon
termination of employment or service pursuant to written agreements in effect on
the date hereof or written agreements approved by the Corporation's Board of
Directors or a committee thereof);

                           (ii)     sell, lease or otherwise dispose of all or
substantially all of the assets of the Corporation, or permit any Subsidiary to
sell, lease or otherwise dispose of all or substantially all of the assets of
such Subsidiary;

                           (iii)    voluntarily liquidate or dissolve or permit
any Subsidiary to voluntarily liquidate or dissolve;

                           (iv)     enter into any merger, consolidation or
capital reorganization, or permit any Subsidiary to enter into any merger,
consolidation or capital reorganization, except as contemplated by the Share
Exchange Agreement;

                                     - 21 -


<PAGE>

                           (v)      effect any acquisition of the capital stock
of another entity that results in the consolidation of that entity into the
results of operations of the Corporation, except as contemplated by the Share
Exchange Agreement;

                           (vi)     increase the number of seats on the Board of
Directors above nine;

                           (vii)    acquire all or substantially all of the
assets of another entity, except as contemplated by the Share Exchange
Agreement;

                           (viii)   incur indebtedness for borrowed funds, in a
single or related series of transactions, in principal amount at any time
outstanding in excess of $500,000 (except in connection with the transactions
contemplated by the Share Exchange Agreement, including the assumption of
indebtedness owed by Ribopharma to Abingworth Bioventures III A LP, Abingworth
Bioventures III B LP, Abingworth Bioventures III C LP and Abingworth Bioventures
Executives LP.)

                           (ix)     create a new plan or arrangement for the
grant of stock options, stock appreciation rights, restricted stock or other
similar stock-based compensation, or increase the number of shares or other
rights available under such existing plan or arrangement, except for increases
in the number of shares approved in the manner provided in Section
2(e)(i)(4)(B);or

                           (x)      any provision of the By-Laws of the
Corporation to the contrary notwithstanding, increase the number of directors
constituting the entire Board of Directors, except as necessary to add
independent outside directors whose election is subject to the approval of all
of the Preferred Stock Directors then in office (as defined below).

                  (e)      (i)      Notwithstanding any other provision of this
Certificate of Incorporation or the Corporation's By-Laws to the contrary,
written notice of any action specified in Section 3(a), 3(b) or 3(d) shall be
given by the Corporation to each holder of outstanding shares of Senior
Preferred Stock at least twenty (20) days before the date on which the books of
the Corporation shall close or a record shall be taken with respect to such
proposed action, or, if there shall be no such date, at least twenty (20) days
before the date when such proposed action is scheduled to take place. Any
holder of outstanding shares of Senior Preferred Stock may waive any notice
required by (his Section by a written document specifically indicating such
waiver, and the holders of two-thirds in voting power of all series of Senior
Preferred Stock, voting together as a single class, may waive any such notice on
behalf of all holders of the Senior Preferred Stock.

                           (ii)     Notwithstanding any other provision of this
Certificate of Incorporation or the Corporation's By-Laws to the contrary,
written notice of any action specified in Section 3(c) shall be given by the
Corporation to each holder of outstanding shares of Series C Preferred Stock at
least twenty (20) days before the date on which the books of the Corporation
shall close or a record shall be taken with respect to such proposed action, or,
if there shall be no such date, at least twenty (20) days before the date when
such proposed action

                                     - 22 -


<PAGE>

is scheduled to take place. Any holder of outstanding shares of Series C
Preferred Stock may waive any notice required by this Section by a written
document specifically indicating such waiver, and the holders of a majority in
voting power of the Series C Preferred Stock, voting together as a single class,
may waive any such notice on behalf of all holders of the Series C Preferred
Stock.

                  Section 4. Voting Rights.

                  (a)      Except as otherwise required by law or set forth in
this Certificate of Incorporation, the holders of Preferred Stock shall be
entitled to notice of any meeting of stockholders and shall vote together with
the holders of Common Stock as a single class upon any matter submitted to the
stockholders for a vote. With respect to all questions as to which, under law,
stockholders are required to vote by classes or series, the Preferred Stock
shall vote separately as a single class and series apart from the Common Stock.
Shares of Common Stock and Preferred Stock shall entitle the holders thereof to
the following number of votes on any matter as to which they are entitled to
vote:

                           (i)      Holders of Common Stock shall have one vote
per share; and

                           (ii)     Holders of Preferred Stock shall have that
number of votes per share as is equal to the number of shares of Common Stock
(including fractions of a share) into which each such share of Preferred Stock
held by such holder could be converted on the date for determination of
stockholders entitled to vote at the meeting or on the date of any written
consent.

                  (b)      Except as contemplated by the Rights Agreement, the
Board of Directors shall not delegate any of its powers or duties to any
committee of the Board of Directors without the consent of all of the Preferred
Stock Directors then in office.

                  (c)      In addition to any other vote required by law or by
this Certificate of Incorporation, the Corporation shall not amend this
Certificate of Incorporation, whether by merger, consolidation or otherwise, so
as to amend, alter or repeal the powers, preferences or special rights of the
Senior Preferred Stock in a manner that affects them adversely, without the
written consent or affirmative vote of the holders of a majority of the then
outstanding shares of Senior Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a class.

                  (d)      In addition to any other vote required by law or by
this Certificate of Incorporation, the Corporation shall not amend this
Certificate of Incorporation, whether by merger, consolidation or otherwise, so
as to amend, alter or repeal the powers, preferences or special rights of the
Series C Preferred Stock in a manner that affects them adversely, without the
written consent or affirmative vote of the holders of a majority of the then
outstanding shares of Series C Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case maybe) separately as a class.

                                     - 23 -


<PAGE>

                  (e)      At all times during which the number of outstanding
shares of Series A Preferred Stock equals or exceeds 1,000,000 (such minimum
number of shares to be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event), the holders of the outstanding shares of Series A
Preferred Stock shall have the exclusive right, separately from the Common Stock
and the other series of Preferred Stock, to elect two directors of the
Corporation. Any such director is sometimes hereinafter referred to as a "SERIES
A PREFERRED STOCK DIRECTOR." At all times during which the number of outstanding
shares of Series B Preferred Stock equals or exceeds 1,000,000 (such minimum
number of shares to be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event), the holders of the outstanding shares of Series B
Preferred Stock shall have the exclusive right, separately from the Common Stock
and the other series of Preferred Stock, to elect one director of the
Corporation. Such director is sometimes hereinafter referred to as a "SERIES B
PREFERRED STOCK DIRECTOR." At all times during which the number of outstanding
shares of Senior Preferred Stock equals or exceeds 2,000,000 (such minimum
number of shares to be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event), the holders of the outstanding shares of Senior Preferred
Stock, voting together as a single class, shall have the exclusive right,
separately from the Common Stock, to elect one director of the Corporation. Such
director is sometimes hereinafter referred to as a "SERIES A/B PREFERRED STOCK
DIRECTOR" and each of the Series A Preferred Stock Directors, the Series B
Preferred Stock Director and the Series A/B Director is sometimes hereinafter
referred to as a "PREFERRED STOCK DIRECTOR." Each Preferred Stock Director shall
be elected by the vote or written consent of the holders of a plurality in
voting power of the series of Senior Preferred Stock entitled to elect such
Preferred Stock Director. If a Preferred Stock Director shall cease to serve as
a director for any reason, another director elected by the holders of the series
of Senior Preferred Stock entitled to elect such Preferred Stock Director shall
replace such director. Any Preferred Stock Director may be removed, with or
without cause, and a replacement Preferred Stock Director may be elected in his
stead, at any time by the affirmative vote at a meeting duly called for the
purpose, or by written consent, of the holders of a plurality in voting power of
the outstanding series of Senior Preferred Stock entitled to elect such
director.

                  (f)      At all times during which shares of Common Stock
remain outstanding, the holders of the outstanding shares of Common Stock shall
have the exclusive right, separately from the Preferred Stock, to elect two
directors of the Corporation (the "COMMON STOCK DIRECTORS"). Each Common Stock
Director shall be elected by the vote or written consent of the holders of a
plurality in voting power of the outstanding Common Stock. If a Common Stock
Director shall cease to serve as a director for any reason, another director
elected by the holders of the Common Stock shall replace such director. Any
Common Stock Director may be removed, with or without cause, and a replacement
Common Stock Director may be elected in his stead, at any time by the
affirmative vote at a meeting duly called for the purpose, or by written
consent, of the holders of a plurality in voting power of the outstanding Common
Stock.

                                     - 24 -


<PAGE>

                  (g)      All other directors of the Corporation shall be
elected by the holders of the Common Stock and Preferred Stock voting together
as a single class, with the holders of Preferred Stock to have that number of
votes as is determined in accordance with Section 4(a)(ii).

                  (h)      In addition to any rights which may be available
under the Corporation's By-Laws or otherwise under law, the holders of not less
than twenty percent (20%) in voting power of the outstanding Senior Preferred
Stock shall be entitled to call meetings of the stockholders of the Corporation.
Within five (5) business days after written application by the holders of not
less than twenty percent (20%) in voting power of the outstanding Senior
Preferred Stock, the President or Secretary, or such other officer of the
Corporation as may be authorized in the By-Laws of the Corporation to give
notice of meetings of stockholders of the Corporation, shall notify each
stockholder of the Corporation entitled to such notice of the date, time, place
and purpose of such meeting.

                  Section 5. Dividends.

                  (a)      Dividends may be declared and paid on Common Stock
and Preferred Stock from funds lawfully available therefor as and when
determined by the Board of Directors of the Corporation.

                  (b)      No dividends shall be declared or paid on the Common
Stock or Preferred Stock except as set forth in this Section 5.

                  Section 6. Redemption

                  (a)      At the written election of holders of at least 66
2/3% in voting power of the outstanding shares of Senior Preferred Stock made at
any time on or after July 25,2007 (the "REDEMPTION ELECTION"), the Corporation
shall be required to redeem all, but not less than all, of the outstanding
shares of Senior Preferred Stock in three equal annual installments, upon the
terms set forth in. this Section 6. The first installment of such redemption
(the "FIRST REDEMPTION DATE") shall occur on a date specified in the Redemption
Election, which shall be not less than ninety (90) days after the date of the
Redemption Election, and the second and third installments of such redemption
shall occur on the first and second anniversaries, respectively, of the First
Redemption Date. The Corporation shall redeem one-third of the outstanding
shares of Senior Preferred Stock held by each holder on the First Redemption
Date, one half of the outstanding shares of Senior Preferred Stock then held by
each holder on the first anniversary thereof and the remaining shares on the
second anniversary thereof. On each such redemption date, the holders shall
surrender the certificate or certificates for the shares to be redeemed duly
endorsed for transfer or with duly executed stock transfer powers sufficient to
permit transfer attached, at the offices of the Corporation or of any transfer
agent for the Senior Preferred Stock. The Corporation shall, as soon as
practicable thereafter, issue and deliver to each holder a certificate or
certificates for the balance of the shares not being redeemed. The redemption
price of each share of Series A Preferred Stock shall be equal to (i) $1.00 (as
adjusted for any stock dividend, stock split, combination of shares,
reclassification or other similar event with respect to such Senior Preferred
Stock) plus all dividends declared but unpaid on such share on the

                                     - 25 -


<PAGE>

applicable redemption date (the "SERIES A REDEMPTION AMOUNT") plus (ii) an
additional amount computed like interest payable on the Series A Redemption
Amount at the rate equal to simple interest of ten percent (10%) per annum from
the date of issuance of such share of Senior Preferred Stock. The redemption
price of each share of Series B Preferred Stock shall be equal to (i) $2.50 (as
adjusted for any stock dividend, stock split, combination of shares,
reclassification or other similar event with respect to such Senior Preferred
Stock) plus all dividends declared but unpaid on such share on the applicable
redemption date (the "SERIES B REDEMPTION AMOUNT," each of the Series A
Redemption Amount and the Series B Redemption Amount being sometimes hereinafter
referred to as a "REDEMPTION AMOUNT") plus (ii) an additional amount computed
like interest payable on the Series B Redemption Amount at the rate equal to
simple interest of ten percent (10%) per annum from the date of issuance of such
share of Senior Preferred Stock.

                  (b)      Notice of redemption shall be sent by first class
mail, postage prepaid, to each holder of record of the Senior Preferred Stock,
not less than thirty days nor more than sixty days prior to the First Redemption
Date, at the address of such holder as it appears on the books of the
Corporation. Such notice shall set forth (i) the First Redemption Date, the
dates of the second and third installments of such redemption, and the place of
redemption; and (ii) the number of shares to be redeemed on each date of
redemption and the redemption price calculated in accordance with Section 6(a)
above, on each such date. The Corporation shall be obligated to redeem the
Senior Preferred Stock on the dates and in the amounts set forth in the notice;
provided, however, that any holder of Senior Preferred Stock who is not party to
a Redemption Election may convert any or all of the shares owned by such holder
into Common Stock in accordance with Section 2(d) at any time prior to the date
of redemption of such shares. The Corporation, if advised before the close of
business on the relevant redemption date by written notice from any holder of
record of Senior Preferred Stock to be redeemed, shall credit against the number
of shares of Senior Preferred Stock required to be redeemed from such holder,
and shall not redeem, the number of shares of Senior Preferred Stock-which shall
have been converted by such holder on or before such date and which shall not
previously have been credited against any redemption.

                  (c)      If, on or before a redemption date, the funds
necessary for such redemption shall have been set aside by the Corporation and
deposited with a bank or trust company, in trust for the pro rata benefit of the
holders of the Senior Preferred Stock that has been called for redemption, then,
notwithstanding that any certificates for shares that have been called for
redemption shall not have been surrendered for cancellation, the shares
represented thereby shall no longer be deemed outstanding from and after such
redemption date, and all rights of holders of such shares so called for
redemption shall forthwith, after such redemption date, cease and terminate with
respect to such shares, excepting only the right to receive the redemption funds
therefor to which they are entitled. Any interest accrued on funds so deposited
and unclaimed by stockholders entitled thereto shall be paid to such
stockholders at the time their respective shares are redeemed or to the
Corporation at the time unclaimed amounts are paid to it. In case the holders of
Senior Preferred Stock which shall have been called for redemption shall not,
within one year after the final redemption date, claim the amounts so deposited
with respect to the redemption thereof, any such bank or trust company shall,
upon demand, pay over to the Corporation such unclaimed amounts and thereupon
such bank or trust company shall be

                                     - 26 -


<PAGE>

relieved of all responsibility in respect thereof to such holder and such holder
shall look only to the Corporation for the payment thereof. Any funds so
deposited with a bank or trust company which shall not be required for such
redemption by reason of the exercise subsequent to the date of such deposit of
the right of conversion of any shares or otherwise shall be returned to the
Corporation forthwith.

                  (d)      If the Corporation for any reason fails to redeem any
of the shares of Senior Preferred Stock in accordance with Section 6(a) on or
prior to the redemption dates determined in accordance with this Section 6,
then, the Corporation shall become obligated to pay, in addition to the
redemption price specified in Section 6(a), interest on the unpaid balance of
such price, which shall accrue at a rate equal to the lesser of (i) one percent
(1%) per month or (ii) the maximum interest rate allowable under applicable
law, until such price is paid in full.

                  (e)      If the funds of the Corporation legally available for
redemption of shares of Senior Preferred Stock on a redemption date are
insufficient to redeem the total number of shares of Senior Preferred Stock
submitted for redemption, those funds which are legally available will be used
to redeem the maximum possible number of whole shares ratably among the holders
of such shares based on the total Redemption Amounts owed to such holders. The
shares of Senior Preferred Stock not redeemed shall remain outstanding and
entitled to all rights and preferences provided herein. At any time thereafter
when additional funds of the Corporation are legally available for the
redemption of such shares of Senior Preferred Stock, such funds will be used, at
the end of the next succeeding fiscal quarter, to redeem the balance of such
shares, or such portion thereof for which funds are then legally available.

                  Section 7. No Reissuance of Preferred Stock. No shares of
Preferred Stock acquired by the Corporation by reason of redemption, purchase,
conversion or otherwise shall be reissued, and all such shares shall be
canceled, retired and eliminated from the shares which the Corporation shall be
authorized to issue.

                  Section 8. Residual Rights. All rights accruing to the
outstanding shares of the Corporation not expressly provided for to the contrary
herein shall be vested in the Common Stock.

                  Section 9. Notices. All notices required or permitted to be
sent pursuant to this Article FOURTH shall be deemed sufficient if contained in
a written instrument and delivered in person or duly sent by first-class mail
postage prepaid (other than in the case of notices to or from any non-U.S.
resident) or by fax or DHL, Federal Express or other recognized express
international courier service, addressed to the intended recipient at the
recipient's address as it appears on the books of the Corporation."

                                     - 27 -


<PAGE>

         3.       Pursuant to Section 228(a) of the General Corporation Law of
the State of Delaware, the holders of outstanding shares of the Corporation
having no less than the minimum number of votes that would be necessary to
authorize or take such actions at a meeting at which all shares entitled to vote
thereon were present and voted, consented to the adoption of the aforesaid
amendments without a meeting, without a vote and without prior notice and that
written notice of the taking of such actions has been given in accordance with
Section 228(e) of State of Delaware.

         4.       The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.

         Signed this 8th day of September 2003.

                                   ALNYLAM HOLDING CO.


                                   BY: /s/ JOHN MARAGANORE
                                       ----------------------
                                       Name: JOHN MARAGANORE
                                       Title: President & CEO

                                     - 28 -


<PAGE>

                                                         State of Delaware
                                                        Secretary of State
                                                     Division of Corporations
                                                   Delivered 01:41 PM 10/09/2003
                                                     FILED 01:13 PM 10/09/2003
                                                   SRV 030650919 - 3651907 FILE


                            CERTIFICATE OF AMENDMENT

                                       OF

                          CERTIFICATE OF INCORPORATION

                                       OF

                               ALNYLAM HOLDING CO.

         Alnylam Holding Co., a Delaware corporation (hereinafter, the
"CORPORATION"), hereby certifies as follows:

         1.       The name of the Corporation is Alnylam Holding Co. The date of
filing of its original Certificate of Incorporation with the Delaware Secretary
of State was May 8,2003.

         2.       The Certificate of Incorporation of the Corporation, as filed
on May 8, 2003, as amended by the Certificate of Amendment, as filed on July 24,
2003 and the Certificate of Amendment, as filed on September 8, 2003
(collectively, the "CERTIFICATE OF INCORPORATION"), is hereby further amended by
deleting the first paragraph of Article FOURTH thereof in its entirety and by
substituting in lieu of said first paragraph of Article FOURTH the following new
first paragraph of Article FOURTH:

         "The total number of shares of all classes of stock which the
         Corporation has authority to issue is 57,011,480 shares, consisting of
         34,739,392 shares of Common Stock, par value $.0001 per share (the
         "COMMON STOCK"), 3,000,010 shares of Series A Convertible Preferred
         Stock, par value $.0001 per share (the "SERIES A PREFERRED STOCK"),
         16,672,078 shares of Series B Convertible Preferred Stock, $.0001 par
         value per share (the "SERIES B PREFERRED STOCK"), and 2,600,000 shares
         of Series C Convertible Preferred Stock, $.0001 par value per share
         (the "SERIES C PREFERRED STOCK"). The Series A Preferred Stock and
         Series B Preferred Stock are sometimes hereinafter collectively
         referred to as the "SENIOR PREFERRED STOCK." The Senior Preferred Stock
         and the Series C Preferred Stock are sometimes hereinafter collectively
         referred to as the "PREFERRED STOCK."

         3.       The Certificate of Incorporation is hereby further amended by
deleting in its entirety Section 2(i)(i)(3) of Article FOURTH and by
substituting in lieu of such section the following new Section 2(i)(i)(3) of
Article FOURTH:

         "(3)     When any holder of shares of Series C Preferred Stock is
         entitled to exercise its right of first refusal (the "SERIES C RIGHT OF
         FIRST REFUSAL") as set forth in Section 3 of the Rights Agreement or
         Section 16 of that certain Investor Rights Agreement, dated as of
         September 8, 2003, by and between the Corporation and Merck & Co., Inc.
         (the "SERIES C RIGHTS AGREEMENT"), as the case may be, with respect to
         any issuance or sale by the Corporation of any equity securities (but
         not options, warrants or debt securities


<PAGE>

         convertible into equity securities) of the Corporation without
         consideration or for a consideration per share less than the Series C
         Conversion Price in effect immediately prior to such issue or sale (a
         "SERIES C DILUTIVE ISSUANCE") and (x) the Corporation has complied in
         all material respects with its obligations pursuant to Section 3 of the
         Rights Agreement or Section 16 of the Series C Rights Agreement, as the
         case may be, in respect thereof and (y) the provisions of the Series C
         Right of First Refusal applicable to the particular Series C Dilutive
         Issuance involved have not been waived by the Corporation or eliminated
         in accordance with the terms of the Rights Agreement or the Series C
         Rights Agreement, as the case may be, if such holder (either alone or
         with or through its partners, stockholders or affiliates) does not, by
         exercise of such holder's Series C Right of First Refusal, acquire at
         least such holder's Basic Amount (as defined in and calculated in
         accordance with Section 3.1 of the Rights Agreement or Section 16(a) of
         the Series C Rights Agreement, as the case may be) of New Securities
         (as defined in Section 3.2 of the Rights Agreement or Section 16(b) of
         the Series C Rights Agreement, as the case may be) in such Series C
         Dilutive Issuance, then each Non-Participating Series C Share (as
         defined below) held by such holder shall automatically and without
         further action on the part of such holder be converted, effective
         subject to and concurrently with consummation of the Series C Dilutive
         Issuance, into shares of Common Stock at the time of the first closing
         of such Series C Dilutive Issuance, at the Series C Conversion Price in
         effect immediately prior to such closing. Each holder whose shares of
         Series C Preferred Stock are converted into shares of Common Stock in
         accordance with this Section 2(i)(i)(3) shall be deemed to have waived
         with respect to each Non-Participating Series C Share (A) the reduction
         in the Series C Conversion Price of such Non-Participating Series C
         Share that would have otherwise resulted pursuant to Section 2(e) from
         such Series C Dilutive Issuance and (B) the right to receive, upon
         conversion of such Non-Participating Series C Share pursuant to this
         Section 2(i)(i)(3), any additional shares of Common Stock that would
         have been issuable as a result of such reduction in the Conversion
         Price. The term "NON-PARTICIPATING SERIES C SHARES" shall mean such
         number of shares of Series C Preferred Stock of a holder that is
         determined by multiplying the total number of shares of Series C
         Preferred Stock held by such holder by a fraction, the numerator of
         which is such holder's Basic Amount in such Series C Dilutive Issuance
         minus the number of New Securities purchased by such holder (and any
         assignee of such holder pursuant to Section 3.9 of the Rights Agreement
         or Section 16(i) of the Series C Rights Agreement, as the case may be)
         in the Series C Dilutive Issuance, and the denominator of which is such
         holder's Basic Amount."

         4.       The Certificate of Incorporation is hereby further amended by
deleting in its entirety Section 2(i)(ii) of Article FOURTH and by substituting
in lieu of such section the following new Section 2(i)(ii) of Article FOURTH:

         "(ii)(1) Notwithstanding the foregoing, in the event that the
         Corporation issues equity securities in a transaction that is both a
         Series B Dilutive Issuance and a Series C Dilutive Issuance (the
         "SERIES B/C DILUTIVE ISSUANCE") and a holder of both Series B Preferred
         Stock and Series C Preferred Stock does not acquire at least such
         holder's Basic Amount of New Securities, then the shares of Preferred
         Stock of such holder that shall be

                                     - 2 -


<PAGE>

         converted into shares of Common Stock in accordance with this Section
         2(i) shall be allocated pro rata to such holder's Series B Preferred
         Stock and Series C Preferred Stock. For purposes of clarity, in the
         event of a Series B/C Dilutive Issuance, (A) the term
         "NON-PARTICIPATING SERIES B SHARES" shall mean such number of shares of
         Series B Preferred Stock of a holder that is determined by multiplying
         the total number of shares of Series B Preferred Stock held by such
         holder by a fraction, the numerator of which is such holder's Basic
         Amount in such Series B/C Dilutive Issuance minus the number of New
         Securities purchased by such holder (and any assignee of such holder
         pursuant to Section 3.9 of the Rights Agreement) in the Series B/C
         Dilutive Issuance, and the denominator of which is such holder's Basic
         Amount and (B) the term "NON-PARTICIPATING SERIES C SHARES" shall mean
         such number of shares of Series C Preferred Stock of a holder that is
         determined by multiplying the total number of shares of Series C
         Preferred Stock held by such holder by a fraction, the numerator of
         which is such holder's Basic Amount in such Series B/C Dilutive
         Issuance minus the number of New Securities purchased by such holder
         (and any assignee of such holder pursuant to Section 3.9 of the Rights
         Agreement) in the Series B/C Dilutive Issuance, and the denominator of
         which is such holder's Basic Amount.

         (2)      Notwithstanding the foregoing, in the event that the
         Corporation issues equity securities in a transaction that is a Series
         A Dilutive Issuance, a Series B Dilutive Issuance and a Series C
         Dilutive Issuance (the "SERIES A/B/C DILUTIVE ISSUANCE") and a holder
         of any combination of (i) Series A Preferred Stock, Series B Preferred
         Stock and Series C Preferred Stock, (ii) Series A Preferred Stock and
         Series B Preferred Stock or (iii) Series A Preferred Stock and Series C
         Preferred Stock does not acquire at least such holder's Basic Amount of
         New Securities, then the shares of Preferred Stock of such holder that
         shall be converted into shares of Common Stock in accordance with this
         Section 2(i) shall be allocated pro rata to such holder's Series A
         Preferred Stock, Series B Preferred Stock and/or Series C Preferred
         Stock. For purposes of clarity, in the event of a Series A/B/C Dilutive
         Issuance, (A) the term "NON-PARTICIPATING SERIES A SHARES" shall mean
         such number of shares of Series A Preferred Stock of a holder that is
         determined by multiplying the total number of shares of Series A
         Preferred Stock held by such holder by a fraction, the numerator of
         which is such holder's Basic Amount in such Series A/B/C Dilutive
         Issuance minus the number of New Securities purchased by such holder
         (and any assignee of such holder pursuant to Section 3.9 of the Rights
         Agreement) in the Series A/B/C Dilutive Issuance, and the denominator
         of which is such holder's Basic Amount, (B) the term "NON-PARTICIPATING
         SERIES B SHARES" shall mean such number of shares of Series B Preferred
         Stock of a holder that is determined by multiplying the total number of
         shares of Series B Preferred Stock held by such holder by a fraction,
         the numerator of which is such holder's Basic Amount in such Series
         A/B/C Dilutive Issuance minus the number of New Securities purchased by
         such holder (and any assignee of such holder pursuant to Section 3.9 of
         the Rights Agreement) in the Series A/B/C Dilutive Issuance, and the
         denominator of which is such holder's Basic Amount and (C) the term
         "NON-PARTICIPATING SERIES C SHARES" shall mean such number of shares of
         Series C Preferred Stock of a holder that is determined by multiplying
         the total number of shares of Series C Preferred Stock held by such
         holder by a fraction, the

                                     - 3 -


<PAGE>

         numerator of which is such holder's Basic Amount in such Series A/B/C
         Dilutive Issuance minus the number of New Securities purchased by such
         holder (and any assignee of such holder pursuant to Section 3.9 of the
         Rights Agreement) in the Series A/B/C Dilutive Issuance, and the
         denominator of which is such holder's Basic Amount."

         5.       Pursuant to Section 228(a) of the General Corporation Law of
the State of Delaware, the holders of outstanding shares of the Corporation
having no less than the minimum number of votes that would be necessary to
authorize or take such actions at a meeting at which all shares entitled to vote
thereon were present and voted, consented to the adoption of the aforesaid
amendments without a meeting, without a vote and without prior notice and that
written notice of the taking of such actions has been given in accordance with
Section 228(e) of the General Corporation Law of the State of Delaware.

         6.       The amendment of the certificate of incorporation herein
certified has been duly adopted in accordance with the provisions of Section 242
of the General Corporation Law of the State of Delaware.

         Signed this 9th day of October, 2003.

                                          ALNYLAM HOLDING CO.


                                          By: /s/ JOHN G. CONLEY
                                              -------------------
                                              Name: JOHN G. CONLEY
                                              Title: CFO

                                     - 4 -

<PAGE>
                            CERTIFICATE OF AMENDMENT

                                       OF

                          CERTIFICATE OF INCORPORATION

                                       OF

                               ALNYLAM HOLDING CO.

                         Pursuant to Section 242 of the

                General Corporation Law of the State of Delaware

                            ------------------------

         Alnylam Holding Co. (hereinafter called the "Corporation"), organized
and existing under and by virtue of the General Corporation Laws of the State of
Delaware, does hereby certify as follows:

         At a meeting of the Board of Directors of the Corporation a resolution
was duly adopted, pursuant to Section 242 of the General Corporation Law of the
State of Delaware, setting forth amendments to the Certificate of Incorporation
of the Corporation and declaring said amendments to be advisable. The
stockholders of the Corporation duly adopted said amendments by written consent
in accordance with Sections 228 and 242 of the General Corporation Law of the
State of Delaware. Said amendments have been duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware. The
resolution setting forth the amendments is as follows:

         RESOLVED: That the Certificate of Incorporation of the Corporation, as
amended (the "Certificate of Incorporation") be further amended as follows:

         (1) Article FIRST of the Certificate of Incorporation is deleted in its
entirety and the following is inserted in lieu thereof:

         "FIRST: The name of the Corporation is Alnylam Pharmaceuticals, Inc."

         (2) Section 2(b)(i) of Article FOURTH of the Certificate of
Incorporation is deleted in its entirety and the following is inserted in lieu
thereof:

                  "(i) Each share of Preferred Stock shall automatically be
                  converted into shares of Common Stock at the applicable
                  Conversion Price then in effect upon the closing of a firm
                  commitment underwritten public offering pursuant to an
                  effective registration statement under the Securities Act of
                  1933, as amended, covering the offer and sale of Common Stock
                  for the account of the Corporation to the public with gross
                  proceeds to the Corporation of not less than $25,000,000 (a
                  "Qualified Public Offering"), in the event of which offering
                  the person(s) entitled to receive the Common Stock issuable
                  upon such conversion of the Preferred Stock shall not be
                  deemed to have converted such Preferred Stock until the
                  closing of such offering."

         (3) Section 2(e)(i)(4)(B) of Article FOURTH of the Certificate of
Incorporation is deleted in its entirety and the following is inserted in lieu
thereof:

<PAGE>

                  "(B) up to 4,407,500 shares of Common Stock issued or issuable
                  to employees, consultants or directors of the Corporation
                  pursuant to a stock purchase or stock option plan or other
                  employee stock bonus arrangement approved by a majority of the
                  Corporation's Board of Directors, which majority includes at
                  least two of the Preferred Stock Directors (as hereinafter
                  defined), (such vote, a "Majority Directors Vote"); and
                  provided that such number may be adjusted upward by a Majority
                  Directors Vote;"

                                      -2-


<PAGE>




         IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President and Chief Executive Officer on this 26th
day of February 2004.

                                     ALNYLAM HOLDING CO.



                                     By: /s/ John M. Maraganore
                                         -------------------------------------
                                         John M. Maraganore
                                         President and Chief Executive Officer



                                      -3-

<PAGE>

                            CERTIFICATE OF AMENDMENT

                                       OF

                          CERTIFICATE OF INCORPORATION

                                       OF

                          ALNYLAM PHARMACEUTICALS, INC.

         Alnylam Pharmaceuticals, Inc., a Delaware corporation (hereinafter, the
"Corporation"), hereby certifies as follows:

1. The name of the Corporation is Alnylam Pharmaceuticals, Inc. The date of
filing of its original Certificate of Incorporation with the Delaware Secretary
of State was May 8, 2003.

2. The Certificate of Incorporation of the Corporation, as filed on May 8, 2003,
as amended by the Certificate of Amendment, as filed on July 24, 2003, the
Certificate of Amendment, as filed on September 8, 2003, the Certificate of
Amendment, as filed on October 9, 2003, and the Certificate of Amendment, as
filed on February 26, 2004 (collectively, the "CERTIFICATE OF INCORPORATION") is
hereby further amended by deleting Article FOURTH thereof in its entirety and by
substituting in lieu of said Article FOURTH the following new Article FOURTH:

         "FOURTH: The total number of shares of all classes of stock which the
Corporation has authority to issue is 54,943,580 shares, consisting of
32,000,000 shares of Common Stock, par value $.0001 per share (the "COMMON
STOCK"), 3,000,010 shares of Series A Convertible Preferred Stock, par value
$.0001 per share (the "SERIES A PREFERRED STOCK"), 16,672,078 shares of Series B
Convertible Preferred Stock, $.0001 par value per share (the "SERIES B PREFERRED
STOCK"), 1,604,825 shares of Series C Convertible Preferred Stock, $.0001 par
value per share (the "SERIES C PREFERRED STOCK") and 1,666,667 shares of Series
D Convertible Preferred Stock, $.0001 par value per share (the "SERIES D
PREFERRED STOCK"). The Series A Preferred Stock and Series B Preferred Stock are
sometimes hereinafter collectively referred to as the "SENIOR PREFERRED STOCK."
The Senior Preferred Stock, the Series C Preferred Stock and the Series D
Preferred Stock are sometimes hereinafter collectively referred to as the
"PREFERRED STOCK."

         The powers, preferences and rights, and the qualifications, limitations
or restrictions thereof in respect of each class or series of stock of the
Corporation shall be as follows:

         Section 1. Liquidation Rights.

                  (a)      Liquidation Payments.

                           (i)      In the event of any liquidation, dissolution
or winding up of the affairs of the Corporation, whether voluntary or
involuntary, the holders of the then outstanding shares of Senior Preferred
Stock shall be entitled to be paid first out of the assets of the Corporation
available for distribution to holders of the Corporation's capital stock of all


<PAGE>

classes an amount equal to (a) in the case of the Series A Preferred Stock,
$1.00 per share (subject to equitable adjustment whenever there shall occur a
stock dividend, stock split, combination of shares, reclassification or other
similar event with respect to such series of Senior Preferred Stock) and (b) in
the case of the Series B Preferred Stock, $2.50 per share (subject to equitable
adjustment whenever there shall occur a stock dividend, stock split, combination
of shares, reclassification or other similar event with respect to such series
of Senior Preferred Stock), plus (in the case of all series of Senior Preferred
Stock) all dividends declared thereon but unpaid and any and all other amounts
owing with respect to such shares, as of and including the date full payment
shall be tendered to the holders of the Senior Preferred Stock with respect to
such liquidation, dissolution or winding up. Such amount is sometimes
hereinafter referred to as the "SENIOR PREFERENCE AMOUNT."

         If the assets of the Corporation shall be insufficient to permit the
payment in full to the holders of the Senior Preferred Stock of the entire
Senior Preference Amount so distributable to them, then the entire assets of the
Corporation available for such distribution shall be distributed ratably among
the holders of the Senior Preferred Stock in proportion to the full. Senior
Preference Amount each such: holder is otherwise entitled to receive under this
Section 1(a)(j).

         No payment shall be made with respect to the Series C Preferred: Stock
or Common Stock unless and until full payment has been made to the holders of
the Senior Preferred Stock of the full Senior Preference Amount.

                           (ii)     After all payments shall have been made in
full to both the holders of the Senior Preferred Stock as contemplated by
Section 1(a)(i) above and to the holders of any class of equity securities that
is senior to or pari passu with the Senior Preferred Stock (the "ADDITIONAL
SENIOR PREFERRED STOCK"), or funds necessary for such payments shall have been
set aside by the Corporation in trust for the account of holders of Senior
Preferred Stock and Additional Senior Preferred Stock so as to be available for
such payments, the holders of the then outstanding shares of Series C Preferred
Stock and the holders of the then outstanding Series D Preferred Stock shall be
entitled to receive out of the remaining assets available for distribution (a)
an amount equal to the price per share paid for the Series C Preferred Stock in
the case of the Series C Preferred Stock and (ii) an amount equal to the price
per share paid for the Series D Preferred Stock in the case of the Series D
Preferred Stock (in each case, subject to equitable adjustment whenever there
shall occur a stock dividend, stock split, combination of shares,
reclassification or other similar event with respect to such series of Preferred
Stock), plus all dividends declared thereon but unpaid and any and all other
amounts owing with respect to such shares, as of and including the date full
payment shall be tendered to the holders of the Series C Preferred Stock and
Series D Preferred Stock with respect to such liquidation, dissolution or
winding up. Such amount is sometimes hereinafter referred to as the "SERIES C
PREFERENCE AMOUNT" in the case of the Series C Preferred Stock and as the
"SERIES D PREFERENCE AMOUNT" in the case of the Series D Preferred Stock.

                           (iii)    After all payments shall have been made in
full to the holders of the Senior Preferred Stock, the Additional Senior
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock
as contemplated by Section 1(a)(i) above and Section 1(a)(ii) above,
respectively, or funds necessary for such payments shall have been set aside by
the Corporation in trust for the account of holders of Senior Preferred Stock,
the

                                      -2-


<PAGE>

Additional Senior Preferred Stock, the Series C Preferred Stock and the
Series D Preferred Stock so as to be available for such payments, remaining
assets available for distribution shall be distributed among the holders of the
Common Stock ratably in proportion to the number of shares of Common Stock then
held by them.

                           (iv)     Upon any such liquidation, dissolution or
winding up, any holder of Preferred Stock may elect to receive, in lieu of the
Preference Amount otherwise payable to it pursuant to Section 1.1(a)(i) or
Section 1(a)(ii), an amount per share of Preferred Stock as would have been
payable had such share been converted to Common Stock immediately prior to such
liquidation, dissolution or winding up, plus all dividends declared but unpaid
on each such share of Preferred Stock to and including the date full payment
shall be tendered to the holders of the Preferred Stock with respect to such
liquidation, dissolution or winding up.

                           (v)      Upon conversion of shares of Preferred Stock
into shares of Common Stock pursuant to Section 2 below, the holder of such
Common Stock shall not be entitled to any preferential payment or distribution
in case of any liquidation, dissolution or winding up, but shall share ratably
in any distribution of the asset of the Corporation to all the holders of Common
Stock.

                           (vi)     The amounts payable with respect to shares
of Preferred Stock under this Section 1(a) are sometimes hereinafter referred to
as "LIQUIDATION PAYMENTS."

                  (b)      Distributions Other than Cash. The amount deemed
distributed to the holders of Preferred Stock upon any liquidation, dissolution,
or winding-up (including any transaction treated as such pursuant to Section
1(c)), and the value of the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock (as defined below), if
distributed or received, as the case may be, in any form of property (tangible
or intangible) other than cash shall be the fair market value of such property.
The term "FAIR MARKET VALUE" or "FAIR VALUE" means, with respect to any
security, its Market Price (as defined below), and with respect to any property
or assets other than cash or securities, the fair value thereof determined in
good faith jointly by the Corporation (including the approval of a director
nominated by holders of Common Stock) and the Requisite Holders (as defined
below); provided, however, that if the parties are not able to agree within a
reasonable period of time (not to exceed thirty (30) days) what amount
constitutes fair value, then the fair value will be determined pursuant to the
Arbitration Procedure (as defined below). The term "REQUISITE HOLDERS" means the
holders of at least two-thirds in voting power of the then outstanding Preferred
Stock. The term "MARKET PRICE" means, as to any security, the average of the
closing prices of such security's sales on all United States securities
exchanges on which such security may at the time be listed, or, if there have
been no sales on any such exchange on any day, the average of the highest bid
and lowest asked prices on all such exchanges at the end of such day, or, if on
any day such security is not so listed, the average of the representative bid
and asked prices quoted in the NASDAQ System as of 4:00 P.M., New York time, on
such day, or, if on any day such security is not quoted in the NASDAQ System,
the average of the highest bid and lowest asked prices on such day in the
domestic over-the-counter market as reported by the National Quotation Bureau,
Incorporated, or any similar or successor organization, in each such case
averaged over a period of 30 days consisting of the thirty day period ending
three days prior to the date as of which Market Price is being determined. If at
any time such security is not listed on any domestic securities exchange

                                      -3-


<PAGE>

or quoted in the NASDAQ System or the domestic over-the-counter market, the
Market Price of such security shall be the fair value thereof as determined in
good faith jointly by the Corporation (including the approval of a director
nominated by holders of Common Stock) and the Requisite Holders; provided,
however, that if such parties are not able to agree within a reasonable period
of time (not to exceed ten (10) days) what amount constitutes the Market Price,
then the Market Price shall be determined pursuant to the Arbitration Procedure.
The term "ARBITRATION PROCEDURE" means the following procedure to determine the
fair value or the Market Price, as applicable (the "VALUATION AMOUNT"). The
valuation amount shall be determined by an investment banking firm of national
recognition, which firm shall be reasonably acceptable to the Corporation and
the Requisite Holders. If the Corporation and the Requisite Holders are unable
to agree upon an acceptable investment banking firm within ten (10) days after
the date either party proposed that one be selected, the investment banking firm
will be selected by an arbitrator located in the City of Boston, Massachusetts,
selected by the American Arbitration Association (or if such organization ceases
to exist, the arbitrator shall be chosen by a court of competent jurisdiction).
The arbitrator shall select the investment banking firm (within ten (10) days of
his appointment) from a list, jointly prepared by the Corporation and the
Requisite Holders, of not more than six investment banking firms of national
standing in the United States, of which no more than three may be named by the
Corporation and no more than three may be named by the Requisite Holders. The
arbitrator may consider, within the ten day period allotted, arguments from the
parties regarding which investment banking firm to choose, but the selection by
the arbitrator shall be made in its sole discretion from the list of six. The
determination of the final valuation amount by such investment banking firm
shall be final and binding upon the parties. The Corporation shall pay one-half
of the fees and expenses of the investment banking firm and arbitrator (if any)
used to determine the valuation amount and the holders of the Preferred Stock
shall pay the other half of such fees and expenses (allocated among them pro
rata based on the number of shares of Preferred Stock, on an as-converted basis,
then held by each of them). If required by any such investment banking firm or
arbitrator, the Corporation and the holders of the Preferred Stock shall execute
a retainer and engagement letter containing reasonable term and conditions,
including customary provisions concerning the rights of indemnification and
contribution by the Corporation and the holders of the Preferred Stock in favor
of such investment banking firm or arbitrator and its officers, directors,
partners, employees, agents and affiliates.

                  (c)      Merger as Liquidation, etc. The merger or
consolidation of the Corporation into or with another corporation (except one in
which the holders of capital stock of the Corporation immediately prior to such
merger or consolidation continue to hold a majority in voting power of the
capital stock of the surviving corporation, in which case the provisions of
Section 2(h) shall apply), or the sale of all or substantially all of the assets
of the Corporation, shall be deemed to be a liquidation, dissolution or winding
up of the affairs of the Corporation for purposes of this Section 1 with respect
to the Preferred Stock, unless the holders of at least two-thirds in voting
power of the then outstanding shares of Preferred Stock elect to the contrary;
such election to be made by giving notice thereof to the Corporation at least
three days before the effective date of such event. If such notice is given with
respect to the Preferred Stock, the provisions of Section 2(h) shall apply.
Unless such election is made with respect to the Preferred Stock, any amounts
received by the holders of Preferred Stock as a result of such merger or
consolidation shall be deemed to be applied toward, and all consideration
received by the

                                      -4-


<PAGE>

Corporation in such asset sale together with all other available assets of the
Corporation shall be distributed toward, the Liquidation Payments.

                  (d)      Notice. In the event the Corporation shall propose to
undertake any liquidation, dissolution or winding up of the affairs of the
Corporation (including any merger, consolidation or sale of assets which may be
deemed to be a liquidation, dissolution or winding up of the affairs of the
Corporation under Section 1(c)), the Corporation shall, within ten (10) days
after the date the Board of Directors approves such action or twenty (20) days
prior to any stockholders' meeting called to approve such action, whichever is
earlier, give each holder of Preferred Stock initial written notice of the
proposed action. Such initial written notice shall describe the material terms
and conditions of such proposed action, including a description of the stock,
cash and property to be received by the holders of the Preferred Stock and of
Common Stock upon consummation of the proposed action and the proposed date of
delivery thereof. If any material change in the facts set forth in the initial
notice shall occur, the Corporation shall promptly give each holder of Preferred
Stock written notice of such material change. The Corporation shall not
consummate any such proposed liquidation, dissolution or winding up before the
expiration of thirty (30) days after the mailing of the initial notice or twenty
(20) days after the mailing of any subsequent written notice, whichever is
later, provided, that any such 30-day or 20-day period may be shortened or
waived upon the written consent of the holders of at least two-thirds in voting
power of the outstanding shares of Preferred Stock. Any holder of outstanding
shares of Preferred Stock may waive any notice required by this Section by
written instrument specifically indicating such waiver.

         Section 2. Conversion. The holders of Preferred Stock shall have
conversion rights as follows (the "CONVERSION RIGHTS"):

                  (a)      Right to Convert Conversion Price. Each share of
Preferred Stock shall be convertible, without the payment of any additional
consideration by the holder thereof and at the option of the holder thereof; at
any time after the date of issuance of such share, at the office of the
Corporation or any transfer agent for the Preferred Stock, into such number of
fully paid and nonassessable shares of Common Stock as is determined in
accordance with the following:

                           (i)      in the case of the Series A Preferred Stock,
by dividing $1.00 by the Series A Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. The Conversion Price at which
shares of Common Stock shall be deliverable upon conversion of Series A
Preferred Stock without the payment of any additional consideration by the
holder thereof (the "SERIES A CONVERSION PRICE") shall initially be $1.00 per
share of Common Stock. Such initial Series A Conversion Price shall be subject
to adjustment, in order to adjust the number of shares of Common Stock into
which the Series A Preferred Stock is convertible, as hereinafter provided.

                           (ii)     in the case of the Series B Preferred Stock,
by dividing $2.50 by the Series B Conversion Price, determined as hereinafter
provided, in effect at the time of conversion. The Conversion Price at which
shares of Common Stock shall be deliverable upon conversion of Series B
Preferred Stock without the payment of any additional consideration by the
holder thereof (the "SERIES B CONVERSION PRICE") shall initially be $2.50 per
share of

                                      -5-


<PAGE>

Common Stock. Such initial Series B Conversion Price shall be subject to
adjustment, in order to adjust the number of shares of Common Stock into which
the Series B Preferred Stock is convertible, as hereinafter provided.

                           (iii)    in the case of the Series C Preferred Stock,
by dividing the price per share paid for the Series C Preferred Stock by the
Series C Conversion Price, determined as hereinafter provided, in effect at the
time of conversion. The Conversion Price at which shares of Common Stock shall
be deliverable upon conversion of Series C Preferred Stock without the payment
of any additional consideration by the holder thereof (the "SERIES C CONVERSION
PRICE") shall initially be the price per share paid for the Series C Preferred
Stock per share of Common Stock. Such initial Series C Conversion Price shall be
subject to adjustment, in order to adjust the number of shares of Common Stock
into which the Series C Preferred Stock is convertible, as hereinafter provided.

                           (iv)     in the case of the Series D Preferred Stock,
by dividing the price per share paid for the Series D Preferred Stock by the
Series D Conversion Price, determined as hereinafter provided, in effect at the
time of conversion. The Conversion Price at which shares of Common Stock shall
be deliverable upon conversion of Series D Preferred Stock without the payment
of any additional consideration by the holder thereof (the "SERIES D CONVERSION
PRICE") shall initially be the price per share paid for the Series D Preferred
Stock per share of Common Stock. Such initial Series D Conversion Price shall be
subject to adjustment, in order to adjust the number of shares of Common Stock
into which the Series D Preferred Stock is convertible, as hereinafter provided.

         Each of the Series A Conversion Price, the Series B Conversion Price,
the Series C Conversion Price and the Series D Conversion Price is sometimes
hereinafter referred to as a "CONVERSION PRICE."

         The right of conversion with respect to any shares of Senior Preferred
Stock which shall have been called for redemption under Section 6 hereof shall
terminate at the close of business on the day fixed for redemption unless the
Corporation shall default in the payment of the redemption price, in which case
the right of conversion with respect to such shares shall continue unless and
until such redemption price is paid in full.

                  (b)      Automatic Conversion.

                           (i)      Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the applicable
Conversion Price then in effect upon the closing of a firm commitment
underwritten public offering pursuant to an effective registration statement
under the Securities Act of 1933, as amended, covering the offer and sale of
Common Stock for the account of the Corporation to the public with gross
proceeds to the Corporation of not less than $25,000,000 (a "QUALIFIED PUBLIC
OFFERING"), in the event of which offering the person(s) entitled to receive the
Common Stock issuable upon such conversion of the Preferred Stock shall not be
deemed to have converted such Preferred Stock until the closing of such
offering.

                                      -6-


<PAGE>

                           (ii)     Each share of Preferred Stock shall
automatically be converted into shares of Common Stock at the applicable
Conversion Price then in effect upon the written election of the holders of not
less than two-thirds in voting power of the then outstanding shares of Preferred
Stock to require such mandatory conversion.

                  (c)      Mechanics of Automatic Conversions. Upon the
occurrence of an event specified in Section 2(b), the Preferred Stock of the
applicable series shall be converted automatically without any further action by
the holders of such shares and whether or not the certificates representing such
shares are surrendered to the Corporation or its transfer agent; provided,
however, that all holders of shares of Preferred Stock being converted shall be
given written notice of the occurrence of the event specified in Section 2(b)
triggering such conversion, including the date such event occurred (the
"MANDATORY CONVERSION DATE"), and the Corporation shall not be obligated to
issue certificates evidencing the shares of Common Stock issuable upon such
conversion unless certificates evidencing such shares of Preferred Stock being
converted are either delivered to the Corporation or its transfer agent, or the
holder notifies the Corporation or any transfer agent that such certificates
have been lost, stolen, or destroyed and executes an agreement satisfactory to
the Corporation (which agreement will not require a bond) to indemnify the
Corporation from any loss incurred by it in connection therewith. On the
Mandatory Conversion Date, all rights with respect to the Preferred Stock so
converted shall terminate, except any of the rights of the holder thereof, upon
surrender of the holder's certificate or certificates therefor, to receive
certificates for the number of shares of Common Stock into which such Preferred
Stock has been converted, together with cash in an amount equal to all dividends
declared but unpaid on, and any and all other amounts owing with respect to, the
shares of Preferred Stock converted to and including the time of conversion.
Upon the automatic conversion of the Preferred Stock, the holders of such
Preferred Stock shall surrender the certificates representing such shares at the
office of the Corporation or of its transfer agent. If so required by the
Corporation, certificates surrendered for conversion shall be endorsed or
accompanied by written instrument or instruments of transfer, in form
satisfactory to the Corporation, duly executed by the registered holder or by
the holder's attorney duly authorized in writing. Upon surrender of such
certificates there shall be issued and delivered to such holder, or to such
holder's nominee or nominees promptly at such office, a certificate or
certificates for the number of shares of Common Stock into which the shares of
Preferred Stock surrendered were convertible on the date on which such automatic
conversions occurred, together with cash in an amount equal to all dividends
declared but unpaid on, and any and all other amounts owing with respect to, the
shares of Preferred Stock converted to and including the time of conversion.
Upon the automatic conversion of the Preferred Stock, all shares of Preferred
Stock being converted by any holder thereof shall be aggregated for the purpose
of determining the number of shares of Common Stock to which such holder shall
be entitled, and no fractional share of Common Stock shall be issued. In lieu of
any fractional share to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the fair market
value of the Common Stock on the Mandatory Conversion Date, as reasonably
determined by the Board of Directors in good faith (notwithstanding the
provisions of Section 1(b)).

                  (d)      Mechanics of Optional Conversions. Before any holder
of Preferred Stock shall be entitled to convert the same into shares of Common
Stock, the holder shall surrender the certificate or certificates therefor at
the office of the Corporation or of any

                                      -7-


<PAGE>

transfer agent for the Preferred Stock, and shall give written notice to the
Corporation at such office that the holder elects to convert the same and shall
state therein the holder's name or the name or names of the holder's nominees in
which the holder wishes the certificate or certificates for shares of Common
Stock to be issued. On the date of conversion, all rights with respect to the
Preferred Stock so converted shall terminate, except any of the rights of the
holder thereof, upon surrender of the holder's certificate or certificates
therefor, to receive certificates for the number of shares of Common Stock into
which such Preferred Stock has been converted and cash in an amount equal to all
dividends declared but unpaid on, and any and all other amounts owing with
respect to, the shares of Preferred Stock being converted to and including the
time of conversion. If so required by the Corporation, certificates surrendered
for conversion shall be endorsed or accompanied by written instrument or
instruments of transfer, in form satisfactory to the Corporation, duly executed
by the registered holder or by the holder's attorney duly authorized in writing.
Upon the optional conversion of the Preferred Stock of any series, all shares of
Preferred Stock being converted by any holder thereof shall be aggregated for
the purpose of determining the number of shares of Common Stock to which such
holder shall be entitled, and no fractional share of Common Stock shall be
issued. In lieu of any fractional share to which the holder would otherwise be
entitled, the Corporation shall pay cash equal to such fraction multiplied by
the fair market value of the Common Stock on the date of conversion, as
reasonably determined by the Board of Directors in good faith (notwithstanding
the provisions of Section 1(b)). The Corporation shall, promptly after surrender
of the certificate or certificates for conversion, issue and deliver at such
office to such holder of Preferred Stock, or to the holder's nominee or
nominees, a certificate or certificates for the number of shares of Common Stock
to which the holder shall be entitled as aforesaid; together with cash in lieu
of any fraction of a share and cash in an amount equal to all dividends declared
but unpaid thereon and any and all other amounts owing with respect thereto at
such time. Unless otherwise specified by the holder in the written notice of
conversion, such conversion shall be deemed to have been made immediately prior
to the close of business on the date of such surrender of the shares of
Preferred Stock to be converted, and the person or persons entitled to receive
the shares of Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock on such
date.

                  (e)      Adjustments to Conversion Price for Diluting Issues.

                           (i)      Special Definitions. For purposes of this
Section 2(e); the following definitions shall apply:

                                    (1)      "OPTION" shall mean rights, options
or warrants to subscribe for, purchase or otherwise acquire either Common Stock
or Convertible Securities.

                                    (2)      "CONVERTIBLE SECURITIES" shall mean
any evidences of indebtedness, shares of capital stock (other than Common Stock)
or other securities directly or indirectly convertible into or exchangeable for
Common Stock.

                                    (3)      "ADDITIONAL SHARES OF COMMON STOCK"
shall mean all shares of Common Stock issued (or, pursuant to Section 2(e)(iii),
deemed to be issued) by the Corporation after March 11, 2004 (the "Baseline
Date"), other than:

                                      -8-


<PAGE>

                                             (A)      shares of Common Stock
issued or issuable upon conversion of shares of Preferred Stock;

                                             (B)      up to 4,407,500 shares of
Common Stock issued or issuable to employees, consultants or directors of the
Corporation pursuant to a stock purchase or stock option plan or other employee
stock bonus arrangement approved by a majority of the Corporation's Board of
Directors, which Majority includes at least two of the Preferred Stock Directors
(as hereinafter defined), (such vote, a "MAJORITY DIRECTORS VOTE"); and provided
that such number may be adjusted upward by a Majority Directors Vote;

                                             (C)      shares of Series D
Preferred Stock issued or issuable to Isis Pharmaceuticals, Inc. (or affiliates
thereof);

                                             (D)      securities issued in
connection with capital leases, bank financing or other similar transactions
with a non-equity financing purpose, in each case as approved by a Majority
Directors Vote;

                                             (E)      securities issued in
connection with licensing or strategic alliance transactions, in each case as
approved by a Majority Directors Vote;

                                             (F)      securities issued pursuant
to the acquisition of another corporation or other entity by the Corporation by
merger, purchase of substantially all of the assets, or other reorganization
whereby the Corporation acquires not less than 51% of the voting power of such
corporation or other entity in a transaction approved by a Majority Directors
Vote;

                                             (G)      up to 16,328 shares of
Series B Preferred Stock issued to Garching Innovation GmbH ("GARCHING"),
Massachusetts Institute of Technology ("MIT"), Whitehead Institute for
Biomedical Research ("WHITEHEAD INSTITUTE") and Max-Planck-Gesellschaft zur
Foerderung der Wissonschaften e.V ("MAX PLANCK") pursuant to license agreements
between such entities and Alnylam; and

                                             (H)      shares of Common Stock
issued in connection with a Qualified Public Offering.

                           (ii)     No Adjustment of Conversion Price. Except
set forth in Section 2(e)(vi), no adjustment in the number of shares of Common
Stock into which any series of Preferred Stock is convertible shall be made, by
adjustment in the applicable Conversion Price for such series in respect of the
issuance of Additional Shares of Common Stock, (a) unless the consideration per
share for an Additional Share of Common Stock (determined pursuant to Section
2(e)(v)) issued or deemed to be issued by the Corporation is less than the
applicable Conversion Price for such series in effect on the date of, and
immediately prior to the issue of such Additional Shares of Common Stock or (b)
if prior to such issuance or within twenty (20) days thereafter the Corporation
receives notice from the holders of at least two-thirds of the outstanding
shares of such series of Preferred Stock that no such adjustment in the
Conversion Price for such series shall be made.

                                      -9-


<PAGE>

                           (iii)    Issue of Securities Deemed Issue of
Additional Shares of Common Stock.

                                    (1)      Options and Convertible Securities.
In the event the Corporation at any time or from time to time after the Baseline
Date shall issue any Options (excluding for all purposes of this Section
2(e)(iii)(1) Options excluded from the definition of Additional Shares of Common
Stock in Section 2(e)(i)(4)(B)) or Convertible Securities or shall fix a record
date for the determination of holders of any class of securities entitled to
receive any such Options or Convertible Securities, then the maximum number of
shares (as set forth in the instrument relating thereto without regard to any
provisions contained therein for a subsequent adjustment of such number) of
Common Stock issuable upon the exercise of such Options or, in the case of
Convertible Securities and Options therefor, the conversion or exchange of such
Convertible Securities, shall be deemed to be Additional Shares of Common Stock
issued as of the time of such issue or, in case such a record date shall have
been fixed, as of the close of business on such record date, and the Conversion
Price of any such series of Preferred Stock shall be adjusted accordingly;
provided, that in any such case in which Additional Shares of Common Stock are
deemed to be issued:

                                             (A)      no further adjustment in
the Conversion Price of any such series of Preferred Stock shall be made upon
the subsequent issue of Convertible Securities or shares of Common Stock upon
the exercise of such Options or conversion or exchange of such Convertible
Securities;

                                             (B)      if such Options or
Convertible Securities by their terms provide, with the passage of time or
otherwise, for any increase in the consideration payable to the Corporation, or
decrease in the number of shares of Common stock issuable, upon the exercise,
conversion or exchange thereof, the Conversion Price of any such series of
Preferred Stock computed upon the original issue thereof (or upon the occurrence
of a record date with respect thereto), and any subsequent adjustments based
thereon, shall, upon any such increase or decrease becoming effective, be
recomputed to reflect such increase or decrease insofar as it affects such
Options or the rights of conversion or exchange under such Convertible
Securities;

                                             (C)      upon the expiration of any
such Options or any rights of conversion or exchange under such Convertible
Securities which shall not have been exercised, the Conversion price of any such
series of Preferred Stock computed upon the original issue thereof (or upon the
occurrence of a record date with respect thereto), and any subsequent
adjustments based thereon, shall, upon such expiration, be recomputed as if:

                                                      (I)      in the case of
         Convertible Securities or Options for Common Stock the only Additional
         Shares of Common Stock issued were the shares of Common Stock, if any,
         actually issued upon the exercise of such Options or the conversion or
         exchange of such Convertible Securities and the consideration received
         therefor was the consideration actually received by the Corporation for
         the issue of all such Options, whether at not exercised, plus the
         consideration actually received by the Corporation upon such exercise,
         or for the issue of all such Convertible Securities which

                                      -10-


<PAGE>

         were actually converted or exchanged, plus the additional
         consideration, if any, actually received by the Corporation upon such
         conversion or exchange; and

                                                      (II)     in the case of
         Options for Convertible Securities only the Convertible Securities, if
         any, actually issued upon the exercise thereof were issued at the time
         of issue of such Options, and the consideration received by the
         Corporation for the Additional Shares of Common Stock deemed to have
         been then issued was the consideration actually received by the
         Corporation for the issue of all such Options, whether or not
         exercised, plus the consideration deemed to have been received by the
         Corporation (determined pursuant to Section 2(e)(v)) upon the issue of
         the Convertible Securities with respect to which such Options were
         actually exercised;

                                             (D)      no readjustment pursuant
to clause (B) or (C) above shall have the effect of increasing the Conversion
Price of any such series of Preferred Stock to an amount which exceeds the lower
of (i) the Conversion Price of any such series of Preferred Stock immediately
prior to adjustment on the original adjustment date, or (ii) the Conversion
Price of any such series of Preferred Stock that would have resulted from any
issuance of Additional Shares of Common Stock between the original adjustment
date and such readjustment date;

                                             (E)      if such record date shall
         have been fixed and such Options or Convertible Securities are not
         issued on the date fixed therefor, the adjustment previously made in
         the Conversion Price of any such series of Preferred Stock which became
         effective on such record date shall be canceled as of the close of
         business on such record date, and thereafter the Conversion Price of
         any such series of Preferred Stock shall be adjusted pursuant to this
         Section 2(e)(iii) as of the actual date of their issuance.

                                    (2)      Stock Dividends Stock Distributions
and Subdivisions. In the event the Corporation at any time or from time to time
after the Baseline Date shall declare or pay any dividend or make any other
distribution on the Common Stock payable in Common Stock or effect a subdivision
of the outstanding shares of Common Stock (by reclassification or otherwise than
by payment of a dividend in Common Stock), then and in any such event,
Additional Shares of Common Stock shall be deemed to have been issued with
respect to such series of Preferred Stock:

                                             (A)      in the case of any such
dividend or distribution, immediately after the close of business on the record
date for the determination of holders of any class of securities entitled to
receive such dividend or distribution, or

                                             (B)      in the case of any such
subdivision, at the close of business on the date immediately prior to the date
upon which such corporate action becomes effective.

If such record date shall have been fixed and no part of such dividend or
distribution shall have been paid on the date fixed therefor, the adjustment
previously made in the Conversion Price of any such series of Preferred Stock
which became effective on such record date shall be canceled as of the close of
business on such record date, and thereafter the Conversion Price of such series

                                      -11-


<PAGE>

of Preferred Stock shall be adjusted pursuant to this Section 2(e)(iii) as of
the time of actual payment of such dividend or distribution.

                           (iv)     Adjustment of Conversion Price Upon Issuance
of Additional Shares of Common Stock.

                                    (1)      Series A Preferred Stock and Series
B Preferred Stock. In the event that at any time or from time to time after the
Baseline Date the Corporation shall issue Additional Shares of Common Stock
(including, without limitation, Additional Shares of Common Stock deemed to be
issued pursuant to Section 2(e)(iii)(1) but excluding Additional Shares of
Common Stock deemed to be issued pursuant to Section 2(e)(iii)(2), which event
is dealt with in Section 2(e)(vi)(1)), without consideration or for a
consideration per share less than the Series A Conversion Price or the Series B
Conversion Price in effect on the date of and immediately prior to such issue,
then and in such event, such Series A Conversion Price or Series B Conversion
Price, as the case may be, shall be reduced, concurrently with such issue, to a
price (calculated to the nearest one tenth of one cent) determined in accordance
with the following formula:

                                    (P1) (Q1) + (P2) (Q2)
                              NCP = ---------------------
                                          Q1 + Q2

         where:

                  NCP =        New Series A Conversion Price or Series B
                               Conversion Price, as applicable;

                  P1  =        Series A Conversion Price or Series B
                               Conversion Price, as applicable, in effect
                               immediately prior to new issue;

                  Q1 =         Number of shares of Common Stock outstanding,
                               or deemed to be outstanding as set forth below,
                               immediately prior to such issue;

                  P2 =         Price per share received by the Corporation upon
                               such issue;

                  Q2 =         Number of shares of Common Stock issued, or
                               deemed to have been issued, in the subject
                               transaction;

Provided, that for the purpose of this Section 2(e)(iv), all shares of Common
Stock issuable upon conversion or exercise of Options or Convertible Securities
(including without limitation shares of Preferred Stock) outstanding immediately
prior to such issue shall be deemed to be outstanding, and immediately after any
Additional Shares of Common Stock are deemed issued pursuant to Section
2(e)(iii), such Additional Shares of Common Stock shall be deemed to be
outstanding.

                                    (2)      Series C Preferred Stock and Series
D Preferred Stock. If there shall occur any adjustment in the Series B
Conversion Price pursuant to Section 2(e)(iv)(1) above, then and in such event,
the Series C Conversion Price and the Series D

                                      -12-


<PAGE>

Conversion Price shall each be automatically adjusted (rounded down to the
nearest cent) by the same percentage as the percentage of the adjustment to the
Series B Conversion Price.

                           (v)      Determination of Consideration. For purposes
of this Section 2(e), the consideration received by the Corporation for the
issue of any Additional Shares of Common Stock shall be computed as follows:

                                    (1)      Cash and Property. Such
consideration shall:

                                             (A)      insofar as it consists of
cash, be computed at the aggregate amounts of cash received by the Corporation
excluding amounts paid or payable for accrued interest or accrued dividends;

                                             (B)      insofar as it consists of
property other than cash, be computed at the fair value thereof at the time of
such issue, as determined in accordance with Section 1(b); and

                                             (C)      in the event Additional
Shares of Common Stock are issued together with other shares or securities or
other assets of the Corporation for consideration which covers both, be the
proportion of such consideration so received, computed as provided in clauses
(A) and (B) above, as determined in good faith by the Board of Directors.

                                    (2)      Options and Convertible Securities.
The consideration per share received by the Corporation for Additional Shares of
Common Stock deemed to have been issued pursuant to Section 2(e)(iii)(1),
relating to Options and Convertible Securities, shall be determined by dividing
(x) the total amount, if any, received or receivable by the Corporation as
consideration for the issue of such Options or Convertible Securities, plus the
minimum aggregate amount of additional consideration (as set forth in the
instruments relating thereto, without regard to any provision contained therein
for a subsequent adjustment of such consideration) payable to the Corporation
upon the exercise of such Options or the conversion or exchange of such
Convertible Securities, or in the case of Options for Convertible Securities,
the exercise of such Options for Convertible Securities and the conversion or
exchange of such Convertible Securities, by (y) the maximum number of shares of
Common Stock (as set forth in the instruments relating thereto, without regard
to any provision contained therein for a subsequent adjustment of such number)
issuable upon the exercise of such Options or the conversion or exchange of such
Convertible Securities.

                  (vi)     Adjustments for Dividends, Distributions,
Subdivisions, Combinations or Consolidations of Common Stock.

                           (1)      Stock Dividends, Distributions or
Subdivisions. In the event the Corporation shall be deemed to issue Additional
Shares of Common Stock pursuant to Section 2(e)(iii)(2) in a stock dividend,
stock distribution or subdivision, the Conversion Price of each series of
Preferred Stock in effect immediately before such deemed issuance shall,
concurrently with the effectiveness of such deemed issuance, be proportionately
decreased.

                           (2)      Combinations or Consolidations. In the event
the outstanding shares of Common Stock shall be combined or consolidated, by
reclassification or

                                      -13-


<PAGE>

otherwise, into a lesser number of shares of Common Stock, the Conversion Price
of each series of Preferred Stock in effect immediately prior to such
combination or consolidation shall, concurrently with the effectiveness of such
combination or consolidation, be proportionately increased.

                  (f)      Adjustments for Certain Dividends and Distributions.
In the event that at any time or from time to time after the Baseline Date the
Corporation shall make or issue, or fix a record date for the determination of
holders of Common Stock entitled to receive, a dividend or other distribution
payable in securities of the Corporation other than shares of Common Stock or
securities the issuance of which are deemed to be issuances of Common Stock
under Section 2(e)(iii), then and in each such event provision shall be made so
that the holders of Preferred Stock of such series shall receive upon conversion
thereof in addition to the number of shares of Common Stock receivable
thereupon, the amount of securities of the Corporation that they would have
received had their Preferred Stock been converted into Common Stock immediately
prior to such event and had they thereafter, during the period from the date of
such event to and including the conversion date, retained such securities
receivable by them as aforesaid during such period, giving application during
such period to all adjustments called for herein.

                  (g)      Adjustment for Reclassification, Exchange, or
Substitution. In the event that at any time or from time to time after the
Baseline Date, the Common Stock issuable upon the conversion of such series of
Preferred Stock shall be changed into the same or a different number of shares
of any class or series of stock or other securities or property, whether by
capital reorganization, reclassification, recapitalization or otherwise (other
than a subdivision or combination of shares or stock dividend provided for
above, or a merger, consolidation, or sale of assets provided for below), then
and in each such event the holder of any shares of such series of Preferred
Stock shall have the right thereafter to convert such shares into the kind and
amount of shares of stock and other securities and property receivable upon such
reorganization, reclassification recapitalization or other change by the holder
of a number of shares of Common Stock equal to the number of shares of Common
Stock into which such shares of such series of Preferred Stock might have been
converted immediately prior to such reorganization, reclassification,
recapitalization or change, all subject to further adjustment as provided
herein.

                  (h)      Adjustment for Merger, Consolidation or Sale of
Assets. In the event that at any time or from time to time the Corporation shall
merge or consolidate with or into another entity or sell all or substantially
all of its assets, and such consolidation, merger or sale is not treated as a
liquidation under Section 1(c), each share of Preferred Stock shall thereafter
be convertible into the kind and amount of shares of stock or other securities
or property to which a holder of the number of shares of Common Stock of the
Corporation deliverable upon conversion of such Preferred Stock would have been
entitled to receive upon such consolidation, merger or sale; and, in such case,
appropriate adjustment (as determined in good faith by the Board of Directors)
shall be made in the application of the provisions set forth in this Section 2
with respect to the rights and interest thereafter of the holders of shares of
such Preferred Stock, to the end that the provisions set forth in this Section 2
(including provisions with respect to changes in and other adjustments of the
Conversion Prices) shall thereafter be applicable, as nearly as reasonably may
be, in relation to any shares of stock or other securities or property
thereafter deliverable upon the conversion of such Preferred Stock

                                      -14-


<PAGE>

                  (i)      Special Mandatory Conversion.

                           (i)      Mandatory Conversion Upon Failure to
Participate in Equity Financing.

                                    (1)      When any holder of shares of Series
A Preferred Stock is entitled to exercise its right of first refusal (the "RIGHT
OF FIRST REFUSAL") as set forth in Section 3 of that certain Investor Rights
Agreement, dated as of July 31, 2003, by and among the Corporation and certain
of its stockholders, as the same may be amended and/or restated from time to
time (the "RIGHTS AGREEMENT") with respect to any issuance or sale by the
Corporation of any equity securities (but not options, warrants or debt
securities convertible into equity securities) of the Corporation without
consideration or for a consideration per share less than the Series A Conversion
Price in effect immediately prior to such issue or sale (a "SERIES A DILUTIVE
ISSUANCE") and (x) the Corporation has complied in all material respects with
its obligations pursuant to Section 3 of the Rights Agreement in respect thereof
and (y) the provisions of the Right of First Refusal applicable to the
particular Series A Dilutive Issuance involved have not been waived by the
Corporation or eliminated in accordance with the terms of the Rights Agreement,
if such holder (either alone or with or through its partners, stockholders or
affiliates) does not, by exercise of such holder's Right of First Refusal,
acquire at least such holder's Basic Amount (as defined in and calculated in
accordance with Section 3.1 of the Rights Agreement) of New Securities (as
defined in Section 3.2 of the Rights Agreement) in such Series A Dilutive
Issuance, then each Non-Participating Series A Share (as defined below) held by
such holder shall automatically and without further action on the part of such
holder be converted, effective subject to and concurrently with consummation of
the Series A Dilutive Issuance, into shares of Common Stock at the time of the
first closing of such Series A Dilutive Issuance, at the Series A Conversion
Price in effect immediately prior to such closing. Each holder whose shares of
Series A Preferred Stock are converted into shares of Common Stock in accordance
with this Section (i)(i)(1) shall be deemed to have waived with respect to each
Non-Participating Series A Share (A) the reduction in the Series A Conversion
Price of such Non-Participating Series A Share that would have otherwise
resulted pursuant to Section 2(e) from such Series A Dilutive Issuance and (B)
the right to receive, upon conversion of such Non-Participating Series A Share
pursuant to this Section 2(i)(i)(1), any additional shares of Common Stock that
would have been issuable as a result of such reduction in the Conversion Price.
The term "NON-PARTICIPATING SERIES A SHARES" shall mean such number of shares of
Series A Preferred Stock held by such holder by a fraction, the numerator of
which is such holder's Basic Amount in such Series A Dilutive Issuance minus the
number of New Securities purchased by such holder (and any assignee of such
holder pursuant to Section 3.9 of the Rights Agreement) in the Series A Dilutive
Issuance, and the denominator of which is such holder's Basic Amount.

                                    (2)      When any holder of shares of Series
B Preferred Stock is entitled to exercise its Right of First Refusal as set
forth in Section 3 of the Rights Agreement with respect to any issuance or sale
by the Corporation of any equity securities (but not options, warrants or debt
securities convertible into equity securities) of the Corporation without
consideration or for a consideration per share less than the Series B Conversion
Price in effect immediately prior to such issue or sale (a "SERIES B DILUTIVE
ISSUANCE") and (x) the Corporation has complied in all material respects with
its obligations pursuant to Section 3 of the Rigs Agreement in respect thereof
and (y) the provisions of the Right of First Refusal applicable

                                      -15-


<PAGE>

to the particular Series B Dilutive Issuance involved have not been waived by
the Corporation or eliminated in accordance with the terms of the Rights
Agreement, if such holder (either alone or with or through its partners,
stockholders or affiliates) does not by exercise of such holder's Right of First
Refusal, acquire at least such holder's Basic Amount of New Securities in such
Series B Dilutive Issuance, then each Non-Participating Series B Share (as
defined below) held by such holder shall automatically and without further
action on the part of such holder be converted, effective subject to and
concurrently with consummation of the Series B Dilutive Issuance, into shares of
Common Stock at the time of the first closing of such Series B Dilutive
Issuance, at the Series B Conversion Price in effect immediately prior to such
closing. Each holder whose shares of Series B Preferred Stock are converted into
shares of Common Stock in accordance with this Section 2(i)(i)(2) shall be
deemed to have waived with respect to each Non-Participating Series B Share (A)
the reduction in the Series B Conversion Price of such Non-Participating Series
B Share that would have otherwise resulted pursuant to Section 2(e) from such
Series B Dilutive Issuance and (B) the right to receive, upon conversion of such
Non-Participating Series B Share pursuant to this Section 2(i)(i)(2), any
additional shares of Common Stock that would have been issuable as a result of
such reduction in the Conversion Price. The term "NON-PARTICIPATING SERIES B
SHARES" shall mean such number of shares of Series B Preferred Stock of a holder
that is determined by multiplying the total number of shares of Series B
Preferred Stock held by such holder by a fraction, the numerator of which is
such holder's Basic Amount in such Series B Dilutive Issuance minus the number
of New Securities purchased by such holder (and any assignee of such holder
pursuant to Section 3.9 of the Rights Agreement) in the Series B Dilutive
Issuance, and the denominator of which is such holder's Basic Amount.

                                    (3)      When any holder of shares of Series
C Preferred Stock is entitled to exercise its right of first refusal (the
"SERIES C RIGHT OF FIRST REFUSAL") as set forth in Section 3 of the Rights
Agreement or Section 16 of that certain Investor Rights Agreement, dated as of
September 8, 2003, by and between the Corporation and Merck & Co., Inc. (the
"SERIES C RIGHTS AGREEMENT"), as the case may be, with respect to any issuance
or sale by the Corporation of any equity securities (but not options, warrants
or debt securities convertible into equity securities) of the Corporation
without consideration or for a consideration per share less than the Series C
Conversion Price in effect immediately prior to such issue or sale (a "SERIES C
DILUTIVE ISSUANCE") and (x) the Corporation has complied in all material
respects with its obligations pursuant to Section 3 of the Rights Agreement or
Section 16 of the Series C Rights Agreement, as the case may be, in respect
thereof and (y) the provisions of the Series C Right of First Refusal applicable
to the particular Series C Dilutive Issuance involved have not been waived by
the Corporation or eliminated in accordance with the terms of the Rights
Agreement or the Series C Rights Agreement, as the case may be, if such holder
(either alone or with or through its partners, stockholders or affiliates) does
not, by exercise of such holder's Series C Right of First Refusal, acquire at
least such holder's Basic Amount (as defined in and calculated in accordance
with Section 3.1 of the Rights Agreement or Section 16(a) of the Series C Rights
Agreement, as the case may be) of New Securities (as defined in Section 3.2 of
the Rights Agreement or Section 16(b) of the Series C Rights Agreement, as the
case may be) in such Series C Dilutive Issuance, then each Non-Participating
Series C Share (as defined below) held by such holder shall automatically and
without further action on the part of such holder be converted, effective
subject to and concurrently with consummation of the Series C Dilutive Issuance,
into shares of Common Stock at the time of the first closing of such Series C
Dilutive

                                      -16-


<PAGE>

Issuance, at the Series C Conversion Price in effect immediately prior to such
closing. Each holder whose shares of Series C Preferred Stock are converted into
shares of Common Stock in accordance with this Section 2(i)(i)(3) shall be
deemed to have waived with respect to each Non-Participating Series C Share (A)
the reduction in the Series C Conversion Price of such Non-Participating Series
C Share that would have otherwise resulted pursuant to Section 2(e) from such
Series C Dilutive Issuance and (B) the right to receive, upon conversion of such
Non-Participating Series C Share pursuant to this Section 2(i)(i)(3), any
additional shares of Common Stock that would have been issuable as a result of
such reduction in the Conversion Price. The term "NON-PARTICIPATING SERIES C
SHARES" shall mean such number of shares of Series C Preferred Stock of a holder
that is determined by multiplying the total number of shares of Series C
Preferred Stock held by such holder by a fraction, the numerator of which is
such holder's Basic Amount in such Series C Dilutive Issuance minus the number
of New Securities purchased by such holder (and any assignee of such holder
pursuant to Section 3.9 of the Rights Agreement or Section 16(i) of the Series C
Rights Agreement, as the case may be) in the Series C Dilutive Issuance, and the
denominator of which is such holder's Basic Amount.

                                    (4)      When any holder of shares of Series
D Preferred Stock is entitled to exercise its right of first refusal (the
"SERIES D RIGHT OF FIRST REFUSAL") as set forth in Section 16 of that certain
Investor Rights Agreement, dated as of March 11, 2004, by and between the
Corporation and Isis Pharmaceuticals, Inc. (the "SERIES D RIGHTS AGREEMENT")
with respect to any issuance or sale by the Corporation of any equity securities
(but not options, warrants or debt securities convertible into equity
securities) of the Corporation without consideration or for a consideration per
share less than the Series D Conversion Price in effect immediately prior to
such issue or sale (a "SERIES D DILUTIVE ISSUANCE") and (x) the Corporation has
complied in all material respects with its obligations pursuant to Section 16 of
the Series D Rights Agreement in respect thereof and (y) the provisions of the
Series D Right of First Refusal applicable to the particular Series D Dilutive
Issuance involved have not been waived by the Corporation or eliminated in
accordance with the terms of the Series D Rights Agreement, if such holder
(either alone or with or through its partners, stockholders or affiliates) does
not, by exercise of such holder's Series D Right of First Refusal, acquire at
least such holder's Basic Amount (as defined in and calculated in accordance
with Section 16(a) of the Series D Rights Agreement) of New Securities (as
defined in Section 16(b) of the Series D Rights Agreement) in such Series D
Dilutive Issuance, then each Non-Participating Series D Share (as defined below)
held by such holder shall automatically and without further action on the part
of such holder be converted, effective subject to and concurrently with
consummation of the Series D Dilutive Issuance, into shares of Common Stock at
the time of the first closing of such Series D Dilutive Issuance, at the Series
D Conversion Price in effect immediately prior to such closing. Each holder
whose shares of Series D Preferred Stock are converted into shares of Common
Stock in accordance with this Section 2(i)(i)(4) shall be deemed to have waived
with respect to each Non-Participating Series D Share (A) the reduction in the
Series D Conversion Price of such Non-Participating Series D Share that would
have otherwise resulted pursuant to Section 2(e) from such Series D Dilutive
Issuance and (B) the right to receive, upon conversion of such Non-Participating
Series D Share pursuant to this Section 2(i)(i)(4), any additional shares of
Common Stock that would have been issuable as a result of such reduction in the
Conversion Price. The term "NON-PARTICIPATING SERIES D SHARES" shall mean such
number of shares of Series D Preferred Stock of a holder that is determined by
multiplying the total number of shares of Series D Preferred Stock held by such
holder by a fraction, the numerator of which is such holder's

                                      -17-


<PAGE>

Basic Amount in such Series D Dilutive Issuance minus the number of New
Securities purchased by such holder (and any assignee of such holder pursuant to
Section 16(i) of the Series D Rights Agreement) in the Series D Dilutive
Issuance, and the denominator of which is such holder's Basic Amount.

                           (ii)

                                    (1)      Notwithstanding the foregoing, in
the event that the Corporation issues equity securities in a transaction that is
a Series B Dilutive Issuance, a Series C Dilutive Issuance and a Series D
Dilutive Issuance (the "SERIES B/C/D DILUTIVE ISSUANCE") and a holder of Series
B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock does
not acquire at least such holder's Basic Amount of New Securities, then the
shares of Preferred Stock of such holder that shall be converted into shares of
Common Stock in accordance with this Section 2(i) shall be allocated pro rata to
such holder's Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock. For purposes of clarity, in the event of a Series B/C/D
Dilutive Issuance, (A) the term "NON-PARTICIPATING SERIES B SHARES" shall mean
such number of shares of Series B Preferred Stock of a holder that is determined
by multiplying the total number of shares of Series B Preferred Stock held by
such holder by a fraction, the numerator of which is such holder's Basic Amount
in such Series B/C/D Dilutive Issuance minus the number of New Securities
purchased by such holder (and any assignee of such holder pursuant to Section
3.9 of the Rights Agreement) in the Series B/C/D Dilutive Issuance, and the
denominator of which is such holder's Basic Amount, (B) the term
"NON-PARTICIPATING SERIES C SHARES" shall mean such number of shares of Series C
Preferred Stock of a holder that is determined by multiplying the total number
of shares of Series C Preferred Stock held by such holder by a fraction, the
numerator of which is such holder's Basic Amount in such Series B/C/D Dilutive
Issuance minus the number of New Securities purchased by such holder (and any
assignee of such holder pursuant to Section 3.9 of the Rights Agreement) in the
Series B/C/D Dilutive Issuance, and the denominator of which is such holder's
Basic Amount and (C) the term "NON-PARTICIPATING SERIES D SHARES" shall mean
such number of shares of Series D Preferred Stock of a holder that is determined
by multiplying the total number of shares of Series D Preferred Stock held by
such holder by a fraction, the numerator of which is such holder's Basic Amount
in such Series B/C/D Dilutive Issuance minus the number of New Securities
purchased by such holder (and any Affiliate of such holder pursuant to Section
16(i) of the Series D Rights Agreement) in the Series B/C/D Dilutive Issuance,
and the denominator of which is such holder's Basic Amount.

                                    (2)      Notwithstanding the foregoing, in
the event that the Corporation issues equity securities in a transaction that is
a Series A Dilutive Issuance, a Series B Dilutive Issuance, a Series C Dilutive
Issuance and a Series D Dilutive Issuance (the "SERIES A/B/C/D DILUTIVE
ISSUANCE") and a holder of any combination of (i) Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock,
(ii) Series A Preferred Stock and Series B Preferred Stock, (iii) Series A
Preferred Stock and Series C Preferred Stock or (iv) Series A Preferred Stock
and Series D Preferred Stock does not acquire at least such holder's Basic
Amount of New Securities, then the shares of Preferred Stock of such holder that
shall be converted into shares of Common Stock in accordance with this Section
2(i) shall be allocated pro rata to such holder's Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and/or Series D Preferred
Stock. For purposes of clarity, in the event of

                                      -18-


<PAGE>

a Series A/B/C/D Dilutive Issuance, (A) the term "NON-PARTICIPATING SERIES A
SHARES" shall mean such number of shares of Series A Preferred Stock of a holder
that is determined by multiplying the total number of shares of Series A
Preferred Stock held by such holder by a fraction, the numerator of which is
such holder's Basic Amount in such Series A/B/C/D Dilutive Issuance minus the
number of New Securities purchased by such holder (and any assignee of such
holder pursuant to Section 3.9 of the Rights Agreement) in the Series A/B/C/D
Dilutive Issuance, and the denominator of which is such holder's Basic Amount,
(B) the term "NON-PARTICIPATING SERIES B SHARES" shall mean such number of
shares of Series B Preferred Stock of a holder that is determined by multiplying
the total number of shares of Series B Preferred Stock held by such holder by a
fraction, the numerator of which is such holder's Basic Amount in such Series
A/B/C/D Dilutive Issuance minus the number of New Securities purchased by such
holder (and any assignee of such holder pursuant to Section 3.9 of the Rights
Agreement) in the Series A/B/C/D Dilutive Issuance, and the denominator of which
is such holder's Basic Amount, (C) the term "NON-PARTICIPATING SERIES C SHARES"
shall mean such number of shares of Series C Preferred Stock of a holder that is
determined by multiplying the total number of shares of Series C Preferred Stock
held by such holder by a fraction, the numerator of which is such holder's Basic
Amount in such Series A/B/C/D Dilutive Issuance minus the number of New
Securities purchased by such holder (and any assignee of such holder pursuant to
Section 3.9 of the Rights Agreement) in the Series A/B/C/D Dilutive Issuance,
and the denominator of which is such holder's Basic Amount and (D) the term
"NON-PARTICIPATING SERIES D SHARES" shall mean such number of shares of Series D
Preferred Stock of a holder that is determined by multiplying the total number
of shares of Series D Preferred Stock held by such holder by a fraction, the
numerator of which is such holder's Basic Amount in such Series A/B/C/D Dilutive
Issuance minus the number of New Securities purchased by such holder (and any
Affiliate of such holder pursuant to 16(i) of the Series D Rights Agreement) in
the Series A/B/C/D Dilutive Issuance, and the denominator of which is such
holder's Basic Amount.

                           (iii)    Mechanics of Special Mandatory Conversion.
The holder of any shares of Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock or Series D Preferred Stock converted pursuant to this
Section 2(i) shall surrender the certificate or certificates of such shares,
duly endorsed for transfer or with duly executed stock transfer powers
sufficient to permit transfers attached, at the office of the Corporation or any
transfer agent for such Preferred Stock (or such holder shall notify the
Corporation or any transfer agent that such certificates have been lost, stolen
or destroyed and shall execute an agreement reasonably satisfactory to the
Corporation (which agreement will not require a bond) to indemnify the
Corporation from any loss incurred by it in connection therewith). The
Corporation shall, as soon as practicable thereafter, issue and deliver at such
office to such holder of Preferred Stock, or to such holder's nominee or
nominees, a certificate or certificates for the number of full shares of Common
Stock to which such holder shall be entitled as aforesaid. Such conversion shall
be deemed to have been made immediately prior to the consummation of the Series
A Dilutive Issuance, Series B Dilutive Issuance, Series C Dilutive Issuance or
Series D Dilutive Issuance, as the case may be, unless the transfer books of the
Corporation are closed on that date, in which event such holder shall be deemed
to have become a holder of record of Common Stock on the next succeeding date on
which the transfer books are open.

                  (j)      No Impairment. The Corporation shall not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation,

                                      -19-


<PAGE>

merger, dissolution, issue or sale of securities or any other voluntary action,
avoid or seek to avoid the observance or performance of any of the terms to be
observed or performed hereunder by the Corporation but shall at all times in
good faith assist in the carrying out of all the provisions of this Section 2
and in the taking of all such action as may be necessary or appropriate in order
to protect the Conversion Rights of the holders of Preferred Stock against
impairment.

                  (k)      Certificate as to Adjustments. Upon the occurrence of
each adjustment or readjustment of the Conversion Price for a particular series
of Preferred Stock pursuant to this Section 2, the Corporation at its expense
shall promptly compute such adjustment or readjustment in accordance with the
terms hereof and furnish to each holder of shares of such series of Preferred
Stock a certificate setting forth such adjustment or readjustment and showing in
detail the facts upon which such adjustment or readjustment is based. The
Corporation shall, upon the written request at any time of any holder of shares
of a particular series of Preferred Stock, furnish or cause to be furnished to
such holder a like certificate setting forth (i) such adjustments and
readjustments, (ii) the Conversion Price for such series at the time in effect,
and (iii) the number of shares of Common Stock and the amount, if any, of other
property which at the time would be received upon the conversion of each share
of such series of Preferred Stock.

                  (l)      Notices of Record Date. In the event of any taking by
the Corporation of a record of the holders of any class or series of securities
for the purpose of determining the holders thereof who are entitled to receive
any dividend or other distribution, the Corporation shall mail to each holder of
Preferred Stock at least ten (10) days prior to such record date a notice
specifying the date on which any such record is to be taken for the purpose of
such dividend or distribution.

                  (m)      Common Stock Reserved. The Corporation shall reserve
and keep available, free from pre-emptive rights, out of its authorized but
unissued Common Stock, solely for the purpose of effecting the conversion of
Preferred Stock, such number of shares of Common Stock as shall from time to
time be sufficient to effect conversion of the Preferred Stock. If at any time
the number of authorized but unissued shares of Common Stock shall not be
sufficient to effect the conversion of all the then outstanding shares of
Preferred Stock, the Corporation shall promptly take such corporate action as
may, in the opinion of its counsel, be necessary to increase its authorized but
unissued shares of Common Stock to such number of shares as shall be sufficient
for such purpose.

                  (n)      Certain Taxes. The Corporation shall pay any issue or
transfer taxes payable in connection with the conversion of Preferred Stock,
provided, however, that the Corporation shall not be required to pay any tax
which may be payable in respect of any transfer to a name other than that of the
holder of the Preferred Stock.

                  (o)      Closing of Books. The Corporation shall at no time
close its transfer books against the transfer of any Preferred Stock or of any
shares of Common Stock issued or issuable upon the conversion of any shares of
Preferred Stock in any manner which interferes with the timely conversion or
transfer of such Preferred Stock or Common Stock.

                                      -20-


<PAGE>

                  (p)      Validity of Shares. The Corporation agrees that it
will from time to time take all such actions as may be required to assure that
all shares of Common Stock which may be issued upon conversion of any Preferred
Stock will, upon issuance, be legally and validly issued, fully paid and
nonassessable and free from all taxes, liens and charges with respect to the
issue thereof.

         Section  3. Restrictions.

                  (a)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least 60% in voting power of the then
outstanding shares of Series A Preferred Stock, the Corporation will not:

                           (i)      amend the preferences, rights or privileges
of the Series A Preferred Stock;

                           (ii)     amend or repeal any provision of, or add any
provision to, the Corporation's Certificate of Incorporation or By-laws or
permit any corporation or other entity in which it holds, directly or
indirectly, an equity interest representing more than 50% of the voting power of
all outstanding capital stock of such entity (any such entity, a "SUBSIDIARY")
to amend or repeal any provision of or add any provision to, the Certificate of
Incorporation (or other equivalent organizational document) or By-Laws (or other
equivalent document) of such Subsidiary that would adversely affect the
preferences, rights or privileges of the Series A Preferred Stock or increase or
decrease the number of authorized shares of Series A Preferred Stock; or

                           (iii)    authorize or designate any class or series
of capital stock having rights senior to or on a parity with the Series A
Preferred Stock as to dividends, liquidation or otherwise.

                  (b)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least 66 2/3% in voting power of the then
outstanding shares of Series B Preferred Stock, the Corporation will not:

                  (i)      amend the preferences, rights or privileges of the
Series B Preferred Stock;

                  (ii)     amend or repeal any provision of or add any provision
to, the Corporation's Certificate of Incorporation or By-laws or permit any
Subsidiary to amend or repeal any provision of, or add any provision to, the
Certificate of Incorporation (or other equivalent organizational document) or
By-laws (or other equivalent document) of such Subsidiary that would adversely
affect the preferences, rights or privileges of the Series B Preferred Stock or
increase or decrease the number of authorized shares of Series B Preferred
Stock; or

                                      -21-


<PAGE>
                          (iii)     authorize or designate any class or series
of capital stock having rights senior to or on a parity with the Series B
Preferred Stock as to dividends, liquidation or otherwise.


                  (c)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least a majority of the voting power of the
then outstanding shares of Series C Preferred Stock, the Corporation will not:

                           (i)      amend the preferences, rights or privileges
of the Series C Preferred Stock; or

                           (ii)     amend or repeal any provision of or add any
provision to, the Corporation's Certificate of Incorporation or By-laws or
permit any Subsidiary to amend or repeal any provision of, or add any provision
to, the Certificate of Incorporation (or other equivalent organizational
document) or By-laws (or other equivalent document) of such Subsidiary that
would adversely affect the preferences, rights or privileges of the Series C
Preferred Stock or increase or decrease the number of authorized shares of
Series C Preferred Stock.

                  (d)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least a majority of the voting power of the
then outstanding shares of Series D Preferred Stock, the Corporation will not:

                           (i)      amend the preferences, rights or privileges
of the Series D Preferred Stock; or

                           (ii)     amend or repeal any provision of or add any
provision to, the Corporation's Certificate of Incorporation or By-laws or
permit any Subsidiary to amend or repeal any provision of, or add any provision
to, the Certificate of Incorporation (or other equivalent organizational
document) or By-laws (or other equivalent document) of such Subsidiary that
would adversely affect the preferences, rights or privileges of the Series D
Preferred Stock or increase or decrease the number of authorized shares of
Series D Preferred Stock.

                  (e)      In addition to any other vote required by law or this
Certificate of Incorporation, without first obtaining the affirmative vote or
written consent of the holders of at least 66 2/3% in voting power of-the then
outstanding shares of all series of Senior Preferred Stock, voting together as a
single class, the Corporation will not:

                           (i)      pay or declare any dividend or distribution
on any shares of its capital stock (except dividends payable solely in shares of
Common Stock), or apply any of its assets to the redemption, retirement,
purchase or acquisition, directly or indirectly, through Subsidiaries or
otherwise, of any shares of the Corporation's capital stock except (a) as
expressly set forth herein or (b) for repurchases of Common Stock upon
termination of employment or service pursuant to written agreements in effect on
the date hereof or written agreements approved by the Corporation's Board of
Directors or a committee thereof);

                                      -22-


<PAGE>

                           (ii)     sell, lease or otherwise dispose of all or
substantially all of the assets of the Corporation, or permit any Subsidiary to
sell, lease or otherwise dispose of all or substantially all of the assets of
such Subsidiary;

                           (iii)    voluntarily liquidate or dissolve or permit
any Subsidiary to voluntarily liquidate or dissolve;

                           (iv)     enter into any merger, consolidation or
capital reorganization, or permit any Subsidiary to enter into any merger,
consolidation or capital reorganization;

                           (v)      effect any acquisition of the capital stock
of another entity that results in the consolidation of that entity into the
results of operations of the Corporation;

                           (vi)     increase the number of seats on the Board of
Directors above nine;

                           (vii)    acquire all or substantially all of the
assets of another entity;

                           (viii)   incur indebtedness for borrowed funds, in a
single or related series of transactions, in principal amount at any time
outstanding in excess of $500,000;

                           (ix)     create a new plan or arrangement for the
grant of stock options, stock appreciation rights, restricted stock or other
similar stock-based compensation, or increase the number of shares or other
rights available under such existing plan or arrangement, except for increases
in the manner of shares approved in the manner provided in Section
2(e)(i)(4)(B); or

                           (x)      any provision of the By-Laws of the
Corporation to the contrary notwithstanding, increase the number of directors
constituting the entire Board of Directors, except as necessary to add
independent outside directors whose election is subject to the approval of all
of the Preferred Stock Directors then in office (as defined below).

                  (f)      (i) Notwithstanding any other provision of this
Certificate of Incorporation or the Corporation's By-Laws to the contrary,
written notice of any action specified in Section 3(a) or 3(b) shall be given by
the Corporation to each holder of outstanding shares of Senior Preferred Stock
at least twenty (20) days before the date on which the books of the Corporation
shall close or a record shall be taken with respect to such proposed action, or,
if there shall be no such date, at least twenty (20) days before the date when
such proposed action is scheduled to take place. Any holder of outstanding
shares of Senior Preferred Stock may waive any notice required by this Section
by a written document specifically indicating such waiver, and the holders of
two-thirds in voting power of all series of Senior Preferred Stock, voting
together as a single class, may waive any such notice on behalf of all holders
of the Senior Preferred Stock.

                           (ii)     Notwithstanding any other provision of this
Certificate of Incorporation or the Corporation's By-Laws to the contrary,
written notice of any action

                                      -23-


<PAGE>

specified in Section 3(c) shall be given by the Corporation to each holder of
outstanding shares of Series C Preferred Stock at least twenty (20) days before
the date on which the books of the Corporation shall close or a record shall be
taken with respect to such proposed action, or, if there shall be no such date,
at least twenty (20) days before the date when such proposed action is scheduled
to take place. Any holder of outstanding shares of Series C Preferred Stock may
waive any notice required by this Section by a written document specifically
indicating such waiver, and the holders of a majority in voting power of the
Series C Preferred Stock, voting together as a single class, may waive any such
notice on behalf of all holders of the Series C Preferred Stock.

                           (iii)    Notwithstanding any other provision of this
Certificate of Incorporation or the Corporation's By-Laws to the contrary,
written notice of any action specified in Section 3(d) shall be given by the
Corporation to each holder of outstanding shares of Series D Preferred Stock at
least twenty (20) days before the date on which the books of the Corporation
shall close or a record shall be taken with respect to such proposed action, or,
if there shall be no such date, at least twenty (20) days before the date when
such proposed action is scheduled to take place. Any holder of outstanding
shares of Series D Preferred Stock may waive any notice required by this Section
by a written document specifically indicating such waiver, and the holders of a
majority in voting power of the Series D Preferred Stock, voting together as a
single class, may waive any such notice on behalf of all holders of the Series D
Preferred Stock.

        Section 4. Voting Rights.

                  (a)      Except as otherwise required by law or set forth in
this Certificate of Incorporation, the holders of Preferred Stock shall be
entitled to notice of any meeting of stockholders and shall vote together with
the holders of Common Stock as a single class upon any matter submitted to the
stockholders for a vote. With respect to all questions as to which, under law,
stockholders are required to vote by classes or series, the Preferred Stock
shall vote separately as a single class and series apart from the Common Stock.
Shares of Common Stock and Preferred Stock shall entitle the holders thereof to
the following number of votes on any matter as to which they are entitled to
vote:

                           (i)      Holders of Common Stock shall have one vote
per share; and

                           (ii)     Holders of Preferred Stock shall have that
number of votes per share as is equal to the number of shares of Common Stock
(including fractions of a share) into which each such share of Preferred Stock
held by such holder could be converted on the date for determination of
stockholders entitled to vote at the meeting or on the date of any written
consent.

                  (b)      Except as contemplated by the Rights Agreement, the
Board of Directors shall not delegate any of its powers or duties to any
committee of the Board of Directors without the consent of all of the Preferred
Stock Directors then in office.

                                      -24-


<PAGE>

                  (c)      In addition to any other vote required by law or by
this Certificate of Incorporation, the Corporation shall not amend this
Certificate of Incorporation, whether by merger, consolidation or otherwise, so
as to amend, alter or repeal the powers, preferences or special rights of the
Senior Preferred Stock in a manner that affects them adversely, without the
written consent or affirmative vote of the holders of a majority of the then
outstanding shares of Senior Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a class.

                  (d)      In addition to any other vote required by law or by
this Certificate of Incorporation, the Corporation shall not amend this
Certificate of Incorporation, whether by merger, consolidation or otherwise, so
as to amend, alter or repeal the powers, preferences or special rights of the
Series C Preferred Stock in a manner that affects them adversely, without the
written consent or affirmative vote of the holders of a majority of the then
outstanding shares of Series C Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a class.

                  (e)      In addition to any other vote required by law or by
this Certificate of Incorporation, the Corporation shall not amend this
Certificate of Incorporation, whether by merger, consolidation or otherwise, so
as to amend, alter or repeal the powers, preferences or special rights of the
Series D Preferred Stock in a manner that affects them adversely, without the
written consent or affirmative vote of the holders of a majority of the then
outstanding shares of Series D Preferred Stock, given in writing or by vote at a
meeting, consenting or voting (as the case may be) separately as a class.

                  (f)      At all times during which the number of outstanding
stares of Series A Preferred Stock equals or exceeds 1,000,000 (such minimum
number of shares to be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event), the holders of the outstanding shares of Series A
Preferred Stock shall have the exclusive right, separately from the Common Stock
and the other series of Preferred Stock, to elect two directors of the
Corporation. Any such director is sometimes hereinafter referred to as a "SERIES
A PREFERRED STOCK DIRECTOR." At all times during which the number of outstanding
shares of Series B Preferred Stock equals or exceeds 1,000,000 (such minimum
number of shares to be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event), the holders of the outstanding shares of Series B
Preferred Stock shall have the exclusive right, separately from the Common Stock
and the other series of Preferred Stock, to elect one director of the
Corporation. Such director is sometimes hereinafter referred to as a "SERIES B
PREFERRED STOCK DIRECTOR." At all times during which the number of outstanding
shares of Senior Preferred Stock equals or exceeds 2,000,000 (such minimum
number of shares to be subject to equitable adjustment whenever there shall
occur a stock dividend, stock split, combination of shares, reclassification or
other similar event), the holders of the outstanding shares of Senior Preferred
Stock, voting together as a single class, shall have the exclusive right,
separately from the Common Stock, to elect one director of the Corporation. Such
director is sometimes hereinafter referred to as a "SERIES A/B PREFERRED STOCK
DIRECTOR" and each of the Series A Preferred Stock Directors, the Series B
Preferred Stock Director and the Series A/B Director is sometimes hereinafter
referred to as a "PREFERRED STOCK DIRECTOR." Each Preferred Stock Director shall
be elected by the vote or written consent of the holders of a plurality in

                                      -25-


<PAGE>

voting power of the series of Senior Preferred Stock entitled to elect such
Preferred Stock Director. If a Preferred Stock Director shall cease to serve as
a director for any reason, another director elected by the holders of the series
of Senior Preferred Stock entitled to elect such Preferred Stock Director shall
replace such Director. Any Preferred Stock Director may be removed, with or
without cease, and a replacement Preferred Stock Director may be elected in his
stead, at any time by the affirmative vote at a meeting duly called for the
purpose, or by written consent, of the holders of a plurality in voting power of
the outstanding series of Senior Preferred Stock entitled to elect such
director.

                  (g)      At all times during which shares of Common Stock
remain outstanding, the holders of the outstanding shares of Common Stock shall
have the exclusive right, separately from the Preferred Stock, to elect two
directors of the Corporation (the "COMMON STOCK DIRECTORS"). Each Common Stock
Director shall be elected by the vote or written consent of the holders of a
plurality in voting power of the outstanding Common Stock. If a Common Stock
Director shall cease to serve as a director for any reason, another director
elected by the holders of the Common Stock shall replace such director. Any
Common Stock Director may be removed, with or without cause, and a replacement
Common Stock Director maybe elected in his stead, at any time by the affirmative
vote at a meeting duly called for the purpose, or by written consent, of the
holders of a plurality in voting power of the outstanding Common Stock.

                  (h)      All other directors of the Corporation shall be
elected by the holders of the Common Stock and Preferred Stock voting together
as a single class, with the holders of Preferred Stock to have that number of
votes as is determined in accordance with Section 4(a)(ii).

                  (i)      In addition to any rights which maybe available under
the Corporation's By-Laws or otherwise under law, the holders of not less than
twenty percent (20%) in voting power of the outstanding Senior Preferred Stock
shall be entitled to call meetings of the stockholders of the Corporation.
Within five (5) business days after written application by the holders of not
less than twenty percent (20%) in voting power of the outstanding Senior
Preferred Stock, the President or Secretary, or such other officer of the
Corporation as may be authorized in the By-Laws of the Corporation to give
notice of meetings of stockholders of the Corporation, shall notify each
stockholder of the Corporation entitled to such notice of the date, time, place
and purpose of such meeting.

         Section 5. Dividends.

                  (a)      Dividends may be declared and paid on Common Stock
and Preferred Stock from funds lawfully available therefor as and when
determined by the Board of Directors of the Corporation.

                  (b)      No dividends shall be declared or paid on the Common
Stock or Preferred Stock except as set forth in this Section 5.

         Section 6. Redemption.

                                      -26-


<PAGE>

                  (a)      At the written election of holders of at least 66
2/3% in voting power of the outstanding shares of Senior Preferred Stock made at
any time on or after July 25, 2007 (the "REDEMPTION ELECTION"), the Corporation
shall be required to redeem all, but not less than all, of the outstanding
shares of Senior Preferred Stock in three equal annual installments, upon the
teams set forth in this Section 6. The first installment of such redemption (the
"FIRST REDEMPTION DATE") shall occur on a date specified in the Redemption
Election, which shall be not less than ninety (90) days after the date of the
Redemption Election, and the second and third installments of such redemption
shall occur on the first and second anniversaries, respectively, of the First
Redemption Date. The Corporation shall redeem one-third of the outstanding
shares of Senior Preferred Stock held by each holder on the First Redemption
Date, one half of the outstanding shares of Senior Preferred Stock then held by
each holder on the first anniversary thereof and the remaining shares on the
second anniversary thereof. On each such redemption date, the holders shall
surrender the certificate or certificates for the shares to be redeemed duly
endorsed for transfer or with duly executed stock transfer powers sufficient to
permit transfer attached, at the offices of the Corporation or of any transfer
agent for the Senior Preferred Stock. The Corporation shall, as soon as
practicable thereafter, issue and deliver to each holder a certificate or
certificates for the balance of the shares not being redeemed. The redemption
price of each share of Series A Preferred Stock shall be equal to (1) $1.00 (as
adjusted for any stock dividend, stock split, combination of shares,
reclassification or other similar event with respect to such Senior Preferred
Stock) plus all dividends declared but unpaid on such share on the applicable
redemption date (the "SERIES A REDEMPTION AMOUNT") plus (ii) an additional
amount computed like interest payable on the Series A Redemption Amount at the
rate equal to simple interest of ten percent (10%) per annum from the date of
issuance of such share of Senior Preferred Stock. The redemption price of each
share of Series B Preferred Stock shall be equal to (1) $2.50 (as adjusted for
any stock dividend, stock split, combination of shares, reclassification or
other similar event with respect to such Senior Preferred Stock) plus all
dividends declared but unpaid on such share opt the applicable redemption date
(the "SERIES B REDEMPTION AMOUNT," each of the Series A Redemption Amount and
the Series B Redemption Amount being sometimes hereinafter referred to as a
"REDEMPTION AMOUNT") plus (ii) an additional amount computed like interest
payable on the Series B Redemption Amount at the rate equal to simple interest
often percent (10%) per annum from the date of issuance of such share of Senior
Preferred Stock.

                  (b)      Notice of redemption shall be sent by first class
mail, postage prepaid, to each holder of record of the Senior Preferred Stock,
not less than thirty days nor more than sixty days prior to the First Redemption
Date, at the address of such holder as it appears on the books of the
Corporation. Such notice shall set forth (i) the First Redemption Date, the
dates of the second and third installments of such redemption, and the place of
redemption, and (ii) the number of shares to be redeemed on each date of
redemption and the redemption price calculated in accordance with Section 6(a)
above, on each such date. The Corporation shall be obligated to redeem the
Senior Preferred Stock on the dates and in the amounts set forth in the notice;
provided; however, that any holder of Senior Preferred Stock who is not party to
a Redemption Election may convert any or all of the shares owned by such holder
into Common Stock in accordance with Section 2(d) at any time prior to the date
of redemption of such shares. The Corporation, if advised before the close of
business on the relevant redemption date by written notice from any holder of
record of Senior Preferred Stock to be redeemed, shall credit against the number
of shares of Senior Preferred Stock required to be redeemed from such holder,
and

                                      -27-


<PAGE>

shall not redeem, the number of shares of Senior Preferred Stock which shall
have been converted by such holder on or before such date and which shall not
previously have been credited against any redemption.

                  (c)      If, on or before a redemption date, the funds
necessary for such redemption shall have been set aside by the Corporation and
deposited with a bank or trust company, in trust for the pro rata benefit of the
holders of the Senior Preferred Stock that has been called for redemption, then,
notwithstanding that any certificates for shares that have been called for
redemption shall not have been surrendered for cancellation, the shares
represented thereby shall no longer be deemed outstanding from and after such
redemption date, and all rights of holders of such shares so called for
redemption shall forthwith, after such redemption date, cease and terminate with
respect to such shares, excepting only the right to receive the redemption funds
therefor to which they are entitled. Any interest accrued on funds so deposited
and unclaimed by stockholders entitled thereto shall be paid to such
stockholders at the time their respective shares are redeemed or to the
Corporation at the time unclaimed amounts are paid to it. In case the holders of
Senior Preferred Stock which shall have been called for redemption shall not,
within one year after the final redemption date, claim the amounts so deposited
with respect to the redemption thereof, any such bank or trust company shall,
upon demand, pay over to the Corporation such unclaimed amounts and thereupon
such bank or trust company shall be relieved of all responsibility in respect
thereof to such holder and such holder shall look only to the Corporation for
the payment thereof. Any funds so deposited with a bank or trust company which
shall not be required for such redemption by reason of the exercise subsequent
to the date of such deposit of the right of conversion of any shares or
otherwise shall be returned to the Corporation forthwith.

                  (d)      If the Corporation for any reason fails to redeem any
of the shares of Senior Preferred Stock in accordance with Section 6(a) on or
prior to the redemption dates determined in accordance with this Section 6,
then, the Corporation shall become obligated to pay, in addition to the
redemption price specified in Section 6(a), interest on the unpaid balance of
such price, which shall, accrue at a rate equal to the lesser of (i) one percent
(1%) per month or (ii) the maximum interest rate allowable under applicable law,
until such price is paid in full.

                  (e)      If the funds of the Corporation legally available for
redemption of shares of Senior Preferred Stock on a redemption date are
insufficient to redeem the total number of shares of Senior Preferred Stock
submitted for redemption, those funds which are legally available will be used
to redeem the maximum possible number of whole shares ratably among the holders
of such shares based on the total Redemption Amounts owed to such holders. The
shares of Senior Preferred Stock not redeemed shall remain outstanding and
entitled to all rights and preferences provided herein. At any time thereafter
when additional funds of the Corporation are legally available for the
redemption of such shares of Senior Preferred Stock, such funds will be used, at
the end of the next succeeding fiscal quarter, to redeem the balance of such
shares, or such portion thereof for which funds are then legally available.

         Section 7. No Reissuance of Preferred Stock. No shares of Preferred
Stock acquired by the Corporation by reason of redemption, purchase, conversion
or otherwise shall be reissued, and all such shares shall be canceled, retired
and eliminated from the shares which the Corporation shall be authorized to
issue.

                                      -28-


<PAGE>

         Section 8. Residual Rights. All rights accruing to the outstanding
shares of the Corporation not expressly provided for to the contrary herein
shall be vested in the Common Stock.

         Section 9. Notices. All notices required or permitted to be sent
pursuant to this Article FOURTH shall be deemed sufficient if contained in a
written instrument and delivered in person or duly sent by first-class mail
postage prepaid (other than in the case of notices to or from many non U.S.
resident) or by fax or DHL, Federal Express or other recognized express
international courier service, addressed to the intended recipient at the
recipient's address as it appears on the books of the Corporation.

         3. Pursuant to Section 228(a) of the General Corporation Law of the
State of Delaware, the holders of outstanding shares of the Corporation having
no less than the minimum number of votes that would be necessary to authorize or
take such actions at a meeting at which all shares entitled to vote thereon were
present and voted, consented to the adoption of the aforesaid amendments without
a meeting, without a vote and without prior notice and that written notice of
the taking of such actions has been given in accordance with Section 228(e) of
the General Corporation Law of the State of Delaware.

         4. The amendment of the certificate of Incorporation herein certified
has been duly adopted in accordance with the provisions of Section 242 of the
General Corporation Law of the State of Delaware.

                                      -29-


<PAGE>

         Signed this 11th day of March, 2004.

                              ALNYLAM PHARMACEUTICALS, INC.


                              By: /s/ Vincent J. Miles
                                  -------------------------------
                              Name: Vincent J. Miles
                              Title: Senior Vice President, Business Development

                                      -30-

<PAGE>
                                                                   

                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION
                                       OF
                          ALNYLAM PHARMACEUTICALS, INC.

                         Pursuant to Section 242 of the
                General Corporation Law of the State of Delaware


      Alnylam Pharmaceuticals, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Laws of
the State of Delaware, does hereby certify as follows:

      At a meeting of the Board of Directors of the Corporation a resolution was
duly adopted, pursuant to Section 242 of the General Corporation Law of the
State of Delaware, setting forth amendments to the Certificate of Incorporation
of the Corporation and declaring said amendments to be advisable. The
stockholders of the Corporation duly adopted said amendments by written consent
in accordance with Sections 228 and 242 of the General Corporation Law of the
State of Delaware. Said amendments have been duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware. The
resolution setting forth the amendments is as follows:

      RESOLVED: That the Certificate of Incorporation of the Corporation, as
amended (the "Certificate of Incorporation") be further amended as follows:

      (1)   The first paragraph of Article FOURTH of the Certificate of
            Incorporation is deleted in its entirety and the following two new
            paragraphs are inserted in lieu thereof:

                  "That, effective upon the filing of this Certificate of
            Amendment of Certificate of Incorporation (the "Effective Time"), a
            one-for-1.9 reverse stock split of the Corporation's Common Stock
            shall become effective, pursuant to which each 1.9 shares of Common
            Stock outstanding and held of record by each stockholder of the
            Corporation (including treasury shares) immediately prior to the
            Effective Time shall be reclassified and combined into one share of
            Common Stock automatically and without any action by the holder
            thereof upon the Effective Time and shall represent one share of
            Common Stock from and after the Effective Time. No fractional shares
            of Common Stock shall be issued as a result of such reclassification
            and combination. In lieu of any fractional shares to which the
            stockholder would otherwise be entitled, the Corporation shall pay
            cash equal to such fraction multiplied by the then fair market value
            of the Common Stock as determined by the Board of Directors of the
            Corporation.

                  The total number of shares of all classes of stock which the
            Corporation has authority to issue is 152,943,580 shares, consisting
            of 125,000,000 shares of common stock, par value $.0001 per share
            (the "Common Stock"); and

<PAGE>
            27,943,580 shares of preferred stock, $0.0001 par value per share,
            of which 3,000,010 shares have been designated as Series A
            Convertible Preferred Stock, par value $.0001 per share (the "Series
            A Preferred Stock"), 16,672,078 shares have been designated as
            Series B Convertible Preferred Stock, $.0001 par value per share
            (the "Series B Preferred Stock"), 1,604,825 shares have been
            designated as Series C Convertible Preferred Stock, $.0001 par value
            per share (the "Series C Preferred Stock"), and 1,666,667 shares
            have been designated as Series D Convertible Preferred Stock, $.0001
            par value per share (the "Series D Preferred Stock"), and 5,000,000
            shares, as of the date hereof, are undesignated.

                  The Series A Preferred Stock and Series B Preferred Stock are
            sometimes hereinafter collectively referred to as the "Senior
            Preferred Stock." The Senior Preferred Stock, the Series C Preferred
            Stock and the Series D Preferred Stock are sometimes hereinafter
            collectively referred to as the "Preferred Stock." The undesignated
            Preferred Stock is hereinafter referred to as "Undesignated
            Preferred Stock."

<PAGE>
         IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President and Chief Executive Officer on this 7th
day of May, 2004.

                                  ALNYLAM PHARMACEUTICALS, INC.



                                  By: /s/ John M. Maraganore
                                     ------------------------------------------
                                  John M. Maraganore
                                  President and Chief Executive Officer

<PAGE>
                            CERTIFICATE OF AMENDMENT
                                       OF
                          CERTIFICATE OF INCORPORATION
                                       OF
                          ALNYLAM PHARMACEUTICALS, INC.

                         Pursuant to Section 242 of the
                General Corporation Law of the State of Delaware

                            ------------------------

     Alnylam Pharmaceuticals, Inc. (hereinafter called the "Corporation"),
organized and existing under and by virtue of the General Corporation Laws of
the State of Delaware, does hereby certify as follows:

     At a meeting of the Board of Directors of the Corporation a resolution was
duly adopted, pursuant to Section 242 of the General Corporation Law of the
State of Delaware, setting forth amendments to the Certificate of Incorporation
of the Corporation and declaring said amendments to be advisable. The
stockholders of the Corporation duly adopted said amendments by written consent
in accordance with Sections 228 and 242 of the General Corporation Law of the
State of Delaware. Said amendments have been duly adopted in accordance with
Section 242 of the General Corporation Law of the State of Delaware. The
resolution setting forth the amendments is as follows:

     RESOLVED: That the Certificate of Incorporation of the Corporation, as
amended (the "Certificate of Incorporation") be further amended as follows:


     (1)  Section 2(c) of Article FOURTH of the Certificate of Incorporation is
          hereby amended by adding the following at the end of such Section 2(c)
          of Article FOURTH:

               "All certificates evidencing shares of Preferred Stock which are
          required to be surrendered for conversion in accordance with the
          provisions of this Section 2(c) shall be, from and after the date such
          certificates are so required to be surrendered, deemed to have been
          retired and canceled and the shares of Preferred Stock presented
          thereby converted into Common Stock for all purposes, notwithstanding
          the failure of the holder or holders thereof to surrender such
          certificates on or prior to such date. Upon the closing of the sale of
          shares of Common Stock in a Qualified Public Offering, the number of
          authorized shares of Series A Preferred Stock, Series B Preferred
          Stock, Series C Preferred Stock and Series D Preferred Stock shall be
          automatically reduced by the number of shares of Series A Preferred
          Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
          Preferred Stock that had been designated as Series A Preferred Stock,
          Series B Preferred Stock, Series C Preferred Stock and Series D
          Preferred Stock and all references to the Series A Preferred Stock,
          Series B Preferred Stock, Series C Preferred Stock and Series D
          Preferred Stock in this Certificate of Incorporation shall be deleted
          and of no further force and effect."


<PAGE>

     (2)  Article SEVENTH of the Certificate of Incorporation is hereby amended
          by deleting the last sentence thereof and the following is inserted in
          lieu thereof:

               "No amendment to or repeal of this provision shall apply to or
          have any effect on the liability or alleged liability of any director
          of the Corporation for or with respect to any acts or omissions of
          such director occurring prior to such amendment or repeal."

     (3)  Article EIGHTH of the Restated Certificate is deleted in its entirety
          and the following new Article EIGHTH is inserted in lieu thereof:

               "EIGHTH: The Corporation shall provide indemnification as
          follows:

                    Section 1. Actions, Suits and Proceedings Other than by or
          in the Right of the Corporation. The Corporation shall indemnify each
          person who was or is a party or threatened to be made a party to any
          threatened, pending or completed action, suit or proceeding, whether
          civil, criminal, administrative or investigative (other than an action
          by or in the right of the Corporation) by reason of the fact that he
          or she is or was, or has agreed to become, a director or officer of
          the Corporation, or is or was serving, or has agreed to serve, at the
          request of the Corporation, as a director, officer, partner, employee
          or trustee of, or in a similar capacity with, another corporation,
          partnership, joint venture, trust or other enterprise (including any
          employee benefit plan) (all such persons being referred to hereafter
          as an "Indemnitee"), or by reason of any action alleged to have been
          taken or omitted in such capacity, against all expenses (including
          attorneys' fees), judgments, fines and amounts paid in settlement
          actually and reasonably incurred by or on behalf of Indemnitee in
          connection with such action, suit or proceeding and any appeal
          therefrom, if Indemnitee acted in good faith and in a manner which
          Indemnitee reasonably believed to be in, or not opposed to, the best
          interests of the Corporation, and, with respect to any criminal action
          or proceeding, had no reasonable cause to believe his or her conduct
          was unlawful. The termination of any action, suit or proceeding by
          judgment, order, settlement, conviction or upon a plea of nolo
          contendere or its equivalent, shall not, of itself, create a
          presumption that Indemnitee did not act in good faith and in a manner
          which Indemnitee reasonably believed to be in, or not opposed to, the
          best interests of the Corporation, and, with respect to any criminal
          action or proceeding, had reasonable cause to believe that his or her
          conduct was unlawful.

                    Section 2. Actions or Suits by or in the Right of the
          Corporation. The Corporation shall indemnify any Indemnitee who was or
          is a party to or threatened to be made a party to any threatened,
          pending or completed action or suit by or in the right of the
          Corporation to procure a judgment in its favor by reason of the fact
          that Indemnitee is or was, or has agreed to become, a director or
          officer of the Corporation, or is or was serving, or has agreed to
          serve, at the request of the Corporation, as a director, officer,
          partner, employee or trustee of, or in a similar capacity with,
          another corporation, partnership, joint venture, trust or other
          enterprise (including any employee benefit plan), or by 


                                      -2-

<PAGE>

          reason of any action alleged to have been taken or omitted in such
          capacity, against all expenses (including attorneys' fees) and, to the
          extent permitted by law, amounts paid in settlement actually and
          reasonably incurred by or on behalf of Indemnitee in connection with
          such action, suit or proceeding and any appeal therefrom, if
          Indemnitee acted in good faith and in a manner which Indemnitee
          reasonably believed to be in, or not opposed to, the best interests of
          the Corporation, except that no indemnification shall be made under
          this Section 2 of Article EIGHTH in respect of any claim, issue or
          matter as to which Indemnitee shall have been adjudged to be liable to
          the Corporation, unless, and only to the extent, that the Court of
          Chancery of Delaware shall determine upon application that, despite
          the adjudication of such liability but in view of all the
          circumstances of the case, Indemnitee is fairly and reasonably
          entitled to indemnity for such expenses (including attorneys' fees)
          which the Court of Chancery of Delaware shall deem proper.

                    Section 3. Indemnification for Expenses of Successful Party.
          Notwithstanding any other provisions of this Article EIGHTH, to the
          extent that an Indemnitee has been successful, on the merits or
          otherwise, in defense of any action, suit or proceeding referred to in
          Sections 1 and 2 of this Article EIGHTH, or in defense of any claim,
          issue or matter therein, or on appeal from any such action, suit or
          proceeding, Indemnitee shall be indemnified against all expenses
          (including attorneys' fees) actually and reasonably incurred by or on
          behalf of Indemnitee in connection therewith. Without limiting the
          foregoing, if any action, suit or proceeding is disposed of, on the
          merits or otherwise (including a disposition without prejudice),
          without (i) the disposition being adverse to Indemnitee, (ii) an
          adjudication that Indemnitee was liable to the Corporation, (iii) a
          please of guilty or nolo contendere by Indemnitee, (iv) an
          adjudication that Indemnitee did not act in good faith and in a manner
          he reasonably believed to be in or not opposed to the best interests
          of the Corporation, and (v) with respect to any criminal proceeding,
          an adjudication that Indemnitee had reasonable cause to believe his
          conduct was unlawful, Indemnitee shall be considered for the purposes
          hereof to have been wholly successful with respect thereto.

                    Section 4. Notification and Defense of Claim. As a condition
          precedent to an Indemnitee's right to be indemnified, such Indemnitee
          must notify the Corporation in writing as soon as practicable of any
          action, suit, proceeding or investigation involving such Indemnitee
          for which indemnity will or could be sought. With respect to any
          action, suit, proceeding or investigation of which the Corporation is
          so notified, the Corporation will be entitled to participate therein
          at its own expense and/or to assume the defense thereof at its own
          expense, with legal counsel reasonably acceptable to Indemnitee. After
          notice from the Corporation to Indemnitee of its election so to assume
          such defense, the Corporation shall not be liable to Indemnitee for
          any legal or other expenses subsequently incurred by Indemnitee in
          connection with such action, suit, proceeding or investigation, other
          than as provided below in this Section 4 of Article EIGHTH. Indemnitee
          shall have the right to employ his or her own counsel in connection
          with such action, suit, proceeding or investigation, but the 


                                      -3-

<PAGE>

          fees and expenses of such counsel incurred after notice from the
          Corporation of its assumption of the defense thereof shall be at the
          expense of Indemnitee unless (i) the employment of counsel by
          Indemnitee has been authorized by the Corporation, (ii) counsel to
          Indemnitee shall have reasonably concluded that there may be a
          conflict of interest or position on any significant issue between the
          Corporation and Indemnitee in the conduct of the defense of such
          action, suit, proceeding or investigation or (iii) the Corporation
          shall not in fact have employed counsel to assume the defense of such
          action, suit, proceeding or investigation, in each of which cases the
          fees and expenses of counsel for Indemnitee shall be at the expense of
          the Corporation, except as otherwise expressly provided by this
          Article. The Corporation shall not be entitled, without the consent of
          Indemnitee, to assume the defense of any claim brought by or in the
          right of the Corporation or as to which counsel for Indemnitee shall
          have reasonably made the conclusion provided for in clause (ii) above.
          The Corporation shall not be required to indemnify Indemnitee under
          this Article EIGHTH for any amounts paid in settlement of any action,
          suit, proceeding or investigation effected without its written
          consent. The Corporation shall not settle any action, suit, proceeding
          or investigation in any manner which would impose any penalty or
          limitation on Indemnitee without Indemnitee's written consent. Neither
          the Corporation nor Indemnitee will unreasonably withhold or delay its
          consent to any proposed settlement.

                    Section 5. Advance of Expenses. Subject to the provisions of
          Section 6 of this Article EIGHTH, in the event that the Corporation
          does not assume the defense pursuant to Section 4 of this Article
          EIGHTH of any action, suit, proceeding or investigation of which the
          Corporation receives notice under this Article, any expenses
          (including attorneys' fees) incurred by or on behalf of Indemnitee in
          defending an action, suit, proceeding or investigation or any appeal
          therefrom shall be paid by the Corporation in advance of the final
          disposition of such matter; provided, however, that the payment of
          such expenses incurred by or on behalf of Indemnitee in advance of the
          final disposition of such matter shall be made only upon receipt of an
          undertaking by or on behalf of Indemnitee to repay all amounts so
          advanced in the event that it shall ultimately be determined that
          Indemnitee is not entitled to be indemnified by the Corporation as
          authorized in this Article; and further provided that no such
          advancement of expenses shall be made under this Article EIGHTH if it
          is determined (in the manner described in Section 6 of this Article
          EIGHTH) that (i) Indemnitee did not act in good faith and in a manner
          he reasonably believed to be in, or not opposed to, the best interests
          of the Corporation, or (ii) with respect to any criminal action or
          proceeding, Indemnitee had reasonable cause to believe his conduct was
          unlawful. Such undertaking shall be accepted without reference to the
          financial ability of Indemnitee to make such repayment.

                    Section 6. Procedure for Indemnification. In order to obtain
          indemnification or advancement of expenses pursuant to Sections 1, 2,
          3 or 5 of this Article EIGHTH, an Indemnitee shall submit to the
          Corporation a written request. Any such advancement of expenses shall
          be made promptly, and in any 


                                      -4-

<PAGE>

          event within 30 days after receipt by the Corporation of the written
          request of Indemnitee, unless the Corporation determines within such
          30-day period that Indemnitee did not meet the applicable standard of
          conduct set forth in Sections 1, 2 or 5 of this Article EIGHTH, as the
          case may be. Any such indemnification, unless ordered by a court,
          shall be made with respect to requests under Sections 1 or 2 of this
          Article EIGHTH only as authorized in the specific case upon a
          determination by the Corporation that the indemnification of
          Indemnitee is proper because Indemnitee has met the applicable
          standard of conduct set forth in Sections 1 or 2 of this Article
          EIGHTH, as the case may be. Such determination shall be made in each
          instance (a) by a majority vote of the directors of the Corporation
          consisting of persons who are not at that time parties to the action,
          suit or proceeding in question ("disinterested directors"), whether or
          not a quorum, (b) by a committee of disinterested directors designated
          by majority vote of disinterested directors, whether or not a quorum,
          (c) if there are no disinterested directors, or if the disinterested
          directors so direct, by independent legal counsel (who may, to the
          extent permitted by law, be regular legal counsel to the Corporation)
          in a written opinion, or (d) by the stockholders of the Corporation.

                    Section 7. Remedies. The right to indemnification or
          advancement of expenses as granted by this Article EIGHTH shall be
          enforceable by Indemnitee in any court of competent jurisdiction.
          Neither the failure of the Corporation to have made a determination
          prior to the commencement of such action that indemnification is
          proper in the circumstances because Indemnitee has met the applicable
          standard of conduct, nor an actual determination by the Corporation
          pursuant to Section 6 of this Article EIGHTH that Indemnitee has not
          met such applicable standard of conduct, shall be a defense to the
          action or create a presumption that Indemnitee has not met the
          applicable standard of conduct. Indemnitee's expenses (including
          attorneys' fees) reasonably incurred in connection with successfully
          establishing Indemnitee's right to indemnification, in whole or in
          part, in any such proceeding shall also be indemnified by the
          Corporation.

                    Section 8. Limitations. Notwithstanding anything to the
          contrary in this Article, except as set forth in Section 7 of this
          Article EIGHTH, the Corporation shall not indemnify an Indemnitee
          pursuant to this Article IX in connection with a proceeding (or part
          thereof) initiated by such Indemnitee unless the initiation thereof
          was approved by the Board of Directors of the Corporation.
          Notwithstanding anything to the contrary in this Article, the
          Corporation shall not indemnify an Indemnitee to the extent such
          Indemnitee is reimbursed from the proceeds of insurance, and in the
          event the Corporation makes any indemnification payments to an
          Indemnitee and such Indemnitee is subsequently reimbursed from the
          proceeds of insurance, such Indemnitee shall promptly refund
          indemnification payments to the Corporation to the extent of such
          insurance reimbursement.


                                      -5-

<PAGE>

                    Section 9. Subsequent Amendment. No amendment, termination
          or repeal of this Article EIGHTH or of the relevant provisions of the
          General Corporation Law of Delaware or any other applicable laws shall
          affect or diminish in any way the rights of any Indemnitee to
          indemnification under the provisions hereof with respect to any
          action, suit, proceeding or investigation arising out of or relating
          to any actions, transactions or facts occurring prior to the final
          adoption of such amendment, termination or repeal.

                    Section 10. Other Rights. The indemnification and
          advancement of expenses provided by this Article EIGHTH shall not be
          deemed exclusive of any other rights to which an Indemnitee seeking
          indemnification or advancement of expenses may be entitled under any
          law (common or statutory), agreement or vote of stockholders or
          disinterested directors or otherwise, both as to action in
          Indemnitee's official capacity and as to action in any other capacity
          while holding office for the Corporation, and shall continue as to an
          Indemnitee who has ceased to be a director or officer, and shall inure
          to the benefit of the estate, heirs, executors and administrators of
          Indemnitee. Nothing contained in this Article EIGHTH shall be deemed
          to prohibit, and the Corporation is specifically authorized to enter
          into, agreements with officers and directors providing indemnification
          rights and procedures different from those set forth in this Article
          EIGHTH. In addition, the Corporation may, to the extent authorized
          from time to time by its Board of Directors, grant indemnification
          rights to other employees or agents of the Corporation or other
          persons serving the Corporation and such rights may be equivalent to,
          or greater or less than, those set forth in this Article EIGHTH.

                    Section 11. Partial Indemnification. If an Indemnitee is
          entitled under any provision of this Article to indemnification by the
          Corporation for some or a portion of the expenses (including
          attorneys' fees), judgments, fines or amounts paid in settlement
          actually and reasonably incurred by or on behalf of Indemnitee in
          connection with any action, suit, proceeding or investigation and any
          appeal therefrom but not, however, for the total amount thereof, the
          Corporation shall nevertheless indemnify Indemnitee for the portion of
          such expenses (including attorneys' fees), judgments, fines or amounts
          paid in settlement to which Indemnitee is entitled.

                    Section 12. Insurance. The Corporation may purchase and
          maintain insurance, at its expense, to protect itself and any
          director, officer, employee or agent of the Corporation or another
          corporation, partnership, joint venture, trust or other enterprise
          (including any employee benefit plan) against any expense, liability
          or loss incurred by him in any such capacity, or arising out of his
          status as such, whether or not the Corporation would have the power to
          indemnify such person against such expense, liability or loss under
          the General Corporation Law of Delaware.

                    Section 13. Savings Clause. If this Article or any portion
          hereof shall be invalidated on any ground by any court of competent
          jurisdiction, then 


                                      -6-

<PAGE>

          the Corporation shall nevertheless indemnify each Indemnitee as to any
          expenses (including attorneys' fees), judgments, fines and amounts
          paid in settlement in connection with any action, suit, proceeding or
          investigation, whether civil, criminal or administrative, including an
          action by or in the right of the Corporation, to the fullest extent
          permitted by any applicable portion of this Article that shall not
          have been invalidated and to the fullest extent permitted by
          applicable law.

                    Section 14. Definitions. Terms used herein and defined in
          Section 145(h) and Section 145(i) of the General Corporation Law of
          Delaware shall have the respective meanings assigned to such terms in
          such Section 145(h) and Section 145(i)."

     (4)  The following new Article TENTH is hereby added to the Certificate of
          Incorporation:

               "TENTH: Upon the closing of a Qualified Public Offering, the
          following provisions shall apply:

                    Section 1. Number of Directors; Election of Directors.
          Subject to the rights of holders of any series of Preferred Stock to
          elect directors, the number of directors of the Corporation shall be
          established by the Board of Directors. Election of directors need not
          be by written ballot, except as and to the extent provided in the
          Bylaws of the Corporation.

                    Section 2. Classes of Directors. Subject to the rights of
          holders of any series of Preferred Stock to elect directors, the Board
          of Directors shall be and is divided into three classes: Class I,
          Class II and Class III.

                    Section 3. Terms of Office. Subject to the rights of holders
          of any series of Preferred Stock to elect directors, each director
          shall serve for a term ending on the date of the third annual meeting
          following the annual meeting at which such director was elected;
          provided, that each director initially appointed to Class I shall
          serve for a term expiring at the Corporation's annual meeting of
          stockholders held in 2005; each director initially appointed to Class
          II shall serve for a term expiring at the Corporation's annual meeting
          of stockholders held in 2006; and each director initially appointed to
          Class III shall serve for a term expiring at the Corporation's annual
          meeting of stockholders held in 2007; provided further, that the term
          of each director shall continue until the election and qualification
          of his successor and be subject to his earlier death, resignation or
          removal.

                    Section 4. Quorum. The greater of (a) a majority of the
          directors at any time in office and (b) one-third of the number of
          directors fixed pursuant to Section 2 of this Article TENTH shall
          constitute a quorum. If at any meeting of the Board of Directors there
          shall be less than such a quorum, a majority of the directors present
          may adjourn the meeting from time to time 


                                      -7-

<PAGE>

          without further notice other than announcement at the meeting, until a
          quorum shall be present.

                    Section 5. Action at Meeting. Every act or decision done or
          made by a majority of the directors present at a meeting duly held at
          which a quorum is present shall be regarded as the act of the Board of
          Directors unless a greater number is required by law or by this
          Certificate of Incorporation.

                    Section 6. Removal. Subject to the rights of holders of any
          series of Preferred Stock, directors of the Corporation may be removed
          only for cause by the affirmative vote of the holders of at least
          seventy-five percent (75%) of the votes which all the stockholders
          would be entitled to cast in any annual election of directors or class
          of directors.

                    Section 7. Vacancies. Subject to the rights of holders of
          any series of Preferred Stock, any vacancy or newly created
          directorships in the Board of Directors, however occurring, shall be
          filled only by vote of a majority of the directors then in office,
          although less than a quorum, or by a sole remaining director and shall
          not be filled by the stockholders. A director elected to fill a
          vacancy shall be elected to hold office until the next election of the
          class for which such director shall have been chosen, subject to the
          election and qualification of a successor and to such director's
          earlier death, resignation or removal.

                    Section 8. Stockholder Nominations and Introduction of
          Business, Etc. Advance notice of stockholder nominations for election
          of directors and other business to be brought by stockholders before a
          meeting of stockholders shall be given in the manner provided by the
          Bylaws of the Corporation.

                    Section 9. Amendments to Article. Notwithstanding any other
          provisions of law, this Certificate of Incorporation or the Bylaws of
          the Corporation, and notwithstanding the fact that a lesser percentage
          may be specified by law, the affirmative vote of the holders of at
          least seventy-five percent (75%) of the votes which all the
          stockholders would be entitled to cast in any annual election of
          directors or class of directors shall be required to amend or repeal,
          or to adopt any provision inconsistent with, this Article TENTH."

     (5)  The following new Article ELEVENTH is hereby added to the Certificate
          of Incorporation:

               "ELEVENTH: (A) Upon the closing of a Qualified Public Offering,
          stockholders of the Corporation may not take any action by written
          consent in lieu of a meeting. Notwithstanding any other provisions of
          law, this Certificate of Incorporation or the Bylaws of the
          Corporation, and notwithstanding the fact that a lesser percentage may
          be specified by law, the affirmative vote of the holders of at least
          seventy-five percent (75%) of the votes which all the stockholders
          would 


                                      -8-

<PAGE>

          be entitled to cast in any annual election of directors or class of
          directors shall be required to amend or repeal, or to adopt any
          provision inconsistent with, this Section (A) of Article ELEVENTH.

                    (B) Special meetings of stockholders for any purpose or
          purposes may be called at any time by the Board of Directors, the
          Chairman of the Board or the President, but such special meetings may
          not be called by any other person or persons. Business transacted at
          any special meeting of stockholders shall be limited to matters
          relating to the purpose or purposes stated in the notice of meeting.
          Notwithstanding any other provision of law, this Certificate of
          Incorporation or the Bylaws of the Corporation, and notwithstanding
          the fact that a lesser percentage may be specified by law, the
          affirmative vote of the holders of at least seventy-five percent (75%)
          of the votes which all the stockholders would be entitled to cast in
          any annual election of directors or class of directors shall be
          required to amend or repeal, or to adopt any provision inconsistent
          with, this Section (B) of this Article ELEVENTH."

     (6)  The following new Article TWELFTH is hereby added to the Certificate
          of Incorporation:

               "TWELFTH: Undesignated Preferred Stock may be issued from time to
          time in one or more series, each of such series to have such terms as
          stated or expressed herein and in the resolution or resolutions
          providing for the issue of such series adopted by the Board of
          Directors of the Corporation as hereinafter provided. Any shares of
          Undesignated Preferred Stock that may be redeemed, purchased or
          acquired by the Corporation may be reissued except as otherwise
          provided by law.

               Authority is hereby expressly granted to the Board of Directors
          from time to time to issue the Undesignated Preferred Stock in one or
          more series, and in connection with the creation of any such series,
          by resolution or resolutions providing for the issuance of the shares
          thereof, to determine and fix the number of shares of such series and
          such voting powers, full or limited, or no voting powers, and such
          designations, preferences and relative participating, optional or
          other special rights, and qualifications, limitations or restrictions
          thereof, including without limitation thereof, dividend rights,
          conversion rights, redemption privileges and liquidation preferences,
          as shall be stated and expressed in such resolutions, all to the full
          extent now or hereafter permitted by the General Corporation Law of
          Delaware. Without limiting the generality of the foregoing, the
          resolutions providing for issuance of any series of Undesignated
          Preferred Stock may provide that such series shall be superior or rank
          equally or be junior to the Undesignated Preferred Stock of any other
          series to the extent permitted by law.

               The number of authorized shares of Undesignated Preferred Stock
          may be increased or decreased (but not below the number of shares then
          outstanding) by the affirmative vote of the holders of a majority of
          the stock of the Corporation entitled to vote, irrespective of the
          provisions of Section 242(b)(2) of the General Corporation Law of
          Delaware."


                                      -9-

<PAGE>

     IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to be signed by its President and Chief Executive Officer on this 10th
day of May, 2004.


                                       ALNYLAM PHARMACEUTICALS, INC.



                                       By: /s/ John M. Maraganore
                                          --------------------------------------
                                          John M. Maraganore
                                          President and Chief Executive Officer



                                      -10-


<PAGE>

                                                                   EXHIBIT 10.16

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                               DATED 18 JULY 2003

                       CANCER RESEARCH TECHNOLOGY LIMITED

                                     - and -

                          ALNYLAM PHARMACEUTICALS, INC

                          =============================

                                LICENCE AGREEMENT

                          =============================

                                  CONFIDENTIAL

                       CANCER RESEARCH TECHNOLOGY LIMITED
                                 Sardinia House
                                 Sardinia Street
                                 London WC2A 3NL


<PAGE>

THIS LICENCE AGREEMENT is made as of the 18th day of July 2003

BETWEEN:

(1)      CANCER RESEARCH TECHNOLOGY LIMITED a company registered in England
         (registered number 1626049) whose registered office is at Sardinia
         House, Sardinia Street 61, London WC2A 3NL ("CRT"); and

(2)      ALNYLAM PHARMACEUTICALS INC a Delaware company whose principal place of
         business is at 790 Memorial Drive, Cambridge, MA 02139 United States of
         America ("Alnylam")

WHEREAS:

(A)      Researchers at the University of Cambridge (some of whom were formerly
         in receipt of funding provided by the Lister Institute of Preventive
         Medicine) have developed techniques for performing RNA interference
         ("RNAi") in mammalian cells and embryos which are the subject of an
         international patent application entitled "inhibiting gene expression
         with dsRNA". The research was supported by funding provided by The
         Cancer
 Research Campaign ("CRC") and Cancer Research UK. The
         researchers and the University have assigned their right, title and
         interest in the foregoing patent application to Cancer Research
         Ventures Limited ("CRV") a wholly owned subsidiary of CRT, and CRV have
         assigned their right, title and interest to CRT.

(B)      CRT is the wholly owned subsidiary of Cancer Research UK and is
         responsible for the management and exploitation of the results derived
         from research funded by CRC and Cancer Research UK. Cancer Research UK
         (registered number 4325234) and registered charity (number 1089464) was
         formed as the successor charity to the Imperial Cancer Research Fund
         and CRC following the merger of their operations with effect from 4
         February 2002.

(C)      Alnylam have requested a licence under the technology described in the
         CRT Patent Rights (as defined below) permitting them to develop
         therapeutics and CRT has agreed to grant a licence to Alnylam on the
         following terms and conditions.

NOW IT IS HEREBY AGREED AS FOLLOWS:

1.       DEFINITIONS AND INTERPRETATION

1.1      In this Licence Agreement and in the Schedules to this Licence
         Agreement the following words and phrases shall have the following
         meanings unless the context requires otherwise:

         "Affiliate"                         means any company, partnership or
                                             other entity which directly or
                                             indirectly Controls, is Controlled
                                             by, or is under common Control
                                             with, any Party including as a
                                             subsidiary or holding company of
                                             any Party.


<PAGE>

                                      - 2 -

         "Blocking IP"                       any and all Patent Rights (other
                                             than that licensed under this
                                             Licence Agreement) which, if claims
                                             covering subject matter of such
                                             Patent Rights issue, would render
                                             the use, development, manufacture,
                                             sale, or other disposal of a
                                             Licensed Product unlawful in the
                                             absence of a licence to such Patent
                                             Rights from a Third Party.

         "Business Day"                      means a day other than a Saturday,
                                             Sunday, bank or other public
                                             holiday in England or the United
                                             States of America.

         "Cancer Research UK-Funded          means any academic researcher in
         Researcher"                         receipt of Cancer Research UK
                                             funding, whether an employee of
                                             Cancer Research UK or a university
                                             employee.

         "Clinical Trial"                    means a clinical trial conducted in
                                             accordance with recognised
                                             protocols approved by a Competent
                                             Authority including CTX clinical
                                             trials or their equivalents
                                             anywhere in the World.

         "Commencement Date"                 means the date first above written.

         "Competent Authority"               means any local or national agency,
                                             authority, department,
                                             inspectorate, minister, ministry
                                             official or public or statutory
                                             person (whether autonomous or not)
                                             of, or of any government of, any
                                             country having jurisdiction over
                                             this Licence Agreement or over any
                                             of the Parties or over the
                                             development or marketing of
                                             medicinal products including, but
                                             not limited to, the European
                                             Commission and the European Court
                                             of Justice.

         "Control"                           means the ownership of at least 50%
                                             of the issued share capital or the
                                             legal power to direct or cause the
                                             direction of the general management
                                             and policies of the Party in
                                             question.

         "CRT Patent Rights"                 means the patent applications
                                             referred to in Schedule 1 and all
                                             Patent Rights deriving priority
                                             from them and all Patent Rights
                                             deriving priority from such Patent
                                             Rights.

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 3 -

         "Field"                             means the development of RNAi
                                             therapeutic products for the
                                             treatment of human disease
                                             (including by means of gene
                                             therapy).

         "Force Majeure"                     means in relation to a Party or its
                                             Affiliate any event or
                                             circumstances which is beyond the
                                             reasonable control of that Party or
                                             its Affiliate which event that
                                             Party or its Affiliate could not
                                             reasonably be expected to have
                                             taken into account at the
                                             Commencement Date and which results
                                             in or causes the failure of that
                                             Party or its Affiliate to perform
                                             any or all of its obligations under
                                             this Licence Agreement including
                                             act of God, lightening, fire,
                                             storm, flood, earthquake,
                                             accumulation of snow or ice, lack
                                             of water arising from weather or
                                             environmental problems, strike,
                                             lockout or other industrial
                                             disturbance, war, terrorist act,
                                             blockade, revolution, riot
                                             insurrection, civil commotion,
                                             public demonstration, sabotage, act
                                             of vandalism, prevention from or
                                             hindrance in obtaining in any way
                                             materials, energy or other
                                             supplies, explosion, fault or
                                             failure of plant or machinery,
                                             governmental restraint, act of
                                             legislature and directive or
                                             requirement of a Competent
                                             Authority governing any Party or
                                             its Affiliate provided that lack of
                                             funds shall not be interpreted as a
                                             cause beyond the reasonable control
                                             of that Party or its Affiliate.

         "Health Registration Approval"      means, with respect to a country in
                                             the Territory, approval by the
                                             health or other Competent Authority
                                             necessary to manufacture and market
                                             a Licensed Product in the country.

         "Issued Valid Claim"                means a claim of an issued and
                                             unexpired and unabandoned patent
                                             included within the CRT Patent
                                             Rights, which claim has not been
                                             held permanently revoked,
                                             unenforceable or invalid by a
                                             decision of a court or other
                                             governmental agency of competent
                                             jurisdiction, unappealable or
                                             unappealed within the time allowed
                                             for appeal, or which has not been
                                             admitted to be invalid or
                                             unenforceable through reissue or
                                             disclaimer or otherwise.

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 4 -

         "Licence Agreement"                 means this agreement and any and
                                             all schedules, appendices and other
                                             addenda to it as may be varied from
                                             time to time in accordance with the
                                             provisions of this agreement.

         "Licensed Products"                 means product or products which, or
                                             the process of production of which,
                                             or the use of which falls within
                                             the scope of a Valid Claim of the
                                             CRT Patent Rights and Licensed
                                             Product shall be construed as any
                                             one of them.

         "Milestone Patent Grant"            means the first grant in the United
                                             States or by the European Patent
                                             Office of a claim comprised within
                                             the CRT Patent Rights, which claim
                                             is substantially similar to and of
                                             equivalent breadth to claim 16 as
                                             originally filed in the PCT
                                             application number [**].

         "Net Sales"                         means the invoiced amount billed
                                             for sales of Royalty Licensed
                                             Products to a Third Party (the
                                             "Customer") by Alnylam or its
                                             Affiliates or by Sub-licensees less
                                             the following items to the extent
                                             they are paid or incurred or
                                             allowed:

                                             a)       quantity, trade and/or
                                                      cash discounts or rebates
                                                      actually granted or
                                                      accrued;

                                             b)       amounts repaid or credited
                                                      and allowances including 
                                                      cash, credit or free goods
                                                      allowances, given by 
                                                      reason of billing errors
                                                      and rebates actually
                                                      allowed or paid or
                                                      accrued;

                                             c)       amounts refunded or
                                                      credited for Licensed
                                                      Products which were
                                                      rejected or damaged or
                                                      recalled;

                                             d)       taxes, tariffs, customs
                                                      duties and surcharges and
                                                      other governmental charges
                                                      incurred in connection
                                                      with the sale, exportation
                                                      or importation of Licensed
                                                      Products; and

                                             e)       outbound transportation
                                                      costs prepaid or allowed
                                                      and costs of insurance in
                                                      transit.

                                             Where Royalty Licensed Products are
                                             not sold separately, but are sold
                                             together with other therapeutic
                                             agents and such combination has
                                             received regulatory approval,
                                             hereinafter such combinations
                                             referred to as a "Combination
                                             Product" and the Royalty Licensed
                                             Product and each such other product
                                             being referred to as a "Component
                                             Product", the Net Sales price to be
                                             used for the purpose of calculating
                                             royalties payable in respect of
                                             Combination Products shall be
                                             determined by multiplying the Net
                                             Sales price of the Combination
                                             Product by the percentage value of
                                             the Royalty Licensed

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 5 -

                                             Product comprising a Component
                                             Product contained in the
                                             Combination Product and subtracting
                                             the items listed in subsections a)
                                             through e) above, using the
                                             following formula:

                                             A/B = C
                                             C*B = D

                                             "A" equals the selling price of the
                                             Royalty Licensed Product; "B"
                                             equals the selling price of the
                                             Combination Product; "C" represents
                                             the fraction of the selling price
                                             of the Combination Product
                                             attributable to the Royalty
                                             Licensed Product; "D" is the Net
                                             Sales price attributable to the
                                             Royalty Licensed Product to be used
                                             for the purpose of calculating
                                             royalties

                                             If the selling price of a Component
                                             Product is not known the fraction
                                             attributable to the Royalty
                                             Licensed Product shall be
                                             calculated by subtracting the price
                                             sold singly of the other Component
                                             Product from the selling price of
                                             the Combination Product.

                                             If the selling price of each
                                             Component Product is unknown the
                                             Parties agree to negotiate in good
                                             faith to agree on a reasonable
                                             value.

                                             For the sake of consistency the
                                             selling price attributable to the
                                             Royalty Licensed Product shall be
                                             the same whether it is sold singly
                                             or as part of a Combination
                                             Product, providing that the grade,
                                             amount, potency and purity of the
                                             Royalty Licensed Product is the
                                             same when sold singly or in
                                             combination

                                             The transfer of Royalty Licensed
                                             Products by Alnylam or one of its
                                             Affiliates to another Affiliate or
                                             to a Sub-licensee shall not be
                                             considered a sale. In such cases,
                                             Net Sales shall be determined based
                                             on the invoiced sale price levied
                                             by the Affiliate or Sub-licensee on
                                             the Customer, less the
                                             aforementioned deductions to the
                                             extent they are allowed, paid or
                                             accrued.

         "Non-cash Consideration"            means any form of consideration
                                             which is not directly calculable in
                                             monetary terms, including, shares,
                                             goods and cross-licences entered
                                             into by Alnylam.

         "Non-Platform Sub-licence"          means a Sub-licence other than a
                                             Platform Sub-

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 6 -

                                             licence.

         "Non-Platform Sub-licence Income"   means all upfront cash payments
                                             excluding equity and research and
                                             development payments, that accrue
                                             to Alnylam or its Affiliate as of
                                             the commencement date of the
                                             Non-Platform Sub-licence (whether
                                             due on the commencement date of the
                                             Non-Platform Sub-licence or
                                             thereafter) under a Sub-licence
                                             other than a Platform Sub-licence.

         "Parties"                           means CRT and Alnylam and "Party"
                                             shall be construed as either one of
                                             them.

         "Patent Rights"                     means any patent applications,
                                             patents, author certificates,
                                             inventor certificates, utility
                                             models (including all divisions,
                                             renewals, continuations,
                                             continuations-in-part, extensions,
                                             reissues, substitutions,
                                             confirmations, registrations,
                                             revalidations and additions of or
                                             to them, as well as any SPC, or any
                                             like form of protection) and any
                                             foreign counterparts thereto and
                                             patents issuing therefrom.

         "Pivotal Phase II Study"            means a phase II Clinical Trial
                                             upon the basis of which an
                                             application for Health Registration
                                             Approval is made.

         "Platform Sub-licence"              means a bare Sub-licence under the
                                             CRT Patent Rights only and which
                                             grants no rights inter alia: (i) to
                                             Licensed Products developed by
                                             Alnylam or its Affiliate; or (ii)
                                             to develop Licensed Products in
                                             collaboration with Alnylam or its
                                             Affiliate.

         Platform Sub-licence Income         means any and all gross
                                             consideration (including upfront,
                                             periodic, and milestone payments
                                             and Non-cash Consideration) other
                                             than royalty payments on Net Sales
                                             that accrue to Alnylam or its
                                             Affiliates under a Platform
                                             Sub-licence.

         "Quarter"                           means a period of three (3)
                                             consecutive calendar months
                                             commencing on 1 January, 1 April, 1
                                             July or 1 October in any year.

         "Royalty Licensed Product"          means a Licensed Product which, or
                                             the process of production of which,
                                             or the use of which falls within
                                             the scope of an Issued Valid Claim.

                              SECTION CONFIDENTIAL


<PAGE>

                                      - 7-

         "SPC"                               means a right based on a patent
                                             pursuant to which the holder of the
                                             SPC is entitled to exclude third
                                             parties from using, making, having
                                             made, selling or otherwise
                                             disposing or offering to dispose
                                             of, importing or keeping the
                                             product to which the SPC relates,
                                             such as Supplementary Protection
                                             Certificates in Europe, and any
                                             similar right anywhere in the
                                             world.

         "Sub-licence"                       means a sub-licence in the Field
                                             granted by Alnylam or its Affiliate
                                             (in accordance with Clause 2.4).

         "Sub-licensee"                      means any person granted a
                                             Sub-licence by Alnylam or its
                                             Affiliate.

         "Territory"                         means the world.

         "Third Party"                       means any entity or person other
                                             than the Parties or an Affiliate of
                                             a Party.

         "Valid Claim"                       means either:-

                                             a)       a claim of an issued and
                                                      unexpired and unabandoned
                                                      patent included within the
                                                      CRT Patent Rights, which
                                                      claim has not been held
                                                      permanently revoked,
                                                      unenforceable or invalid
                                                      by a decision of a court
                                                      or other governmental
                                                      agency of competent
                                                      jurisdiction, unappealable
                                                      or unappealed within the
                                                      time allowed for appeal,
                                                      or which has not been
                                                      admitted to be invalid or
                                                      unenforceable through
                                                      reissue or disclaimer or
                                                      otherwise; or

                                             b)       a claim of a pending
                                                      patent application
                                                      included within the CRT
                                                      Patent Rights which claim
                                                      was filed in good faith
                                                      and has not been abandoned
                                                      or finally disallowed
                                                      without the possibility of
                                                      appeal or refiling of the
                                                      application.

         "Year"                              means the one (1) year periods
                                             commencing on 31 March annually,
                                             and "Yearly" shall be construed
                                             accordingly.

                              SECTION CONFIDENTIAL


<PAGE>

                                      - 8 -

1.2      In this Licence Agreement:

         1.2.1    unless the context otherwise requires, all references to a
                  particular clause or schedule shall be a reference to that
                  clause or schedule in or to this Licence Agreement as it may
                  be amended from time to time pursuant to this Licence
                  Agreement;

         1.2.2    the headings are inserted for convenience only and shall be
                  ignored in construing this Licence Agreement;

         1.2.3    unless the contrary intention appears, words importing the
                  masculine gender shall include the feminine and vice versa and
                  words in the singular include the plural and vice versa;

         1.2.4    unless the contrary intention appears, words denoting persons
                  shall include any individual, partnership, company,
                  corporation, joint venture, trust association, organisation or
                  other entity, in each case whether or not having separate
                  legal personality;

         1.2.5    the words "include", "included" or "including" are to be
                  construed without limitation to the generality of the
                  preceding words; and

         1.2.6    reference to any statute or regulation includes any
                  modification or re-enactment of that statute or regulation.

2.       GRANT OF LICENCE

2.1      CRT hereby grants to Alnylam, and its Affiliate(s) who have confirmed
         to Alnylam their agreement in writing to be bound (to CRT) by the terms
         of this Licence Agreement which specifically apply to Affiliates, with
         a copy to be sent to CRT, a licence in the Field throughout the
         Territory under the CRT Patent Rights to research, develop, have
         developed, use, keep, make, have made, import, have imported, sell,
         have sold and otherwise dispose or offer to dispose of Licensed
         Products. Such Affiliates shall be listed on Schedule 2 to this Licence
         Agreement which shall be updated periodically by Alnylam and sent to
         CRT. For the sake of clarity, save to the extent necessary for the
         development and/or sale of Licensed Products in the Field neither
         Alnylam or any Affiliate is granted the right to make use of the CRT
         Patent Rights to research, develop, use, keep, make, have made, sell
         and otherwise dispose or offer to dispose of products:

         a)       for any diagnostic application;

         b)       as research tools or reagents;

         c)       for target validation; or

         d)       small molecule drug discovery

         including the provision of services in relation thereto to Affiliates
         or Third Parties.

2.2      Subject to Clause 2.3, the licence granted in Clause 2.1 shall, in
         relation to a particular country in the Territory, be exclusive within
         the Field for the term of the relevant Patent Rights included within
         the CRT Patent Rights.

                              SECTION CONFIDENTIAL


<PAGE>

                                      - 9 -

2.3      It is acknowledged and agreed that CRT and Cancer Research UK shall
         have the right to use, and CRT shall have the right to consent to the
         use by academic research institutions (including for the sake of
         clarity those in receipt of Cancer Research UK funding) of, the CRT
         Patent Rights in the Field for internal, or in collaboration with
         another academic research institution, non-commercial, non-commercially
         sponsored research. For the sake of clarity, Cancer Research UK-funded
         Researchers shall be permitted under the CRT Patent Rights to conduct
         clinical trials of potential dsRNA therapeutic agents as part of their
         Cancer Research UK-funded academic research.

2.4      Alnylam and its Affiliates shall be entitled to sublicence the rights
         granted in this Licence Agreement. Any Sub-licence which is granted in
         breach of this Clause 2.4 shall be void. Alnylam or its Affiliate shall
         (subject to Alnylam's and its Affiliate's right to redact confidential
         information not related to CRT's rights hereunder) provide to CRT in
         confidence a copy of each and every Platform Sub-licence entered into.
         Any Sub-licence entered into by Alnylam or an Affiliate shall;

         a)       be limited to the Field and shall contain restrictions in
                  equivalent terms to those set out in Clause 2.1.

         b)       provide that the Sub-licence shall terminate automatically on
                  the expiry or termination for whatever reason of this Licence
                  Agreement. In the event of termination of this Agreement
                  pursuant to Clause 10, CRT shall enter into a direct licensing
                  arrangement with any Sub-licensee on terms substantially
                  similar to those contained herein save that any licence
                  granted by CRT to any Sub-licensee shall be consistent with
                  the terms of the Sub-licence granted by Alnylam (or its
                  Affiliate as the case may be) in relation to field, territory,
                  exclusivity, rights to sub-license and payment provisions.
                  However, in the event of termination of this Agreement by
                  Alnylam pursuant to Clause 10.2 the provisions of the
                  foregoing sentence shall apply save that the granting of such
                  licence by CRT shall be subject to CRT's consent. Nothing in
                  this Clause 2.4 shall confer upon CRT any obligation to enter
                  into a direct licensing arrangement with the Sub-licensee
                  where the Sub-licensee is in default of its obligations under
                  the Sub-licence. CRT shall not be expected to take any
                  responsibility for any disputes between Alnylam (or its
                  Affiliate as the case may be) and its Sub-licensees relating
                  to the terms of the Sub-licence(s) and notwithstanding the
                  foregoing provisions of this Clause 2.4, CRT shall not be
                  obliged to enter into a direct licence with a Sub-licensee in
                  circumstances in which the Sub-licensee reserves any right to
                  maintain a claim against CRT where such claim was previously
                  maintained against Alnylam (or its Affiliate as the case may
                  be).

         c)       provide that the Third Party with whom the Sub-licence has
                  been entered into shall undertake to CRT directly to allow CRT
                  the same access to the books and records as it has to
                  Alnylam's books and records under this Licence Agreement; and

         d)       contain restrictions on assignment in equivalent terms to
                  those set out in Clause 15 and require that any further
                  sublicensing be subject to the terms of this Clause 2.4.

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 10 -

         Alnylam shall only grant a Platform Sub-licence as a separate licence
         (or sub-licence) for separate consideration identified in the Platform
         Sub-licence and shall not include a Platform Sub-licence as part of any
         other licence (or sub-licence).

2.5      CRT hereby grants an option to Alnylam and its Affiliates exercisable
         during the term of this Licence Agreement to enter into non-exclusive,
         non-sublicensable and non-assignable licences under the CRT Patent
         Rights in the fields of either or both of:

         a)       [**]; and

         b)       [**]

         on terms to be agreed in good faith between CRT and Alnylam, the
         payment terms in respect of each licence which shall be no more than:

         a)       annual payments of [**] pounds sterling ((pound)[**]); or

         b)       any (lesser) sum that may be agreed between CRT and a Third
                  Party licensee after the Commencement Date in the same field
                  (other than a licence pursuant to which, or under the terms of
                  a related agreement, significant resources are provided by the
                  Third Party in respect of a collaboration in the field).

3.       CONSIDERATION

3.1      In consideration of the rights granted under this Licence Agreement,
         Alnylam shall pay the following sums to CRT:

         3.1.1    subject to Clause 3.5, [**] United States dollars (US$[**]) on
                  the Commencement Date; and

         3.1.2    until the expiry of the last to expire of the CRT Patent
                  Rights on each and every anniversary of the Commencement Date,
                  an annual fee of [**] United States dollars (US$[**]); and

         3.1.3    a one-time payment of [**] United States dollars (US$[**]) on
                  Milestone Patent Grant; and

         3.1.4    the following milestone fees in respect of the first Licensed
                  Product in the Field to achieve the milestone (upon
                  achievement of the milestone by Alnylam, or its Affiliate, or
                  a Non-Platform Sub-licensee);

                  (a)      [**] United States dollars (US$[**]) on the
                           commencement of the first phase I Clinical Trial 
                           conducted anywhere in the Territory; and

                  (b)      [**] United States dollars (US$[**] on the
                           commencement of the first phase II Clinical Trial or 
                           Privotal Phase II Study conducted anywhere in the 
                           Territory.

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 11 -

         3.1.5    any and all reasonable patent filing, maintenance and
                  prosecution costs incurred after the Commencement Date by CRT
                  or its agents subject to Clause 7, within 30 (thirty) days of
                  the date of an invoice from CRT.

         3.2      As further consideration of the rights granted under this
                  Licence Agreement, Alnylam (or its Affiliate as the case may
                  be) shall pay the following sums to CRT:

                  3.2.1    royalties of [**] percent ([**]%) of Net Sales of
                           Royalty Licensed Products in the Field; and

                  3.2.2    [**] percent ([**]%) of Platform Sub-licence Income
                           provided that to the extent Platform Sub-licence
                           Income includes;

                           (a)      milestone payment(s) for patent issuance,
                                    the milestone payment made by Alnylam in
                                    Clause 3.1.3 shall be fully creditable
                                    against that part of Platform Sub-licence
                                    Income expressly payable for patent issuance
                                    and Alnylam or its Affiliate shall not pay
                                    [**]% of Platform Sub-licence Income payable
                                    for patent issuance until the milestone
                                    payment made by Alnylam in Clause 3.1.3 has
                                    been fully credited against such Platform
                                    Sub-licence Income; and/or

                           (b)      Non-cash Consideration, Alnylam or its
                                    Affiliate shall following consultation with
                                    CRT have the option of apportioning such
                                    Non-cash Consideration (including by
                                    transfer of [**] percent ([**]%) of
                                    Alnylam's or its Affiliate's shareholding
                                    where Non-Cash Consideration is comprised of
                                    shares), if possible, or valuing the
                                    Non-cash Consideration at its fair market
                                    value, when received and paying [**] percent
                                    ([**]%) of the cash equivalent to CRT; and

                  3.2.3    in respect of each Non-Platform Sub-licence, and
                           solely to the extent that Alnylam or its Affiliate
                           receives Non-Platform Sub-licence Income arising
                           therefrom, [**] percent ([**]%) of Non-Platform
                           Sub-licence Income under such Non-Platform
                           Sub-licence; and

3.3      Provided always that the royalty payable to CRT shall not in any event
         be reduced below [**] percent ([**]%), if at any time prior to or
         during the period for the payment of royalties under this Licence
         Agreement in relation to any particular territory, Alnylam (or its
         Affiliate as the case may be) or a Sub-licensee elects in its
         reasonable opinion to take a licence from a Third Party to any Blocking
         IP to develop, make, sell or otherwise dispose of Licensed Products,
         the royalties set forth in Clause 3.2.1 applicable to such Licensed
         Product shall be reduced by [**]% of the amount paid to such Third
         Party to access said Blocking IP.

3.4      Provided always that Non-Platform Sub-licence Income shall not in any
         event be reduced below [**] percent ([**]%), the percent payment of
         Non-Platform Sub-licence Income set forth in Clause 3.2.3 shall be
         reduced if at any time prior to or

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 12 -

         during the period for the payment thereof under this Licence Agreement
         in relation to any particular territory, in order to grant the rights
         under the Sub-licence Alnylam (or its Affiliate as the case may be)
         elects to take a licence from a Third Party under Patent Rights which
         Alnylam (or its Affiliate as the case may be) reasonably believes to be
         Blocking IP and thereafter the percent of Non-Platform Sub-licence
         Income payable shall be determined by applying the formula [**]N [**]
         where N is the number of Third Party licensors of Blocking IP.

3.5      CRT agrees that in respect of the sum payable under Clause 3.1.1 credit
         shall be given to Alnylam for the sum of [**] dollars (US$[**])
         received by CRT under the terms of a letter of exclusivity dated 4 June
         2003 entered into between the Parties, and provided that Alnylam has
         confirmed that CRT is entitled to retain the said sum, Alnylam shall
         only be obliged to pay [**] dollars (US$[**]) pursuant to Clause 3.1.1.

4.       PAYMENT

4.1      All payments due to CRT under this Licence Agreement shall (subject to
         written advice from CRT amending the account details) be made in United
         States dollars or pounds sterling by telegraphic transfer to the
         accounts below:

         Payee: Cancer Research Technology Limited

         Lloyds TSB, Pall Mall St James's Branch
         8-10 Waterloo Place
         London SW1Y 4BE

         US$ account
         Sort Code: 30-00-08
         Account Code: [**]
         Account Name: Cancer Research Technology Ltd

         Sterling account
         Sort Code: 30-00-08
         Account Code: [**]
         Account Name: Cancer Research Technology Ltd

         For the attention of the Financial Controller (or such other nominee of
         CRT as CRT may direct from time to time).

4.2      Alnylam (or its Affiliate as the case may be) shall make the payments
         to CRT:

         4.2.1    in the case of the royalties payable pursuant to Clause 3.2.1,
                  within 30 (thirty) days of the end of the Quarter in which the
                  sales of the relevant Licensed Products took place;

         4.2.2    in the case of Platform Sub-licence Income and Non-Platform
                  Sub-licence Income payable pursuant to Clauses 3.2.2 and 3.2.3
                  within the later of 30 (thirty) days of the date of receipt of
                  the payment from the Sub-licensee (in respect of any up-front
                  payments) or the end of the Quarter in which the Sub-licence
                  Income has been received by Alnylam;

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 13 -

         4.2.3    in the case of the payments due under Clauses 3.1.1 through
                  3.1.3, within thirty (30) days of the date of an invoice from
                  CRT; and

         4.2.4    in the case of the payments due under Clause 3.1.4, within
                  thirty (30) days of the achievement of the relevant milestone.

4.3      Where sums are received by Alnylam (or its Affiliate as the case may
         be) in a currency other than United States dollars or pounds sterling,
         conversion of such currencies to United States dollars will be
         performed at the closing mid-point rate published in the Financial
         Times in London on the last Business Day of the Quarter in which the
         sum is to be paid. For the sake of clarity Alnylam (or its Affiliate as
         the case may be) shall be under no obligation to convert payments
         received into United States Dollars.

4.4      Where CRT does not receive payment of any sums due to it within thirty
         (30) days of the dates set out in Clauses 3.1 or 4.2 as the case may be
         (the "Due Date"), interest shall accrue on the sum due and owing to CRT
         at the rate equivalent to an annual rate of four percent (4%) over the
         then current US dollar base rate of Lloyds Bank plc, calculated on a
         daily basis, without prejudice to CRT's right to receive payment on the
         Due Date.

4.5      All payments to CRT shall be made free and clear of, and without
         deduction or deferment in respect of, any claims, set-off and taxes
         imposed or levied by any competent authority including any withholding
         taxes. In the event that Alnylam (or its Affiliate as the case may be)
         is obliged to deduct any withholding or other taxes it shall pay to CRT
         an amount as shall result in the net amount being received by CRT being
         equal to the amount which would have been received by CRT had no
         deduction or withholding been made. If CRT is able to recover or
         set-off any such deduction or withholding it shall refund such amount
         to Alnylam (or its Affiliate as the case may be) as shall result in net
         amount being retained by CRT being equal to the amount which would have
         been received by CRT had no deduction or withholding been made. CRT
         shall to any extent reasonably practicable co-operate with Alnylam in
         seeking to effect a recovery from the relevant taxation authority of
         any withholding taxes actually deducted and in the event that CRT makes
         a recovery shall pay to Alnylam (or its Affiliate as the case may be)
         any sums recovered.

5.       BOOKS AND RECORDS

5.1      Following the earlier of the first commercial sale of a Licensed
         Product in the Field by Alnylam or its Affiliate or the grant of a
         Sub-licence, Alnylam (or its Affiliate as the case may be) shall
         prepare an annual statement which shall show on a country by country
         basis for the previous calendar year all monies due to CRT under this
         Licence Agreement. That statement shall include the number of units of
         each Royalty Licensed Product sold in each country in which sales
         occurred, and shall be submitted to CRT within sixty (60) Business Days
         of 31st March of each year. If CRT gives notice to Alnylam within
         twenty (20) Business Days of the receipt of any such statement that it
         does not accept the same, that statement shall be certified by an
         independent accountant appointed by agreement between Alnylam and CRT
         or, in default of agreement within ten (10) Business Days, appointed at
         the request of either

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 14 -

         CRT or Alnylam by the President for the time being of the Institute of
         Chartered Accountants of England and Wales in London. Alnylam (or its
         Affiliate as the case may be) shall make available to the independent
         accountant all books and records required for the purpose of that
         certification under terms of confidentiality equivalent to those
         contained in this Agreement and the statements so certified shall, in
         the absence of manifest error, be final and binding between the
         Parties. The cost of the certification shall be the responsibility of
         Alnylam if the statement is shown to have underestimated the monies
         payable to CRT by more than five percent (5%) and the responsibility of
         CRT otherwise. Any outstanding payments due to CRT which are identified
         as a result of carrying out the investigation shall be paid to CRT
         immediately. There shall be no more than one certification by an
         independent accountant in relation to any one annual statement.

5.2      Alnylam shall, and shall require that its Affiliates and Sub-licensees
         shall, keep true and accurate records and books of account containing
         all data necessary for the calculation of the amounts payable by it to
         CRT pursuant to this Licence Agreement. Such records and books of
         account shall be kept for five (5) years following the end of the
         calendar year to which they relate and shall, upon reasonable notice
         having been given by CRT, be open at all reasonable times on Business
         Days for inspection under the terms of confidentiality contained in
         this Licence Agreement, by an independent firm of accountants appointed
         by agreement between the Parties or, failing such agreement within ten
         (10) Business Days, appointed at the request of either CRT or Alnylam
         by the President for the time being of the Institute of Chartered
         Accountants of England and Wales in London. The cost of any such
         examination shall be borne by CRT, such examination to take place not
         later than five (5) years following the expiration of the period to
         which it relates and there shall be no more than one examination per
         year.

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 15 -

6.       PERFORMANCE AND CLINICAL DEVELOPMENT

6.1      Alnylam shall use reasonable efforts to develop, make, market, sell and
         otherwise dispose of Licensed Products in all therapeutic areas within
         the Field and market each Licensed Product in the Field throughout the
         United States, Europe and Japan. This obligation may be satisfied by
         the efforts of Alnylam's Affiliate(s) or Sub-licensee(s).

6.2      CRT shall provide notice to Alnylam of its knowledge of a willing
         potential sub-licensee. Without prejudice to Clause 6.1, in the event
         that Alnylam (itself or through Affiliates or Sub-licensees) declines
         to develop, make, market, sell or otherwise dispose of Licensed
         Products in any therapeutic area or any indication within the cancer
         therapeutic area within the Field or any territory within the Territory
         in the Field, Alnylam shall (save as hereinafter provided) upon direct
         approach made by, or receipt of notice from CRT of a, willing potential
         sublicensee in respect of a Licensed Product that has demonstrated
         clinical efficacy be obliged to enter into negotiations in good faith
         with such Third Party to enter into a Sub-licence in relation to such
         therapeutic area, indication, or territory. The preceding provisions of
         this Clause 6.2 shall not apply in respect of any therapeutic area,
         indication, or territory in respect of which Alnylam provides to CRT's
         reasonable satisfaction evidence that the conclusion of a Sub-licence
         would:

         6.2.1    be contrary to sound and reasonable business practice
                  applicable to pharmaceutical development; or

         6.2.2    not materially increase the availability of therapeutic
                  products covered by the CRT Patent Rights.

6.3      If CRT believes that Alnylam has failed to meet the diligence
         requirements set forth in Clause 6, it shall serve notice on Alnylam of
         such failure and Alnylam shall have a [**] period from the date of
         receipt of such notice to reestablish diligence towards its objectives,
         and if Alnylam reestablishes diligence towards its objectives during
         this [**] period, any prior lack of diligence will be deemed cured.
         Notwithstanding anything in this agreement to the contrary, in the
         event that Alnylam fails to reestablish diligence to the standard
         provided in Clause 6 within the said [**] period, this shall not be
         cause for CRT's termination of this Licence Agreement, rather, CRT's
         remedy shall be limited to, at CRT's discretion, termination of
         Alnylam's licence under the CRT Patent Rights in the particular
         territory or therapeutic area or, with respect to Clause 6.2,
         indication within the cancer therapeutic area for which Alnylam has
         failed to meet the diligence requirements. For the sake of clarity
         should Alnylam's licence be terminated in respect of a therapeutic area
         or territory pursuant to this Clause 6.3 CRT shall be free to offer
         such therapeutic area or territory to a potential licensee.

         As part of its annual statement deliverable to CRT pursuant to Clause
         6.4, Alnylam shall include a detailed description of therapeutic areas
         and territories under development and an overview of Alnylam's
         development plans for the forthcoming year (itself or through
         Affiliates or Sub-licensees).

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 16 -

6.4      Alnylam shall, within thirty days of the end of each Year provide CRT
         with a written report of the steps taken by Alnylam, its Affiliates and
         any Sub-licensees to comply with the performance obligations of Clauses
         6.1 and 6.2.

6.5      In the event that Alnylam (or its Affiliate as the case may be) intends
         to undertake a Phase I Clinical Trial of any Licensed Product in the UK
         Alnylam shall, at its option (a) notify CRT providing particulars in
         reasonable detail of the proposed investigation; and (b) allow Cancer
         Research UK the opportunity of conducting or procuring the conduct of
         the investigation on behalf of Alnylam or participate in such an
         investigation, subject to the agreement of terms acceptable to Alnylam,
         CRT and Cancer Research UK.

7.       MANAGEMENT OF PATENT RIGHTS

7.1      CRT shall or shall procure in consultation with and (save to the extent
         provided in Clause 7.2) at the reasonable expense of Alnylam the
         filing, prosecution, and maintenance of any patents and patent
         applications comprised within the CRT Patent Rights. CRT shall use
         reasonable efforts to ensure that Alnylam is provided with copies of
         all material correspondence with patent agents in sufficient time for
         Alnylam to comment thereon. Alnylam's comments shall be incorporated to
         the extent reasonably practicable. Alnylam shall (save to the extent
         provided in Clause 7.2) bear the full expense and shall reimburse in
         full and hold CRT harmless in respect of any and all reasonable fees,
         charges, costs, levies or expenses incurred by CRT or its agents after
         the Commencement Date in relation to such applications. Nothing in this
         Licence Agreement shall oblige CRT or Alnylam to bring, defend or
         contest any enforcement, interference, opposition or infringement
         proceedings in respect of any of the CRT Patent Rights.

7.2      Save as hereinafter provided in this Clause 7.2, the reasonable costs
         of opposition and interference proceedings in relation to the CRT
         Patent Rights (together "Challenges") shall be borne equally by the
         Parties. In the event that the total aggregate costs of Challenges in
         any year exceed [**] United States dollars (US$[**]), CRT shall be free
         to make no further contribution to the costs of Challenges and all
         further costs incurred during that year ("Further Challenge Costs")
         and, at Alnylam's option, the future control of such Challenge(s) shall
         be borne by Alnylam solely. CRT shall give credit for [**] percent
         ([**]%) of Further Challenge Costs actually paid by Alnylam against
         sums due from Alnylam to CRT pursuant to Clause 3 from that time
         forward. In the event that one or more of the CRT Patent Rights are the
         subject of a declaration of interference by the U.S. Patent and
         Trademark Office as interfering with claims in a patent or patent
         application which is owned by or licensed by Alnylam or its Affiliate,
         CRT and Alnylam shall negotiate in good faith to reasonably agree on a
         mechanism outside the U.S. Patent and Trademark Office which simplifies
         the issues involved in determining priority and which awards priority
         to the appropriate party to the interference.

         In any country where Alnylam elects not to have a patent application
         included in CRT Patent Rights filed or to pay expenses associated with
         filing, prosecuting, interference or equivalent proceedings, or
         maintaining a patent application or patent included in CRT Patent
         Rights, CRT may file, prosecute, continue with interference or
         equivalent proceedings, and/or maintain such patent application or
         patent at its own expense and

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 17 -

         for its own exclusive benefit and Alnylam (and its Affiliates)
         thereafter shall not be licensed under such patent or patent
         application. For the sake of clarity, should Alnylam elect not to
         continue with interference or equivalent proceedings and CRT elect to
         continue with such proceedings, Alnylam (and its Affiliates) shall
         cease to be licensed for the patent subject to interference for that
         territory.

7.3      If either Party receives any notice, claim or proceedings from any
         Third Party alleging infringement of that Third Party's intellectual
         property by reason of Alnylam's activities in relation to this Licence
         Agreement or the use and exploitation of the CRT Patent Rights by
         Alnylam or its Sub-licensee(s) or its Affiliates, the Party receiving
         that notice shall forthwith notify the other Party of the notice, claim
         or proceeding.

7.4      Alnylam shall, at its option and at its own cost, defend and enforce or
         shall procure the defence or enforcement of the rights under the CRT
         Patent Rights. CRT shall, at Alnylam' reasonable cost, render such
         reasonable assistance as Alnylam reasonably requests. If necessary, CRT
         shall grant to Alnylam the right to conduct such an action in its name.
         Any damages or financial settlement monies received by Alnylam pursuant
         to such proceedings shall, after deduction of all of the costs incurred
         by Alnylam in such proceedings, be treated as Net Sales.

7.5      Without prejudice to CRT's other rights arising from such failure, if
         Alnylam opts not to defend or enforce the relevant CRT Patent Rights
         and if CRT desires to enforce or defend such rights, CRT shall notify
         Alnylam and Alnylam shall, at CRT's request, grant to CRT any and all
         rights that would be necessary for CRT to undertake the enforcement or
         defence. If Alnylam is unable to grant such rights then it shall, at
         CRT's request, grant to CRT the right to conduct such an action in its
         name. Alnylam shall provide, at CRT's request and CRT's reasonable
         expense, such reasonable assistance as CRT may reasonably request in
         any such proceedings. Any monies received by CRT pursuant to any
         enforcement or defence of the CRT Patent Rights by them under this
         Clause 7.5 shall be solely for the benefit of CRT.

8.       WARRANTIES AND LIABILITY

8.1      Each Party represents and warrants to the other Party that it has legal
         power, authority and right to enter into this Licence Agreement and to
         perform its respective obligations hereunder.

8.2      CRT represents and warrants to Alnylam that it has had assigned to it
         all Cambridge University's and the Lister Institute of Preventive
         Medicine's rights under the CRT Patent Rights pursuant to the terms of
         assignments, a copy of which will be provided to Alnylam upon request.

8.3      CRT represents and warrants to Alnylam that to the best of its
         knowledge, upon reasonable inquiry, as at the Commencement Date the
         inventors (as determined by the laws of England) of the patent
         applications referred to in Schedule 1 are [**] and all of these
         inventors have assigned their rights in the CRT Patent Rights to CRV
         (to the extent that the same were not vested in Cambridge University or
         the Lister Institute of Preventive Medicine and assigned to CRT in
         accordance with Clause 8.2). CRV have in turn assigned their rights to
         CRT. In the event of breach of this Clause 8.3,

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 18 -

         Alnylam's remedy for breach shall be limited to the rights conferred
         upon Alnylam by Clause 8.9.

8.4      Other than expressly set out herein, no Party gives any representation
         or warranty to any other Party that the performance of this Licence
         Agreement will not result in the infringement of any rights, including
         intellectual property rights, vested in a Third Party and it is agreed
         and understood by the Parties that Alnylam is responsible for
         undertaking each and every investigation necessary to satisfy itself
         that the rights granted under this Licence Agreement can be properly
         and lawfully exercised by Alnylam (and any Affiliate) without
         infringing the rights of any Third Party, and save as expressly set out
         in Clauses 8.1 and 8.2 no warranties of any kind are given by CRT in
         relation to the intellectual property rights granted under this Licence
         Agreement or owned or controlled by any Third Party which may affect
         the exercise of such rights.

8.5      Nothing in this Licence Agreement shall be construed as a
         representation made or warranty given by CRT in relation to the CRT
         Patent Rights that:

         8.5.1    any patent will issue based upon any pending patent
                  application;

         8.5.2    any patent which issues will be valid; nor

         8.5.3    the use of any CRT Patent Rights will not infringe the patent
                  or proprietary rights of any Third Party.

         Furthermore, CRT makes no representation or warranty, express or
         implied, with respect to merchantability or fitness of the CRT Patent
         Rights for a particular purpose.

8.6      No Party shall be liable to the other Party, its Affiliates or
         Sub-licensees in contract, tort, negligence, breach of statutory duty
         or otherwise for any loss, damage, cost or expense of an indirect or
         consequential nature (including any economic loss or other loss of
         turnover, profits, business or goodwill) arising out of or in
         connection with this Licence Agreement or the subject matter of this
         Licence Agreement.

8.7      Alnylam and any Affiliate licenced under this Licence Agreement shall
         respectively be responsible for and indemnify, defend and hold harmless
         CRT, the University of Cambridge, the Lister Institute of Preventive
         Medicine and their respective officers, servants and agents against any
         and all liability, loss, damage, cost or expense (including reasonable
         attorney's fees and court and other expenses of litigation) arising out
         of or in connection with Third Party claims relating to the discovery,
         research, development, manufacture, marketing, selling and disposal of
         Licensed Products or candidate Licensed Products by Alnylam, its
         Affiliates and their Sub-licensees except to the extent due to the
         gross negligence or wilful misconduct of an indemnitee.

8.8      In the event that CRT intends to seek indemnification under Clause 8.7,
         it shall promptly inform Alnylam (or its Affiliate as the case may be)
         in writing of a claim after receiving notice of the claim and shall
         permit Alnylam (or its Affiliate as the case may be) to direct and
         control the defence of the claim and shall provide such reasonable
         assistance as reasonably requested by Alnylam (or its Affiliate as the
         case may be) (at Alnylam's (or its Affiliate's as the case may be)
         cost) in the defence of

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 19 -

         the claim. Provided always that nothing in this Clause 8.8 shall permit
         Alnylam (or its Affiliate as the case may be) to make any admission on
         behalf of CRT, without the prior written consent of, CRT.

8.9      In the event that a Third Party has rights to the CRT Patent Rights,
         CRT shall obtain, at its cost, such Third Party's rights in the CRT
         Patent Rights to the extent necessary to preserve Alnylam's exclusive
         licence granted under and on the terms of this Licence Agreement. If
         CRT is not able to obtain such rights within one year of learning of
         the existence of such Third Party's rights, Alnylam shall have the
         option to 1) terminate this Licence Agreement; or 2) decrease all
         financial obligations of Alnylam, its Sub-licensees and Affiliates by
         50% in respect of all future revenues, credit 50% of past revenues
         against future revenues owed to CRT under this Licence Agreement and,
         at Alnylam's option, renegotiate the terms of this Licence Agreement
         with CRT in order, to preserve the original intent of this Licence
         Agreement. For the sake of clarity CRT shall not be obliged to repay
         sums received previously.

9.       CONFIDENTIALITY

9.1      Each Party undertakes and agrees not at any time for any reason
         whatsoever to disclose or permit to be disclosed to any Third Party or
         otherwise make use of or permit to be made use of (except as expressly
         permitted by or in conjunction with a licence granted under this
         Licence Agreement), any trade secrets or confidential information
         relating to the other Party's technology or the business affairs or
         finances of the other Party or of an Affiliate, Sub-licensee or of any
         suppliers, agents, distributors or customers of the other Party (the
         "Confidential Information") which come into its possession pursuant to
         this Licence Agreement. Nothing in this Licence Agreement shall prevent
         CRT from disclosing its own information relating to the CRT Patent
         Rights for any purpose outside the Field.

9.2      The Parties shall ensure that only those of their and their Affiliates'
         and Sub-licensee(s) officers, employees, agents and consultants who
         have a need to know are given access to Confidential Information and
         that those who are directly concerned with the carrying out of this
         Licence Agreement and who have access to the Confidential Information
         of the other Party are informed of its secret and confidential nature
         and are bound by obligations of confidentiality and non-use comparable
         to those obligations set forth in this Clause 9.

9.3      The obligations of confidence referred to in this Clause 9 shall not
         extend to any Confidential Information which:

         9.3.1    is at the time of disclosure, or thereafter becomes, available
                  to the public otherwise than by reason of a breach by the
                  recipient Party of the provisions of this Clause 9; or

         9.3.2    is known to the recipient Party without obligations of
                  confidence to the disclosing Party prior to its receipt from
                  the disclosing Party, as can be shown by written record; or

         9.3.3    is subsequently disclosed to the recipient Party by another
                  party owing no obligations of confidentiality to the
                  disclosing Party in respect thereof; or

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 20 -

         9.3.4    is required to be disclosed by any applicable law or any
                  Competent Authority to which a Party is from time to time
                  subject provided to any extent practicable that the disclosing
                  Party receives prior written notice of such disclosure and
                  that the receiving Party takes all reasonable and lawful
                  actions to obtain confidential treatment for such disclosure
                  and, if possible, to minimize the extent of such disclosure;
                  or

         9.3.5    is independently developed by a servant, agent, consultant or
                  employee of the recipient Party having no access to the
                  Confidential Information disclosed by a Party, as demonstrated
                  by written records.

9.4      The obligations of each Party under this Clause 9 shall survive the
         expiration or termination for whatever reason of this Licence Agreement
         for a period of five (5) years.

10.      TERM AND TERMINATION

10.1     This Licence Agreement shall become effective as of the Commencement
         Date and expires when Alnylam's and its Affiliate's obligations to pay
         sums according to Clause 3 finally expire.

10.2     In the event that Alnylam serves a written notice upon CRT confirming
         Alnylam's intention to terminate this Licence Agreement, this Licence
         Agreement shall terminate 90 (ninety) days after receipt by CRT of such
         notice.

10.3     Either CRT on the one hand or Alnylam on the other hand ("the
         Terminating Party") shall have the right to terminate this Licence
         Agreement forthwith upon giving written notice of termination to
         Alnylam on the one hand or CRT on the other hand as the case may be
         ("the Defaulting Party"), upon the occurrence of any of the following
         events at any time during this Licence Agreement:

         10.3.1   the Defaulting Party commits a material breach of this Licence
                  Agreement which in the case of a breach capable of remedy
                  shall not have been remedied within sixty (60) Business Days
                  of the receipt by it of a notice identifying the breach and
                  requiring its remedy;

         10.3.2   the Defaulting Party for a period of longer than sixty (60)
                  Business Days becomes bankrupt or insolvent (including without
                  limitation being deemed to be unable to pay its debts);

         10.3.3   proceedings are commenced in relation to the Defaulting Party
                  under any law, regulation or procedure relating to the
                  re-construction or re-adjustment of debts (including where a
                  petition is filed or proceeding commenced seeking any
                  reorganisation, arrangement, composition or re-adjustment
                  under any applicable bankruptcy, insolvency, moratorium,
                  reorganisation or other similar law affecting creditors'
                  rights or where the Defaulting Party consents to, or
                  acquiesces in, the filing of such a petition), which is not
                  dismissed within ninety (90) days;

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 21 -

         10.3.4   the Defaulting Party takes, any action, or any legal
                  proceedings are started or other steps taken by a Third Party,
                  which proceedings are not dismissed within ninety (90) days
                  with a view to:

                  (i)      the winding up or dissolution of the Defaulting Party
                           (other than for the reconstruction of a solvent
                           company for any purpose, including the inclusion of
                           any part of the share capital of the Defaulting Party
                           on a recognised public Stock Exchange); or

                  (ii)     the appointment of a liquidator, trustee, receiver,
                           administrative receiver, receiver and manager,
                           interim receiver custodian, sequestrator or similar
                           officer of the Defaulting Party against the
                           Defaulting Party or a substantial part of the assets
                           of the Defaulting Party,

                  or anything analogous to any of the foregoing occurs under the
                  laws of any country.

10.4     In the event of Alnylam's material breach of its obligations under
         either or both of Clauses 6.1 and 6.2 CRT shall have the right in its
         absolute discretion to selectively terminate the licence granted under
         Clause 2 in respect of either or both of:

         10.4.1   any therapeutic area or areas within the Field; and

         10.4.2   any territory or territories within the Territory

         in respect of which Alnylam is in material breach as set forth in
         Clause 6.3. In the event of termination by CRT of any part of the
         licence granted to Alnylam under Clause 2 pursuant to the exercise of
         CRT of its rights under this Clause 10.4, the other terms of this
         Licence Agreement (including any surviving licence under Clause 2)
         shall remain in full force and effect.

10.5     CRT shall have the right to terminate this Licence Agreement forthwith
         upon giving thirty (30) days written notice of termination to Alnylam
         in the event that Alnylam or its Affiliate:

         10.5.1   commences legal proceedings, with for the sake of clarity the
                  exception of interference proceedings declared by the USPTO or
                  any other patent office, contesting the validity of the CRT
                  Patent Rights ; or

         10.5.2   commences itself, or provides any material assistance to a
                  Third Party in relation to, legal proceedings contesting the
                  ownership of the CRT Patent Rights.

         For the sake of clarity and notwithstanding anything in this Licence
         Agreement to the contrary, any actions taken concerning determination
         of priority of invention under US patent law between a CRT Patent Right
         and claims in a patent or patent application which is owned by or
         licensed by Alnylam or its Affiliate, shall not be considered a contest
         of validity or ownership under this Clause 10.5.

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 22 -

11.      CONSEQUENCES OF TERMINATION

11.1     Upon termination of this Licence Agreement:

         11.1.1   the licence rights granted by CRT to Alnylam and its
                  Affiliates pursuant to Clause 2 shall terminate in its
                  entirety;

         11.1.2   Alnylam and any Affiliates shall pay to CRT within sixty (60)
                  Business Days all sums due to CRT hereunder which have accrued
                  prior to the date of termination;

         11.1.3   Save that each Party shall be entitled to retain a single copy
                  of any document for their records, Alnylam and CRT shall
                  return to each other any Confidential Information provided
                  under this Agreement.

11.2     Termination or expiry of this Licence Agreement for whatever reason
         shall not affect the accrued rights of the Parties arising in any way
         out of this Licence Agreement as at the date of termination or expiry
         and in particular but without limitation the right to recover damages
         and interest, and the provisions of Clauses 5, 8, 9 and 20 shall remain
         in full force and effect.

12.      WAIVER

12.1     Neither Party or its Affiliate shall be deemed to have waived any of
         its rights or remedies conferred by this Licence Agreement unless the
         waiver is made in writing and signed by a duly authorised
         representative of that Party or its Affiliate. In particular, no delay
         or failure of either Party or its Affiliate in exercising or enforcing
         any of its rights or remedies conferred by this Licence Agreement shall
         operate as a waiver of those rights or remedies or so as to preclude or
         impair the exercise or enforcement of those rights or remedies nor
         shall any partial exercise or enforcement of any right or remedy by
         either Party or its Affiliate preclude or impair any other exercise or
         enforcement of that right or remedy by that Party or its Affiliate.

13.      ENTIRE AGREEMENT/VARIATIONS

13.1     This Licence Agreement constitutes the entire agreement and
         understanding between the Parties and supersedes all prior oral or
         written understandings, arrangements, representations or agreements
         between them relating to the subject matter of this Licence Agreement.
         No director, employee or agent of either Party is authorised to make
         any representation or warranty to another Party not contained in this
         Licence Agreement, and each Party acknowledges that it has not relied
         on any such oral or written representations or warranties.

13.2     No variation, amendments, modification or supplement to this Licence
         Agreement shall be valid unless made in writing in the English language
         and signed by a duly authorised representative of each Party.

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 23 -

14.      NOTICES

14.1     Any notice to be given pursuant to this Licence Agreement shall be in
         writing in the English language and shall be delivered by hand, sent by
         reputable courier service, or sent by facsimile confirmed to the
         address or facsimile number of the recipient set out below or such
         other address or facsimile number as a Party may from time to time
         designate by written notice to the other Party.

         ADDRESS OF CRT

         Sardinia House
         Sardinia Street
         London
         WC2A 3NL

         For the attention of the Chief Executive

         Fax No. ++ 44 207 269 3641

         For the attention of the Chief Executive.

         ADDRESS OF ALNYLAM

         790 Memorial Drive
         Suite 202
         Cambridge, Massachusetts 02139
         United States of America

         For the attention of the Chief Executive
         Fax No. ++1 617 252 0011

14.2     Any notice given pursuant to this Clause 14 shall be deemed to have
         been given upon receipt.

15.      ASSIGNMENT

15.1     Subject to Clause 15.2, neither Party shall without the prior written
         consent of the other Party, which shall not be unreasonably withheld,
         assign the benefit and/or burden of this Licence Agreement nor
         sub-contract any of its obligations hereunder unless otherwise
         permitted by the terms hereof.

15.2     Either Party shall be entitled to assign the benefit and/or burden of
         this Licence Agreement to any Affiliate or to its successor in
         connection with any merger, consolidation or sale or other disposal of
         all or substantially all of its assets and/or business to which this
         Agreement relates.

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 24 -

16.      FORCE MAJEURE

16.1     If a Party or its Affiliate (the "Non-Performing Party") is unable to
         carry out any of its obligations under this Licence Agreement due to
         Force Majeure this Licence Agreement shall remain in effect but the
         Non-Performing Party's relevant obligations under this Licence
         Agreement and the relevant obligations of the other Party ("the
         Innocent Party") under this Licence Agreement shall be suspended for a
         period equal to the duration of the circumstance of Force Majeure
         provided that:

         16.1.1   the suspension of performance is of no greater scope than is
                  required by the Force Majeure;

         16.1.2   the Non-Performing Party gives the Innocent Party prompt
                  notice describing the circumstance of Force Majeure, including
                  the nature of the occurrence and its expected duration, and
                  continues to furnish regular reports during the period of
                  Force Majeure;

         16.1.3   the Non-Performing Party uses all reasonable efforts to remedy
                  its inability to perform and to mitigate the effects of the
                  circumstance of Force Majeure; and

         16.1.4   as soon as practicable after the event which constitutes Force
                  Majeure, the Non-Performing Party shall discuss with the
                  Innocent Party how best to continue its operations as far as
                  possible in accordance with this Licence Agreement.

16.2     If an event of Force Majeure should persist for more than 12 (twelve)
         months in any territory or therapeutic area, and a Third Party has the
         ability and desire to perform Alnylam's or its Affiliate's obligations
         under this Licence Agreement in such territory or therapeutic area, and
         Alnylam or its Affiliate does not enter into good faith negotiations
         with such Third Party during such twelve month period to conclude a
         Sub-licence in such territory or therapeutic area during Alnylam's or
         its Affiliate's period of disability and does not conclude a
         Sub-licence within 18 (eighteen) months of the commencement of the
         event of Force Majeure, then CRT shall have the right to terminate this
         Licence Agreement for such therapeutic area or territory as the case
         may be upon thirty (30) days written notice to Alnylam. The ability and
         desire of a Third Party to enter into a Sub-licence and perform
         Alnylam's or its Affiliate's obligations under this Licence Agreement
         in such territory or therapeutic area shall be demonstrated by CRT
         introducing a potential Sub-licensee who has confirmed in writing the
         terms upon which they agree to be bound. If Alnylam or its Affiliate is
         unable to conclude a Sub-licence with such Third Party, but such Third
         Party agrees nonetheless with CRT on the terms of an agreement to
         perform Alnylam's or its Affiliate's obligations in such territory or
         therapeutic area, then Alnylam or its Affiliate shall be given the
         opportunity to grant a Subl-icence to such Third Party on the same
         terms as those agreed between CRT and such Third Party and uponentering
         a Sub-licence with such Third Party, Alnylam's and its Affiliate's
         rights and obligations under this Licence Agreement in such territory
         or therapeutic area will be reinstated.

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 25 -

17.      SEVERANCE OF TERMS

17.1     If the whole or any part of this Licence Agreement is or becomes or is
         declared illegal, invalid or unenforceable in any jurisdiction for any
         reason (including both by reason of the provisions of any legislation
         and also by reason of any court or Competent Authority which either has
         jurisdiction over this Licence Agreement or has jurisdiction over
         either or both of the Parties):

         17.1.1   in the case of the illegality, invalidity or un-enforceability
                  of the whole of this Licence Agreement it shall terminate only
                  in relation to the jurisdiction in question; or

         17.1.2   in the case of the illegality, invalidity or un-enforceability
                  of part of this Licence Agreement, that part shall be severed
                  from this Licence Agreement in the jurisdiction in question
                  and that illegality, invalidity or un-enforceability shall not
                  in any way whatsoever prejudice or affect the remaining parts
                  of this Licence Agreement which shall continue in full force
                  and effect.

17.2     If in the reasonable opinion of either Party any severance under this
         Clause 17 materially affects the commercial basis of this Licence
         Agreement, the Parties shall negotiate, in good faith, to modify the
         Licence Agreement to eliminate the material effect and to preserve (to
         the extent possible) the original intent. If the parties fail to reach
         a modified agreement within thirty (30) days after the severance under
         this Clause 17, then the dispute shall be resolved in accordance with
         the procedures set forth in Clause 20.

18.      THIS LICENCE AGREEMENT NOT TO CONSTITUTE A PARTNERSHIP

18.1     None of the provisions of this Licence Agreement shall be deemed to
         constitute a partnership between the Parties and no Party shall have
         any authority to bind any other Party in any way except as provided in
         this Licence Agreement.

19.      PUBLIC STATEMENTS

19.1     Except as provided in Clause 19.2, neither Party shall, without the
         prior written consent of the other Parties, which shall not be
         unreasonably withheld:

         19.1.1   use in advertising, publicly or otherwise, any trade-name,
                  personal name, trademark, trade device, service mark, symbol,
                  or any abbreviation, contraction or simulation thereof, owned
                  by another Party (including for the sake of clarity in
                  relation to CRT, Cancer Research UK); or

         19.1.2   represent, either directly or indirectly, that any product or
                  service of another Party is a product or service of the
                  representing Party or that it is made in accordance with or
                  utilises the information or documents of another Party.

19.2     The restrictions in Clause 19.1 shall not apply to the following:

         19.2.1   a press release, in a form agreed to in writing by the
                  Parties, publicly announcing this Licence Agreement; or

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 26 -

         19.2.2   use as required by any applicable law or governmental
                  regulation; or

         19.2.3   a statement that Alnylam or its Affiliate is licensed by CRT
                  under one or more of the patents and/or patent applications
                  comprising the CRT Patent Rights; or

         19.2.4   re-use of any previously agreed to public statement.

20.      GOVERNING LAW AND JURISDICTION

20.1     Save to the extent provided in Clause 20.2, the Parties shall attempt
         to settle any dispute or claim arising out of or relating to this
         Agreement by good faith negotiations. If the Parties fail to agree on a
         reasonable settlement within sixty (60) days after the affected Party
         informed the other Party in writing of such dispute or claim, either
         Party may initiate arbitration under the procedural Rules of the
         American Arbitration Association upon written notice to the other Party
         within thirty (30) days after such failure. The arbitration tribunal
         shall be appointed as follows: each Party shall select, within thirty
         (30) days after notice to initiate arbitration, an independent and
         experienced Third Party as its arbitrator. The two arbitrators selected
         by the parties shall mutually select an independent and experienced
         Third Party as a third arbitrator. The venue for the arbitration
         procedure shall be in London, England and the validity, construction
         and performance of this Licence Agreement shall be governed by the laws
         of England. The award of the arbitration tribunal shall be final and
         binding for the parties. Notwithstanding the foregoing, each Party may
         apply for interlocutory relief in court.

20.2     In the event of a dispute between the Parties as to whether:

         20.2.1   the Milestone Patent Grant has been achieved; or

         20.2.1   Alnylam's belief that any Patent Rights are Blocking IP is
                  reasonable,

         the dispute shall be referred to an independent expert in the field of
         patents (acting as an expert and not as an arbitrator) appointed by
         agreement between the Parties and in the absence of such agreement
         within thirty (30) Business Days, then at the request of either Party
         by the President for the time being of the Chartered Institute of
         Patent Agents. The cost of the expert shall be borne equally by the
         Parties.

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 27 -

                                   SCHEDULE 1

CRT Patent Rights


<TABLE>
<S>           <C>        <C>           <C>       <C>             <C>
[**]          [**]       [**]          [**]      [**]            Pending
------------------------------------------------------------------------
[**]          [**]       [**]          [**]      [**]            Pending
------------------------------------------------------------------------
[**]          [**]       [**]          [**]      [**]            Pending
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[**]          [**]       [**]          [**]      [**]            Pending
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[**]          [**]       [**]          [**]      [**]            Pending
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[**]          [**]       [**]          [**]      [**]            Pending
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[**]          [**]       [**]          [**]      [**]            Pending
------------------------------------------------------------------------
[**]          [**]       [**]          [**]      [**]            Pending
------------------------------------------------------------------------
[**]          [**]       [**]          [**]      [**]            Pending
------------------------------------------------------------------------
[**]          [**]       [**]          [**]      [**]            Pending
------------------------------------------------------------------------
[**]          [**]       [**]          [**]      [**]            Pending
------------------------------------------------------------------------
[**]          [**]       [**]          [**]      [**]            Pending
------------------------------------------------------------------------
[**]          [**]       [**]          [**]      [**]            Pending
------------------------------------------------------------------------
[**]          [**]
------------------------------------------------------------------------
[**]          [**]       [**]          [**]      [**]            Pending
------------------------------------------------------------------------
</TABLE>


                              SECTION CONFIDENTIAL


<PAGE>

                                     - 28 -

                                   SCHEDULE 2

LICENSED AFFILIATES

(details to be provided by Alnylam pursuant to Clause 2.1).

                              SECTION CONFIDENTIAL


<PAGE>

                                     - 29 -

IN WITNESS whereof this Licence Agreement has been executed by duly authorised
officers of the Parties on the date first above written.

Signed by:                 /s/Harpal S. Kumar
                           ---------------------------

Name:                      Harpal S. Kumar

Title:                     Chief Executive
                           For and on behalf of
                           CANCER RESEARCH TECHNOLOGY LIMITED

Signed by:                 /s/John Maraganore
                           ---------------------------

Name:                      John Maraganore

Title:                     CEO
                           For and on behalf of
                           ALNYLAM PHARMACEUTICALS INC

                              SECTION CONFIDENTIAL


<PAGE>

ALNYLAM
   PHARMA

                                              790 MEMORIAL DRIVE - SUITE 220
                                                         CAMBRIDGE, MA 02139
                                                    TELEPHONE - 617-252-0700
                                                            FAX-617-252-0011

5 August 2003

Dr. Robert Kreutzer
Chief Executive Officer
Ribopharma AG
Fritz-Hormschuch-Strasse 9
95326 Kulmbach
Germany

RE:      CANCER RESEARCH TECHNOLOGY LIMITED AND ALNYLAM PHARMACEUTICALS, INC.
         LICENSE AGREEMENT DATED 18 JULY 2003

Dear Roland:

By signing this letter Riopharma AG hereby agrees to be bound to Cancer
Research Technology Ltd. By the terms of the above referenced License Agreement
that specifically apply to Affiliates.

Sincerely,

/s/John G. Conley
John G. Conley
Vice President Strategy, Chief Financial Officer

Acknowledge and Agreed,

/s/Roland Kreutzer                                    August 11, 2003
------------------
Roland Kreutzer


<PAGE>

ALNYLAM
   PHARMA

                                               790 MEMORIAL DRIVE - SUITE 220
                                                          CAMBRIDGE, MA 02139
                                                     TELEPHONE - 617-252-0700
                                                             FAX-617-252-0011

August 27, 2003

                                   VIA COURIER

Harpala S. Kumar
Chief Executive
Cancer Research Technology Ltd.
Sardina House
Sardina Street
London WC2A 3NL
United Kingdom

RE:      AMENDED SCHEDULE 2 TO THE LICENSE AGREEMENT BETWEEN CANCER RESEARCH
         TECHNOLOGY LIMITED AND ALNYLAM PHARMACEUTICALS, INC. DATED 18 JULY 2003

Dear Mr. Kumar

Enclosed please find an Amended Schedule 2 to be attached to our mutual License
Agreement. The amendment adds Ribopharma AG as a licensed Affiliate, now that
our merger has been completed. Pursuant to Clause 2, I have enclosed a copy of a
letter in which Ribopharma AG agrees to be bound as an Affiliate (to CRT) by the
terms of the License Agreement.

Please sign all copies of this letter acknowledging the above and return two
letters to me.

Sincerely,

/s/John M. Maraganore                              Acknowledged and agreed,
John M. Maraganore, Ph.D.
President and Chief Executive Officer
Tel: 617-252-0700                                    /s/Harpal S. Kumar
Fax: 617-252-0011                                    ------------------
jmaraganore@aknylam.com                              Harpal S. Kumar
                       
cc: J.Solbe                                          29/8/03
    R.Kreutzer                                       Date

Enclosures (3)


<PAGE>

                                                                   EXHIBIT 10.18

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                                LICENSE AGREEMENT

         This License Agreement (this "Agreement"), is effective December 30,
2003 (the "Effective Date"), by and between Cold Spring Harbor Laboratory, a
not-for-profit research institution located at 1 Bungtown Road, Cold Spring
Harbor, New York ("CSHL"), and Alnylam Pharmaceuticals, Inc., a Delaware
corporation having a principal place of business at 790 Memorial Drive,
Cambridge, MA 02139 ("Alnylam").

         WHEREAS, CSHL has certain RNAi-related technologies developed in the
laboratory of Dr. Greg Hannon at Cold Spring Harbor Laboratory as taught in the
patent applications listed in Schedule A;

         WHEREAS, Alnylam further desires to obtain rights to the aforementioned
RNAi-related technologies for the consideration set forth herein; and

         WHEREAS, CSHL is willing to grant to Alnylam a non-exclusive license to
research and use know-how and inventions to make, use, import and sell
therapeutic products, which in each case may be covered by claims in the patent
applications listed in Exhibit A on the terms and conditions set forth below;

         THEREFORE, the parties agree as follows:


1.       DEFINITIONS

         1.1      "Affiliate" shall mean a corporation, company, partnership,
joint venture or other entity which directly or indirectly controls, is
controlled by or under common control with Alnylam. For the purposes of this
Section 1.1 only, "control" shall mean (A) the direct or indirect ownership or
control of fifty percent (50%) or more of (i) the stock (or other securities or
voting rights) having the right to vote for directors or other governing
authority thereof or (ii) ownership interest or (B) the ability to otherwise
control the management thereof or (C) in any country where the local law shall
not permit foreign equity participation of fifty percent (50%) or more, then the
direct or indirect ownership or control of the maximum percentage of such
outstanding stock or voting rights permitted by local law.

         1.2      "Alnylam Confidential Information" or "Confidential
Information" of Alnylam shall mean all non-public information disclosed by
Alnylam to CSHL. Notwithstanding the foregoing, only the information, which is
designated as confidential in writing by Alnylam, whether by letter or by the
use of an appropriate stamp or legend, prior to or at the time any such


<PAGE>

information is disclosed by Alnylam to CSHL shall be considered Alnylam
Confidential Information. Information which is orally, visually or physically
disclosed by Alnylam shall constitute Alnylam Confidential Information only if
Alnylam indicated at the time of such disclosure that such information was
confidential and, within thirty (30) days after such disclosure, delivers to
CSHL a written document or documents describing such information and referencing
the place and date of such oral, visual or physical disclosure and the names of
the persons to whom such disclosure was made.

         1.3      "Commercial Introduction" of Licensed Product(s) means, on a
country-by-country and Licensed Product-by-Licensed Product basis, the date of
first commercial sale of a Licensed Product by Alnylam or its Affiliates in an
arms'-length transaction to an independent third party in such country after
obtaining all necessary Regulatory Approvals; provided that such Licensed
Product(s) are neither units provided for evaluation purposes nor free units for
indigent persons.

         1.4      "Contractor" means a third party corporation, person, or
entity under written agreement with Alnylam ("Contract") (i) who, for
non-royalty based payment(s), undertakes on the behalf of Alnylam to make, use,
and/or import, products or processes embodying or made in accordance with the
Licensed Patents (collectively, "Contract Work"), and (ii) which party shall
not, after termination of the Contract, receive subsequent CSHL rights to CSHL
intellectual property under this Agreement and (iii) from whom Alnylam receives
no payments for entering such Contract (iv) and from whom Alnylam receives full
ownership and/or exclusive license to all results obtained from the Contract
Work.

         1.5      "Control" or "Controlled" means possession of the ability to
grant access to or a license or sublicense as provided for herein without
violating the terms of any agreement or other arrangement with any third party.

         1.6      "CSHL Confidential Information" or "Confidential Information"
of CSHL means (a) non-public documents and information relating to the filing
and prosecution of Licensed Patents provided to Alnylam during the term of this
Agreement at Alnylam's written request; and (b) CSHL Know-How provided to
Alnylam. Notwithstanding the foregoing, only such documents, information,
reports, and CSHL Know-How which are designated as confidential in writing by
CSHL, whether by letter or by the use of an appropriate stamp or legend, prior
to or at the time any such documents, information or reports are disclosed by
CSHL to Alnylam shall be considered CSHL Confidential Information. The
information, reports, or CSHL Know-How described above which are orally,
visually or physically disclosed by CSHL shall constitute CSHL Confidential
Information only if CSHL indicated at the time of such disclosure that such
information, reports, or CSHL Know-How were confidential and, within thirty (30)
days after such disclosure, delivers to Alnylam a written document or documents
describing such information, reports, or CSHL Know-How and referencing the place
and date of such oral, visual or physical disclosure and the names of the
persons to whom such disclosure was made. No other information disclosed by CSHL
to Alnylam hereunder shall be considered Confidential Information of CSHL,
unless the parties specifically and expressly agree otherwise in a separate
writing signed by the authorized representatives of both parties.

                                      -2-

<PAGE>

         1.7      "CSHL Know-How" means all non-public information, and all
non-public materials, ideas, and technical information, developed by or for the
Principal Investigator and owned or Controlled by CSHL and necessary to practice
the Licensed Patents. CSHL Know-How shall not include anything that is generally
ascertainable from publicly available information or that was, as evidenced by
Alnylam's written record, (i) known to Alnylam prior to disclosure to Alnylam by
CSHL, as evidenced by Alnylam's written record or, (ii) which Alnylam develops
independently or obtains not in violation of any obligation of confidentiality
owed to CSHL.

         1.8      "FDA" shall mean the United States Food and Drug
Administration and any successor agency or authority thereto.

         1.9      "FDA Approval" means the act of the FDA necessary for the
marketing and sale of a Product in the United States.

         1.10     "Field of Use" means all therapeutic uses in humans, including
without limitation the diagnosis, prevention and treatment of diseases or
conditions and all other healthcare applications. Field of Use shall not include
research reagent sales.

         1.11     "Gross Sales" of a Licensed Product means, on a Licensed
Product-by Licensed Product basis, for purposes of the calculation of royalties,
the gross amount invoiced for independent arm's length sales of a Licensed
Product by Alnylam or its third party sublicensees to independent third parties,
on a worldwide basis. If a product is sold for use in a single vial or other
single dispensation vehicle in combination with other active ingredient(s),
notwithstanding the foregoing, "Gross Sales" shall mean Adjusted Gross Sales.
"Adjusted Gross Sales" shall mean the gross invoiced sales price from such sales
multiplied by the fraction B/(A+B), where A is the gross invoiced sales price
for the amount of the other active ingredient(s) used in the combination when
distributed separately and B is the gross invoiced sales price for the amount of
the Licensed Product used in the combination when distributed separately.

         1.12     "Licensed Patents" means the U.S. Patent Applications listed
in Schedule A and any divisions, continuations, reissues, reexamines, extensions
and continuations-in-part applications thereof and any patents issuing thereto;
and any and all foreign patents, foreign applications, extensions and
supplemental protection certificates or patent applications corresponding
thereto having the Principal Investigator as an inventor and claiming the same
priority date as a parent application.

         1.13     "Licensed Product" means any product, including but not
limited to any lyophilized liquid, sustained release or aerosolized formulation
or other formulation, or process for which Alnylam, or its Affiliate has
received FDA Approval and/or Regulatory Approval, which is made through the use
of CSHL Know-How or falls within the scope of a Valid Claim of a Licensed
Patent.

         1.14     "Net Sales" of a Licensed Product, means the Gross Sales of
such Licensed Product less applicable Sales Returns and Allowances for such
Licensed Product, on a worldwide basis. Bona fide sample units, free units for
indigent persons, and pre-clinical,

                                      -3-

<PAGE>

clinical (including any placebo materials), or market-focused trial units of
Licensed Product will not be included in any calculations of Net Sales.

         1.15     "Regulatory Approval" means the approval, license,
registration or other authorization of the relevant Regulatory Authority
received by Alnylam or its Affiliates necessary for the commercial sale of a
Licensed Product.

         1.16     "Regulatory Authority" means any regulatory authority,
comparable to the FDA, which is responsible for the approval and regulation of a
Licensed Product within a country, or if applicable a centralized regulatory
authority with jurisdiction over multiple countries, and any successor
regulatory authority or authorities. The term "Regulatory Authority" includes,
but is not limited to, the FDA.

         1.17     "Sales Returns and Allowances" means, for purposes of the
calculation of royalties due for Licensed Products, the sum of (a) and (b),
where: (a) is a provision, determined by Alnylam under U.S. GAAP or IAS as
applicable for sales of such products for (i) trade, cash and quantity 
discounts or price adjustments or rebates on such products (including but not 
limited to discounts or rebates to governmental or managed care organizations), 
other than price discounts granted at the time of invoicing and which are 
included in the determination of Gross Sales, (ii) credits or allowances given 
or made for rejection or return of, and for uncollectible amounts on, such 
previously sold products or for retroactive price reductions (including 
Medicare and similar types of rebates and chargebacks), (iii) taxes, duties or 
other governmental charges (including any tax such as a value added or similar 
tax or government charge other than an income tax) levied on or measured by the 
billing amount for such products, as adjusted for rebates and refunds, 
(iv) charges for freight and insurance directly related to the distribution of 
such products, to the extent included in Gross Sales, (v) credits or allowances
given or made for wastage replacement or indigent patients, and (vi) other 
special sales programs agreed to by the parties for such products; and (b) is a
periodic adjustment of the provision determined in (a) to reflect amounts
actually incurred by Alnylam and/or its Affiliates for items (i), (ii), (iii),
(iv), (v), and (vi) in clause (a).

         1.18     "Valid Claim" means an issued claim of an unexpired patent or
a claim of a pending patent, which shall not have been withdrawn, canceled or
disclaimed, or held invalid or unenforceable by a court of competent
jurisdiction in an unappealed or unappealable decision.

2.       GRANT OF LICENSE

         2.1      License Grant to Alnylam. CSHL hereby grants to Alnylam and
its Affiliates a worldwide, non-exclusive license, under CSHL Know-How and
Licensed Patents (i) for all internal research and development purposes,
including without limitation, the right to make, use and import CSHL Know How
and inventions claimed in the Licensed Patents and (ii) to develop, make, use,
market, sell, offer for sale, export and import, in the Field of Use, Licensed
Products, including without limitation those covered by Valid Claims in the
Licensed Patents.

         2.2      Government Rights. The licenses granted in Sections 2.1 is
subject to the rights of the United States Government as set forth in 35 U.S.C.
Section 200 et seq. If there is any conflict between any rights and the rights
granted herein, such Government rights shall prevail.

         2.3      Sublicenses to Contractors. Alnylam may grant sublicenses to
Contractors to the extent necessary for such Contractor to perform its
obligations with respect to Contract Work only, provided however, that all
rights under Section 2.1 herein sublicensed to Contractors terminate concurrent
with termination of the corresponding Contract. The sublicenses granted by
Alnylam under this Agreement shall be subject to such third party sublicensees
entering into written agreement with Alnylam that are no less protective of
CSHL's rights than the terms of

                                      -4-

<PAGE>

this Agreement. All sublicenses granted under this Section 2.3 will have
appended to them and separately signed the terms in Schedule B. In no event
shall Alnylam sublicensees have the right to any grant further sublicenses to
CSHL rights licensed under this Agreement without the prior written consent of
CSHL. At CSHL's request, Alnylam shall provide to CSHL notice that Alnylam has
granted each such sublicense. All of such information provided by Alnylam to
CSHL shall be deemed to be Alnylam Confidential Information

         2.4      Right to Negotiate for Licenses to Third Party Collaborators.
The parties acknowledge that Alnylam has or may enter into collaborations with
third parties ("Collaborator(s)") in various areas. Upon Alnylam's written
documented request, CSHL agrees, to the extent that it is legally able, to
promptly enter into negotiations in good faith with one or more such existing or
potential Collaborators, not to exceed [**] Collaborators, for a license under
Licensed Patents. Notwithstanding anything to the contrary in this Section 2.4,
if for any reason whatsoever or for no reason, CSHL and such Collaborator do not
conclude negotiations for such license within a period of [**] immediately
following Alnylam's request to begin negotiations for such license, CSHL shall
have no further obligations to Alnylam or such Collaborator with regard to any
such license.

3.       PAYMENTS

         3.1      Upfront License Fee. As partial consideration for the license
granted in this Agreement, Alnylam shall pay CSHL a one-time non-refundable
upfront license fee of [**] U.S. Dollars ($[**] USD). Such fee shall be due
within thirty (30) days of the full execution of this Agreement. The upfront
license fee will not be creditable against any milestone or royalty due under
this Agreement.

         3.2      License Maintenance Fee. Alnylam shall pay CSHL an annual
license maintenance fee of [**] U.S. Dollars ($[**] USD) due within thirty (30)
days of the first anniversary of the Effective Date of the Agreement and within
thirty (30) days of each anniversary thereafter.

         3.3      Milestone Payments. Alnylam shall pay CSHL a milestone payment
of [**]U.S. Dollars ($[**] USD) upon FDA Approval for Commercial Introduction of
the first Licensed Product that would infringe a Valid Claim of a Licensed
Patent in the United States in the absence of the license granted in this
Agreement;

         3.4      Earned Royalties. Alnylam shall pay CSHL a [**] Percent
([**]%) royalty on Net Sales of Licensed Products for which the development,
making, use, marketing, selling, offering for sale, exporting or importing would
infringe a Valid Claim under Licensed Patents in the absence of the license
granted in this Agreement. Such royalty shall be payable on a Licensed
Product-by-Licensed Product, and country-by-country basis beginning with the
Commercial Introduction of a Licensed Product in a country and ending upon the
expiration date of the last to expire in such country of the Licensed Patents
referenced in the first sentence of this Section 3.4.

         3.5      Royalty Payment Terms.

                                      -5-

<PAGE>

                  (a)      The obligation to pay royalties under Section 3.4 of
this Agreement shall be imposed only once with respect to the same unit of
Licensed Product, regardless of the number of patents within Licensed Patents
pertaining thereto. Net Sales referred to in Section 3.4 of this Agreement will
be calculated on a calendar quarter basis. In the event that Alnylam, or its
Affiliates makes any adjustments to Sales Returns and Allowances after the
associated Net Sales have been reported pursuant to this Agreement, the
adjustments shall be reported by Alnlyam and reconciled with the next report and
payment of any royalties due. For purposes of determining when a sale of any
Licensed Product occurs under this Agreement, the sale shall be deemed to occur
on the date shipment of such Licensed Product is recognizable as revenue by
Alnylam under U.S. GAAP. After the date of Commercial Introduction of each
Licensed Product, all royalty payments for such Licensed Product shall be made
within sixty (60) days after the end of each calendar quarter in which such
sales were deemed to occur. All payments hereunder shall be made free and clear
of any taxes, duties, levies, fees or charges, except for withholding taxes (to
the extent required). All payments hereunder due to CSHL shall be made in U.S.
Dollars by bank wire transfer to: JPMorgan Chase Bank, 350 Main Street
Huntington, NY 11743 (Federal ABA#: 021-000-021, Account #: [**]).
Notwithstanding the foregoing, CSHL may modify such bank wire transfer
information upon providing prior written notice to Alnylam.

                  (b)      For the purpose of calculating royalty payments to
CSHL, Net Sales in each country shall be first determined in the currency of the
country in which they are earned and shall be converted quarterly into an amount
in U.S. Dollars at the closing of the average of the bid and ask prices reported
by Reuters Ltd. (or, if not available, the Wall Street Journal, East Coast
Edition) on the last business day in such quarter for which such payment is due.
If by law, regulations or fiscal policy of a particular country, remittance of
royalties in U.S. Dollars is restricted or forbidden, written notice thereof
will promptly be given to CSHL, and payment of the royalty shall be made by the
deposit thereof in local currency to the credit of CSHL in a recognized banking
institution in such country selected by Alnylam and reasonably acceptable to
CSHL. When, in any country, the law or regulations prohibit both the transmittal
and deposit of royalties on sales in such country, royalty payments shall be
suspended for as long as such prohibition is in effect and as soon as such
prohibition ceases to be in effect, all royalties that Alnylam would have been
under an obligation to transmit or deposit but for the prohibition shall
forthwith be deposited or transmitted to the extent allowable. In the event that
CSHL cannot arrange to have the blocked currency transferred out of the foreign
country within (12) months after deposit, CSHL may notify Alnylam in writing of
such event and return such blocked deposited currency to Alnylam in such
country, and Alnylam shall cause such royalties to be paid to CSHL in United
States Dollars to the bank account listed in Section 3.5 (a) at the exchange
rate quoted by Reuters, LTD. on the day the blocked currency was deposited in
the bank designated by CSHL within thirty (30) days of such notification and
return.

                  (c)      Taxes. CSHL will be responsible for any and all taxes
levied on account of amounts received under this Agreement. If Alnylam or its
Affiliates are required by law, rule or regulation to withhold taxes from the
types of payment due CSHL hereunder, the parties shall (a) deduct those taxes
from the amount otherwise remittable to CSHL hereunder, (b) pay such taxes to
the proper taxing authority, and (c) send evidence of the obligation together
with proof of payment to CSHL within fifteen (15) business days following that
payment.

                                      -6-

<PAGE>

                  (d)      Records and Bookkeeping. Alnylam and its Affiliates
shall keep books and records accurately showing all Licensed Products that
Alnylam and its Affiliates manufactured, used, and/or sold. Such books and
records must be preserved for at least three (3) years from the date of the
royalty payment to which they pertain and shall be open to inspection by an
independent public accountant selected by CSHL and reasonably acceptable to
Alnylam and its Affiliates during normal business hours, upon at least ten (10)
business days' prior notice and not more than once in each calendar year. The
parties agree that all information subject to review under this Section 3.5.1
(d) is Confidential Information of Alnylam and its Affiliates and that CSHL
shall cause the independent public accountant to execute a confidentiality
agreement reasonably acceptable to Alnylam and its Affiliates with respect to
the confidentiality and nonuse of such information; provided that the public
accountant performing the audit pursuant to this Section 3.5.1 may disclose to
CSHL the amount of any overpayment or underpayment.

The fees and expenses of CSHL's independent public accountant performing an
examination shall be borne by CSHL. However, if an error in royalties of more
than seven percent (7%) of the total royalties due for any year is discovered,
then the fees and expenses of the independent public accountant shall be borne
by Alnylam.

                  (e)      Interest. All amounts that are not paid by Alnylarn
or its Affiliates when due under the Agreement will accrue interest at a rate of
the annual prime rate of interest as published in the Federal Reserve Bulletin
H. 15 or successor bulletin thereto, plus an additional 1%.

4.       PATENT PROSECUTION

CSHL shall be solely responsible, at its sole discretion and expense, for the
prosecution, defense, and maintenance of Licensed Patents, and for enforcing
Licensed Patents against actual or suspected third party infringers. CSHL will
provide reasonable advance notice to Alnylam of any decision to abandon or
discontinue the prosecution of Licensed Patents in any country.

5.       REPRESENTATIONS AND WARRANTIES, INDEMNIFICATION, DISCLAIMERS AND
         LIMITATION OF LIABILITY

         5.1      By Alnylam. Alnylam represents and warrants to CSHL that
Alnylam has all necessary corporate power and authority to enter into and
perform its obligations under this Agreement without the consent or approval of
any other person or entity.

         5.2      Alnylam agrees to indemnify, hold harmless and defend CSHL,
its officers, directors, employees and agents, from and against any and all
claims, suits, losses, damages, costs, fees and expenses (collectively,
"Claims") resulting from or arising out of the development, manufacture,
storage, sale or other distribution or any other use of Licensed Patents or
Licensed Products by Alnylam, its Affiliates, agents and representatives or use
by end users and other third parties of Licensed Products.

         5.3      In all cases where CSHL seeks indemnification from Alnylam
under this Section 5, CSHL will promptly notify Alnylam of receipt of any claim
or lawsuit covered by such indemnification obligation and will cooperate fully
with Alnylam in connection with the investigation and defense of such claim or
lawsuit. Alnylam will have the right to control the

                                      -7-

<PAGE>

defense, with counsel of its choice, provided that CSHL will have the right to
be represented by advisory counsel at its own expense. Neither party will settle
or dispose of the matter in any matter that could negatively and materially
affect the rights or liability of the other party without the prior written
consent of such party, which will not be unreasonably withheld or delayed.

         5.4      Commencing not later than the date of Commercial Introduction
of a Licensed Product, Alnylam shall obtain and carry in full force and effect
product liability insurance against any claims, judgments, liabilities and
expenses for which it is obligated to indemnify the CSHL under Section 5.2
above, in such amounts as is reasonable at the time for similarly situated
companies engaged in similar business marketing similar products.

         5.5      By CSHL. CSHL represents and warrants that it has all
necessary power and authority to enter into and perform its obligations under
this Agreement without the consent or approval of any other person or entity,
including with respect to any pre-existing contractual relationships relating to
the subject matter hereof. CSHL further represents and warrants that to the
knowledge of the CSHL Office of Technology Transfer and Principal Investigator,
as of the Effective Date of this Agreement, CSHL is not party to an agreement or
named in any judgment or judicial or administrative order that reduces the
rights granted to Alnylam in Article 2 to the Licensed Patents.

         5.6      THIS LICENSE IS PROVIDED WITHOUT WARRANTY OF MERCHANTABILITY
OR FITNESS FOR A PARTICULAR PURPOSE OR ANY OTHER WARRANTY, EXPRESS OR IMPLIED.
CSHL MAKES NO REPRESENTATION OR WARRANTY THAT THE LICENSED PRODUCTS WILL NOT
INFRINGE ANY PATENT OR OTHER PROPRIETARY RIGHT. CSHL DOES NOT MAKE, AND ALNYLAM
AND ITS AFFILIATES HEREBY WAIVES, ALL OTHER WARRANTIES EXPRESS OR IMPLIED.

IN NO EVENT WILL CSHL BE LIABLE TO ALNYLAM OR ITS AFFILIATES FOR ANY INCIDENTAL,
SPECIAL OR CONSEQUENTIAL DAMAGES RESULTING FROM EXERCISE OF THIS LICENSE OR THE
USE OF THE LICENSED PRODUCTS.

         5.7      Nothing in this Agreement should be construed as:

                  (a)      A warranty or representation by CSHL as to the
validity or scope of any Licensed Patents;

                  (b)      A warranty or representation that anything made,
used, sold or otherwise disposed of under any license granted in this Agreement
is or will be free from infringement of patents of third parties; or

                  (c)      A requirement that CSHL shall file any patent
application, secure any patent, or maintain any patent, including without
limitation any Licensed Patents, in force.

6.       CONFIDENTIAL INFORMATION

         6.1      Non-Disclosure and Non-Use. The parties also agree that
disclosure of CSHL Confidential Information and/or Alnylam Confidential
Information to third parties could destroy

                                      -8-

<PAGE>

the value of such information and each hereby agrees, with respect to the
Confidential Information of the other party, (i) not to use any such
Confidential Information except as expressly permitted hereunder or as
authorized in writing by the disclosing party; (ii) to safeguard such
Confidential Information against disclosure to others with the same degree of
care as it exercises with its own confidential information but in no event less
than a reasonable degree of care; (iii) to mark any duplication or reproduction,
in whole or in part, of such Confidential Information with a proprietary notice
stating that same is the Confidential Information of the other party; and (iv)
not to disclose such Confidential Information to others without the permission
of the other party, all such obligations to continue until the later of (a) five
years from the date of the disclosure of the corresponding Confidential
Information or (b) one year from the effective date of termination of this
Agreement. Notwithstanding the foregoing or anything to the contrary in this
Agreement, the obligations under this Agreement shall not apply with respect to
any information that the receiving party can demonstrate (a) is, as of the date
of disclosure or development hereunder, known to the receiving party as
evidenced by written records; (b) is, as of the date of disclosure or
development hereunder, or becomes in the future, publicly available other than
by act or omission of the receiving party; (c) is rightfully obtained by the
receiving party from a third party without any binder of secrecy, or (d) has
been independently developed by the receiving party without use of or reference
to the disclosing party's Confidential Information, as demonstrated by such
receiving party's independent written records contemporaneous with such
development. Notwithstanding any provisions of this Agreement to the contrary,
the receiving party may disclose Confidential Information of the disclosing
party to the extent and to the persons or entities required under applicable
governmental law, rule, regulation or order, including without limitation if
required by the rules or regulations of the United States Securities and
Exchange Commission or similar regulatory agency in a country other than the
United States or of any stock exchange or Nasdaq, provided that such receiving
party (i) first gives prompt notice of such disclosure requirement to the
disclosing party so as to enable the disclosing party to seek any limitations on
or exemptions from such disclosure requirement and (ii) reasonably cooperates,
at the disclosing party's request and expense in any such efforts. In addition,
the parties and their respective duly designated employees, agents or
representatives or other agents may disclose to any and all such persons,
without limitation, the United States federal tax treatment and tax structure of
the transaction(s) covered by this Agreement and all materials of any kind that
are provided to the parties relating to such tax treatment and tax structure.

         6.2      Subject to Section 6.1 and with a further exception for
disclosures to bona fide potential investors, lenders and acquirors/acquirees
and to a party's consultants and advisors under a written obligation of
confidentiality, neither party will disclose the specific terms of this
Agreement to a third party. For clarity, Alnylam shall first disclose the
existence of this Agreement, but only after providing CSHL the material language
of such disclosure and an opportunity to comment at least one week prior to such
disclosure.

         6.3      No Implied Right. Unless expressly stated herein, the
furnishing of Confidential Information hereunder does not constitute any grant,
option, license or transfer of any right to, in, or under any patent or any
other intellectual property rights now or hereinafter held by the disclosing
party.

                                      -9-

<PAGE>

7.       TERM AND TERMINATION

         7.1      Term. Unless sooner terminated in a manner herein provided,
this Agreement shall expire upon the expiration of the last-to-expire patent
within the Licensed Patents. Upon expiration of this Agreement, Alnylam shall
have fully paid up, royalty-free, worldwide, perpetual, irrevocable,
nonexclusive licenses under Section 2.

         7.2      Termination By Alnylam. Alnylam may terminate this Agreement
with or without cause upon thirty (30) days advance written notification to
CSHL.

         7.3      Termination By A Party For Breach.

                  (a)      In the event one party materially breaches this
Agreement, then the other party may terminate this Agreement, at its option and
without prejudice to any of its other legal and equitable rights and remedies,
only in the event no Dispute Regarding Breach (as defined below) exists, by
giving the party who committed such material breach sixty (60) days notice in
writing, particularly specifying the breach and the intent to terminate, unless
the notified party within such sixty (60) day period shall have rectified such
breach. For clarity, the other party may not terminate this Agreement if the
notified party has rectified such breach within such sixty (60) day period.

                  (b)      In the event of a good faith dispute between the
parties as to whether a party ("Defaulting Party") has materially breached this
Agreement (a "Dispute Regarding Breach"), the parties shall submit the Dispute
Regarding Breach under the dispute resolution procedures set forth in Section
8.11. If the parties submit the Dispute Regarding Breach to an arbitration panel
as set forth in Section 8.11(b) and the decision of such arbitration panel is
that the Defaulting Party is in material breach of this Agreement (an "Adverse
Judgment"), then such arbitration panel shall specify the manner in which such
breach could be cured. If the decision of the arbitration panel is an Adverse
Judgment, then Defaulting Party shall have thirty (30) days to substantially
cure such breach in accordance with the arbitration panel's decision. If
Defaulting Party fails to substantially cure such breach within such thirty (30)
day period or as otherwise agreed, only then shall the other party have the
right to terminate this Agreement under this Section 7.3.

                  (c)      Upon termination of this Agreement for a material
breach of this Agreement by CSHL under Section 7.3(a) or 7.3(b), Alnylam shall
have a perpetual, irrevocable, worldwide, nonexclusive license under Article 2.

         7.4      Termination by CSHL For Bankruptcy. To the extent permitted by
law, if (a) Alnylam shall become insolvent or shall suspend business without a
successor or shall file a voluntary petition or answer admitting the
jurisdiction of the court and the material allegations thereof or shall consent
to an involuntary petition pursuant to or purporting to be pursuant to any
reorganization or insolvency law of any jurisdiction or shall make an assignment
for the benefit of creditors, or shall apply for or consent to the appointment
of a receiver or trustee of a substantial part of its property, and such
proceedings are not dismissed within one-hundred and twenty (120) days of filing
and (b) no Affiliate shall undertake to assume its obligations under the
provisions of this Agreement within ninety (90) days from the date on which
Alnylam

                                      -10-

<PAGE>

becomes so disabled, then, to the extent permitted by law, CSHL may thereafter
immediately terminate this Agreement by giving written notice of termination to
Alnylam. This Agreement and all of each party's right, obligations, and licenses
hereunder shall terminate upon receipt of such notice, except with respect to
all accrued and unpaid initial license fees, annual license fee(s) and/or
Library construction, license fees, and royalties on Licensed Products under
Section 4 herein, if applicable, incurred prior to the date of termination and
except as provided in Section 8.5 herein. Alnylam shall notify CSHL in writing
within forty-five (45) days after the filing of any petition, answer, consent,
assignment, application or other document evidencing the conditions set forth in
subsection (a) of this Section 7.4.

         7.5      Survival. Upon any termination or expiration, all of each
party's rights and obligations hereunder shall terminate, except as expressly
set forth herein and except that the following provisions of this Agreement
granted pursuant to this Agreement shall survive and remain in full force and
effect for as long as necessary to permit their full discharge: Sections 4
through 9. Alnylam's obligations to provide royalty payments and reports of Net
Sales of Licensed Products shall remain in effect until the end of the calendar
quarter of such termination date, and its obligation to preserve books and
records and to make them available for inspection as provided in Section 3.5.1
(d) shall continue as provided in Section 3.5.1 (d).

8.       MISCELLANEOUS PROVISIONS

         8.1      Notices. All notices and communications provided for hereunder
shall be in writing and shall be deemed to be properly delivered and effective
(a) on the date of delivery if delivered by hand, by telefacsimile, or by
overnight courier, or (b) three days after mailing if mailed by first-class
mail, postage paid, to the respective addresses given below, or to such other
address as either party shall designate in writing to the other:

If to CSHL:                                  With a copy to:
John Maroney                                 [**]                           
Director, Office of Technology Transfer                                 
Cold Spring Harbor Laboratory                                           
Box 100                                                                 
1 Bungtown Road
Cold Spring Harbor, NY 11724

If to Alnylam:                               With a copy to:
Alnylam Pharmaceuticals, Inc.                The Helix Law Group, P.C.
790 Memorial Drive                           One Broadway, 14th Floor
Cambridge, MA 02139                          Cambridge MA 02142
Attention: Chief Operating Officer           Attention: James R. McGarrah, Esq.

         8.2      Governing Law. This Agreement shall be governed by and
interpreted in accordance with the laws of the State of New York without giving
effect to any conflict of laws provisions thereof.

         8.3      Independent Contractors. Nothing contained herein shall be
interpreted as creating any relationship between the parties hereto except as
specifically set forth herein and it

                                      -11-

<PAGE>

is understood and agreed that the parties hereto are and shall remain
independent contractors, that neither party hereto shall be considered the
agent, partner, or joint venturer of the other for any purpose and that neither
party shall be responsible for or have any liability for the acts, actions, or
failures to act of the other party. Nothing in this Agreement or the performance
of the parties under this Agreement shall constitute (or be deemed to constitute
in law or in equity) a partnership, agency, distributorship, fiduciary,
employment or joint venture relationship between the parties. The parties are
not affiliated and neither has any right or authority to bind the other in any
way.

         8.4      Severability. The invalidity of any provision or part of this
Agreement shall not affect the validity of this Agreement in its entirety nor
any provision or part thereof. If any provision of this Agreement shall be held
by a court of competent jurisdiction to be illegal, invalid or unenforceable,
that provision shall be limited or eliminated to the minimum extent necessary so
that this Agreement shall otherwise remain in full force and effect and
enforceable.

         8.5      Waiver. No delay or failure of either party hereto in
exercising any right, power, or remedy hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any right, power, or remedy
preclude other or further exercise thereof or the exercise of any other right,
power, or remedy.

         8.6      Headings. The headings in this Agreement are intended solely
for convenience of reference and shall be given no effect in the construction or
interpretation of this Agreement.

         8.7      Entire Understanding. This Agreement and any attachments
hereto constitute the entire understanding between the parties hereto with
respect to the subject matter hereof and supersedes all proposals, oral or
written, all negotiations, conversations, or discussions between or among the
parties relating to the subject matter of this Agreement and all past dealing or
industry custom. No modifications, extensions or waiver of any provisions hereof
or release of any right hereunder shall be valid, unless the same is in writing
and is consented to by both parties hereto.

         8.8      No Assignments. Neither this Agreement nor any of the rights,
options or licenses granted to Alnylam hereunder shall be assignable to any
third party without the prior written consent of CSHL; provided that Alnylam may
without CSHL's consent assign this Agreement and delegate its obligations to any
acquiror of all or of substantially all of Alnylam's assets or business or
equity securities that relate to the licenses and rights granted herein.

         8.9      No Use of Names. No right, express or implied, is granted by
this Agreement to use in any manner the names "Cold Spring Harbor Laboratory",
"CSHL" or "Alnylam" or any other trade name or trademark of CSHL or Alnylam
without the prior written consent of the other party. Subject to Section 6,
neither party shall make any public announcement, press release, or other public
disclosure, advertisement or promotion concerning this Agreement or the subject
matter hereof without the prior written consent of the other party.

         8.10     Counterparts. This Agreement may be executed simultaneously in
counterparts, each of which shall be deemed to be original but all of which
together shall constitute one and the same Agreement.

                                      -12-

<PAGE>

         8.11     Dispute Resolution.

                  (a)      Internal Resolution. Any controversy, dispute or
claim which may arise out of or in connection with this Agreement, or the
interpretation, enforceability, performance, breach, termination or validity
thereof, including disputes relating to- alleged breach or termination of this
Agreement, but excluding any determination as to the infringement, validity or
claim interpretation of the Licensed Patents ("Dispute") shall be first referred
to designated senior representatives of each party for resolution prior to
proceeding under the following provisions in this Section 8.11. Such dispute
shall be referred to such representatives within fifteen (15) business days of
one party providing the other with written notice that such dispute exists, and
such representatives shall meet to attempt to resolve such dispute through good
faith discussions within fifteen (15) business days thereafter.

                  (b)      Arbitration. The parties agree that any Dispute not
resolved internally by the parties within thirty (30) days after meeting
pursuant to Section 8.11 (a) above, shall be resolved by binding arbitration in
accordance with the Commercial Arbitration Rules of the American Arbitration
Association ("AAA"), except as modified in this Agreement. The arbitration
tribunal shall consist of three neutral arbitrators. Each party shall nominate
in the request for arbitration and the answer thereto one arbitrator and the two
arbitrators so named will then jointly appoint the third arbitrator as chairman
of the arbitration tribunal. The parties shall have no ex-party communication
with their proposed arbitrator. If one party fails to nominate its arbitrator
or, if the parties' arbitrators cannot agree on the person to be named as
chairman within sixty (60) days, the President of the American Arbitration
Association shall make the necessary appointments for arbitrator or chairman.
The arbitration shall be conducted in accordance with AAA's Commercial Dispute
Resolution Procedures. The place of arbitration shall be New Haven, Connecticut
and the arbitration proceedings shall be held in English. The procedural law of
the State of New York shall apply where the said Arbitration Rules are silent.
The decision of the arbitration tribunal must be in writing and must specify the
basis on which the decision was made, and the award of the arbitration tribunal
shall be final and judgment upon such an award may be entered in any competent
court or application may be made to any competent court for judicial acceptance
of such an award and order of enforcement.

[SIGNATURE PAGE FOLLOWS]

                                      -13-

<PAGE>

         IN WITNESS HEREOF, the parties hereto have executed this Agreement
as-of the date and year first above written.

                                 ALNYLAM PHARMACEUTICALS, INC.

                                 By: /s/John Maraganore
                                     -------------------------------------------

                                 Title: President and CEO

                                 Date: December 30, 2003

                                 COLD SPRING HARBOR LABORATORY

                                 By: /s/ John Maroney
                                     -------------------------------------------

                                 Title: Director, Office of Technology Transfer

                                 Date: 12/31/2003

                                      -14-

<PAGE>

SCHEDULE A
CSHL Patents


<TABLE>
<CAPTION>
Serial No.     Type      Title   Date Filed     Status
------------------------------------------------------
<S>            <C>       <C>     <C>            <C>
 [**]          [**]      [**]      [**]          [**]
 [**]          [**]      [**]      [**]          [**]
 [**]          [**]      [**]      [**]          [**]
 [**]          [**]      [**]      [**]          [**]
</TABLE>


                                      -15-

<PAGE>

Schedule B

The sublicense for rights to make or use products or processes under the CSHL
Licensed Patents conveys to the end user the limited, non-exclusive,
non-transferable license under these patent rights to perform the processes in
those patent applications for performance of contract work on behalf of Alnylam,
only. No other license is granted to the end user whether expressly, by
implication, by estoppel or otherwise. In particular, the right to make or use
products or processes under the CSHL Licensed Patents does not include nor carry
any right or license to sell or offer for sale products, formulations, or
methods claimed in Cold Spring Harbor Laboratory patents or patent applications
and no rights are conveyed to the end user to use the product or components of
the product for any other purposes, including without limitation, provision of
services to a third party, or selling of commercial databases.

In the event that a not-for-profit entity desires or intends to receive rights
to make or use products or processes under the CSHL Licensed Patents on the
behalf of Alnylam, such not-for-profit entity must contact CSHL to negotiate the
appropriate interinstitutional agreement.

THE CSHL LICENSED PATENT RIGHTS ARE MADE AVAILABLE PURSUANT TO A LICENSE FROM
CSHL, AND CSHL RESERVES ALL OTHER RIGHTS UNDER THESE PATENT RIGHTS. FOR
INFORMATION ON PURCHASING A LICENSE TO THE PATENT RIGHTS FOR USES OTHER THAN IN
CONJUNCTION WITH THIS PRODUCT OR TO USE THIS PRODUCT FOR PURPOSES OTHER THAN
CONTRACT WORK ON BEHALF OF ALNYLAM, PLEASE CONTACT THE CSHL OFFICE OF TECHNOLOGY
TRANSFER AT 516-367-8312.

                                      -16-


<PAGE>

                                                                   EXHIBIT 10.19

          Confidential Materials omitted and filed separately with the
         Securities and Exchange Commission. Asterisks denote omissions.

                         CO-EXCLUSIVE LICENSE AGREEMENT

between

Garching Innovation GmbH,
Hofgartenstrasse 8, 80539 Munchen, Germany,
represented by the Managing Director, Dr. Bernhard Hertel,
- as licensor, hereinafter called "GI"-

and

Alnylam Pharmaceuticals Inc.,
790 Memorial Drive, Suite 202, Cambridge, MA 02139, USA
represented by the Chief Executive Officer, John Maraganore,
 - as licensee, hereinafter called "COMPANY" -

                                                                          page 1


<PAGE>

PREAMBLE

WHEREAS, Massachusetts Institute of Technology ("M.I.T."), Whitehead Institute
for Biomedical Research ("WHITEHEAD"), Max-Planck-Gesellschaft zur Foerderung
der Wissenschaften e.V. ("MAX-PLANCK") and University of Massachusetts
("UMASS"), are joint owners of certain JOINT PATENT RIGHTS (as later defined
herein) relating to "RNA Sequence-Specific Mediators of RNA Interference", by
David P. Bartel, Phillip A. Sharp, Thomas Tuschl, and Phillip D. Zamore
(MAX-PLANCK Case No. GI 2716 KTM).

WHEREAS, MAX-PLANCK is the owner of certain MAX PLANCK PATENT RIGHTS (as later
defined herein) relating to "RNA Interference Mediating Small RNA Molecules," by
Thomas Tuschl, Sayda Elbashir
 and Winfried Lendeckel (MAX-PLANCK Case No. GI
2782 KTM).

WHEREAS, M.I.T., WHITEHEAD, MAX-PLANCK and UMASS have the right to grant
licenses under the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS, subject
to a royalty-free, nonexclusive license granted to the United States and the
German Governments to practice the JOINT PATENT RIGHTS and the MAX PLANCK PATENT
RIGHTS for government purposes.

WHEREAS, MAX-PLANCK has authorized Garching Innovation GmbH ("GI") to act as its
agent for the purposes of licensing its ownership position of JOINT PATENT
RIGHTS and the MAX PLANCK PATENT RIGHTS.

WHEREAS, WHITEHEAD, M.I.T. and UMASS have not authorized GI to act as their
agent for the purposes of licensing the JOINT PATENT RIGHTS and the MAX PLANCK
PATENT RIGHTS for therapeutic purposes, and therefore, this Agreement is not
binding on each of WHITEHEAD, M.I.T. and UMASS unless and until it gives its
respective individual approval.

WHEREAS, COMPANY is an early-stage therapeutics company which was founded in
2002 by an international group of scientists that helped discover the novel
biological phenomenon of RNA interference.

WHEREAS, COMPANY desires to obtain one co-exclusive license, with the right to
grant sublicenses, under the JOINT PATENT RIGHTS and the MAX PLANCK PATENT
RIGHTS for the purpose of developing and commercializing therapeutic products,
and GI desires to grant such license on the terms and conditions hereinafter set
forth.

WHEREAS, the shareholders of COMPANY desire to found and finance EuropeRNAi (as
later defined herein) under certain REQUIREMENTS (as later defined herein) as an
European-based therapeutics company.

WHEREAS, GI intends to grant to EuropeRNAi, upon fulfillment of the
REQUIREMENTS, one

                                                      Alnylam; GI 2716, 2782 ZTM
                                                           Dec. 19, 2002; page 2


<PAGE>

additional co-exclusive license, with the right to grant sublicenses, under the
JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS for the purpose of
developing and commercializing therapeutic products.

NOW, THEREFORE, GI and COMPANY hereby agree as follows:

ARTICLE 1 - DEFINITIONS

1.1      "JOINT PATENT RIGHTS"

shall mean:

(a)      the United States and international patent and provisional applications
         listed on Appendix A and the resulting patents,

(b)      any patent applications resulting from the provisional applications
         listed on Appendix A, and any divisionals, continuations,
         continuation-in-part applications, and continued prosecution
         applications (and their relevant international equivalents) of the
         patent applications listed on Appendix A and of such patent
         applications that result from the provisional applications listed on
         Appendix A, to the extent the claims are directed to subject matter
         specifically described in the patent applications listed on Appendix A,
         and the resulting patents,

(c)      any patents resulting from reissues, reexaminations, or extensions (and
         their relevant international equivalents) of the patents described in
         (a) and (b) above, and

(d)      international (non-United States) patent applications and provisional
         applications filed after the EFFECTIVE DATE and the relevant
         international equivalents to divisionals, continuations,
         continuations-in-part applications and continued prosecution
         applications of the patent applications to the extent the claims are
         directed to subject matter specifically described in the patents or
         patent applications referred to in (a), (b), and (c) above, and the
         resulting patents.

1.2      "MAX PLANCK PATENT RIGHTS"

shall mean:

(a)      the United States and international patent and provisional applications
         listed on Appendix B and the resulting patents,

(b)      any patent applications resulting from the provisional applications
         listed on Appendix B, and any divisionals, continuations,
         continuation-in-part applications, and continued prosecution
         applications (and their relevant international equivalents) of the
         patent applications listed on Appendix B and of such patent
         applications that result from the provisional applications listed on
         Appendix B, to the extent the claims are directed to subject matter
         specifically described in the patent applications listed on Appendix B,
         and the resulting patents,

(c)      any patents resulting from reissues, reexaminations, or extensions (and
         their relevant international equivalents) of the patents described in
         (a) and (b) above, and

(d)      international (non-United States) patent applications and provisional
         applications filed after

                                                      Alnylam; GI 2716, 2782 ZTM
                                                           Dec. 19, 2002; page 3


<PAGE>

         the EFFECTIVE DATE and the relevant international equivalents to
         divisionals, continuations, continuations-in-part applications and
         continued prosecution applications of the patent applications to the
         extent the claims are directed to subject matter specifically described
         in the patents or patent applications referred to in (a), (b), and (c)
         above, and the resulting patents.

1.3      "PATENT RIGHTS"

shall mean the JOINT PATENT RIGHTS and MAX PLANCK PATENT RIGHTS together.

1.4      "OWNERS"

shall mean M.I.T., WHITEHEAD, UMASS and MAX-PLANCK collectively.

1.5      "LICENSED PRODUCTS"

shall mean any product or part thereof the manufacture, use or sale of which
would, absent the license granted hereunder, infringe one or more issued claims
of the PATENT RIGHTS or one or more pending claims of the PATENT RIGHTS that
have not been pending for more than 5 (five) years after filing national patent
applications in the country in question.

1.6      "FIELD"

shall mean all uses other than the commercial sale or use of the LICENSED
PRODUCTS as a research reagent, including in a kit format, for research or
educational purposes, including without limitation,

(i) COMPANY'S internal and collaborative research use, and

(ii) all therapeutic and prophylactic uses, and

(iii) diagnostic uses for purposes of therapeutic monitoring, but excluding all
other diagnostic uses,

specifically including human and veterinary diseases, initially for all
indications, but with a later split of indications according to Section 2.3.

1.7      "SUBLICENSEE"

shall mean any third party who sells or intends to commercialize LICENSED
PRODUCTS under a sublicense from COMPANY to develop, make, use and sell LICENSED
PRODUCTS. SUBLICENSEE shall not include a distributor which purchases LICENSED
PRODUCTS (whether in packaged form or bulk form) from COMPANY and resells such
LICENSED PRODUCTS to third parties in a manner consistent with normal trade
practices in the pharmaceutical industry.

1.8      "NET SALES"

shall mean the gross amount invoiced by COMPANY and its SUBLICENSEES to third
parties for LICENSED PRODUCTS, less the following: (i) to the extent separately
stated on the document of sale, any taxes or duties imposed on the manufacture,
use, sale or import of LICENSED PRODUCTS which are paid by COMPANY, (ii) 
outbound transportation costs and costs of insurance in transit, (iii) 
customary trade, cash or quantity discounts or rebates, to the extent actually 
allowed and taken, and (iv) amounts repaid or credited by reason of rejection 
or return. No deductions shall be made for commissions paid to individuals or 
entities, or for cost of collections. NET SALES shall occur on the date of the 
invoice for a 


                                                      Alnylam; GI 2716, 2782 ZTM
                                                           Dec. 19, 2002; page 4


<PAGE>

LICENSED PRODUCT.

Non-cash consideration shall not be accepted by COMPANY or any SUBLICENSEE for
LICENSED PRODUCTS without the prior written consent of GI.

In the event that a LICENSED PRODUCT is sold in combination with one or more
active ingredients (excluding, without limitation, any formulation,
stabilisation and delivery technology) which are not LICENSED PRODUCTS, which
active ingredients are also independently marketed during the royalty period in
question in the FIELD (or the non-exclusive field licensed in the second
paragraph of Section 2.1, as the case may be) in the country in question, then
NET SALES, for purposes of determining royalty payments on the combination
product, shall be calculated by multiplying the NET SALES of the combination
product by the fraction A/A+B, where A is the average gross selling price of the
LICENSED PRODUCT sold separately in similar quantities in the country in
question during the royalty period in question, and B is the average gross
selling price of the other active ingredient(s) sold separately in similar
quantities in the country in question during the royalty period in question. In
the event that a LICENSED PRODUCT is sold in combination with other active
ingredient(s), and the LICENSED PRODUCT or one or more other active ingredients
are not sold separately, GI and COMPANY shall negotiate in good faith other
means of calculating NET SALES with respect to such combination product, in
order to fairly reflect the value of the LICENSED PRODUCT relative to the other
active ingredient(s) in such combination product.

1.9      "REQUIREMENTS"

shall mean the requirements listed on Appendix C for EuropeRNAi.

1.10     "EuropeRNAi"

shall mean the European-based therapeutics company founded and established
according to the REQUIREMENTS.

1.11 "EFFECTIVE DATE"

shall mean the date of signature to this Agreement by the party last to sign.

1.12     "TERM"

shall mean the term of this Agreement, which shall commence on the EFFECTIVE
DATE and shall remain in effect until the expiration or abandonment of all
issued patents and filed patent applications within the PATENT RIGHTS, unless
earlier terminated in accordance with the provisions of this Agreement.

                                                      Alnylam; GI 2716, 2782 ZTM
                                                           Dec. 19, 2002; page 5


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ARTICLE 2 - GRANT OF RIGHTS

2.1      License Grant

GI grants to COMPANY for the TERM a worldwide royalty-bearing co-exclusive
license, with the right to grant sublicenses, under the PATENT RIGHTS to
develop, make, have made, use, sell and import LICENSED PRODUCTS in the FIELD.

GI grants to COMPANY for the TERM a worldwide royalty-bearing non-exclusive
license, without the right to grant sublicenses, under the PATENT RIGHTS to
develop, make, have made, use, sell and import LICENSED PRODUCTS for all
diagnostic uses other than for purposes of therapeutic monitoring.

2.2      Co-Exclusivity

GI and the approving OWNERS (according to Appendix D) shall not grant more than
a total of [**] (including the license granted hereby) worldwide royalty-bearing
co-exclusive licenses, with the right to grant sublicenses, under the PATENT
RIGHTS to develop, make, have made, use, sell and import LICENSED PRODUCTS in
the FIELD, and shall not grant any licenses under the PATENT RIGHTS in the FIELD
other than such [**] licenses.

This Section 2.2 shall not apply to the non-exclusive license stated in the
second paragraph of Section 2.1.

2.3      Split of Indications within the FIELD

[**] years after the EFFECTIVE DATE, COMPANY shall provide GI with information
in sufficient detail for each relevant indication and sub-indication within the
FIELD with respect to the estimated market size and accessibility by RNAi. If GI
decides, for good reason, that the received information is not complete and/or
not accurate and/or not sufficient, GI shall give COMPANY written notice thereof
within [**] after receiving the information. COMPANY shall provide GI within
[**] after receiving GI's written notice with the necessary information. GI will
oblige Europe-RNAi accordingly.

Within [**] after GI's receipt of the necessary information from COMPANY and
Europe-RNAi, GI and COMPANY shall mutually agree, jointly with EuropeRNAi, [**]
according to the estimated market size and accessibility by RNAi within the
FIELD between COMPANY and Europe-RNAi. After such split, the indications and
sub-indications awarded to COMPANY shall be regarded as exclusively licensed to
COMPANY.

If the parties do not agree within the timeframe, each party has the right to
initiate arbitration procedure according to Section 12.3.

In the event that, within [**] years after the EFFECTIVE DATE, (i) COMPANY or
EuropeRNAi merges with a third party in a transaction in which the shareholders
of COMPANY or EuropeRNAi (who hold shares in COMPANY or EuropeRNAi immediately
before such merger) own less than [**]% ([**] percent) of the shares of the
resulting entity after such merger, or (ii) a third party acquires all or
substantially all of the assets or shares of COMPANY or EuropeRNAi, this Section
2.3 shall not apply.

2.4      Sublicenses

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                                                           Dec. 19, 2002; page 6


<PAGE>

Within [**] years after the EFFECTIVE DATE, COMPANY is not allowed to grant
sublicenses to third parties without the prior approval of GI, which shall not
unreasonably be withheld. COMPANY shall inform GI in writing in due time prior
to the intended signature, of any sublicense agreement in sufficient detail to
permit GI to decide whether or not to approve. GI shall inform COMPANY in
writing within [**] days after receiving the information whether or not GI
approves; in particular, GI may withhold its approval if GI deems the reveived
information not sufficient. Notwithstanding the foregoing, COMPANY may grant,
within [**] years after the EFFECTIVE DATE, [**] for a specific indication to a
third party without the prior approval of GI, in which event COMPANY is obliged
to reserve an indication of comparable market size and RNAi accessibility to the
indication covered by the sublicense for EuropeRNAi.

After [**] years after the EFFECTIVE DATE, COMPANY is allowed to grant
sublicenses to third parties without the prior approval of GI.

Immediately after the signature of each sublicense granted under this Agreement,
COMPANY shall provide GI with a copy of the signed sublicense agreement, and
COMPANY shall confirm in writing to GI that COMPANY shall be liable for payment
of royalties on NET SALES of the SUBLICENSEE in accordance with Sections 5.2 and
5.3.

2.5      Retained Rights

OWNERS retain the right to practice under the PATENT RIGHTS for research,
teaching, education, non-commercial collaboration and publication purposes.
COMPANY acknowledges that the German and the U.S. federal government retain a
royalty-free, non-exclusive, non-transferable license to practice any
government-funded invention claimed in any PATENT RIGHTS for government
purposes.

2.6      No Additional Rights

Nothing in this Agreement shall be construed to confer any rights upon COMPANY
by implication, estoppel, or otherwise as to any intellectual property rights,
including without limitation patents and patent applications, trademarks,
copyrights and know-how, of the OWNERS other than the PATENT RIGHTS, regardless
of whether such intellectual property rights shall be dominant or subordinate to
any PATENT RIGHTS.

ARTICLE 3 - NO REPRESENTATIONS OR WARRANTIES

COMPANY is informed of the PATENT RIGHTS and the difficult patent situation in
the field of RNAi, and that it might need additional licenses from third parties
to have freedom to operate. GI and THE OWNERS MAKE NO REPRESENTATIONS OR
WARRANTIES OF ANY KIND CONCERNING THE PATENT RIGHTS, EXPRESS OR IMPLIED, AND THE
ABSENCE OF ANY LEGAL OR ACTUAL DEFECTS, WHETHER OR NOT DISCOVERABLE.
Specifically, and not to limit the foregoing, GI and the OWNERS make no warranty
or representation (i) regarding the merchantability or fitness for a particular
purpose of the PATENT RIGHTS, (ii) regarding the patentability, validity or
scope of the PATENT RIGHTS, (iii) that the exploitation of the PATENT

                                                      Alnylam; GI 2716, 2782 ZTM
                                                           Dec. 19, 2002; page 7


<PAGE>

RIGHTS or any LICENSED PRODUCT will not infringe any patents or other
intellectual property rights of the OWNERS or of a third party, and (iv) that
the exploitation of the PATENT RIGHTS or any LICENSED PRODUCT will not cause any
damages of any kind to COMPANY or a third party.

IN NO EVENT SHALL GI, THE OWNERS, THEIR TRUSTEES, DIRECTORS, OFFICERS, EMPLOYEES
AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND,
INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF
WHETHER GI OR ANY OF THE OWNERS SHALL BE ADVISED, SHALL HAVE OTHER REASON TO
KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING.

ARTICLE 4 - COMPANY DILIGENCE OBLIGATIONS AND REPORTS

4.1      Activity Requirements

COMPANY shall use commercially reasonable efforts, and shall oblige its
SUBLICENSEES to use commercially reasonable efforts, to develop and to introduce
into the commercial market LICENSED PRODUCTS at the earliest practical date.

4.2      Development Reports

Commencing with the beginning of 2003, COMPANY shall furnish, and shall oblige
its SUBLICENSEES to furnish to COMPANY for inclusion in its reports to GI, to GI
in writing, within 30 (thirty) days after the end of each calendar quarter with
COMPANY's standard R&D report, as provided to the investors pursuant to the
Amended and Restated Investor's Rights Agreement Series B, on the progress of
its efforts during the immediately preceding calendar quarter to develop and
commercialize LICENSED PRODUCTS for each indication and sub-indication within
the FIELD. The report shall also contain a discussion of intended R&D efforts
for the calendar quarter in which the report is submitted.

4.3      Target Specific Sublicenses

[**] years after the EFFECTIVE DATE, COMPANY shall be obliged to enter into good
faith negotiations on reasonable terms and conditions with a third party
requesting a sublicense under the PATENT RIGHTS for the development, use and
sale of products against a target gene in a specific indication or
sub-indication which is covered by pending or issued patent rights of such third
party, provided, however, that

(a)      COMPANY has not entered into a sublicense or is in serious negotiations
         for a sublicense for the use of [**], or

(b)      COMPANY can not demonstrate, through its standard research planning
         documents, significant current work which has commenced or is scheduled
         to commence within [**], to develop, within reasonable time, [**].

COMPANY shall inform GI on a quarterly basis of all such third party sublicense
requests, and

                                                      Alnylam; GI 2716, 2782 ZTM
                                                           Dec. 19, 2002; page 8


<PAGE>

whether or not COMPANY has granted such sublicense. In the event of non-grant,
COMPANY shall, upon GI's request, provide GI, within [**] after receiving GI's
request, with information in sufficient detail showing COMPANY's reason for the
non-grant.

If GI decides that COMPANY did not fulfill the requirements of (a) or (b),
and/or that COMPANY's terms and conditions for the requested sublicense have
been unreasonable, GI may initiate the arbitration procedure according to
Section 12.3. If the award of the arbitration tribunal states a non-fulfillment
of the requirements of (a) or (b), COMPANY shall immediately start negotiations
with the third party; if the award of the arbitration tribunal states
unreasonable terms and conditions, COMPANY shall immediately re-negotiate
reasonable terms and conditions with the third party. In any such awards of the
arbitration tribunal, the costs for the arbitration procedure shall be borne
solely by COMPANY.

4.4      Liability for SUBLICENSEES

If SUBLICENSEES of COMPANY develop, manufacture, use and/or sell LICENSED
PRODUCTS under the PATENT RIGHTS, COMPANY warrants and is liable towards GI that
the SUBLICENSEES perform their sublicense agreement in accordance with this
Agreement, and COMPANY shall be responsible and liable for royalty payments and
reports of the SUBLICENSEES.

4.5      Effect of Failure

In the event that GI determines that COMPANY or any of its SUBLICENSEES has
failed to fulfill any of its obligations under this Section 4, then GI may treat
such failure as a material breach in accordance with Section 11.7.

ARTICLE 5 - SHARES, ROYALTIES AND PAYMENT TERMS

5.1      Shares

As partial consideration for the grant of rights, COMPANY shall transfer to the
OWNERS cost-free 6% (six percent), or a proportionally reduced percentage
according to Appendix D 1, of COMPANY's total capital stock, which is currently
(post Series B) 12,200,010 shares. This translates currently, in the event of a
6% transfer, into 732,000 (seven hundred thirty two thousand) existing shares or
778,724 (seven hundred seventy eight thousand seven hundred twenty four) newly
issued shares. The transfer of shares according to this Section 5.1 to the
OWNERS shall be effected by COMPANY on or before March 31, 2003; such shares
shall be transferred irrevocably and non-retransferably, and shall be registered
as preferred shares Series B. In the event of an increase of COMPANY's total
number of shares prior to the transfer to the OWNERS, the number of shares to be
transferred to the OWNERS shall be increased to six percent of the increased
total capital stock.

In the event that COMPANY fulfills the REQUIREMENTS of Appendix C 1 and C 2, and
all of the OWNERS approve the Plan, then GI and the OWNERS shall grant a second
co-exclusive license to EuropeRNAi substantially identical to this Agreement. In
the event that COMPANY

                                                      Alnylam; GI 2716, 2782 ZTM
                                                           Dec. 19, 2002; page 9


<PAGE>

fulfills the REQUIREMENTS of Appendix C 1, and any of the OWNERS does not
approve the Plan, then Appendix D 2c) shall apply. In the event that COMPANY
fulfills the REQUIREMENTS of Appendix C 1 and C2, and any of the OWNERS does not
grant the second co-exclusive license to EuropeRNAi, then Appendix D 2c) shall
apply.

5.2      Running Royalties

COMPANY shall pay to GI the following running royalties on NET SALES of
therapeutic and prophylactic LICENSED PRODUCTS by COMPANY and its SUBLICENSEES:

(a)      [**]% (one point five percent) of the first US$[**] ([**] US Dollars)
         of annual accumulated NET SALES of all LICENSED PRODUCTS ;

(b)      [**]% (one point seven percent) of annual accumulated NET SALES of all
         LICENSED PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**]
         US Dollars);

(c)      [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED
         PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US
         Dollars);

(d)      [**]% [**] percent) of annual accumulated NET SALES of all LICENSED
         PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US
         Dollars);

(e)      [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED
         PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US
         Dollars); and

(f)      [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED
         PRODUCTS above US$[**] ([**] US Dollars).

In the event that COMPANY or a SUBLICENSEE develops diagnostic LICENSED
PRODUCTS, COMPANY shall initiate negotiations with GI at least [**] prior to the
intended first commercial sale of each diagnostic LICENSED PRODUCT. COMPANY and
GI shall negotiate in good faith [**] for such diagnostic LICENSED PRODUCT.

If the sale of any LICENSED PRODUCT is covered by more than one of the PATENT
RIGHTS, multiple royalties shall not be due.

Non-cash consideration shall not be accepted by COMPANY or any SUBLICENSEE for
LICENSED PRODUCTS without the prior written consent of GI.

5.3      Royalty Stacking

(a)      Third Party Licenses

In the event COMPANY or a SUBLICENSEE takes, for objective commercial and/or
legal reasons, a license from any third party under any patent applications or
patents that dominate the PATENT RIGHTS or is dominated by the PATENT RIGHTS in
order to develop, make, use, sell or import any LICENSED PRODUCT (explicitly
excluding, without limitation, any third party patents and patent applications
for formulation, stabilization and delivery), then COMPANY is allowed to deduct
[**]% ([**] percent) of any additional running royalties to be paid to such
third party up to [**]% ([**] percent) of the running royalties stated in
Section 5.2, from the date COMPANY has to pay running royalties to such third
party. However, the running royalties stated in Section 5.2 shall not be reduced
to less than a minimum of [**]% ([**] percent) of NET SALES in any case.

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 10


<PAGE>

For avoidance of doubt, if COMPANY or a SUBLICENSEE takes a license to a third
party target, COMPANY is in no event allowed to deduct any license fees for such
target from running royalties due to GI under this Agreement.

(b)      PATENT RIGHTS Coverage

In the event that (i) COMPANY or its SUBLICENSEES sell a LICENSED PRODUCT in a
country where no PATENT RIGHTS are issued and no patent applications that are
part of the PATENT RIGHTS are pending that have not been pending for less than
[**] years after filing national patent applications in the country in question,
and (ii) such LICENSED PRODUCT is manufactured in a country where PATENT RIGHTS
are issued or patent applications that are part of the PATENT RIGHTS are pending
that have not been pending for more than [**] years after filing national patent
applications in the country in question, the royalties stated in Section 5.2
will be reduced by [**]% ([**] percent) for such LICENSED PRODUCT, until the
expiration or abandonment of all issued patents and filed patent applications
within the PATENT RIGHTS in the country in which the LICENSED PRODUCT is
manufactured.

5.4      Reports

Within 30 (thirty) days of the end of each calendar half year, COMPANY shall
deliver a detailed report to GI for the immediately preceding calendar half year
showing at least (i) the number of LICENSED PRODUCTS sold by COMPANY and its
SUBLICENSEES in each country, (ii) the gross price charged by COMPANY and its
SUBLICENSEES for each LICENSED PRODUCTS in each country, (iii) the calculation
of NET SALES, and (iv) the resulting running royalties due to GI according to
those figures. If no running royalties are due to GI, the report shall so state.

5.5      Payments

(a)      Accounting and Payments

Running royalties shall be payable for each calendar half year, and shall be due
to GI within 60 (sixty) days of the end of each calendar half year.

(b)      Method of Payment

All payments under this Agreement shall be made payable to "Garching Innovation
GmbH" to the following account: Bayerische Hypo- und Vereinsbank AG; account
number [**]; bank code 700 202 70; SWIFT address: HYVEDEMMXXX. Each payment
shall reference this Agreement and the obligation under this Agreement that the
payment satisfies.

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 11


<PAGE>

(c)      Payments in US Dollars

All payments due under this Agreement shall be payable in US Dollars and, if
legally required, shall be paid with the additional value added tax. Conversion
of foreign currency to US Dollars shall be made at the conversion rate existing
in the United States (as reported in the Wall Street Journal) on the last
working day of the relevant calendar half year. Such payments shall be without
deduction of exchange, collection, or other charges, except for deduction of
withholding or similar taxes.

(d)      Late Payments

Any payments by COMPANY that are not paid on or before the date such payments
are due under this Agreement shall bear interest on arrears at 2 % (two
percentage points) above the Prime Rate of interest as reported in the Wall
Street Journal on the date the payment is due.

5.6      Bookkeeping and Auditing

COMPANY is obliged to keep, and shall oblige its SUBLICENSEES to keep, complete
and accurate books on any reports and payments due to GI under this Agreement,
which books shall contain sufficient information to permit GI to confirm the
accuracy of any reports and payments made to GI. GI, or GI's appointed agents,
is authorized to check the books of COMPANY, and, upon GI's request, COMPANY, or
agents appointed by GI for COMPANY, shall check the books of its SUBLICENSEES
for GI, once a year. The charges for such a check shall be borne by GI. In the
event that such check reveals an underpayment in excess of 5% (five percent),
COMPANY shall bear the full cost of such check and shall remit any amounts due
to GI within thirty days of receiving notice thereof from GI.

The right of auditing by GI under this Section shall expire five years after
each report or payment has been made. Sublicenses granted by COMPANY shall
provide that COMPANY shall have the right to check the books of its SUBLICENSEES
according to this Section 5.6.

5.7      No Refund

All payments made by COMPANY or its SUBLICENSEES under this Agreement are
nonrefundable and noncreditable against each other.

ARTICLE 6 - PATENT PROSECUTION AND INFRINGEMENT

6.1      Responsibility for PATENT RIGHTS

The OWNERS shall, in their sole discretion, apply for, seek issuance of,
maintain, or abandon the PATENT RIGHTS during the TERM of this Agreement. GI
shall (i) keep COMPANY reasonably informed as to the filing, prosecution,
maintenance and abandonment of the PATENT RIGHTS, (ii) furnish COMPANY copies of
documents relevant to any such filing, prosecution maintenance and abandonment,
and (iii) allow COMPANY reasonable opportunity to comment and advise on patent
attorneys to be used and on documents to be filed with any patent office which
would affect the PATENT RIGHTS in the FIELD, and (iv) give good faith

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 12


<PAGE>

consideration to the comments and advice of COMPANY.

In the event that all OWNERS wish to cease prosecution or abandon any of the
PATENT RIGHTS, GI shall notify COMPANY thereof in writing in due time, and shall
offer COMPANY the right to continue prosecution or maintenance of such PATENT
RIGHTS in its discretion, in its name and at its expense. GI will inform and
offer EuropeRNAi respectively. If COMPANY does not accept GI's offer within 30
(thirty) days after receiving it, the OWNERS shall be free to cease prosecution
or abandon such PATENT RIGHTS. In any event, if the manufacture and sale of a
LICENSED PRODUCT is solely covered by such PATENT RIGHTS, the respective NET
SALES are not royalty-bearing.

6.2      Patent Costs

COMPANY shall pay to GI [**]% ([**] percent) of all fees and costs, including
attorneys fees, relating to the filing, prosecution and maintenance of the
PATENT RIGHTS, which incur during the TERM. GI shall decide, in its sole
discretion, if such costs shall be paid directly by COMPANY to the creditor, or
if COMPANY shall reimburse GI for all amounts due pursuant to this Section
within 30 (thirty) days of invoicing.

In addition, if any or all of the current and future licensees which bear patent
costs cease to pay, for whatever reason, their respective patent cost share,
then COMPANY shall assume [**]% ([**]percent) of such share. GI will oblige
EuropeRNAi respectively.

Furthermore, if COMPANY wishes to prosecute or maintain any of the PATENT RIGHTS
in countries where none of the current and future licensees want to prosecute or
maintain, COMPANY shall bear [**]% ([**] percent) of all fees and costs relating
to such PATENT RIGHTS.

In the event that COMPANY wishes to cease payment for any of the PATENT RIGHTS,
COMPANY shall notify GI thereof in writing in due time, at least 3 months prior
to any deadline. The OWNERS shall have the right to continue payment for such
PATENT RIGHTS in their discretion and at their expense. In any event, such
PATENT RIGHTS shall no longer be covered by this Agreement from the date COMPANY
informs GI of its cessation of payments.

6.3      Infringement

COMPANY shall inform GI promptly in writing of any alleged infringement of the
PATENT RIGHTS by a third party and of any available evidence thereof.

Subject to COMPANY's right to join in the prosecution of infringements set forth
below, the OWNERS shall have the right, but not the obligation, to prosecute in
their own discretion and at their own expense, all infringements of the PATENT
RIGHTS. The total cost of any such sole infringement action shall be borne by
the OWNERS, and the OWNERS shall keep any recovery or damages derived therefrom.
In any such infringement suits, COMPANY shall, at the OWNERS' expense, cooperate
in all respects.

COMPANY shall have the right to join the OWNERS' prosecution of any
infringements of the PATENT RIGHTS: In any such joint infringement suits, the
OWNERS and COMPANY will cooperate in all respects. The OWNERS and COMPANY will
agree in good faith on the sharing of the total cost of any such joint
infringement action and the sharing of any recovery or

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 13


<PAGE>

damages derived therefrom.

In the event that the OWNERS decide not to prosecute infringements of the PATENT
RIGHTS, neither solely nor jointly with COMPANY, GI shall offer to COMPANY to
prosecute any such infringement in its own discretion and at its own expense. GI
will offer EuropeRNAi respectively. The OWNERS shall, at COMPANY'S expense,
cooperate. The total cost of any such sole infringement action shall be borne by
COMPANY, and COMPANY shall keep any recovery or damages derived therefrom.

In the event that COMPANY intends to make any arrangements with the infringer to
settle the infringement (such as sublicenses), and solely the OWNERS or the
OWNERS jointly with COMPANY have prosecuted the infringement, any such
settlement needs the prior written approval of GI, which shall not unreasonably
be withheld; reasons to withheld include, without limitation, that the
settlement is financially disadvantageous for the OWNERS or GI. Any infringer to
which COMPANY grants such sublicenses shall be a SUBLICENSEE under this
Agreement.

ARTICLE 7 - INDEMNIFICATION AND INSURANCE

7.1      Indemnification

COMPANY shall indemnify, defend, and hold harmless the OWNERS and their
trustees, officers, faculty, students, employees, and agents and their
respective successors, heirs and assigns (the "Indemnitees"), against any
liability, damage, loss, or expense (including reasonable attorneys fees and
expenses) incurred by or imposed upon any of the Indemnitees in connection with
any claims, suits, actions, demands or judgments arising out of any theory of
liability (including without limitation actions in the form of tort, warranty,
or strict liability and regardless of whether such action has any factual basis)
concerning (i) any use of the PATENT RIGHTS by COMPANY or its SUBLICENSEES, or
(ii) any product, process, or service that is developed, made, used, sold, or
performed pursuant to any right or license granted under this Agreement.

7.2      Insurance

COMPANY shall obtain and carry in full force and effect commercial general
liability insurance, including product liability and errors and omissions
insurance, which shall protect COMPANY and the Indemnitees with respect to
events covered by Section 7.1 above. Such insurance shall list GI and the OWNERS
as additional insured, and the limit of insurance shall not be less than
1,000,000 $ (one million US Dollars) per incident. Upon request, COMPANY shall
provide GI with certificates of insurance evidencing compliance with this
section.

ARTICLE 8 - CONFIDENTIALITY

8.1      Obligation for Company

The content of this Agreement and any information marked confidential which is
disclosed to COMPANY under this Agreement by GI or the OWNERS shall be treated
confidential by

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 14


<PAGE>

COMPANY during the TERM and for 5 (five) years thereafter. COMPANY shall not use
such information for any purposes other than those necessary to directly further
the purpose of this Agreement. COMPANY may disclose such information to its
actual and prospective SUBLICENSEES, investors, lenders, other financing
sources, acquirors and third parties being acquired by COMPANY, provided
however, that COMPANY has entered into serious discussions with such entities,
and such entities have requested such information, and such entities are obliged
to confidentiality to the same extent as COMPANY.

The confidentiality obligation shall not apply to information which is (i)
publicly available or becomes publicly available through no fault of COMPANY, or
(ii) obtained by COMPANY from another source without a duty of confidentiality,
or (iii) demonstrably independently developed or possessed by COMPANY, or (iv)
is required by law, regulation, accounting principles or an order of a court or
government agency to be disclosed.

8.2      Obligation for GI

The content of this Agreement and any information marked confidential which is
disclosed to GI under this Agreement by COMPANY or its SUBLICENSEES shall be
treated confidential by GI during the TERM and for 5 (five) years thereafter. GI
shall not use such information for any purposes other than those necessary to
directly further the purpose of this Agreement. GI may disclose such information
to the OWNERS, provided however, that the OWNERS are obliged to confidentiality
to the same extent as GI.

The confidentiality obligation shall not apply to information which is (i)
publicly available or becomes publicly available through no fault of GI, or (ii)
obtained by GI from another source without a duty of confidentiality, or (iii)
demonstrably independently developed or possessed by GI, or (iv) is required by
law, regulation, accounting principles or an order of a court or government
agency to be disclosed.

ARTICLE 9 - NO ASSIGNMENT OR TRANSFER

9.1      Assignment

This Agreement is personal to COMPANY and no rights or obligations may be
assigned by COMPANY to a third party or a SUBLICENSEE or EuropeRNAi without the
prior written consent of GI, except that sublicenses may be granted in
accordance with Section 2.4, and except that COMPANY may assign its rights and
obligations under this Agreement to a successor in connection with the merger,
consolidation, or sale of all or substantially all of its assets or that portion
of its business to which this Agreement relates; provided, however, that this
Agreement shall immediately terminate if the proposed assignee fails to agree in
writing to be bound by the terms and conditions of this Agreement on or before
the effective date of the assignment. After the effective date of the
assignment, the assignee shall provide GI, upon GI's request, with written
reports in reasonable detail on the actual and intended future activities of the
assignee to develop and commercialise LICENSED PRODUCTS. If the reports are not
provided to GI in due time and/or in sufficient detail, such failure will be a
material breach under Section 11.7, and GI

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 15


<PAGE>

shall have the right to terminate this Agreement in accordance with the
procedures set forth in Section 11.7.

9.2      Transfer to Europe-RNAi

Notwithstanding Section 9.1, the assignment or transfer of this Agreement in
whole from COMPANY to Europe-RNAi as new licensee, for example in connection
with a sale or transfer of at least 50% of COMPANY's assets or that portion of
its business to which this Agreement relates, needs the prior written consent of
GI, if such sale or transfer is implemented within 5 (five) years after the
EFFECTIVE DATE, unless such sale or transfer is in connection with an Initial
Public Offering or a trade sale whereby a third party acquires both COMPANY and
EuropeRNAi.

COMPANY shall inform GI immediately of any intended such sale or transfer.

ARTICLE 10 - GENERAL COMPLIANCE WITH LAWS

10.1     Compliance with Laws

COMPANY shall use commercially reasonable efforts to comply with all local,
state, federal, and international laws and regulations relating to the
development, manufacture, use and sale of LICENSED PRODUCTS.

10.2     Non-Use of OWNERS Names

Neither COMPANY nor its SUBLICENSEES shall use the name of "Massachusetts
Institute of Technology," "University of Massachusetts", "Whitehead Institute",
"Max Planck Institute", "Max Planck Society", "Garching Innovation" or any
variation, adaptation, or abbreviation thereof, or of any of its trustees,
officers, faculty, students, employees, or agents, or any trademark owned by any
of the OWNERS, in any promotional material or other public announcement or
disclosure without the prior written consent of the OWNERS or in the case of an
individual, the consent of that individual. The foregoing notwithstanding,
without the consent of the OWNERS, COMPANY may state generally that it is
co-exclusively licensed by the OWNERS under the PATENT RIGHTS.

ARTICLE 11 - EFFECTIVENESS AND TERMINATION

11.1     Effectiveness

The effectiveness of this Agreement is subject to the approval of all OWNERS.

In the event that all OWNERS approve on or before Jan. 31, 2003, this Agreement
shall become effective retroactively on the EFFECTIVE DATE.

In the event that not all OWNERS approve on or before Jan. 31, 2003, this
Agreement shall be amended in writing according to Appendix D 1.

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 16


<PAGE>

11.2     Voluntary Termination by COMPANY

COMPANY shall have the right to terminate this Agreement, for any reason, (i)
upon at least 6 (six) months prior written notice to GI, such notice to state
the date at least 6 (six) months in the future upon which termination is to be
effective, and (ii) upon payment of all amounts due to GI through such
termination effective date.

11.3     Cessation of Business

If COMPANY ceases to carry on its business related to this Agreement, COMPANY
has to inform GI thereof immediately. COMPANY and GI shall have the right to
terminate this Agreement immediately upon written notice to the other.

11.4     Change of Ownership

In the event that at least 50% (fifty percent) of COMPANY'S stock capital is
assigned or transferred to a third party or a SUBLICENSEE, COMPANY shall provide
GI, upon GI's request, with written reports in reasonable detail on the actual
and intended future activities of COMPANY to develop and commercialise LICENSED
PRODUCTS. If the reports are not provided to GI in due time and/or in sufficient
detail, such failure will be a material breach under Section 11.7, and GI shall
have the right to terminate this Agreement in accordance with the procedures set
forth in Section 11.7.

GI shall have the right to terminate this Agreement immediately upon written
notice to COMPANY, if at least 50% (fifty percent) of COMPANY'S stock capital is
assigned or transferred to EuropeRNAi within 5 (five) years after the EFFECTIVE
DATE, except in connection with an Initial Public Offering or a trade sale
whereby a third party acquires both COMPANY and EuropeRNAi.

COMPANY shall inform GI immediately of the implementation of any such assignment
or transfer.

11.5     Attack on PATENT RIGHTS

GI shall have the right to terminate this Agreement immediately upon written
notice to COMPANY, if COMPANY attacks, or has attacked or supports an attack
through a third party, the validity of any of the PATENT RIGHTS. To the extent
legally enforcable, sublicenses granted by COMPANY shall provide that in the
event the SUBLICENSEE attacks, or has attacked or supports an attack through a
third party, the validity of any of the PATENT RIGHTS, COMPANY shall have the
right to terminate the sublicense agreement immediately; upon request of GI,
COMPANY shall have the obligation to terminate such sublicense agreement.

11.6     Licenses to EuropeRNAi

In the event that

(i) COMPANY does not grant to EuropeRNAi a worldwide non-exclusive unrestricted
royalty-free license, with the right to grant sublicenses, to all of COMPANY'S
existing and future intellectual property rights owned or controlled by COMPANY,
including without limitation patents and patent applications, trademarks,
copyrights and know-how, necessary or useful to perform

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 17


<PAGE>

EuropeRNAi's business in the field of RNAi, or

(ii) COMPANY does not grant to EuropeRNAi a worldwide non-exclusive
unrestricted, with royalties payable only with respect to COMPANY's royalty
obligations towards its licensor, sublicense, with the right to grant further
sublicenses to the greatest extent permitted by its licensor, to all
intellectual property rights currently and in the future licensed to COMPANY,
including without limitation patents and patent applications, trademarks,
copyrights and know-how, necessary or useful to perform EuropeRNAi's business in
the field of RNAi,

GI shall have the right to terminate this Agreement immediately upon written
notice to COMPANY, if COMPANY fails to grant such licenses or sublicenses to
EuropeRNAi within 30 (thirty) days after receiving written notice thereof from
GI.

This Section 11.6 shall not apply in the event that (i) COMPANY or EuropeRNAi
merges with a third party in a transaction in which the shareholders of COMPANY
or EuropeRNAi (who hold shares in COMPANY or EuropeRNAi immediately before such
merger) own less than 50% (fifty percent) of the shares of the resulting entity
after such merger, or (ii) a third party acquires all or substantially all of
the assets or shares of COMPANY or EuropeRNAi.

11.7     Termination for Default

In the event COMPANY fails to pay any amounts due and payable to GI hereunder,
and fails to make such payments within 30 (thirty) days after receiving written
notice of such failure, GI may terminate this Agreement immediately upon written
notice to COMPANY. Notwithstanding the foregoing, in the event COMPANY commits a
material breach of its obligations under this Agreement, and fails to cure that
breach within 60 (sixty) days after receiving written notice thereof, GI may
terminate this Agreement immediately upon written notice to COMPANY.

Notwithstanding the foregoing, if COMPANY disputes any alleged failure to make a
payment or alleged material breach, the matter shall be resolved in accordance
with Section 12.3, and if the matter is resolved against COMPANY, COMPANY shall
have 10 (ten) days from the final decision of the arbitration tribunal to make
the payment, with additional interest on arrears according to Section 5.5 (d),
or cure the breach.

11.8     Effect of Termination

The following provisions shall survive the expiration or termination of this
Agreement: Articles 1, 3, 5.5, 7, 8, 12 and Section 11.1 and 11.8. In no event
shall termination of this Agreement release COMPANY or its SUBLICENSEES from the
obligation to pay any amounts that became due on or before the effective date of
termination.

In the event that any license granted to COMPANY under this Agreement is
terminated, any sublicense under such license granted prior to termination of
said license shall remain in full fore and effect, provided that:

(a) the SUBLICENSEE is not then in breach of its sublicense agreement, and

(b) the SUBLICENSEE agrees to be bound to GI as licensor under the terms and
conditions of the sublicense agreement, provided that GI shall have no other
obligation than to leave the sublicense granted by COMPANY in place.

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 18


<PAGE>

11.9     Insolvency

This Agreement shall terminate automatically, if (i) COMPANY files a petition in
bankruptcy, or (ii) COMPANY makes an assignment for the benefit of creditors, or
(iii) a petition in bankruptcy is filed against COMPANY and not dismissed within
90 (ninety) days.

ARTICLE 12 - MISCELLANEOUS

12.1     Notice

Any notices required or permitted under this Agreement and all correspondence
hereunder shall be in English and in writing, shall specifically refer to this
Agreement, and shall be sent by a method providing confirmation of delivery to
the following addresses or facsimile numbers of the parties:

If to GI:         Garching Innovation GmbH
                  Hofgartenstrasse 8
                  D-80539 Muenchen/Germany
                  Tel: +49/89/290919-0
                  Fax: +49/89/290919-99

If to COMPANY:    Alnylam Pharmaceuticals Inc.
                  790 Memorial Drive, Suite 202,
                  Cambridge, MA 02139, USA
                  Tel: +1-617-252-0700
                  Fax: +1-617-252-0011

All notices under this Agreement shall be deemed effective upon receipt. A party
may change its contact information immediately upon written notice to the other
party in the manner provided in this Section.

12.2     Governing Law

The parties explicitly agree and deem appropriate that this Agreement and all
disputes arising out of or related to this Agreement, or the performance,
enforcement, breach or termination hereof, and any remedies relating thereto,
shall be construed, governed, interpreted and applied in accordance with the
laws of the Federal Republic of Germany, except that questions affecting the
construction and effect of any patent shall be determined by the law of the
country in which the patent shall have been granted.

12.3     Dispute Resolution

The parties shall attempt to settle any dispute or claim arising out of or
relating to this Agreement by good faith negotiations. If the parties fail to
agree on a reasonable settlement within 60 (sixty) days after the affected party
informed the other party in writing of such dispute or claim, either

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 19


<PAGE>

party may initiate arbitration under the procedural Rules of the International
Chamber of Commerce upon written notice to the other party within 30 (thirty)
days after such failure. The arbitration tribunal shall be appointed as follows:
each party shall select, within 30 (thirty) days after notice to initiate
arbitration, an independent and experienced third party as its arbitrator. The
two arbitrators selected by the parties shall mutually select an independent and
experienced third party as third arbitrator. The venue for the arbitration
procedure shall be London, England, the language shall be English, and German
law shall be applied. The award of the arbitration tribunal shall be final and
binding for the parties. Notwithstanding the foregoing, each party may apply for
interlocutory relief in court.

12.4     Amendment and Waiver

This Agreement may be amended, supplemented, or otherwise modified only by means
of a written instrument signed by both parties. Any waiver of any rights or
failure to act in a specific instance shall relate only to such instance and
shall not be construed as an agreement to waive any rights or fail to act in any
other instance, whether or not similar.

12.5     Severability

Should one of the provisions of this Agreement be held void, invalid or
unenforceable, the remaining provisions of this Agreement will not cease to be
effective. The parties shall negotiate in good faith to replace such void,
invalid or unenforceable provision by a new provision which reflects, to the
extent possible, the original intent of the parties.

12.6     Headings

All headings are for convenience only and shall not affect the meaning of any
provision of this Agreement.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.

Garching Innovation GmbH                          Alnylam, Inc.

By:    /s/Bernhard Hertel                         By:    /s/John Maraganore
       --------------------------                        -----------------------
Name:  Dr. Bernhard Hertel                        Name:  John Maraganore
Title: Managing Director                          Title: Chief Executive Officer
Date:  12/20/02                                   Date:  12/20/02
       --------------------------                        -----------------------

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 20


<PAGE>

                                   APPENDIX A

                               JOINT PATENT RIGHTS

I.       United States Patents and Applications

USSN [**] entitled [**]

USSN [**] entitled [**]

II.      International (non-U.S.) Patents and Applications

[**] entitled [**]

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 21


<PAGE>

                                   APPENDIX B

                            MAX-PLANCK PATENT RIGHTS

I.       United States Patents and Applications
USSN [**] entitled [**]

II.      International (non-U.S.) Patents and Applications

European Serial Number [**] entitled [**]

[**] entitled "[**]

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 22


<PAGE>

                                   APPENDIX C

                                  REQUIREMENTS

1. within three months after the EFFECTIVE DATE:

COMPANY shall provide GI and the OWNERS with the final plan for structuring
EuropeRNAi for approval (the "Plan") the Plan shall address and solve, without
limitation, the following issues:

a)       legal and institutional policy needs of each of the OWNERS

b)       initial and future identical percentage shareholding of the
         shareholders of COMPANY in EuropeRNAi;

c)       initial financing of EuropeRNAi, and future financing of both
         EuropeRNAi and COMPANY;

d)       EuropeRNAi must have a German AG or GmbH with comparable operational
         forces in terms of budget, employees, R&D and BD capacity as COMPANY;

e)       problems and solutions of M&A transactions of only COMPANY or
         EuropeRNAi with a third party, if the third party acquires or is
         acquired by COMPANY or EuropeRNAi; security of fulfillment of
         REQUIREMENTS and access to intellectual property in such a scenario;

f)       mechanism how both COMPANY and EuropeRNAi can give each other full
         access to all current and future intellectual property which is useful
         or needed to perform the business in each ones indication fields;

g)       restructuring options of both COMPANY and EuropeRNAi in case of an IPO
         or trade sale.

2. within one month after Plan approval by one or more of the OWNERS:

incorporation of EuropeRNAi and the German AG/GmbH according to the Plan effect
of non-approval of the Plan by one or more OWNERS on the EuropeRNAi-license: see
Appendix D 2.

3. within three months after Plan approval

OWNERS shall receive cost-free 6% (six percent) of EuropeRNAi's total stock
capital; effect of non-approval of the Plan by one or more OWNERS on the shares:
see Appendix D 2. the transferred shares shall be registered equivalent to the
preferred shares issued to the investors (who hold preferred shares Series B in
COMPANY) in EuropeRNAi and shall be irrevocable and non-retransferable.

4. within eight months after Plan approval:

in place: laboratory and office in Germany with a minimum of six full time
employees

5. after eight months after Plan approval and until two years after the
EFFECTIVE DATE: EuropeRNAi and COMPANY shall use reasonable commercial efforts
to build for EuropeRNAi capabilities to develop, make, use, sell or import
LICENSED PRODUCTS comparable to COMPANY

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 23


<PAGE>

6. after Plan approval and for five years after the EFFECTIVE DATE:

no direct or indirect shareholding of COMPANY in EuropeRNAi without the OWNERS's
approval, except in connection with an Initial Public Offering or a trade sale
whereby a third party acquires both COMPANY and EuropeRNAi

7. for as long as (i) COMPANY or EuropeRNAi does not merge with a third party in
a transaction in which the shareholders of COMPANY or EuropeRNAi (who hold
shares in COMPANY or EuropeRNAi immediately before such merger) own less than
50% (fifty percent) of the shares of the resulting entity after such merger, or
(ii) a third party does not acquire all or substantially all of the assets or
shares of COMPANY or EuropeRNAi:

both COMPANY and EuropeRNAi shall give each other full access to all current and
future intellectual property which is useful or needed to perform the business
in each ones indication fields, excluding the intellectual property licensed
under this Agreement.

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 24


<PAGE>

                                   APPENDIX D

                             EFFECT OF NON-APPROVAL

1. In the event that one or more of the OWNERS do not approve this Agreement on
or before Jan. 31, 2003,

a)       the non-approving OWNERS shall be excluded from this Agreement, in
         particular their ownership position in the PATENT RIGHTS shall be
         excluded from the PATENT RIGHTS;

b)       the non-approving OWNERS do not receive any shares from COMPANY; the
         shares stated in Section 5.1 shall be reduced according to the
         proportional internal ownership of the non-approving OWNERS in the
         PATENT RIGHTS, and COMPANY shall transfer the so determined reduced
         number of shares to the approving OWNERS;

c)       the non-approving OWNERS shall not receive any portion of the running
         royalties as stated in Section 5.2, which running royalties shall
         remain unchanged; and

d)       the approving OWNERS authorize GI to grant to COMPANY the license
         according to Section 2.1; in countries where it is legally impossible
         to grant licenses to jointly owned patent rights without the approval
         of all joint owners, the approving OWNERS will partial assign their
         ownership position in the PATENT RIGHTS in such countries to COMPANY.

2. In the event that (i) one or more of the OWNERS do not approve the Plan
within 2 months after receiving the Plan, or (ii) one or more of the approving
OWNERS do not grant the second co-exclusive license to EuropeRNAi within one
month after incorporation of EuropeRNAi and the German AG/GmbH according to the
Plan:

a)       the non-approving and non-granting OWNERS shall be excluded from the
         EuropeRNAi-license agreement, in particular their ownership position in
         the PATENT RIGHTS shall be excluded from the PATENT RIGHTS;

b)       the non-approving and non-granting OWNERS do not receive any shares
         from EuropeRNAi; the shares stated in the EuropeRNAi-license agreement
         (equivalent to Section 5.1 of this Agreement) shall be reduced
         according to the proportional internal ownership of the non-approving
         OWNERS in the PATENT RIGHTS, and EuropeRNAi shall transfer the so
         determined reduced number of shares to the approving OWNERS;

c)       the non-approving and non-granting OWNERS shall retransfer to COMPANY
         65% of their shares received according to Section 5.1; in this event
         the non-approving and non-granting

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 25


<PAGE>

         OWNERS shall be entitled to grant one co-exclusive license to their
         ownership position in the PATENT RIGHTS to any European-based party of
         their choice;

d)       the non-approving and non-granting OWNERS shall not receive any portion
         of the running royalties according to the EuropeRNAi-license agreement
         (equivalent to Section 5.2 of this Agreement), which running royalties
         shall remain unchanged; and

e)       the approving OWNERS authorize GI to grant to EuropeRNAi the license
         according to the EuropeRNAi-license agreement (equivalent to Section
         2.1 of this Agreement); in countries where it is legally impossible to
         grant licenses to jointly owned patent rights without the approval of
         all joint owners, the approving OWNERS will partial assign their
         ownership position in the PATENT RIGHTS in such countries to
         EuropeRNAi.

                                                      Alnylam; GI 2716, 2782 ZTM
                                                          Dec. 19, 2002; page 26


<PAGE>

                                    AMENDMENT

         OF THE LICENSE AGREEMENT DATED DEC. 20, 2002 (THE "AGREEMENT")

                                     BETWEEN

                GARCHING INNOVATION GmBH, MUNICH, GERMANY ("GI")

                                       AND

            ALNYLAM PHARMACEUTICALS INC., CAMBRIDGE, USA ("COMPANY")

PREAMBLE

COMPANY and Ribopharma AG, Kulmbach, Germany ("Ribopharma") have signed a letter
of intent to combine their businesses by way of a merger, acquisition, cross
investment or any other way of transaction (collectively, the "Merger") to
achieve parallel equity ownership in both entities or a combined entity.

The parties to that transaction plan to have a parent holding company that will
own and control directly or indirectly the two existing entities COMPANY and
Ribopharma ("Hold Co."). The parent holding company shall be a US corporation.
This planned structure doesn't comply with certain of the requirements set forth
in Appendix C of the Agreement (the "REQUIREMENTS") on the assumption that
Ribopharma will be granted the second co-exclusive license described in Appendix
C. COMPANY wishes that the second co-exclusive license will be granted by GI to
Ribopharma.

Hold Co. and COMPANY have expressed their strong commitment that Ribopharma
shall be comparable to Alnylam, in particular in terms of growth, operational
forces and business capabilities, in the next five years. GI is willing to
support the Merger by amending certain REQUIREMENTS which are not in compliance
with the planned structuring of the transaction, if Hold Co. and COMPANY, on the
other hand, give GI greater security with respect to their commitment towards
Ribopharma.

Now, therefore, GI, COMPANY, and Hold Co. agree to amend and restate the
REQUIREMENTS to allow the execution of the Merger in compliance with the
Agreement on the following conditions:

The words in capital letters used in this Amendment shall have the meaning
defined in the Agreement.

A) GENERAL PROVISIONS

1.       COMPANY and GI agree that after the execution of the Merger, Ribopharma
         shall be regarded as the German AG or GmbH, which shall have comparable
         operational forces in terms of budget, employees, Research &
         Development and Business Development capacities as COMPANY for the next
         [**] in Germany. The split of indications according to Section 2.3 of
         the Agreement shall apply to COMPANY and Ribopharma.

                                                                          page 1


<PAGE>

2.       Due to time restrictions in the preparation of the Merger, COMPANY was
         only able to provide GI with a preliminary plan, which does not fulfil
         sufficiently REQUIREMENT No. 1 regarding the final Plan. GI and COMPANY
         agree that the signature of this Amendment shall be regarded as Plan
         approval by MAX PLANCK and a waiver of any failure of COMPANY to comply
         with the REQUIREMENTS regarding the Plan. Any of the other OWNERS shall
         only be regarded as an approving OWNER if it approves both the
         Agreement and this Amendment.

3.       GI agrees that the second co-exclusive license described in the
         Agreement will be granted by GI to Ribopharma (the
         "Ribopharma-License") contemporaneously with the closing of the Merger.
         The Ribopharma License shall include, without limitation, the following
         terms and conditions, and shall otherwise be comparable in scope and
         terms to the license granted by GI to COMPANY under the Agreement:

                  (a)      Ribopharma shall have no right to grant sublicenses
                  of its rights granted under the Ribopharma License to COMPANY,
                  Hold Co. or any affiliate or other company associated with the
                  Merger;

                  (b)      Any and each assignment of any rights and obligations
                           of the Ribopharma License by Ribopharma to COMPANY,
                           Hold Co. or any affiliate or any other company
                           associated with the Merger shall be subject to the
                           prior written approval of GI; and

                  (c)      Detailed definitions for "Affiliates" and for "Third
                           Parties".

                  (d)      In the event that one or more of the amended
                           REQUIREMENTS of this Amendment stated in B) to D)
                           below are not or no longer met by COMPANY, GI has the
                           extraordinary right to terminate the Ribopharma
                           License after compliance with the procedures set
                           forth in REQUIREMENT No. 5 c) below.

4.       All parties of the Merger acknowledge that they have each interests
         outside the FIELD of the Agreement. All parties of the Merger agree to
         maintain a periodic dialogue in good faith to discuss and potentially
         resolve any emerging commercial conflicts of interest outside the FIELD
         of the Agreement.

B) REQUIREMENT NO. 3 shall have the following wording:

"3. within three months after Plan approval:

         The OWNERS shall receive cost-free non-retransferable shares in Hold
         Co. of the same class that the Series B investors in COMPANY's Series B
         financing round will receive in Hold Co. in the course of the Merger,
         whereby the automatic conversion of Series B shares in Series B-1
         shares shall not apply to the OWNERS, and the OWNERS are not subject to
         the Special Mandatory Conversion as set forth in Article Fourth,
         Section 2(i) of the Certificate of Incorporation of Hold Co. as amended
         (the "Shares"). The Shares received by the OWNERS, as a group, shall be
         equivalent to 6% of COMPANY's total capital stock and equivalent to 6%
         of Ribopharma's total capital stock, each of the percentage of shares
         adjusted according to Appendix D2 in the event one or more OWNERS do
         not approve the Plan. For the avoidance of doubt, the approving OWNERS
         (MPG, MIT and WHITEHEAD) shall receive an equivalent number of shares
         in Hold-Co. as calculated in the capitalization tables of both COMPANY
         (723.240 Series B

                                                      Alnylam; GI 2716, 2782 ZTM
                                                           Dec. 19, 2002; page 2


<PAGE>

         shares) and Ribopharma (142.277 Series B shares). The total number of
         Shares the approving OWNERS shall receive in Hold-Co. is shown in the
         capitalization table of Hold Co. (865.517 Shares and 32.656 Additional
         Shares (as defined below in b)) The total capital stock of COMPANY,
         Ribopharma and Hold-Co. are attached to this Amendment as Appendixes 1,
         2 and 3.

         The total amount of Shares to be received by the OWNERS is subject to
         increase in an amount to be defined in good faith by the parties in the
         event that COMPANY:

         (a)      makes any cash payments to the shareholders of Ribopharma,
                  other than (i) payments (whether in the form of loans or cash)
                  for the payment of taxes incurred by such stockholders, (ii)
                  salary and bonus payments in connection with any employment
                  agreements with such stockholders, and (iii) payments made in
                  return for a reduction of shares having equal value to such
                  payment received or receivable in exchange for the
                  shareholding in Ribopharma in the Merger;

         (b)      executes or agrees to enter into a financing agreement prior
                  to the share transfer to the OWNERS pursuant to which the
                  investors in the financing receive shares at a price lower
                  than that paid for the Series B shares offered to the OWNERS
                  (US$ 2.50) in the Agreement.

                  For the avoidance of doubt, the parties already agreed that as
                  compensation for the 1,000,000 Series A shares Abingworth
                  receives at a price of US$ 1.00 per share prior to or in
                  connection with the Merger, the number of Shares the OWNERS
                  will receice shall be increased by cost-free
                  non-retransferable additional Shares in Hold Co. (the
                  "Additional Shares") as follows:

                  (i) 16,328 Additional Shares are due to the approving OWNERS
                  (MPG, MIT and WHITEHEAD) upon signature of the Ribopharma
                  License, and

                  (ii) 16,328 Additional Shares are due to the approving OWNERS
                  (MPG, MIT and WHITEHEAD) upon issuance of patent claims of the
                  MAX PLANCK PATENT RIGHTS in the United States which cover the
                  application of double stranded RNA molecules with a length of
                  19-23 nucleotides whereas at least one strand has a 3'-prime
                  overhang of minimum one nucleotide for the use in the field of
                  RNA interference.

         (c)      Other measures decreasing the value of the Shares in
                  connection with the transaction. If shares are allotted to
                  investors pursuant to the Merger on any basis different from
                  the combined capitalization table here attached, an
                  appropriate adjustment to the shares received by the OWNERS
                  will be made according to the above calculation.

C) REQUIREMENT NO. 5 shall have the following wording:

"5. after Plan approval and for [**] years after the EFFECTIVE DATE (the
"Period"):

a)  Hold Co. shall use reasonable commercial efforts to build for Ribopharma
    capabilities to develop, make, use, sell or import LICENSED PRODUCTS
    comparable to COMPANY. Ribopharma must have comparable operational forces in
    Germany in terms of budget, employees, Research & Development and Business
    Development capacities as COMPANY.

b)  As an exception, and not to limit the general rule set forth in 5. a) above,
    COMPANY may, in extraordinary business situations (with respect to
    importance and volume of the deal, such

                                                      Alnylam; GI 2716, 2782 ZTM
                                                           Dec. 19, 2002; page 3


<PAGE>

    as drug discovery and drug development deals with big pharma companies),
    make business decisions based on objective business reasons and on all
    reasonable care, which may have an adverse effect on the obligations set
    forth in 5. a) above, only if Hold Co. restores comparability at the
    earliest practical date and in the most efficient way. In the event that
    COMPANY acquires all or substantially all of the assets or shares of a third
    party in a transaction, the obligation to restore comparability set forth
    above shall not apply as to such transaction.

c)  GI shall have the right to request from Hold Co., at any time during the
    Period but not more than four times per year, a specific report (the
    "Report") showing how COMPANY and Ribopharma has fulfilled in the past and
    will fulfill within the Period its obligations specified in 5. a) and b)
    above. The Report shall include the general business objectives of COMPANY
    and Ribopharma and how COMPANY and Ribopharma intends to reach its
    objectives. Hold Co. has to deliver the Report to GI in writing within
    thirty (30) days after request in sufficient detail. GI shall notify Hold
    Co. within fifteen (15) days after receiving the Report if GI believes that
    COMPANY does not fulfill its obligations specified in 5. a) and b) above
    (the "Deficiency Notice"). Hold Co. shall, within thirty (30) days after
    receiving the Deficiency Notice, provide GI in writing with a detailed plan
    describing how Hold Co. proposes to achieve the compliance to fulfill within
    the Period its obligations specified in 5. a) and b) above, the specific
    goals to be met in order to achieve compliance, and the measures that Hold
    Co. will take in order to achieve compliance (the "Corrective Plan"). GI
    shall, within fifteen (15) days following receipt, either accept or reject
    the Corrective Plan. If GI accepts the Corrective Plan, Hold Co. shall
    implement the Corrective Plan within three (3) months after receiving GI's
    approval. If GI rejects the Corrective Plan, GI shall have the right to
    initiate arbitration according to Section 12.3, with the following
    modifications: all time limits shall be reduced by one half, the costs for
    such arbitration shall be borne by Hold Co. and GI according to their
    success. Hold Co. shall implement the award of the arbitrators within three
    (3) months. If GI believes that Hold Co. has not implemented the Corrective
    Plan or the award of the arbitrators, GI shall have the right to initiate
    the above described arbitration procedure to determine if Hold Co. has fully
    implemented the Corrective Plan or the award of the arbitrators. In the
    event that Hold Co. is judged to be in default of implementing, GI shall
    have the right to terminate the Ribopharma License immediately.

d)  All information provided by COMPANY in connection with this Amendment shall
    be treated as confidential by GI under Section 8.2 of the Agreement.

D) REQUIREMENT NO. 6 shall be deleted entirely.

However, in the event that COMPANY decides, within the Period, that COMPANY and
Ribopharma (or the then existing licensee of the second co-exclusive license)
shall be completely separate entities (regarding legal, business, financial and
any other issues), then, from the date such separation is executed, the original
wording of the REQUIREMENTS No. 5 and 6 shall return to force.

In witness whereof, the parties have caused this Amendment to be executed by
their duly authorized representatives.

Garching Innovation GmbH                  Alnylam Pharmaceuticals, Inc.

By:    /s/Bernard Hertel                  By:    /s/John Margaranore
       -----------------------------             -----------------------------
Name:  Dr. Bernhard Hertel                Name:  John Maraganore
Title: Geschaftsfuhrer                    Title: Chief Executive Officer
Date:  July 2, 2003                       Date:  July 8, 2003

                                                      Alnylam; GI 2716, 2782 ZTM
                                                           Dec. 19, 2002; page 4


<PAGE>

Hold Co., Inc.                                Ribopharma AG

By:    /s/John Margaranore          By:    /s/ Roland Kreutzer /s/ Stefan Limmer
       ------------------------            -------------------------------------
Name:  John Maraganore              Name:  Roland Kreutzer
Title: Chief Executive Officer      Title: Vorstand
Date:  July 8, 2003                 Date:  July 2, 2003

                                                Alnylam; GI 2716, 2782 ZTM
                                                     Dec. 19, 2002; page 5

<PAGE>


                            INDEMNIFICATION AGREEMENT

between

Garching Innovation GmbH,
a German corporation having a principal place of business at
Hofgartenstrasse 8, 80539 Munchen, Germany,
represented by the Managing Director, Dr. Bernhard Hertel,
hereinafter called "GI"-

and

Alnylam Pharmaceuticals Inc.,
a Delaware corporation having a principal place of business at 
790 Memorial Drive, Suite 202, Cambridge, MA 02139, USA, 
represented by the Chief Executive Officer, John Maraganore, 
hereinafter called "COMPANY" -

PREAMBLE

Massachusetts Institute of Technology ("MIT"), Whitehead Institute for
Biomedical Research ("Whitehead"), Max-Planck-Gesellschaft zur Foerderung der
Wissenschaften e.V. ("MPG") and University of Massachusetts ("UMass"), are joint
owners of certain patent rights relating to "RNA Sequence-Specific Mediators of
RNA Interference", by David P. Bartel, Phillip A. Sharp, Thomas Tuschl, and
Phillip D. Zamore (PCT Publication No. WO 01/75164, hereinafter "Tuschl I", MPG
Case No. GI 2716 KTM).

MPG is the sole owner of certain patent rights relating to "RNA Interference
Mediating Small RNA Molecules," by Thomas Tuschl, Sayda Elbashir, and Winfried
Lendeckel (claims 1-29 of PCT Publication No. WO 02/44321, hereinafter "Tuschl
II", MPG Case No. GI 2782 KTM). MPG has authorized GI to act as its agent for
the purposes of licensing its ownership position of Tuschl I, and of licensing
Tuschl II.

COMPANY (formerly Alnylam Holding Co.) is the parent holding company of its two
subsidiaries Alnylam US, Cambridge, MA, USA (formerly Alnylam Pharmaceutical,
Inc.) and Alnylam Europe, Kulmbach, Germany (formerly Ribopharma AG). GI has
signed with each of Alnylam US and Alnylam Europe (collectively, the "GI
Licensees") a co-exclusive license regarding the use of Tuschl I and Tuschl II
for therapeutic purposes.

UMass has licensed its ownership position of Tuschl I to several licensees,
including Sirna Therapeutics, Boulder, CO, USA, (collectively, the "UMass
Licensees") for therapeutic purposes. In the course of the prosecution of Tuschl
I, certain data of Tuschl II, including data on 3' overhangs and on mammalian
cell activity, has been incorporated in Tuschl I, such incorporation was
initiated by Whitehead (hereinafter "Tuschl II Data"). The UMass Licensees claim
that they have rights, through their license to Tuschl I, to use the Tuschl II
Data to support and make certain claims in Tuschl I.

GI and COMPANY currently discuss reasonable actions of GI, or approval of
actions by GI, in connection with the ownership or inventorship of the Tuschl II
Data, including without limitation 


                                                     Indemnification Tuschl I/II
                                                          April 22, 2004, page 1

<PAGE>


clarification that the inventive subject matter of Tuschl II cannot be claimed
in Tuschl I, and removal of the Tuschl II Data from Tuschl I, (collectively, the
"Tuschl I/II Matters").

GI is willing to actively support COMPANY to solve the Tuschl I/Tuschl II
Matters, but only if COMPANY bears the costs and indemnifies GI and MPG.

Now, therefore, COMPANY, acting in its own name and also in the name of Alnylam
US and Alnylam Europe, and GI hereby agree as follows:

1. Indemnification and Cost-Bearing

COMPANY shall, at its sole expense, indemnify, defend, and hold harmless MPG and
GI, and their trustees, officers, faculty, students, employees, and agents and
their respective successors, heirs and assigns (collectively, the
"Indemnitees"), against any liability, damage, loss, costs, fees or expense
(including reasonable attorneys fees and expenses) incurred by or imposed upon
any of the Indemnitees in connection with any claims, suits, actions, demands or
judgments (collectively, the "Claims") arising out of any theory of liability
(including without limitation actions in the form of tort, warranty, or strict
liability and regardless of whether such action has any factual basis) relating
to the Tuschl I/Tuschl II Matters

COMPANY shall pay to GI all reasonable costs, fees or expense (including without
limitation internal costs, e.g. travel expenses of the Indemnitees, and external
costs, e.g. attorneys fees) incurred by any of the Indemnitees relating to the
Tuschl I/Tuschl II Matters, within 30 days after receipt of the respective
invoice from GI. 

COMPANY shall not be responsible for indemnifying the Indemnitees for any
actions of the Indemnitees, or any actions approved by the Indemnitees, that
occurred prior to the licensing of Tuschl I and Tuschl II to COMPANY. 

COMPANY shall not be responsible for indemnifying the Indemnitees for any
actions of the Indemnitees, or any actions approved by the Indemnitees, judged
by a court of competent jurisdiction to be unlawful or fraudulent.

2. Procedures of Defense

The Indemnitees agree to provide COMPANY with written notice in due time of any
Claims for which indemnification is sought under Section 1 above. COMPANY
agrees, at its own expense, to provide attorneys reasonably acceptable to GI to
defend against any Claims. The Indemnitees shall cooperate fully with COMPANY in
such defense and will permit COMPANY to reasonably conduct such defense of
Claims (including all decisions relative to litigation, appeal, and settlement);
provided, however, that any Indemnitee shall have the right to retain its own
counsel, at the expense of COMPANY, if representation of such Indemnitee by the
counsel retained by COMPANY would be inappropriate because of actual or
potential differences in the interests of such Indemnitee and any other party
represented by such counsel. COMPANY shall keep GI informed of the progress in
the defense of Claims and shall consult with GI with regard to any proposed
settlement or any other decision on Claims. In no event may COMPANY compromise,
settle or otherwise dispose of any Claim without the prior written consent of
GI.

3. Term

This Agreement shall come into effect on April 1, 2004, and shall remain in
effect until the sooner of (i) all potential Claims relating to the Tuschl
I/Tuschl II Matters are expired, statute-barred, or otherwise finally not
enforceable against the Indemnitees, or (ii) ten years after the last action of
the Indemnitees, or the last action approved by the Indemnitees, relating to the
Tuschl I/II Matters has occurred.


                                                     Indemnification Tuschl I/II
                                                          April 22, 2004, page 2

<PAGE>

4. Assignment and Transfer

This Agreement is personal to COMPANY and no rights or obligations may be
assigned by COMPANY without the prior written consent of GI. COMPANY may assign
its rights and obligations under this Agreement to a legal successor in
connection with the merger, consolidation, or sale of all or substantially all
of its assets or that portion of its business to which this Agreement relates;
provided however that such successor has agreed towards GI in writing to be
bound by the terms and conditions of this Agreement. If such successor fails to
agree, COMPANY shall pay into escrow a one-time payment of USD 1.000.000 to
cover potential Claims for the term of this Agreement as defined in Section 3.

5. Governing Law

The parties explicitly agree and deem appropriate that this Agreement and all
disputes arising out of or related to this Agreement, or the performance,
enforcement, breach or termination hereof, and any remedies relating thereto,
shall be construed, governed, interpreted and applied in accordance with the
laws of the Federal Republic of Germany, except that questions affecting the
construction and effect of any patent shall be determined by the law of the
country in which the patent shall have been granted.

6. Amendment and Waiver

This Agreement may be amended, supplemented, or otherwise modified only by means
of a written instrument signed by both parties. Any waiver of any rights or
failure to act in a specific instance shall relate only to such instance and
shall not be construed as an agreement to waive any rights or fail to act in any
other instance, whether or not similar.

7. Severability

Should one of the provisions of this Agreement be held void, invalid or
unenforceable, the remaining provisions of this Agreement will not cease to be
effective. The parties shall negotiate in good faith to replace such void,
invalid or unenforceable provision by a new provision which reflects, to the
extent possible, the original intent of the parties.

In witness whereof, the parties have caused this Agreement to be executed by
their duly authorized representatives.

Garching Innovation GmbH                    Alnylam Pharmaceuticals, Inc.


By:      /s/ I.V. Maria Pasecky,            By:     /s/ John Maraganore
             I.V. Joem Erselius
         -----------------------------              -------------------
Name:    I.V. Maria Pasecky,                Name:   John Maraganore
         I.V. Joem Erselius on              Title:  Chief Executive Officer
         behalf of Dr. Bernhard Hertel
                                            Date:   April 23, 2004
                                                    --------------
Date:    April 23, 2004                     
         --------------                     


                                                     Indemnification Tuschl I/II
                                                          April 22, 2004, page 3


<PAGE>

                                                                   EXHIBIT 10.20

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                         CO-EXCLUSIVE LICENSE AGREEMENT

between

Garching Innovation GmbH,
Hofgartenstrasse 8, 80539 Munchen, Germany,
represented by the Geschaftsfuhrer, Dr. Bernhard Hertel,
- as licensor, hereinafter called "GI"-

and

Ribopharma AG,
Fritz-Hornschuch-Str. 9, 95326 Kulmbach, Germany,
represented by the Vorstande, Dr. Roland Kreutzer and Dr. Stefan Limmer,
- as licensee, hereinafter called "COMPANY" -

                                                                               1


<PAGE>

PREAMBLE

WHEREAS, Massachusetts Institute of Technology ("M.I.T."), Whitehead Institute
for Biomedical Research ("WHITEHEAD"), Max-Planck-Gesellschaft zur Foerderung
der Wissenschaften e.V. ("MAX-PLANCK") and University of Massachusetts
("UMASS"), are joint owners of certain JOINT PATENT RIGHTS (as later defined
herein) relating to "RNA Sequence-Specific Mediators of RNA Interference", by
David P. Bartel, Phillip A. Sharp, Thomas Tuschl, and Phillip D. Zamore
(MAX-PLANCK Case No. GI 2716 KTM).

WHEREAS, MAX-PLANCK is the owner of certain MAX PLANCK PATENT RIGHTS (as later
defined herein) relating to "RNA Interference Mediating Small RNA Molecules," by
Thomas Tuschl, Sayda Elbashir and Winfried Lendeckel
 (MAX-PLANCK Case No. GI
2782 KTM).

WHEREAS, M.I.T., WHITEHEAD, MAX-PLANCK and UMASS have the right to grant
licenses under the JOINT PATENT RIGHTS and the MAX PLANCK PATENT RIGHTS, subject
to a royalty-free, nonexclusive license granted to the United States and the
German Governments to practice the JOINT PATENT RIGHTS and the MAX PLANCK PATENT
RIGHTS for government purposes.

WHEREAS, MAX-PLANCK has authorized GARCHING INNOVATION GMBH ("GI") to act as its
agent for the purposes of licensing its ownership position of JOINT PATENT
RIGHTS and the MAX PLANCK PATENT RIGHTS.

WHEREAS, MAX-PLANCK, WHITEHEAD and M.I.T. have authorized GI to act as their
agent for the purposes of licensing the JOINT PATENT RIGHTS and the MAX PLANCK
PATENT RIGHTS for therapeutic purposes, and therefore, this Agreement is only
binding on each of WHITEHEAD, M.I.T. and MAX-PLANCK.

WHEREAS, UMASS has not authorized GI to act as its agent for the purposes of
licensing the JOINT PATENT RIGHTS and the MAX-PLANCK PATENT RIGHTS for
therapeutic purposes, and therefore its ownership position in the JOINT PATENT
RIGHTS will be excluded from the license grant hereunder, and this Agreement is
not binding on UMASS, unless and until otherwise agreed upon between MAX-PLANCK,
WHITEHEAD, M.I.T., UMASS and COMPANY.

WHEREAS, Alnylam Pharmaceuticals Inc., Cambridge, MA, USA ("ALNYLAM"), an
early-stage therapeutics company which was founded in June 2002 by an
international group of scientists that helped discover the novel biological
phenomenon of RNA interference, and GI have signed the ALNYLAM LICENSE, which
includes certain REQUIREMENTS (as defined in the ALNYLAM LICENSE) for ALNYLAM to
found and establish a European-based therapeutics company, and, upon fulfillment
of the REQUIREMENTS (as defined in the ALNYLAM LICENSE), GI shall grant a second
co-exclusive license, comparable in scope and terms to the ALNYLAM LICENSE, to
such company.

WHEREAS, COMPANY is an early-stage therapeutics company which was founded in
June 2000 by scientists who had the idea that a modified form of the RNA
interference principle might be suitable as a basis for new therapeutic agents
for the treatment of diseases

                                                                               1


<PAGE>

accompanying an altered genetic expression.

WHEREAS, COMPANY and ALNYLAM have entered into an agreement to complete the
MERGER (as later defined herein) on July 3, 2003, by which a U.S. parent holding
company ("HOLD CO.") will own and control directly or indirectly COMPANY and
ALNYLAM.

WHEREAS, the structure of the MERGER does not fulfil certain of the REQUIREMENTS
(as defined in the ALNYLAM LICENSE) necessary for the COMPANY to be granted the
second co-exclusive license. HOLD CO. and ALNYLAM have expressed their strong
commitment that COMPANY shall be comparable to ALNYLAM, in particular in terms
of growth, operational forces and business capabilities, for the next five
years, and, therefore, GI was willing to support the MERGER, and to sign the
AMENDMENT (as later defined herein).

WHEREAS, COMPANY desires to obtain the second co-exclusive license, with the
right to grant sublicenses, under the JOINT PATENT RIGHTS and the MAX PLANCK
PATENT RIGHTS for the purpose of developing and commercializing therapeutic
products, and GI desires to grant such license on the terms and conditions
hereinafter set forth.

NOW, THEREFORE, GI and COMPANY hereby agree as follows:

ARTICLE 1 - DEFINITIONS

1.1      "ALNYLAM LICENSE"

shall mean the co-exclusive license to the JOINT PATENT RIGHTS and the MAX
PLANCK PATENT RIGHTS for therapeutic purposes signed by ALNYLAM and GI on
December 20, 2002, and approved by MAX-PLANCK, WHITEHEAD and M.I.T.. The ALNYLAM
LICENSE is attached to this Agreement as Appendix C.

1.2      "MERGER"

shall mean the combination of the businesses of COMPANY and ALNYLAM in July 2003
by way of a merger, acquisition, cross investment or any other way of
transaction.

1.3      "AMENDMENT"

shall mean the amendment of the ALNYLAM LICENSE to amend and restate certain of
the REQUIREMENTS (as defined in the ALNYLAM LICENSE) and other terms due to the
MERGER, signed by GI, COMPANY, ALNYLAM and HOLD CO. on July 2, 2003, and
approved by MAX-PLANCK, WHITEHEAD and M.I.T. The AMENDMENT is attached to this
Agreement as Appendix D.

1.4      "JOINT PATENT RIGHTS"

shall mean:

(a)      the United States and international patent and provisional applications
         listed on Appendix A and the resulting patents,

                                                                               2


<PAGE>

(b)      any patent applications resulting from the provisional applications
         listed on Appendix A, and any divisionals, continuations,
         continuation-in-part applications, and continued prosecution
         applications (and their relevant international equivalents) of the
         patent applications listed on Appendix A and of such patent
         applications that result from the provisional applications listed on
         Appendix A, to the extent the claims are directed to subject matter
         specifically described in the patent applications listed on Appendix A,
         and the resulting patents,

(c)      any patents resulting from reissues, reexaminations, or extensions (and
         their relevant international equivalents) of the patents described in
         (a) and (b) above, and

(d)      international (non-United States) patent applications and provisional
         applications filed after the EFFECTIVE DATE and the relevant
         international equivalents to divisionals, continuations,
         continuations-in-part applications and continued prosecution
         applications of the patent applications to the extent the claims are
         directed to subject matter specifically described in the patents or
         patent applications referred to in (a), (b), and (c) above, and the
         resulting patents.

         For the purpose of this Agreement, the ownership position of UMASS in
         the JOINT PATENT RIGHTS shall be explicitly excluded from the JOINT
         PATENT RIGHTS unless and until otherwise agreed upon between
         MAX-PLANCK, WHITEHEAD, M.I.T. and UMASS and COMPANY.

1.5      "MAX PLANCK PATENT RIGHTS"

shall mean:

(a)      the United States and international patent and provisional applications
         listed on Appendix B and the resulting patents,

(b)      any patent applications resulting from the provisional applications
         listed on Appendix B, and any divisionals, continuations,
         continuation-in-part applications, and continued prosecution
         applications (and their relevant international equivalents) of the
         patent applications listed on Appendix B and of such patent
         applications that result from the provisional applications listed on
         Appendix B, to the extent the claims are directed to subject matter
         specifically described in the patent applications listed on Appendix B,
         and the resulting patents,

(c)      any patents resulting from reissues, reexaminations, or extensions (and
         their relevant international equivalents) of the patents described in
         (a) and (b) above, and

(d)      international (non-United States) patent applications and provisional
         applications filed after the EFFECTIVE DATE and the relevant
         international equivalents to divisionals, continuations,
         continuations-in-part applications and continued prosecution
         applications of the patent applications to the extent the claims are
         directed to subject matter specifically described in the patents or
         patent applications referred to in (a), (b), and (c) above, and the
         resulting patents.

                                                                               3

<PAGE>

1.6      "PATENT RIGHTS"

shall mean the JOINT PATENT RIGHTS and MAX PLANCK PATENT RIGHTS together.

1.7      "OWNERS"

shall mean M.I.T., WHITEHEAD, UMASS and MAX-PLANCK collectively.

1.8      "APPROVING OWNERS"

shall mean M.I.T., WHITEHEAD and MAX-PLANCK collectively, each of which had
approved the ALNYLAM LICENSE, the AMENDMENT and this Agreement. APPROVING OWNERS
shall also mean UMASS in the event that M.I.T., WHITEHEAD, MAX-PLANCK, UMASS,
and COMPANY agree that UMASS shall join as a party to this Agreement.

1.9      "LICENSED PRODUCTS"

shall mean any product or part thereof the manufacture, use or sale of which
would, absent the license granted hereunder, infringe one or more issued claims
of the PATENT RIGHTS or one or more pending claims of the PATENT RIGHTS that
have not been pending for more than 5 (five) years after filing national patent
applications in the country in question.

1.10     "FIELD"

shall mean all uses other than the commercial sale or use of the LICENSED
PRODUCTS as a research reagent, including in a kit format, for research or
educational purposes, including without limitation,

(i) COMPANY'S internal and collaborative research use, and

(ii) all therapeutic and prophylactic uses, and

(iii) diagnostic uses for purposes of therapeutic monitoring, but excluding all
other diagnostic uses,

specifically including human and veterinary diseases, initially for all
indications, but with a later split of indications according to Section 2.3.

1.11     "AFFILIATE"

shall mean any legal entity (such as a corporation, partnership, or limited
liability company) that is controlled by COMPANY. For the purposes of this
definition, the term "control" means (i) ownership of at least fifty percent
(50%) of the voting securities of a legal entity with voting securities or (ii)
a fifty percent (50%) or greater interest in the net assets or profits of a
legal entity without voting securities.

1.12     "SUBLICENSEE"

shall mean any legal entity (such as a corporation, partnership, or limited
liability company)

                                                                               4

<PAGE>

other than AFFILIATE, ALNYLAM, HOLD CO. (including any affiliate of ALNYLAM and
HOLD CO.) and any other individual or legal entity associated with the MERGER,
that sells or intends to commercialize LICENSED PRODUCTS under a sublicense from
COMPANY to develop, make, use and sell LICENSED PRODUCTS. SUBLICENSEE shall not
include a distributor which purchases LICENSED PRODUCTS (whether in packaged
form or bulk form) from COMPANY and resells such LICENSED PRODUCTS to THIRD
PARTIES in a manner consistent with normal trade practices in the pharmaceutical
industry.

For the purpose of this Agreement, SUBLICENSEE shall also include the assignees
of COMPANY to which COMPANY has sub-assigned its ownership position in the JOINT
PATENT RIGHTS in certain countries in accordance with the last paragraph of
Section 2.1.

1.13     "THIRD PARTY"

shall mean any individual or legal entity (such as a corporation, partnership,
or limited liability company) other than (i) COMPANY, AFFILIATE, SUBLICENSEE,
(ii) ALNYLAM, HOLD CO. (including any affiliate and sublicensee of ALNYLAM and
HOLD CO.), and (iii) any other individual or legal entity associated with the
MERGER.

1.14     "NET SALES"

shall mean the gross amount invoiced by COMPANY, its AFFILIATES and SUBLICENSEES
to THIRD PARTIES for LICENSED PRODUCTS, less the following: (i) to the extent
separately stated on the document of sale, any taxes or duties imposed on the
manufacture, use, sale or import of LICENSED PRODUCTS which are paid by COMPANY,
(ii) outbound transportation costs and costs of insurance in transit, (iii) 
customary trade, cash or quantity discounts or rebates, to the extent actually 
allowed and taken, and (iv) amounts repaid or credited by reason of rejection 
or return. 

No deductions shall be made for commissions paid to individuals or entities, or
for cost of collections. NET SALES shall occur on the date of the invoice for a
LICENSED PRODUCT.



Non-cash consideration shall not be accepted by COMPANY, its AFFILIATES or any
SUBLICENSEE for LICENSED PRODUCTS without the prior written consent of GI.

In the event that a LICENSED PRODUCT is sold in combination with one or more
active ingredients (excluding, without limitation, any formulation,
stabilisation and delivery technology) which are not LICENSED PRODUCTS, which
active ingredients are also independently marketed during the royalty period in
question in the FIELD (or the non-exclusive field licensed in the second
paragraph of Section 2.1, as the case may be) in the country in question, then
NET SALES, for purposes of determining royalty payments on the combination
product, shall be calculated by multiplying the NET SALES of the combination
product by the fraction A/A+B, where A is the average gross selling price of the
LICENSED PRODUCT sold separately in similar quantities in the country in
question during the royalty period in question, and B is the average gross
selling price of the other active ingredient(s) sold separately in similar
quantities in the country in question during the royalty period in question. In
the event that a LICENSED PRODUCT is sold in combination with other active
ingredient(s), and the LICENSED PRODUCT or one or more other active ingredients
are not sold separately, GI and COMPANY shall negotiate in good faith other
means of calculating NET SALES with respect to such combination product, in
order to fairly reflect the value of the LICENSED PRODUCT relative to the other
active ingredient(s) in such combination product.

                                                                               5

<PAGE>

1.15     "EFFECTIVE DATE"

shall mean the date of signature to this Agreement by the party last to sign.

1.16     "TERM"

shall mean the term of this Agreement, which shall commence on the EFFECTIVE
DATE and shall remain in effect until the expiration or abandonment of all
issued patents and filed patent applications within the PATENT RIGHTS, unless
earlier terminated in accordance with the provisions of this Agreement.

ARTICLE 2 - GRANT OF RIGHTS

2.1      License Grant

GI grants to COMPANY for the TERM a worldwide royalty-bearing co-exclusive
license, with the right to grant sublicenses, under the PATENT RIGHTS to
develop, make, have made, use, sell and import LICENSED PRODUCTS in the FIELD.

GI grants to COMPANY for the TERM a worldwide royalty-bearing non-exclusive
license, without the right to grant sublicenses, under the PATENT RIGHTS to
develop, make, have made, use, sell and import LICENSED PRODUCTS for all
diagnostic uses other than for purposes of therapeutic monitoring.

In countries where it is legally impossible to grant licenses to jointly owned
patent rights without the approval of all joint owners, MAX-PLANCK will
partially assign its ownership position in the JOINT PATENT RIGHTS in such
countries to COMPANY, restricted to develop, make, have made, use, sell and
import LICENSED PRODUCTS (i) in the FIELD, whereby COMPANY is allowed to further
assign such ownership position, restricted to develop, make, have made, use,
sell and import LICENSED PRODUCTS in the FIELD, in such countries to THIRD
PARTIES and SUBLICENSEES only with the prior written approval of GI, which shall
not unreasonable be withheld, and (ii) for all diagnostic uses other than for
purposes of therapeutic monitoring, whereby COMPANY is not allowed to further
assign such ownership position in such countries to THIRD PARTIES and
SUBLICENSEES. In any event, the ownership position assigned to COMPANY and, as
the case may be, sub-assigned by COMPANY to its assignees, shall entitle neither
COMPANY nor its assignees to any actions, claims or anything other which exceed
the rights granted to them under the PATENT RIGHTS by this Agreement.

2.2      Co-Exclusivity

GI and the APPROVING OWNERS shall not grant more than a total of [**] (including
the license granted hereby) worldwide royalty-bearing co-exclusive licenses,
with the right to grant sublicenses, under the PATENT RIGHTS to develop, make,
have made, use, sell and import LICENSED PRODUCTS in the FIELD, and shall not
grant any licenses under the PATENT RIGHTS in the FIELD other than such [**]
licenses.

This Section 2.2 shall not apply to the non-exclusive license stated in the
second paragraph of Section 2.1.

                                                                               6

<PAGE>

2.3      Split of Indications within the FIELD

[**] years after December 20, 2002, COMPANY shall provide GI with information in
sufficient detail for each relevant indication and sub-indication within the
FIELD with respect to the estimated market size and accessibility by RNAi. If GI
decides, for good reason, that the received information is not complete and/or
not accurate and/or not sufficient, GI shall give COMPANY written notice thereof
within [**] after receiving the information. COMPANY shall provide GI within
[**] after receiving GI's written notice with the necessary information. GI will
oblige ALNYLAM accordingly.

Within [**] days after GI's receipt of the necessary information from COMPANY
and ALNYLAM, GI and COMPANY shall mutually agree, jointly with ALNYLAM, [**]
according to the estimated market size and accessibility by RNAi within the
FIELD between COMPANY and ALNYLAM. After such split, the indications and
sub-indications awarded to COMPANY shall be regarded as exclusively licensed to
COMPANY.

If the parties do not agree within the timeframe, each party has the right to
initiate arbitration procedure according to Section 12.3.

In the event that, within [**] years after December 20, 2002, (i) COMPANY or
ALNYLAM merges with a THIRD PARTY or SUBLICENSEE in a transaction in which the
shareholders of COMPANY or ALNYLAM (who hold shares in COMPANY or ALNYLAM
immediately before such merger) own less than [**]% ([**] percent) of the shares
of the resulting entity after such merger, or (ii) a THIRD PARTY or SUBLICENSEE
acquires all or substantially all of the assets or shares of COMPANY or ALNYLAM
, this Section 2.3 shall not apply.

2.4      Sublicenses

Within [**] years after December 20, 2002, COMPANY is not allowed to grant
sublicenses to THIRD PARTIES or SUBLICENSEES without the prior approval of GI,
which shall not unreasonably be withheld. COMPANY shall inform GI in writing in
due time prior to the intended signature, of any sublicense agreement in
sufficient detail to permit GI to decide whether or not to approve. GI shall
inform COMPANY in writing within 30 (thirty) days after receiving the
information whether or not GI approves; in particular, GI may withhold its
approval if GI deems the received information not sufficient. Notwithstanding
the foregoing, COMPANY may grant, within [**] years after December 20, 2002,
[**] for a specific indication to a THIRD PARTY or a SUBLICENSEE without the
prior approval of GI, in which event COMPANY is obliged to reserve an indication
of comparable market size and RNAi accessibility to the indication covered by
the sublicense for ALNYLAM.

After [**] years after December 20, 2002, COMPANY is allowed to grant
sublicenses to THIRD PARTIES or SUBLICENSEES (and grant additional sublicenses
to SUBLICENSEES) without the prior approval of GI.

Immediately after the signature of each sublicense granted under this Agreement,
COMPANY shall provide GI with a copy of the signed sublicense agreement, and
COMPANY shall confirm in writing to GI that COMPANY shall be liable for payment
of royalties on NET SALES of the SUBLICENSEE in accordance with Sections 5.2 and
5.3.

                                                                               7

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2.5      Retained Rights

The APPROVING OWNERS retain the right to practice under the PATENT RIGHTS for
research, teaching, education, non-commercial collaboration and publication
purposes. COMPANY acknowledges that the German and the U.S. federal government
retain a royalty-free, non-exclusive, non-transferable license to practice any
government-funded invention claimed in any PATENT RIGHTS for government
purposes.

2.6      No Additional Rights

Nothing in this Agreement shall be construed to confer any rights upon COMPANY
by implication, estoppel, or otherwise as to any intellectual property rights,
including without limitation patents and patent applications, trademarks,
copyrights and know-how, of the APPROVING OWNERS other than the PATENT RIGHTS,
regardless of whether such intellectual property rights shall be dominant or
subordinate to any PATENT RIGHTS.

ARTICLE 3 - NO REPRESENTATIONS OR WARRANTIES

COMPANY is informed of the PATENT RIGHTS and the difficult patent situation in
the field of RNAi, and that it might need additional licenses from THIRD PARTIES
to have freedom to operate. GI and THE APPROVING OWNERS MAKE NO REPRESENTATIONS
OR WARRANTIES OF ANY KIND CONCERNING THE PATENT RIGHTS, EXPRESS OR IMPLIED, AND
THE ABSENCE OF ANY LEGAL OR ACTUAL DEFECTS, WHETHER OR NOT DISCOVERABLE.
Specifically, and not to limit the foregoing, GI and the APPROVING OWNERS make
no warranty or representation (i) regarding the merchantability or fitness for a
particular purpose of the PATENT RIGHTS, (ii) regarding the patentability,
validity or scope of the PATENT RIGHTS, (iii) that the exploitation of the
PATENT RIGHTS or any LICENSED PRODUCT will not infringe any patents or other
intellectual property rights of the APPROVING OWNERS or of a THIRD PARTY, and
(iv) that the exploitation of the PATENT RIGHTS or any LICENSED PRODUCT will not
cause any damages of any kind to COMPANY or a THIRD PARTY.

IN NO EVENT SHALL GI, THE APPROVING OWNERS, THEIR TRUSTEES, DIRECTORS, OFFICERS,
EMPLOYEES AND AFFILIATES BE LIABLE FOR INCIDENTAL OR CONSEQUENTIAL DAMAGES OF
ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS,
REGARDLESS OF WHETHER GI OR ANY OF THE APPROVING OWNERS SHALL BE ADVISED, SHALL
HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE
FOREGOING.

ARTICLE 4 - COMPANY DILIGENCE OBLIGATIONS AND REPORTS

4.1      Activity Requirements

COMPANY shall use commercially reasonable efforts, and shall oblige its
AFFILIATES and SUBLICENSEES to use commercially reasonable efforts, to develop
and to introduce into the commercial market LICENSED PRODUCTS at the earliest
practical date.

                                                                               8

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4.2      Development Reports

Commencing with the third calendar quarter of 2003, COMPANY shall furnish, and
shall oblige its AFFILIATES and SUBLICENSEES to furnish to COMPANY for inclusion
in its reports to GI, to GI in writing, within 30 (thirty) days after the end of
each calendar quarter with COMPANY's standard Research and Development report,
as shall be provided to the investors pursuant to the Investor Rights Agreement
between HOLD CO. and the investors named therein to be entered into as of the
closing of the MERGER, on the progress of its efforts during the immediately
preceding calendar quarter to develop and commercialize LICENSED PRODUCTS for
each indication and sub-indication within the FIELD. The report shall also
contain a discussion of intended Research and Development efforts for the
calendar quarter in which the report is submitted.

4.3      Target Specific Sublicenses

[**] years after December 20, 2002, COMPANY shall be obliged to enter into good
faith negotiations on reasonable terms and conditions with a THIRD PARTY
requesting a sublicense under the PATENT RIGHTS for the development, use and
sale of products against a target gene in a specific indication or
sub-indication which is covered by pending or issued patent rights of such THIRD
PARTY, provided, however, that

(a)      COMPANY has not entered into a sublicense or is in serious negotiations
         for a sublicense for the use of [**] in such indication, or

(b)      COMPANY can not demonstrate, through its standard research planning
         documents, significant current work which has commenced or is scheduled
         to commence within [**], to develop, within reasonable time, a product
         utilizing [**] in such indication.

COMPANY shall inform GI on a quarterly basis of all such THIRD PARTY sublicense
requests, and whether or not COMPANY has granted such sublicense. In the event
of non-grant, COMPANY shall, upon GI's request, provide GI, within [**] days
after receiving GI's request, with information in sufficient detail showing
COMPANY's reason for the non-grant.

If GI decides that COMPANY did not fulfill the requirements of (a) or (b),
and/or that COMPANY's terms and conditions for the requested sublicense have
been unreasonable, GI may initiate the arbitration procedure according to
Section 12.3. If the award of the arbitration tribunal states a non-fulfillment
of the requirements of (a) or (b), COMPANY shall immediately start negotiations
with the THIRD PARTY; if the award of the arbitration tribunal states
unreasonable terms and conditions, COMPANY shall immediately re-negotiate
reasonable terms and conditions with the THIRD PARTY. In any such awards of the
arbitration tribunal, the costs for the arbitration procedure shall be borne
solely by COMPANY.

4.4      Liability for AFFILIATES and SUBLICENSEES

If SUBLICENSEES or AFFILIATES of COMPANY develop, manufacture, use and/or sell
LICENSED PRODUCTS under the PATENT RIGHTS, COMPANY warrants and is liable
towards GI that the SUBLICENSEES and AFFILIATES perform their sublicense
agreement in accordance with this Agreement, and COMPANY shall be responsible
and liable for royalty

                                                                               9

<PAGE>

payments and reports of the SUBLICENSEES and AFFILIATES.

4.5      Effect of Failure

In the event that GI determines that COMPANY or any of its AFFILIATES and
SUBLICENSEES has failed to fulfill any of its obligations under this Section 4,
then GI may treat such failure as a material breach in accordance with Section
11.7.

ARTICLE 5 - SHARES, ROYALTIES AND PAYMENT TERMS

5.1      Shares

As a consequence of the MERGER, the APPROVING OWNERS do not receive shares in
both ALNYLAM and COMPANY, but they shall receive shares in HOLD CO. as stated in
Section B) of the AMENDMENT.

As partial consideration for the licenses granted to ALNYLAM and COMPANY, HOLD
CO. shall transfer, by September 1st, 2003, 865,516 Shares (as defined in the
AMENDMENT) and 16,328 Additional Shares (as defined in the AMENDMENT) to the
APPROVING OWNERS according to Section B) of the AMENDMENT.

In addition, HOLD CO. shall transfer 16,328 Additional Shares (as defined in the
AMENDMENT) to the APPROVING OWNERS according to Section B) b) of the AMENDMENT.
Furthermore, the total amount of Shares (as defined in the AMENDMENT) to be
received by the APPROVING OWNERS shall be increased in an amount to be defined
in good faith by the parties if one or more of the events described in Section
B) of the AMENDMENT occur.

In addition and notwithstanding the foregoing, M.I.T., WHITEHEAD, MAX-PLANCK,
and COMPANY acknowledge that it may be necessary for COMPANY to pay additional
consideration to UMASS (in the form of cash, stock, or otherwise) in order for
COMPANY to obtain a license to UMASS' ownership interest in the JOINT PATENT
RIGHTS. Therefore, in the case of such an event, M.I.T., WHITEHEAD, MAX-PLANCK,
and COMPANY agree on a cost sharing of such costs between them substantially
identical to the cost-sharing mechanism set forth in the Letter Agreement
between ALNYLAM, GI, M.I.T., and WHITEHEAD dated December 19, 2002 with respect
to the ALNYLAM LICENSE, M.I.T., WHITEHEAD, MAX-PLANCK and COMPANY, ALNYLAM and
HOLD CO. agree that the cost sharing mechanism set forth both in the Letter
Agreement between ALNYLAM, GI, M.I.T., and WHITEHEAD dated December 19, 2002 and
in this Section 5.1 shall only apply with respect to the JOINT PATENT RIGHTS,
which means that the 50%-cost-sharing for M.I.T., WHITEHEAD and MAX-PLANCK shall
be limited to 50% of the value of shares (to be calculated at HOLD CO.'s last
round of financing, if the shares are privately held, or at the average closing
price of ten trading days preceding the closing date of ALNYLAM and COMPANY with
UMASS, if the shares are listed on a stock exchange) transferred to M.I.T.,
WHITEHEAD and MAX-PLANCK by HOLD CO. in return for the JOINT PATENT RIGHTS. The
value of shares shall be calculated on the basis of 396,763 Shares and 7,485
Additional Shares and further 7,485 Additional Shares (according to Section B)b)
of the AMENDMENT) attributed to the JOINT PATENT RIGHTS.

                                                                              10

<PAGE>

5.2      Running Royalties

COMPANY shall pay to GI the following running royalties on NET SALES of
therapeutic and prophylactic LICENSED PRODUCTS by COMPANY, its AFFILIATES and
SUBLICENSEES:

(a)      [**]% ([**] percent) of the first US$[**] ([**] US Dollars) of annual
         accumulated NET SALES of all LICENSED PRODUCTS;

(b)      [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED
         PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US
         Dollars);

(c)      [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED
         PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US
         Dollars);

(d)      [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED
         PRODUCTS between US$[**] ([**] US Dollars) and US$[**]n ([**] US
         Dollars);

(e)      [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED
         PRODUCTS between US$[**] ([**] US Dollars) and US$[**] ([**] US
         Dollars); and

(f)      [**]% ([**] percent) of annual accumulated NET SALES of all LICENSED
         PRODUCTS above US$[**] ([**] US Dollars).

In the event that COMPANY, an AFFILIATE or a SUBLICENSEE develops diagnostic
LICENSED PRODUCTS, COMPANY shall initiate negotiations with GI at least [**]
prior to the intended first commercial sale of each diagnostic LICENSED PRODUCT.
COMPANY and GI shall negotiate in good faith [**] terms for such diagnostic
LICENSED PRODUCT.

If the sale of any LICENSED PRODUCT is covered by more than one of the PATENT
RIGHTS, multiple royalties shall not be due.

Non-cash consideration shall not be accepted by COMPANY or an AFFILIATE or any
SUBLICENSEE for LICENSED PRODUCTS without the prior written consent of GI.

For the avoidance of doubt, in no event shall COMPANY and ALNYLAM be responsible
for paying royalties under this Agreement and the ALNYLAM LICENSE on
inter-company sales of LICENSED PRODUCTS between ALNYLAM and COMPANY. ALNYLAM or
COMPANY shall only pay royalties on sales of such LICENSED PRODUCTS to a THIRD
PARTY. Further for the avoidance of doubt, in no event shall royalties be due
under both the ALNYLAM LICENSE and this Agreement on the same NET SALE of a
particular LICENSED PRODUCT.

5.3      Royalty Stacking

(a)      THIRD PARTY Licenses

In the event COMPANY, an AFFILIATE or a SUBLICENSEE takes, for objective
commercial and/or legal reasons, a license from any THIRD PARTY or other
SUBLICENSEE under any patent applications or patents that dominate the PATENT
RIGHTS or is dominated by the PATENT RIGHTS in order to develop, make, use, sell
or import any LICENSED PRODUCT

                                                                              11

<PAGE>

(explicitly excluding, without limitation, any THIRD PARTY's, or other
SUBLICENSEE's, patents and patent applications for formulation, stabilization
and delivery), then COMPANY is allowed to deduct [**]% ([**] percent) of any
additional running royalties to be paid to such THIRD PARTY or other SUBLICENSEE
up to [**]% ([**] percent) of the running royalties stated in Section 5.2, from
the date COMPANY has to pay running royalties to such THIRD PARTY or other
SUBLICENSEE. However, the running royalties stated in Section 5.2 shall not be
reduced to less than a minimum of [**]% ([**] percent) of NET SALES in any case.

For avoidance of doubt, if COMPANY, an AFFILIATE or a SUBLICENSEE takes a
license to a THIRD PARTY's, or other SUBLICENSEE's, target, COMPANY is in no
event allowed to deduct any license fees for such target from running royalties
due to GI under this Agreement.

(b)      PATENT RIGHTS Coverage

In the event that (i) COMPANY, its AFFILIATES or SUBLICENSEES sell a LICENSED
PRODUCT in a country where no PATENT RIGHTS are issued and no patent
applications that are part of the PATENT RIGHTS are pending that have not been
pending for less than [**] years after filing national patent applications in
the country in question, and (ii) such LICENSED PRODUCT is manufactured in a
country where PATENT RIGHTS are issued or patent applications that are part of
the PATENT RIGHTS are pending that have not been pending for more than [**]
years after filing national patent applications in the country in question, the
royalties stated in Section 5.2 will be reduced by [**]% ([**] percent) for such
LICENSED PRODUCT, until the expiration or abandonment of all issued patents and
filed patent applications within the PATENT RIGHTS in the country in which the
LICENSED PRODUCT is manufactured.

5.4      Reports

Within 30 (thirty) days of the end of each calendar half year, COMPANY shall
deliver a detailed report to GI for the immediately preceding calendar half year
showing at least (i) the number of LICENSED PRODUCTS sold by COMPANY, its
AFFILIATES and SUBLICENSEES in each country, (ii) the gross price charged by
COMPANY, its AFFILIATES and SUBLICENSEES for each LICENSED PRODUCTS in each
country, (iii) the calculation of NET SALES, and (iv) the resulting running
royalties due to GI according to those figures. If no running royalties are due
to GI, the report shall so state.

5.5      Payments

(a)      Accounting and Payments

Running royalties shall be payable for each calendar half year, and shall be due
to GI within 60 (sixty) days of the end of each calendar half year.

(b)      Method of Payment

All payments under this Agreement shall be made payable to "Garching Innovation
GmbH" to the following account: Bayerische Hypo- und Vereinsbank AG; account
number [**]; bank code 700 202 70; SWIFT address: HYVEDEMMXXX. Each payment
shall reference this

                                                                              12

<PAGE>

Agreement and the obligation under this Agreement that the payment satisfies.

(c)      Payments in Euros

All payments due under this Agreement shall be payable in Euros and, if legally
required, shall be paid with the additional value added tax. Conversion of
foreign currency to Euros shall be made at the conversion rate reported in the
Wall Street Journal (United States Edition) on the last working day of the
relevant calendar half year. Such payments shall be without deduction of
exchange, collection, or other charges, except for deduction of withholding or
similar taxes.

(d)      Late Payments

Any payments by COMPANY that are not paid on or before the date such payments
are due under this Agreement shall bear interest on arrears at 2 % (two
percentage points) above the Prime Rate of interest as reported in the Wall
Street Journal on the date the payment is due.

5.6      Bookkeeping and Auditing

COMPANY is obliged to keep, and shall oblige its AFFILIATES and SUBLICENSEES to
keep, complete and accurate books on any reports and payments due to GI under
this Agreement, which books shall contain sufficient information to permit GI to
confirm the accuracy of any reports and payments made to GI. GI, or GI's
appointed agents, is authorized to check the books of COMPANY, and, upon GI's
request, COMPANY, or agents appointed by GI for COMPANY, shall check the books
of its AFFILIATES and SUBLICENSEES for GI, once a year. The charges for such a
check shall be borne by GI. In the event that such check reveals an underpayment
in excess of 5% (five percent), COMPANY shall bear the full cost of such check
and shall remit any amounts due to GI within thirty days of receiving notice
thereof from GI.

The right of auditing by GI under this Section shall expire five years after
each report or payment has been made. Sublicenses granted by COMPANY shall
provide that COMPANY shall have the right to check the books of its AFFILIATES
and SUBLICENSEES according to this Section 5.6.

5.7      No Refund

All payments made by COMPANY or its AFFILIATES and SUBLICENSEES under this
Agreement are nonrefundable and noncreditable against each other.

ARTICLE 6 - PATENT PROSECUTION AND INFRINGEMENT

6.1      Responsibility for PATENT RIGHTS

The APPROVING OWNERS shall, in their sole discretion, apply for, seek issuance
of, maintain, or abandon the PATENT RIGHTS during the TERM of this Agreement. GI
shall (i) keep COMPANY reasonably informed as to the filing, prosecution,
maintenance and abandonment of the PATENT RIGHTS, (ii) furnish COMPANY copies of
documents relevant to any such filing, prosecution maintenance and abandonment,
and (iii) allow COMPANY reasonable opportunity to comment and advise on patent
attorneys to be used and on documents to be filed with any patent office which
would affect the PATENT RIGHTS in the FIELD, and (iv) give good faith

                                                                              13

<PAGE>

consideration to the comments and advice of COMPANY.

In the event that all OWNERS wish to cease prosecution or abandon any of the
PATENT RIGHTS, GI shall notify COMPANY thereof in writing in due time, and shall
offer COMPANY the right to continue prosecution or maintenance of such PATENT
RIGHTS in its discretion, in its name and at its expense. GI will inform and
offer ALNYLAM respectively. If COMPANY does not accept GI's offer within 30
(thirty) days after receiving it, the OWNERS shall be free to cease prosecution
or abandon such PATENT RIGHTS. In any event, if the manufacture and sale of a
LICENSED PRODUCT is solely covered by such PATENT RIGHTS, the respective NET
SALES are not royalty-bearing.

6.2      Patent Costs

COMPANY shall pay to GI [**]% ([**] percent) of all fees and costs, including
attorneys fees, relating to the filing, prosecution and maintenance of the
PATENT RIGHTS, which incur during the TERM. [In addition, COMPANY shall
reimburse GI [**]% ([**] percent) of all fees and costs, including attorneys
fees, relating to the filing, prosecution and maintenance of the PATENT RIGHTS,
which have already incurred as of December 20, 2002 until the EFFECTIVE DATE. GI
shall decide, in its sole discretion, if such costs shall be paid directly by
COMPANY to the creditor, or if COMPANY shall reimburse GI for all amounts due
pursuant to this Section within 30 (thirty) days of invoicing.

In addition, if any or all of the current and future licensees which bear patent
costs cease to pay, for whatever reason, their respective patent cost share,
then COMPANY shall assume [**]% ([**] percent) of such share. GI will oblige
ALNYLAM respectively.

Furthermore, if COMPANY wishes to prosecute or maintain any of the PATENT RIGHTS
in countries where none of the current and future licensees, including ALNYLAM,
want to prosecute or maintain, COMPANY shall bear [**]% ([**] percent) of all
fees and costs relating to such PATENT RIGHTS.

In the event that COMPANY wishes to cease payment for any of the PATENT RIGHTS,
COMPANY shall notify GI thereof in writing in due time, at least 3 months prior
to any deadline. The APPROVING OWNERS shall have the right to continue payment
for such PATENT RIGHTS in their discretion and at their expense. In any event,
such PATENT RIGHTS shall no longer be covered by this Agreement from the date
COMPANY informs GI of its cessation of payments.

6.3      Infringement

COMPANY shall inform GI promptly in writing of any alleged infringement of the
PATENT RIGHTS by a THIRD PARTY and of any available evidence thereof.

Subject to COMPANY's right to join in the prosecution of infringements set forth
below, the OWNERS shall have the right, but not the obligation, to prosecute in
their own discretion and at their own expense, all infringements of the PATENT
RIGHTS. The total cost of any such sole infringement action shall be borne by
the OWNERS, and the OWNERS shall keep any recovery or damages derived therefrom.
In any such infringement suits, COMPANY shall, at the

                                                                              14

<PAGE>

OWNERS' expense, cooperate in all respects.

COMPANY shall have the right to join the OWNERS' prosecution of any
infringements of the PATENT RIGHTS. In any such joint infringement suits, the
OWNERS and COMPANY will cooperate in all respects. The OWNERS and COMPANY will
agree in good faith on the sharing of the total cost of any such joint
infringement action and the sharing of any recovery or damages derived
therefrom.

In the event that the OWNERS decide not to prosecute infringements of the PATENT
RIGHTS, neither solely nor jointly with COMPANY, GI shall offer to COMPANY to
prosecute any such infringement in its own discretion and at its own expense. GI
will offer ALNYLAM respectively. The OWNERS shall, at COMPANY'S expense,
cooperate. The total cost of any such sole infringement action shall be borne by
COMPANY, and COMPANY shall keep any recovery or damages derived therefrom.

In the event that COMPANY intends to make any arrangements with the infringer to
settle the infringement (such as sublicenses), and solely the OWNERS or the
OWNERS jointly with COMPANY have prosecuted the infringement, any such
settlement needs the prior written approval of GI, which shall not unreasonably
be withheld; reasons to withheld include, without limitation, that the
settlement is financially disadvantageous for the OWNERS or GI. Any infringer to
which COMPANY grants such sublicenses shall be a SUBLICENSEE under this
Agreement.

ARTICLE 7 - INDEMNIFICATION AND INSURANCE

7.1      Indemnification

COMPANY shall indemnify, defend, and hold harmless the APPROVING OWNERS and
their trustees, officers, faculty, students, employees, and agents and their
respective successors, heirs and assigns (the "Indemnitees"), against any
liability, damage, loss, or expense (including reasonable attorneys fees and
expenses) incurred by or imposed upon any of the Indemnitees in connection with
any claims, suits, actions, demands or judgments arising out of any theory of
liability (including without limitation actions in the form of tort, warranty,
or strict liability and regardless of whether such action has any factual basis)
concerning (i) any use of the PATENT RIGHTS by COMPANY or its AFFILIATES and
SUBLICENSEES, or (ii) any product, process, or service that is developed, made,
used, sold, or performed pursuant to any right or license granted under this
Agreement.

7.2      Insurance

COMPANY shall obtain and carry in full force and effect commercial general
liability insurance, including product liability and errors and omissions
insurance, which shall protect COMPANY and the Indemnitees with respect to
events covered by Section 7.1 above. Such insurance shall list GI and the
APPROVING OWNERS as additional insured, and the limit of insurance shall not be
less than 1,000,000 $ (one million US Dollars) per incident. Upon request,
COMPANY shall provide GI with certificates of insurance evidencing compliance
with this section.

ARTICLE 8 - CONFIDENTIALITY

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<PAGE>

8.1      Obligation for Company

The content of this Agreement and any information marked confidential which is
disclosed to COMPANY under this Agreement by GI or the APPROVING OWNERS shall be
treated confidential by COMPANY during the TERM and for 5 (five) years
thereafter. COMPANY shall not use such information for any purposes other than
those necessary to directly further the purpose of this Agreement. COMPANY may
disclose such information to ALNYLAM, HOLD Co., and its actual and prospective
AFFILIATES, SUBLICENSEES, investors, lenders, other financing sources, acquirors
and THIRD PARTIES being acquired by COMPANY, provided however, that COMPANY has
entered into serious discussions with such entities, and such entities have
requested such information, and such entities are obliged to confidentiality to
the same extent as COMPANY.

The confidentiality obligation shall not apply to information which is (i)
publicly available or becomes publicly available through no fault of COMPANY, or
(ii) obtained by COMPANY from another source without a duty of confidentiality,
or (iii) demonstrably independently developed or possessed by COMPANY, or (iv)
is required by law, regulation, accounting principles or an order of a court or
government agency to be disclosed.

8.2      Obligation for GI

The content of this Agreement and any information marked confidential which is
disclosed to GI under this Agreement by COMPANY, its AFFILIATES or SUBLICENSEES
shall be treated confidential by GI during the TERM and for 5 (five) years
thereafter. GI shall not use such information for any purposes other than those
necessary to directly further the purpose of this Agreement. GI may disclose
such information to the APPROVING OWNERS, provided however, that the APPROVING
OWNERS are obliged to confidentiality to the same extent as GI.

The confidentiality obligation shall not apply to information which is (i)
publicly available or becomes publicly available through no fault of GI, or (ii)
obtained by GI from another source without a duty of confidentiality, or (iii)
demonstrably independently developed or possessed by GI, or (iv) is required by
law, regulation, accounting principles or an order of a court or government
agency to be disclosed.

ARTICLE 9 - NO ASSIGNMENT OR TRANSFER

9.1      Assignment

This Agreement is personal to COMPANY and no rights or obligations may be
assigned by COMPANY to an AFFILIATE or a SUBLICENSEE or ALNYLAM or HOLD CO.
(including any affiliate and sublicensee of ALNYLAM and HOLD CO.) or any other
legal entity associated with the MERGER without the prior written consent of GI.
COMPANY may grant sublicenses in accordance with Section 2.4 to THIRD PARTIES or
SUBLICENSEES. COMPANY may assign its rights and obligations under this Agreement
to a THIRD PARTY successor or SUBLICENSEE successor in connection with the
merger, consolidation, or sale of all or substantially all of its assets or that
portion of its business to which this Agreement relates; provided, however, that
this Agreement shall immediately terminate if the proposed THIRD

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<PAGE>

PARTY assignee or SUBLICENSEE assignee fails to agree in writing to be bound by
the terms and conditions of this Agreement on or before the effective date of
the assignment. After the effective date of the assignment, the THIRD PARTY
assignee or SUBLICENSEE assignee shall provide GI, upon GI's request, with
written reports in reasonable detail on the actual and intended future
activities of the THIRD PARTY assignee or SUBLICENSEE assignee to develop and
commercialize LICENSED PRODUCTS. If the reports are not provided to GI in due
time and/or in sufficient detail, such failure will be a material breach under
Section 11.7, and GI shall have the right to terminate this Agreement in
accordance with the procedures set forth in Section 11.7.

9.2      Transfer to ALNYLAM

Notwithstanding Section 9.1, the assignment or transfer of this Agreement in
whole from COMPANY to ALNYLAM or HOLD CO. (including any affiliate of ALNYLAM
and HOLD CO.) as new licensee, for example in connection with a sale or transfer
of at least 50% of COMPANY's assets or that portion of its business to which
this Agreement relates, needs the prior written consent of GI, if such sale or
transfer is implemented within 5 (five) years after the EFFECTIVE DATE, unless
such sale or transfer is in connection with an Initial Public Offering or a
trade sale whereby a THIRD PARTY or SUBLICENSEE acquires both COMPANY and
ALNYLAM.

COMPANY shall inform GI immediately of any intended such sale or transfer.

ARTICLE 10 - GENERAL COMPLIANCE WITH LAWS

10.1     Compliance with Laws

COMPANY shall use commercially reasonable efforts to comply with all local,
state, federal, and international laws and regulations relating to the
development, manufacture, use and sale of LICENSED PRODUCTS.

10.2     Non-Use of APPROVING OWNERS Names

Neither COMPANY nor its AFFILIATES and SUBLICENSEES shall use the name of
"Massachusetts Institute of Technology," "Whitehead Institute", "Max Planck
Institute", "Max Planck Society", "Garching Innovation" or any variation,
adaptation, or abbreviation thereof, or of any of its trustees, officers,
faculty, students, employees, or agents, or any trademark owned by any of the
APPROVING OWNERS, in any promotional material or other public announcement or
disclosure without the prior written consent of the APPROVING OWNERS or in the
case of an individual, the consent of that individual. The foregoing
notwithstanding, without the consent of the APPROVING OWNERS, COMPANY may state
generally that it is co-exclusively licensed by the APPROVING OWNERS under the
PATENT RIGHTS.

ARTICLE 11 - TERM AND TERMINATION

11.1     Term

This Agreement shall come into effect on the EFFECTIVE DATE and shall remain in
effect until the expiration or abandonment of all issued patents and filed
patent applications within the

                                                                              17

<PAGE>

PATENT RIGHTS, unless earlier terminated in accordance with the provisions of
this Agreement.

11.2     Voluntary Termination by COMPANY

COMPANY shall have the right to terminate this Agreement, for any reason, (i)
upon at least 6 (six) months prior written notice to GI, such notice to state
the date at least 6 (six) months in the future upon which termination is to be
effective, and (ii) upon payment of all amounts due to GI through such
termination effective date.

11.3     Cessation of Business

If COMPANY ceases to carry on its business related to this Agreement, COMPANY
has to inform GI thereof immediately. COMPANY and GI shall have the right to
terminate this Agreement immediately upon written notice to the other.

11.4     Change of Ownership

In the event that at least 50% (fifty percent) of COMPANY'S stock capital is
assigned or transferred to a THIRD PARTY or an AFFILIATE or a SUBLICENSEE,
COMPANY shall provide GI, upon GI's request, with written reports in reasonable
detail on the actual and intended future activities of COMPANY to develop and
commercialize LICENSED PRODUCTS. If the reports are not provided to GI in due
time and/or in sufficient detail, such failure will be a material breach under
Section 11.7, and GI shall have the right to terminate this Agreement in
accordance with the procedures set forth in Section 11.7. COMPANY shall inform
GI immediately of the implementation of any such assignment or transfer.

11.5     Attack on PATENT RIGHTS

GI shall have the right to terminate this Agreement immediately upon written
notice to COMPANY, if COMPANY attacks, or has attacked or supports an attack
through a THIRD PARTY, the validity of any of the PATENT RIGHTS. To the extent
legally enforceable, sublicenses granted by COMPANY shall provide that in the
event the SUBLICENSEE attacks, or has attacked or supports an attack through a
THIRD PARTY, the validity of any of the PATENT RIGHTS, COMPANY shall have the
right to terminate the sublicense agreement immediately; upon request of GI,
COMPANY shall have the obligation to terminate such sublicense agreement.

11.6     Licenses to ALNYLAM

In the event that

(i)      COMPANY does not grant to ALNYLAM a worldwide non-exclusive
unrestricted royalty-free license, with the right to grant sublicenses, to all
of COMPANY'S existing and future intellectual property rights owned or
controlled by COMPANY, including without limitation patents and patent
applications, trademarks, copyrights and know-how, necessary or useful to
perform ALNYLAM's business in the field of RNAi, or

(ii)     COMPANY does not grant to ALNYLAM a worldwide non-exclusive
unrestricted, with

                                                                              18

<PAGE>
royalties payable only with respect to COMPANY's royalty obligations towards
its licensor, sublicense, with the right to grant further sublicenses to the
greatest extent permitted by its licensor, to all intellectual property rights
currently and in the future licensed to COMPANY, including without limitation
patents and patent applications, trademarks, copyrights and know-how, necessary
or useful to perform ALNYLAM's business in the field of RNAi,

GI shall have the right to terminate this Agreement immediately upon written
notice to COMPANY, if COMPANY fails to grant such licenses or sublicenses to
ALNYLAM within 30 (thirty) days after receiving written notice thereof from GI.

This Section 11.6 shall not apply in the event that (i) COMPANY or ALNYLAM
merges with a THIRD PARTY or SUBLICENSEE in a transaction in which the
shareholders of COMPANY or ALNYLAM (who hold shares in COMPANY or ALNYLAM
immediately before such merger) own less than 50% (fifty percent) of the shares
of the resulting entity after such merger, or (ii) a THIRD PARTY or SUBLICENSEE
acquires all or substantially all of the assets or shares of COMPANY or ALNYLAM.

11.7     Termination for Default

In the event COMPANY fails to pay any amounts due and payable to GI hereunder,
and fails to make such payments within 30 (thirty) days after receiving written
notice of such failure, GI may terminate this Agreement immediately upon written
notice to COMPANY. Notwithstanding the foregoing, in the event COMPANY commits a
material breach of its obligations under this Agreement, and fails to cure that
breach within 60 (sixty) days after receiving written notice thereof, GI may
terminate this Agreement immediately upon written notice to COMPANY.

Notwithstanding the foregoing, if COMPANY disputes any alleged failure to make a
payment or alleged material breach, the matter shall be resolved in accordance
with Section 12.3, and if the matter is resolved against COMPANY, COMPANY shall
have 10 (ten) days from the final decision of the arbitration tribunal to make
the payment, with additional interest on arrears according to Section 5.5 (d),
or cure the breach.

11.8     Termination According to AMENDMENT

GI shall have the right to terminate this Agreement immediately upon written
notice to COMPANY after compliance with the procedures set forth in Section c)
of REQUIREMENT 5 as modified by the AMENDMENT, if one or more of the amended
REQUIREMENTS stated in Section B) to D) of the AMENDMENT are not or no longer
met by ALNYLAM and/or HOLD Co., as applicable.

11.9     Effect of Termination

The following provisions shall survive the expiration or termination of this
Agreement: Articles 1, 3, 5.5, 7, 8, 12 and Section 11.1 and 11.9. In no event
shall termination of this Agreement release COMPANY, its AFFILIATES or
SUBLICENSEES from the obligation to pay any amounts that became due on or before
the effective date of termination.

In the event that any license granted to COMPANY under this Agreement is
terminated, any

                                                                              19

<PAGE>

sublicense under such license granted prior to termination of said license shall
remain in full force and effect, provided that:

(a)      the SUBLICENSEE is not then in breach of its sublicense agreement, and

(b)      the SUBLICENSEE agrees to be bound to GI as licensor under the terms
and conditions of the sublicense agreement, provided that GI shall have no other
obligation than to leave the sublicense granted by COMPANY in place.

In the event that MAX-PLANCK has partially assigned its ownership position in
the JOINT PATENT RIGHTS in certain countries to COMPANY according to Section
2.1, COMPANY shall cost-free re-assign such ownership position in such countries
to MAX-PLANCK on or before the effective date of termination. In the event that
COMPANY has further assigned its ownership position in certain countries in
accordance with Section 2.1, such further assignment shall remain in full force
and effect, provided that

(a)      the sub-assignee is not then in breach of its sub-assignment agreement,
and

(b)      the sub-assignee agrees to be bound to GI as assignor under the terms
and conditions of the sub-assignment agreement, provided that GI shall have no
other obligation than to leave the sub-assignment granted by COMPANY in place.
[A SIMILAR PROVISION SHOULD ALSO BE ADDED TO THE ALNYLAM LICENSE.]

11.10    Insolvency

This Agreement shall terminate automatically, if, regarding the assets of
COMPANY, a petition in insolvency is filed and not withdrawn by the petitioner
or dismissed by court for inappropriateness within 90 (ninety) days of the
filing, or the commencement of insolvency proceedings has been declined by court
for insufficiency of assets. In addition, this Agreement shall terminate
automatically, if COMPANY is in liquidation for other reasons, except for a
liquidation to reorganize COMPANY, if the reorganized entity agrees in writing
that this Agreement shall be continued entirely by such reorganized entity.

ARTICLE 12 - MISCELLANEOUS

12.1     Notice

Any notices required or permitted under this Agreement and all correspondence
hereunder shall be in English and in writing, shall specifically refer to this
Agreement, and shall be sent by a method providing confirmation of delivery to
the following addresses or facsimile numbers of the parties:

If to GI:         Garching Innovation GmbH
                  Hofgartenstrasse 8
                  D-80539 Muenchen/Germany
                  Tel: +49/89/290919-0
                  Fax: +49/89/290919-99

If to COMPANY:    Ribopharma AG,

                                                                              20

<PAGE>

                  Fritz-Hornschuh-Strasse 9
                  95326 Kulmbach/Germany
                  Tel: 09221/827 62 11
                  Fax: 09 221/827 62 99

All notices under this Agreement shall be deemed effective upon receipt. A party
may change its contact information immediately upon written notice to the other
party in the manner provided in this Section.

12.2     Governing Law

The parties explicitly agree and deem appropriate that this Agreement and all
disputes arising out of or related to this Agreement, or the performance,
enforcement, breach or termination hereof, and any remedies relating thereto,
shall be construed, governed, interpreted and applied in accordance with the
laws of the Federal Republic of Germany, except that questions affecting the
construction and effect of any patent shall be determined by the law of the
country in which the patent shall have been granted.

12.3     Dispute Resolution

The parties shall attempt to settle any dispute or claim arising out of or
relating to this Agreement by good faith negotiations. If the parties fail to
agree on a reasonable settlement within 60 (sixty) days after the affected party
informed the other party in writing of such dispute or claim, either party may
initiate arbitration under the procedural Rules of the International Chamber of
Commerce upon written notice to the other party within 30 (thirty) days after
such failure. The arbitration tribunal shall be appointed as follows: each party
shall select, within 30 (thirty) days after notice to initiate arbitration, an
independent and experienced THIRD PARTY as its arbitrator. The two arbitrators
selected by the parties shall mutually select an independent and experienced
THIRD PARTY as third arbitrator. The venue for the arbitration procedure shall
be Munich, Germany, the language shall be English, and German law shall be
applied. The award of the arbitration tribunal shall be final and binding for
the parties. Notwithstanding the foregoing, each party may apply for
interlocutory relief in court.

12.4     Amendment and Waiver

This Agreement may be amended, supplemented, or otherwise modified only by means
of a written instrument signed by both parties. Any waiver of any rights or
failure to act in a specific instance shall relate only to such instance and
shall not be construed as an agreement to waive any rights or fail to act in any
other instance, whether or not similar.

12.5     Severability

Should one of the provisions of this Agreement be held void, invalid or
unenforceable, the remaining provisions of this Agreement will not cease to be
effective. The parties shall negotiate in good faith to replace such void,
invalid or unenforceable provision by a new provision which reflects, to the
extent possible, the original intent of the parties.

12.6     Headings

                                                                              21

<PAGE>

All headings are for convenience only and shall not affect the meaning of any
provision of this Agreement.

12.7.    Effect on ALNYLAM LICENSE

To avoid any discrepancies between this Agreement and the ALNYLAM LICENSE due to
the fact that the ALNYLAM LICENSE does not reflect that (i) UMASS' ownership
position in the JOINT PATENT RIGHTS is excluded from the JOINT PATENT RIGHTS
with respect to the ALNYLAM LICENSE and this Agreement, and (ii) ALNYLAM has not
founded and established a European-based therapeutics company, but ALNYLAM and
COMPANY executed the MERGER, this Agreement shall prevail the ALNYLAM LICENSE to
the extent the aforementioned discrepancies occur.

IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by
their duly authorized representatives.

Garching Innovation GmbH           Ribopharma AG

By:    /s/Bernhard Hertel          By:    /s/ Roland Kreutzer /s/ Stefan Limmer
       --------------------               --------------------------------------
Name:  Dr. Bernhard Hertel         Name:  Dr. Roland Kreutzer, Dr. S. Limmer
Title: Geschaftsfuhrer             Title: Vorstande
Date:  July 30, 2003               Date:  July 30, 2003
       --------------------               --------------------------------------

Acknowledged and agreed:

Hold Co., Inc.                     Alnylam Pharmaceuticals, Inc.

By:    /s/ John Maraganore         By:    /s/ John Maraganore
       --------------------               --------------------------------------
Name:  John Maraganore             Name:  John Maraganore
Title: Chief Executive Officer     Title: Chief Executive Officer
Date:  August 26, 2003             Date:  August 26, 2003
       --------------------               --------------------------------------

                                                                              22

<PAGE>

                                   APPENDIX A

                               JOINT PATENT RIGHTS

I.       United States Patents and Applications

USSN [**] entitled [**]

USSN [**] entitled [**]

II.      International (non-U.S.) Patents and Applications

[**] entitled [**]

                                                                              23

<PAGE>

                                   APPENDIX B

                            MAX-PLANCK PATENT RIGHTS

I.       United States Patents and Applications

USSN [**] entitled "[**]II. International (non-U.S.) Patents and Applications

European Serial Number [**]

                               [**] entitled "[**]

                                                                              24

<PAGE>

                                   APPENDIX C

                                 ALNYLAM LICENSE

                       [FILED SEPARATELY AS EXHIBIT 10.19]

                                                                              25


<PAGE>

                                                                   EXHIBIT 10.21

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                                    AGREEMENT

This agreement ("Agreement") is effective as of the 17th day of September, 2003
("Effective Date") between THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR
UNIVERSITY ("Stanford"), an institution of higher education having corporate
powers under the laws of the State of California, and Alnylam Pharmaceuticals,
Inc. ("Alnylam" or "Licensee"), a corporation having a principal place of
business at 790 Memorial Drive, Suite 202, Cambridge, MA 02139. Stanford and
Alnylam agree as follows:

1        BACKGROUND

1.1      Stanford has an assignment of "Efficient RNA Transfection to the Livers
         of Living Mice" from the laboratory of Mark Kay ("Invention"), as
         described in Stanford Docket S00-012 and any Licensed Patent, as
         defined below, which may issue to the Invention.

1.2      Stanford wants to have the Invention perfected and marketed as soon as
         possible so that resulting products may be available for public use and
         benefit.

1.3      Alnylam wants a license under the Invention, and Licensed Patent to
         develop, manufacture, use, and sell Licensed Product in the field of
         use of Delivery of synthesized
 siRNA molecules for research and
         therapeutic use.

1.4      The Technology and Invention were made in the course of research
         supported by the National Institutes of Health (NIH).

2        DEFINITIONS

2.1      "Licensed Patents" means all patent applications filed on the Invention
         and all patents issuing thereon including

         (A)      Stanford's U.S. Patent Application, Serial Number [**]
                  entitled [**],[**],

         (B)      Stanford's U.S. Patent Application, Serial Number [**]
                  entitled [**],
         
         (C)      [**]the Continuation-in-Part, Serial Number [**] entitled
                  [**], and

         (D)      any divisions, continuations and any foreign patent
                  application or equivalent corresponding thereto, and any
                  Letters patent or equivalent thereof issuing thereon or
                  reissue, reexamination or extension thereof.

         (E)      Continuation-in-part applications (CIPs) that are offered to
                  the other co-exclusive licensee will also be offered to
                  Alnylam for licensing in the Licensed Field of Use.

2.2      "Licensed Product" means any product or part in the Licensed Field of
         Use, the manufacture, use, or sale of which:

                                                                   Page: 1 of 16

<PAGE>
         (A)      is covered by a valid claim of an issued, unexpired Licensed
                  Patent directed to the Invention in the country in which it is
                  made, used or sold. A claim of an issued, unexpired Licensed
                  Patent is presumed to be valid unless it has been held to be
                  invalid or unenforceable by a final judgment of a court of
                  competent jurisdiction from which no appeal can be or is
                  taken; rendered unenforceable through disclaimer or otherwise;
                  donated to the public; or lost through an interference
                  proceeding; or

         (B)      is covered by any claim being prosecuted in a pending
                  application of Licensed Patents in the country in which it is
                  made, used or sold unless such claim has been pending in such
                  application or an earlier application of Licensed Patents for
                  greater than [**] years.

2.3      "Net Sales" means the gross commercialization revenue derived by
         Alnylam and any sublicensee from Licensed Product, less the following
         items but only as they actually pertain to the disposition of Licensed
         Product by Alnylam and any sublicensee, are included in gross revenue,
         and are separately billed:

         (A)      import, export, excise and sales taxes, and custom duties;

         (B)      costs of insurance, packing, and transportation from the place
                  of manufacture to the customer's premises or point of
                  installation;

         (C)      costs of installation at the place of use; and

         (D)      credit for returns, allowances, or trades; and

         (E)      customary trade, quantity or cash discounts actually allowed
                  or taken.

         (F)      Where Licensed Products are not sold separately, but are sold
                  in combination with or as parts of other therapeutic products,
                  hereinafter such combinations referred to as a "Combination
                  Product" and the Licensed Product and each such other product
                  being referred to as a "Component Product", the Net Sales
                  price to be used for the purpose of calculating royalties
                  payable in respect of Combination Products must be determined
                  by multiplying the Net Sales price of the Combination Product
                  by the percentage value of the Licensed Product comprising a
                  Component Product contained in the Combination Product, such
                  percentage value being determined by dividing the current
                  market value of the Licensed Product comprising a Component
                  Product by a sum of the separate current market values of each
                  of the Component Products which are contained in the
                  Combination Product. The current market value of each of the
                  Component Products must be for a quantity comparable to that
                  contained in the Combination Product and of the same class,
                  purity and potency. When no current market value is available
                  for a Component Product, a reasonable hypothetical market
                  value for such Component Product based upon the allocation of
                  the same proportions of costs, reasonable overhead and profits
                  (all of which must be determined on the basis of generally
                  accepted accounting principles) as are or should be allocated
                  to similar Component Products and having an ascertainable
                  market value.

2.4      "siRNA Molecule" means an agent that modulates expression of a target
         gene by an RNA interference mechanism.

                                                                   Page: 2 of 16

<PAGE>

2.5      "Licensed Field of Use" means delivery of ex-vivo synthesized siRNA
         Molecules for research, development and therapeutic uses (including a
         diagnostic necessary for development, sale or reimbursement of a
         therapeutic Licensed Product). The Licensed Field of Use specifically
         excludes delivery of any system producing in vivo expressed siRNAs for
         therapeutic use, including but not limited to episomal and integrated
         vectors, and recombinant viruses.

2.6      "Licensed Territory" means worldwide.

2.7      "Co-Exclusive" means that, subject to Article 4, Stanford will only
         grant one further license in the Licensed Territory in the Licensed
         Field of Use.

2.8      "Affiliate" means any legal entity (such as a corporation, partnership,
         or limited liability company) that directly, or indirectly through one
         or more intermediaries, controls or is controlled by, or is under
         common control with Company and that is bound by the terms and
         conditions of this Agreement. For the purposes of this definition, the
         term "control" means (i) beneficial ownership of at least fifty percent
         (50%) of the voting securities of a corporation or other business
         organization with voting securities or (ii) a fifty percent (50%) or
         greater interest in the net assets or profits of a partnership or other
         business organization without voting securities. For purposes of this
         Agreement, the term Alnylam shall include its Affiliates, unless the
         context indicates otherwise.

3        GRANT

3.1      GRANT. Stanford grants and Alnylam accepts a license in the Licensed
         Field of Use to make, have made, use, have used, sell, have sold,
         import and have imported Licensed Product in the Licensed Territory.

3.2      CO-EXCLUSIVITY. The license is Co-Exclusive, including the right to
         sublicense pursuant to Article 13, in the Licensed Field of Use for a
         term beginning on the Effective Date, and ending, on a
         country-by-country basis, on the expiration of the last to expire of
         Licensed Patents.

3.3      RETAINED RIGHTS. Stanford may practice the Invention and use the
         Technology for its own bona fide research, including sponsored research
         and collaborations. Stanford has the right to publish any information
         included in Technology and Licensed Patent.

3.4      EXCLUSIVITY.

         (A)      If the other Co-Licensee discontinues licensing this Field of
                  Use, then the Field of Use will become exclusive for Alnylam.

         (B)      If the other Co-Licensee discontinues any other therapeutic
                  license under the Licensed Patents, Stanford shall so inform
                  Alnylam and Alnylam shall have the option to obtain an
                  exclusive, worldwide sublicensable license to such therapeutic
                  field. The terms of any such license shall be negotiated in
                  good faith by Stanford and Alnylam. This option may be
                  exercised by Alnylam by written notice to Stanford at any time
                  during a period of ninety (90) days after notification by
                  Stanford.

4        GOVERNMENT RIGHTS

                                                                   Page: 3 of 16

<PAGE>

This Agreement is subject to all of the terms and conditions of Title 35 United
States Code Sections 200 through 204, including an obligation that Licensed
Product sold or produced in the United States be "manufactured substantially in
the United States." Alnylam will take all reasonable action necessary on its
part as licensee to enable Stanford to satisfy its obligations to the U.S.
Government under Title 35. If Alnylam reasonably desires an exception to the
government requirement of substantial manufacture in the United States then
Stanford shall reasonably cooperate with Alnylam in obtaining such exception.

5        DILIGENCE

5.1      MILESTONES. As an inducement to Stanford to enter into this Agreement,
         Alnylam will use all commercially reasonable efforts and diligence to
         develop, manufacture, and sell or lease Licensed Product and to
         diligently develop markets for the Licensed Product. In particular,
         Alnylam will meet the milestones shown in Appendix A, which shall
         satisfy Alnylam's diligence obligations. If Alnylam in good faith fails
         to meet a milestone set forth in Appendix A, then Alnylam shall have a
         [**] period of time to reestablish diligence towards its objectives,
         and if Alnylam reestablishes diligence towards its objectives during
         this [**] period, any prior lack of diligence will be deemed cured. If
         Alnylam does not reestablish diligence towards its objectives during
         this [**] period, Stanford may terminate this Agreement if Alnylam has
         not met the milestones. Stanford may terminate this Agreement if
         Alnylam or a sublicensee has not sold Licensed Product for any [**]
         period after Alnylam's or a sublicensee's first commercial sale of
         Licensed Product. Efforts by Alnylam's sublicensees or Affiliates shall
         be considered efforts of Alnylam under this section.

5.2      PROGRESS REPORT. Alnylam acknowledges that diligent development of
         Licensed Product is of utmost importance to Stanford. On or before
         September 30 of each year until Alnylam markets a Licensed Product,
         Alnylam will make a written annual report in confidence to Stanford
         covering the preceding year ending June 30, regarding the progress of
         Alnylam toward commercialization of Licensed Product. The report will
         include, as a minimum, information (e.g., summary of work completed,
         key scientific discoveries, summary of work in progress, current
         schedule of anticipated events or milestones and market plans for
         introduction of Licensed Product) sufficient to enable Stanford to
         satisfy reporting requirements of the U.S. Government and for Stanford
         to ascertain progress by Alnylam toward meeting the diligence
         requirements of this Article 5.

6        ROYALTIES

6.1      ISSUE ROYALTY. Alnylam will pay to Stanford a noncreditable,
         nonrefundable license issue royalty of $[**] on signing this Agreement.

6.2      MINIMUM ROYALTY. Beginning one year from the Effective Date, and each
         anniversary thereafter, Alnylam will pay to Stanford a yearly royalty
         of $[**]. Yearly royalty payments are nonrefundable, but they are
         creditable against earned royalties to the extent provided in Section
         6.4.

                                                                   Page: 4 of 16

<PAGE>

6.3      EARNED ROYALTY. In addition, Alnylam will pay Stanford earned royalties
         on Net Sales as follows:

         (A)      [**]% of Net Sales for a Licensed Product subject to the
                  following;

         (B)      Such royalty payments shall be reduced up to [**]% (from [**]%
                  of Net Sales down to [**]% of Net Sales) by the amount of
                  royalty paid to access additional intellectual property
                  necessary in order to sell Licensed Products ("Additional
                  Earned Royalties").

         (C)      Such royalty payments shall be reduced as follows:

                  (1)      [**]% if Additional Earned Royalties are [**]% or
                           less.

                  (2)      [**]% if Additional Earned Royalties are greater than
                           [**]% but less than [**]%.

                  (3)      [**]% if Additional Earned Royalties are equal to or
                           greater than [**]% but less than [**]%.

                  (4)      [**]% if Additional Earned Royalties are equal to or
                           greater than [**]% but less than [**]%.

                  (5)      [**]% if Additional Earned Royalties are equal to or
                           higher than [**]%.

         (D)      Only one royalty is due on each Licensed Product sold by
                  Alnylam or its sublicensees regardless of whether its
                  manufacture, use, importation or sale are or shall be covered
                  by more than one patent or patent application included in
                  Licensed Patents under this Agreement, and no further
                  royalties will be due for use of such Licensed Product by
                  Alnylam or its sublicensee's customers.

6.4      CREDITABLE PAYMENTS. Creditable payments under this Agreement will be
         an offset to Alnylam against each earned royalty payment which Alnylam
         would be required to pay under Section 6.3 until the entire credit is
         exhausted.

6.5      MILESTONE PAYMENTS.

         (A)      For the first Licensed Product, Alnylam will make the
                  following payments for the filing of an IND, initiation of
                  Phase II trial, initiation of Phase III trial, and approval of
                  New Drug Application or equivalent in the U.S. ("Milestone
                  Payments"):

                  (1)      $[**] for filing of the first IND.

                  (2)      $[**] for initiation of the first Phase II trial.

                  (3)      $[**] for initiation of the first Phase III trial.

                  (4)      $[**] for approval of the first New Drug Application
                           or equivalent regulatory approval in the U.S.

         (B)      For the second Licensed Product, Alnylam will make the
                  following Milestone Payments:

                  (1)      $[**] for filing of the first IND.

                  (2)      $[**] for initiation of the first Phase II trial.

                  (3)      $[**] for initiation of the first Phase III trial.

                  (4)      $[**] for approval of the first New Drug Application
                           or equivalent regulatory approval in the U.S.

                                                                   Page: 5 of 16

<PAGE>
         (C)      For the third and every subsequent Licensed Product, Alnylam
                  will make the following Milestone Payments:

                  (1)      $[**] for filing of the first IND.

                  (2)      $[**] for initiation of the first Phase II trial.

                  (3)      $[**] for initiation of the first Phase III trial.

                  (4)      $[**] for approval of the first New Drug Application 
                           or equivalent regulatory approval in the U.S.

         (D)      Notwithstanding the above, at the time that Stanford receives
                  a Milestone Payment from Alnylam on behalf of a sublicensee
                  under Section 13.6, the corresponding Milestone Payment under
                  this Section 6.5 will not be due.

6.6      OBLIGATION TO PAY ROYALTIES. If this Agreement is not terminated in
         accordance with other provisions, Alnylam will be obligated to pay
         royalties on all Licensed Product that is either sold or produced under
         the license granted in Article 3, whether or not the Licensed Product
         is produced before the Effective Date of this Agreement or sold after
         the Licensed Patent has expired.

6.7      CURRENCY. The royalty on sales in currencies other than U.S. Dollars
         will be calculated using the appropriate foreign exchange rate for the
         currency quoted by the Bank of America (San Francisco) foreign exchange
         desk, on the close of business on the last banking day of each calendar
         quarter. Royalty payments to Stanford will be in U.S. Dollars. All
         non-U.S. taxes related to royalty payments will be paid by Alnylam and
         are not deductible from the payments due Stanford. Stanford shall
         assist Alnylam as reasonably requested by Alnylam and at Alnylam's
         expense, in recovering such taxes to the extent possible under
         applicable tax laws and treaties.

6.8      PATENT COSTS. Within thirty days after receiving a statement from
         Stanford during the Co-Exclusive period, Alnylam will reimburse
         Stanford:

         (A)      [**] of the Licensed Patent patenting expenses incurred by
                  Stanford before the Effective Date; and

         (B)      $[**] per year for Licensed Patent patenting expenses incurred
                  by Stanford after the Effective Date.

         (C)      If the Field of Use covered in this license becomes Exclusive
                  for Alnylam, Stanford and Alnylam will negotiate coverage of
                  patent expenses in good faith.

6.9      PATENT PROSECUTION.

         (A)      Stanford will be responsible for the filing, prosecution and
                  maintenance of the Licensed Patents. Alnylam shall be kept
                  informed of and shall receive copies of all documentation and
                  substantive actions pertaining to the filing, prosecution and
                  maintenance of Licensed Patents. Alnylam shall have reasonable
                  opportunities to participate in decision making and Stanford
                  will use diligent efforts to incorporate Alnylam's reasonable
                  suggestion.

         (B)      Throughout the term of this agreement, Alnylam will retain
                  rights to any claims that have support in the Licensed Patents
                  (defined in Section 2.1), whether or not they are in a CIP.

         (C)      If Stanford elects not to continue to seek or maintain patent
                  prosecution on any Licensed Patent in any country during the
                  co-exclusive term of the license despite

                                                                   Page: 6 of 16

<PAGE>

                  Alnylam's willingness to pay its share of the prosecution
                  costs, Alnylam shall have the right, at its expense, to
                  procure, maintain and enforce in any country such Licensed
                  Patent.

6.10     MOST FAVORED LICENSEE Stanford warrants and represents that it has not
         granted a license in the Field of Use to another party and shall not do
         so in the future on terms that are more favorable than those hereby
         granted to Alnylam.

7        ROYALTY REPORTS, PAYMENTS, AND ACCOUNTING

7.1      QUARTERLY EARNED ROYALTY PAYMENT AND REPORT. Beginning with the first
         sale of a Licensed Product, Alnylam will make written reports (even if
         there are no sales) and earned royalty payments to Stanford within
         thirty days after the end of each calendar quarter. This report will be
         in the form of the report of Appendix B and will state the number,
         description, and aggregate Net Sales of Licensed Product during the
         completed calendar quarter, and resulting calculation pursuant to
         Section 6.3 of earned royalty payment due Stanford for the completed
         calendar quarter. With each report, Alnylam will include payment due
         Stanford of royalties for the completed calendar quarter.

7.2      TERMINATION REPORT. Alnylam will make a written report to Stanford
         within ninety days after the license expires under Section 3.2. Alnylam
         will continue to make reports after the license has expired, until all
         Licensed Product produced under the license have been sold or
         destroyed. Concurrent with the submittal of each post-termination
         report, Alnylam will pay Stanford all applicable royalties.

7.3      ACCOUNTING. Alnylam will keep and maintain records for a period of
         three years showing the manufacture, sale, use, and other disposition
         of products sold or otherwise disposed of under the license. Records
         will include general-ledger records showing cash receipts and expenses,
         and records that include production records, customers, serial numbers,
         and related information in sufficient detail to enable Alnylam to
         determine the royalties payable under this Agreement.

7.4      AUDIT BY STANFORD. Alnylam will permit an independent certified public
         accountant selected by Stanford and acceptable to Alnylam to examine
         Alnylam's books and records from time to time (but no more than one
         time a year) to the extent necessary to verify reports provided for in
         Sections 7.1 and 7.2. Stanford will pay for the cost of such audit,
         unless the results of the audit reveal an underreporting of royalties
         due Stanford of five percent or more, in which case, Alnylam will pay
         the audit costs.

8        NEGATION OF WARRANTIES

8.1      To the best of Stanford's OTL knowledge, Stanford is the sole owner of
         Licensed Patent and has the right to enter into this Agreement and to
         grant the rights and licenses set forth herein.

8.2      NEGATION OF WARRANTIES. Nothing in this Agreement is construed as:

                                                                   Page: 7 of 16

<PAGE>

         (A)      Stanford's warranty or representation as to the validity or
                  scope of any Licensed Patent;

         (B)      A warranty or representation that anything made, used, sold,
                  or otherwise disposed of under any license granted in this
                  Agreement is or will be free from infringement of patents,
                  copyrights, and other rights of third parties;

         (C)      An obligation to bring suit against third parties for
                  infringement, except as described in Article 12;

         (D)      Granting by implication, estoppel, or otherwise any licenses
                  or rights under patents or other rights of Stanford or other
                  persons other than Licensed Patent, regardless of whether the
                  patents or other rights are dominant or subordinate to any
                  Licensed Patent; or

         (E)      An obligation to furnish any technology or technological
                  information.

8.3      NO WARRANTIES. Except as expressly set forth in this Agreement,
         Stanford makes no representations and extends no warranties of any
         kind, either express or implied. There are no express or implied
         warranties of merchantability or fitness for a particular purpose, or
         that Licensed Product will not infringe any patent, copyright,
         trademark, or other rights, or any other express or implied warranties.

8.4      SPECIFIC EXCLUSION. Nothing in this Agreement grants Alnylam any
         express or implied license or right under or to U.S. Patent 4,656,134
         entitled "Amplification of Eucaryotic Genes" or any patent application
         corresponding thereto.

9        INDEMNITY

9.1      INDEMNIFICATION. Alnylam will indemnify, hold harmless, and defend
         Stanford and Stanford Hospitals and Clinics, and their respective
         trustees, officers, employees, students, and agents against all claims
         for death, illness, personal injury, property damage, and improper
         business practices arising out of the manufacture, use, sale, or other
         disposition of Invention, Licensed Patent, Licensed Product, by Alnylam
         or any sublicensee, or their customers except to the extent such claims
         are due to the gross negligence or willful misconduct of Stanford.
         Stanford agreed to promptly notify Alnylam in writing of any such claim
         and Alnylam shall manage and control, at its own expense, the defense
         of such claim and its settlement. Alnylam agrees not to settle any such
         claim against Stanford without Stanford's written consent where such
         settlement would include any admission of liability on the part of
         Stanford, where the settlement would impose any restriction on the
         conduct by Stanford of any of its activities, or where the settlement
         would not include an unconditional release of Stanford from all
         liability for claims that are the subject matter of such claim.

9.2      NO LIABILITY. Subject to Section 9.1, neither party will be liable to
         each other for any loss profit, expectation, punitive or other
         indirect, special, consequential, or other damages whatsoever, in
         connection with any claim arising out of or related to this Agreement
         whether grounded in tort (including negligence), strict liability,
         contract, or otherwise.

                                                                   Page: 8 of 16

<PAGE>

9.3      WORKERS' COMPENSATION. Alnylam will at all times comply, through
         insurance or self-insurance, with all statutory workers' compensation
         and employers' liability requirements covering all employees with
         respect to activities performed under this Agreement.

9.4      INSURANCE. Alnylam will maintain, during the term of this Agreement,
         Comprehensive General Liability Insurance, including Product Liability
         Insurance prior to commercialization, with a reputable and financially
         secure insurance carrier to cover the activities of Alnylam and its
         sublicensees. Upon initiation of human clinical trials of Licensed
         Product, such insurance will provide minimum limits of liability of
         Five Million Dollars and will include Stanford and Stanford Hospitals
         and Clinics, and their respective trustees, directors, officers,
         employees, students, and agents as additional insureds. Insurance will
         be written to cover claims incurred, discovered, manifested, or made
         during or after the expiration of this Agreement and must be placed
         with carriers with ratings of at least A- as rated by A.M. Best.
         Alnylam will furnish a Certificate of Insurance evidencing primary
         coverage and additional insured requirements and requiring thirty (30)
         days prior written notice of cancellation or material change to
         Stanford. Alnylam will advise Stanford, in writing, that it maintains
         excess liability coverage (following form) over primary insurance for
         at least the minimum limits set forth above. All insurance of Alnylam
         will be primary coverage; insurance of Stanford and Stanford Hospitals
         and Clinics will be excess and noncontributory.

10       MARKING

Before the issuance of Licensed Patents, Alnylam will mark Licensed Product (or
their containers or labels) made, sold, or otherwise disposed of by it under the
license granted in this Agreement with the words "Patent Pending," and following
the issuance of one or more patents, with the numbers of the Licensed Patent.

11       STANFORD NAMES AND MARKS

Alnylam will not identify Stanford in any promotional advertising or other
promotional materials to be disseminated to the public or to use the name of any
Stanford faculty member, employee, or student, or any trademark, service mark,
trade name, or symbol of Stanford or Stanford Hospitals and Clinics, or any that
is associated with any of them, without Stanford's prior written consent, except
as may be required by law. Any use of Stanford's name will be limited to
statements of fact, e.g., that Stanford has co-exclusively licensed Licensed
Patents to Alnylam, and will not imply endorsement of Alnylam's products or
services.

12       INFRINGEMENT BY OTHERS: PROTECTION OF PATENTS

12.1     INFRINGEMENT ACTION.

         (A)      The parties will promptly inform each other of any suspected
                  infringement of any Licensed Patent by a third party.

         (B)      Stanford, Licensee and the other Co-Exclusive licensee will
                  meet to discuss the matter during the Co-Exclusive period of
                  this Agreement.

                                                                   Page: 9 of 16

<PAGE>
         (C)      If the Field-of-Use becomes Exclusive for Licensee, Stanford
                  and Licensee will meet to discuss the matter during the
                  Exclusive period of this Agreement.

         (D)      If Stanford does not choose to institute suit against said
                  third party within sixty days of notification, then the suit
                  may be brought in both Licensee's and the other Co-Exclusive
                  licensee's names, and Stanford's name if necessary and the
                  out-of-pocket costs thereof shall be borne equally by Licensee
                  and the other Co-Exclusive licensee and any recovery or
                  settlement shall be shared equally between Licensee and the
                  other Co-Exclusive licensee. In such situation, Licensee and
                  the other Co-Exclusive licensee shall agree to the manner in
                  which they exercise control over such action and if either
                  party desires to also be represented by separate counsel of
                  its own selection, the fees for such counsel shall be paid by
                  such party.

         (E)      If both, Stanford and the other Co-Exclusive licensee, or
                  Stanford if there is no other Co-Exclusive Licensee, choose
                  not to institute suit against said third party within sixty
                  days of notification, then Licensee shall have the right to
                  institute suit in its own name or if necessary, in Stanford's
                  name, to enjoin such infringement. Licensee shall bear the
                  entire cost of such litigation and shall be entitled to retain
                  the entire amount of any recovery or settlement. However, any
                  recovery in excess of litigation/settlement costs will be
                  considered Net Sales and Licensee will pay Stanford royalties
                  as indicated in Article 6 hereof. Stanford shall provide
                  reasonable assistance to Licensee in the prosecution of any
                  such suit brought by Licensee, at Licensee's expense.

13       SUBLICENSING

13.1     PERMITTED SUBLICENSING FOR LICENSED CO-EXCLUSIVE FIELD OF USE. Alnylam
         may grant sublicenses in the Co-exclusive Licensed Field of Use during
         the Co-Exclusive period:

         (A)      only in conjunction with intellectual property under Alnylam's
                  control; and

         (B)      only if Alnylam is developing or selling Licensed Products in
                  the Co-Exclusive Licensed Field of Use.

13.2     REQUIRED SUBLICENSING FOR LICENSED CO-EXCLUSIVE FIELD OF USE.

         (A)      If Alnylam or its sublicensee(s) is unable or unwilling to
                  serve or develop a potential market or market territory for
                  which there is a willing sublicensee, Alnylam will, at
                  Stanford's request, negotiate in good faith a sublicense under
                  the Licensed Patents, provided that the same request has been
                  made of the other Co-Exclusive licensee.

         (B)      Bona fide business concerns of Alnylam will be considered in
                  any good faith negotiations for a sublicense under this
                  Agreement and Alnylam shall not be required to
                  license/sublicense any other intellectual property to such
                  sublicensee.

         (C)      If the other Co-Exclusive licensee itself or through its
                  sublicensees is already developing a product in the market or
                  market territory for which there is a willing sublicensee,
                  Alnylam will not be required to sublicense to such party.

                                                                  Page: 10 of 16

<PAGE>
         (D)      In case that any other issue arises in the context of Required
                  Sublicensing, Stanford will discuss and try to resolve such
                  issue with Alnylam in good faith.

13.3     SUBLICENSE REQUIREMENTS. Any sublicense granted by Alnylam under this
         Agreement will be subject and subordinate to terms and conditions of
         this Agreement, except:

         (A)      Sublicense terms and conditions will reflect that any
                  sublicensee will not further sublicense, with the exception
                  that sublicensee may further sublicense rights under Licensed
                  Patents only as needed or implied in the course of
                  distribution or performance of service as required for the
                  sale to an end user of Licensed Products; and

         (B)      The earned royalty rate specified in the sublicense may be at
                  different rates than the rates in this Agreement.

13.4     SUBLICENSES REVERT TO STANFORD. Any sublicense will expressly include
         the provisions of Articles 7, 8, and 9 for the benefit of Stanford. If
         a sublicensee desires that its sublicense survive the termination of
         this agreement, Stanford agrees that the sublicense will revert to
         Stanford subject to the transfer of all obligations, including the
         payment of royalties specified in the sublicense, to Stanford or its
         designee, if this Agreement is terminated.

13.5     COPY OF SUBLICENSES. Alnylam will provide Stanford in confidence a copy
         of all relevant portions of any sublicenses granted pursuant to this
         Article 13.

13.6     SHARING OF SUBLICENSING INCOME. In addition to the earned royalties
         defined in Article 6, Alnylam will pay Stanford [**] percent ([**]%) of
         the amount received by Alnylam, that is specifically attributable to
         the Licensed Patents, from a sublicensee in

         (A)      up-front license fees, and

         (B)      clinical Milestone Payments as defined in Article 6.5.

13.7     ROYALTY-FREE SUBLICENSES. Alnylam may grant royalty-free or noncash
         sublicenses or cross-licenses if Alnylam pays all royalties due
         Stanford from sublicensee's Net Sales.

14       TERMINATION

14.1     TERMINATION BY ALNYLAM - Alnylam may terminate this Agreement by giving
         Stanford notice in writing at least thirty days in advance of the
         effective date of termination selected by Alnylam.

14.2     TERMINATION BY STANFORD - Stanford may terminate this Agreement if:

         (A)      Alnylam is:

                  (1)      delinquent on any royalty payment or report;

                  (2)      not diligently developing and commercializing
                           Licensed Product in accordance with Article 5 hereof;

                  (3)      in breach of any material provision; or

                  (4)      provides any false report; and

         (B)      Alnylam fails to remedy the breach within sixty days after
                  written notice by Stanford.

                                                                  Page: 11 of 16

<PAGE>

14.3     SURVIVING PROVISIONS - Surviving any termination or expiration are:

         (A)      Alnylam's obligation to pay royalties accrued or accruable
                  based on Licensed Product made, used or sold during the term
                  of this Agreement;

         (B)      Any cause of action or claim of Alnylam or Stanford, accrued
                  or to accrue, because of any breach or default by the other
                  party; and

         (C)      The provisions of Articles 6, 7, 8, and 9, 18.8and any other
                  provisions that by their nature are intended to survive.

15       ASSIGNMENT

15.1     ASSIGNMENT BY ALNYLAM - Alnylam may assign this Agreement to an
         Affiliate or, subject to Section 15.2 as part of:

         (A)      A sale or other transfer of Alnylam's entire business; or

         (B)      Sale or other transfer of that part of Alnylam's business to
                  which the license granted hereby relates.

15.2     CONDITIONS OF ASSIGNMENT - Prior to any assignment,

         (A)      Alnylam must give Stanford written notice of the assignment,
                  including the new assignee's contact information and;

         (B)      The new assignee must agree in writing to Stanford to be bound
                  by this Agreement.

         (C)      If the new assignee is a pharmaceutical or biotechnology
                  company having aggregate annual sales revenues of at least 3
                  times higher than the aggregate annual sales revenues of
                  Alnylam, Stanford must have received a $40,000 assignment fee.

15.3     AFTER THE ASSIGNMENT - Upon assignment of this Agreement, Alnylam will
         be released of liability under this Agreement and the term "Alnylam" as
         used in this Agreement will mean the new assignee.

16       ARBITRATION

16.1     DISPUTE RESOLUTION BY ARBITRATION. Any controversy arising under or
         related to this Agreement, and any disputed claim by either party
         against the other under this Agreement excluding any dispute relating
         to patent validity or infringement arising under this Agreement, will
         be settled by arbitration in accordance with the Licensing Agreement
         Arbitration Rules of the American Arbitration Association.

16.2     REQUEST FOR ARBITRATION. Either party may request arbitration. Stanford
         and Alnylam will mutually agree in writing on a third party arbitrator
         within thirty days of the arbitration request. The arbitrator's
         decision will be final and nonappealable and may be entered in any
         court having jurisdiction.

                                                                  Page: 12 of 16

<PAGE>

16.3     DISCOVERY. The parties will be entitled to discovery as if the
         arbitration were a civil suit in the California Superior Court. The
         arbitrator may limit the scope, time, and issues involved in discovery.

16.4     PLACE OF ARBITRATION. The parties will mutually agree in writing to a
         place where arbitration will be held.

17       NOTICES

All notices under this Agreement will be sent by first class mail, registered or
certified with return receipt requested, by reputable overnight courier or
delivered personally and shall be deemed to have been fully given upon receipt:

All general notices to Alnylam will be sent to:

                                    John Maraganore, Ph.D.
                                    President and Chief Executive Officer
                                    Alnylam Pharmaceuticals, Inc.
                                    790 Memorial Drive, Suite 202
                                    Cambridge, MA 02139

All financial invoices to Alnylam (i.e., accounting contact) will be sent in
writing to:

                                    Mary Trueblood
                                    Controller
                                    Alnylam Pharmaceuticals, Inc.
                                    790 Memorial Drive, Suite 202
                                    Cambridge, MA 02139

                                                                  Page: 13 of 16

<PAGE>

All progress report invoices to Alnylam (i.e., technical contact) will be sent
in writing to:

                                    Nagesh Mahanthappa, Ph.D., M.BA.
                                    Director, Corporate Development
                                    Alnylam Pharmaceuticals, Inc.
                                    790 Memorial Drive, Suite 202
                                    Cambridge, MA 02139

All general notices to Stanford will be e-mailed or mailed to:

                                    Office of Technology Licensing
                                    900 Welch Road, Suite 350
                                    Palo Alto, CA 94304-1080
                                    info@otlmail.Stanford.edu

All payments to Stanford will be mailed to:

                                    Stanford University
                                    Office of Technology Licensing
                                    Department #44439
                                    P.O. Box 44000
                                    San Francisco, CA 94144-4439

All progress reports to Stanford will be e-mailed or mailed to:

                                    Office of Technology Licensing
                                    1705 El Camino Real
                                    Palo Alto, CA 94306-1106
                                    info@otlmail.Stanford.edu

Either party may change its address with written notice to the other party.

18       MISCELLANEOUS

18.1     WAIVER AND AMENDMENT. This Agreement may be amended, supplemented or
         otherwise modified only by means of a written instrument signed by both
         parties. None of the terms of this Agreement can be waived except by
         the written consent of the party waiving compliance.

18.2     CHOICE OF LAW. This Agreement will be governed by the laws of the State
         of California applicable to agreements negotiated, executed, and
         performed within California.

18.3     HEADINGS. The headings in this Agreement are for convenience of
         reference only and do not constitute a part of it. The headings do not
         affect its interpretation.

                                                                  Page: 14 of 16

<PAGE>

18.4     FORCE MAJEURE. Neither party will be responsible for delays resulting
         from causes beyond the reasonable control of such party, including
         without limitation fire, explosion, flood, war, strike, or riot,
         provided that the nonperforming party uses commercially reasonable
         efforts to avoid or remove such causes of nonperformance and continues
         performance under this Agreement with reasonable dispatch whenever such
         causes are removed.

18.5     BINDING EFFECT. This Agreement shall be binding upon and inure to the
         benefit of the parties and their respective permitted successors and
         assigns.

18.6     SEVERABILITY In the event that any provision of this Agreement shall be
         held invalid or unenforceable for any reason, such invalidity or
         unenforceability shall not affect any other provision of this
         Agreement, and the parties shall negotiate in good faith to modify the
         Agreement to preserve (to the extent possible) their original intent.

18.7     ENTIRE AGREEMENT This Agreement constitutes the entire agreement
         between the parties with respect to its subject matter and supercedes
         all prior agreements or understandings between the parties relating to
         its subject matter.

18.8     CONFIDENTIALITY. Stanford agrees that diligent efforts shall be used to
         maintain the confidentiality of reports or documents received from
         Alnylam or its Affiliate or sublicensees pursuant to this Agreement.

The parties execute this Agreement in duplicate originals by their duly
authorized officers or representatives.

                           THE BOARD OF TRUSTEES OF THE LELAND

                           STANFORD JUNIOR UNIVERSITY

                                              /s/ Katharine Ku
                                    Signature __________________________________

                                             Katharine Ku
                                    Name    ____________________________________

                                             Director, Technology Licensing
                                    Title   ____________________________________

                                             Sept. 17, 2003
                                    Date    ____________________________________

                           LICENSEE

                                    Signature /s/John Maraganore

                                              _________________________________

                                    Name John Maraganore

                                    Title President and CEO

                                             September 19, 2003
                                    Date    ____________________________________

                                                                  Page: 15 of 16

<PAGE>

                             APPENDIX A: MILESTONES

1.       By the end of the year [**], Alnylam will [**].

2.       By the end of the year [**], Alnylam will [**].

3.       By the end of the year [**], Alnylam will [**].

                                                                  Page: 16 of 16


<PAGE>

                                                                   EXHIBIT 10.22

          CONFIDENTIAL MATERIALS OMITTED AND FILED SEPARATELY WITH THE
         SECURITIES AND EXCHANGE COMMISSION. ASTERISKS DENOTE OMISSIONS.

                                                                  EXECUTION COPY

                  RESEARCH COLLABORATION AND LICENSE AGREEMENT

                                  BY AND AMONG

                               MERCK & CO., INC.,

                         ALNYLAM PHARMACEUTICALS, INC.,

                                       AND

                               ALNYLAM HOLDING CO.


<PAGE>

                  RESEARCH COLLABORATION AND LICENSE AGREEMENT

         THIS AGREEMENT effective as of September 8, 2003 (the "EFFECTIVE
DATE"), by and among MERCK & CO., INC., a corporation organized and existing
under the laws of New Jersey ("MERCK") on the one hand, and ALNYLAM
Pharmaceuticals, Inc., a corporation organized under the laws of Delaware and
ALNYLAM HOLDING CO. ("ALNYLAM HOLDING"), a corporation organized and existing
under the laws of Delaware (collectively, "ALNYLAM") on the other hand.

                                    RECITALS:

         WHEREAS, MERCK and ALNYLAM desire to enter into a research
collaboration to develop technology useful for in vitro and/or in vivo target
identification and/or target validation using RNAi and to develop RNAi
therapeutic products upon the terms and conditions set forth herein;

         WHEREAS, ALNYLAM has developed ALNYLAM RNAi Technology (as hereinafter
defined) and has rights to ALNYLAM RNAi Patent Rights (as hereinafter defined);

         WHEREAS, MERCK desires
 to obtain a license under the ALNYLAM RNAi
Patent Rights and the ALNYLAM RNAi Technology upon the terms and conditions set
forth herein and ALNYLAM desires to grant such a license;

         WHEREAS, MERCK has developed MERCK RNAi Technology (as hereinafter
defined) and has rights to MERCK RNAi Patent Rights (as hereinafter defined);

         WHEREAS, ALNYLAM desires to obtain a license under the MERCK RNAi
Patent Rights and MERCK RNAi Technology upon the terms and conditions set forth
herein and MERCK desires to grant such a license; and

         NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants herein contained, the Parties hereby agree as follows:

1.  DEFINITIONS

Unless specifically set forth to the contrary herein, the following terms,
whether used in the singular or plural, shall have the respective meanings set
forth below:

1.1      "AAA" has the meaning set forth in Section 9.6.1 of this Agreement.

1.2      "ABANDONED MERCK RNAi NOVEL TARGET" has the meaning set forth in
         Section 2.14.2 of this Agreement.

                                       2

<PAGE>

1.3      "AFFILIATE" means (except as provided for in Section 3.1.8) (i) any
         corporation or business entity of which fifty percent (50%) or more of
         the securities or other ownership interests representing the equity,
         the voting stock or general partnership interest are owned, controlled
         or held, directly or indirectly, by MERCK or ALNYLAM, as the case may
         be; (ii) any corporation or business entity, which, directly or
         indirectly, owns, controls or holds fifty percent (50%) (or the maximum
         ownership interest permitted by law) or more of the securities or other
         ownership interests representing the equity, the voting stock or, if
         applicable, the general partnership interest, of MERCK or ALNYLAM, as
         the case may be, or (iii) any corporation or business entity, fifty
         percent (50%) or more of the securities or other ownership interests
         representing the equity of which is directly or indirectly, owned,
         controlled or held by the same corporation, business entity or security
         holders, or holders of ownership interests who own, control or hold
         fifty percent (50%) or more of the securities or other ownership
         interests representing the equity or the voting stock of MERCK or
         ALNYLAM, as the case may be.

1.4      "ALNYLAM" has the meaning set forth in the preamble to this Agreement.

1.5      "ALNYLAM-ASSIGNED THERAPEUTIC COLLABORATION INVENTIONS" has the meaning
         set forth in Section 2.7(d).

1.6      "ALNYLAM COLLABORATION INVENTIONS" means ALNYLAM Technology
         Collaboration Inventions, ALNYLAM Therapeutic Collaboration Inventions,
         ALNYLAM's interest in Joint Technology Collaboration Inventions, and
         ALNYLAM's interest in Joint Therapeutic Collaboration Inventions,
         collectively.

1.7      "ALNYLAM PRODUCT AGREEMENT" has the meaning set forth in Section
         3.1.5(c).

1.8      "ALNYLAM RNAi PATENT RIGHTS" means any and all patents and patent
         applications in the Territory (which for the purposes of this Agreement
         shall be deemed to include certificates of invention and applications
         for certificates of invention and to exclude Joint Collaboration Patent
         Rights) which, as of the Effective Date and/or during the Collaboration
         Term, are Controlled by ALNYLAM or its Affiliates and which are
         necessary or useful to MERCK in connection with the Technology
         Collaboration and/or for in vitro and/or in vivo target identification
         and/or target validation ("ALNYLAM TARGET IDENTIFICATION AND TARGET
         VALIDATION RNAi PATENT RIGHTS") and/or in the research, development,
         manufacture, marketing, use, import or sale of RNAi Therapeutic
         Products within the Therapeutic Collaboration ("ALNYLAM THERAPEUTIC
         RNAi PATENT RIGHTS"), including, but not limited to, those listed on
         Schedule 1.8. "ALNYLAM RNAi Patent Rights" include but are not limited
         to those which: (i) claim, cover or relate to RNAi Therapeutic Products
         including but not limited to improvements; or (ii) claim, cover or
         relate to ALNYLAM Collaboration Inventions; or (iii) are divisions,
         continuations, any portions of continuations-in-part that are
         themselves within the definition of ALNYLAM RNAi Patent Rights,
         reissues, renewals, extensions, supplementary protection certificates,
         and the like of any covered patents and patent applications and foreign
         equivalents thereof.

                                       3

<PAGE>

1.9      "ALNYLAM RNAi TECHNOLOGY" means any and all technology, information,
         material, and know-how, including but not limited to inventions
         (including without limitation ALNYLAM Collaboration Inventions and
         ALNYLAM's rights in Joint Collaboration Inventions), discoveries,
         improvements, processes, methods, protocols, formulas, data, and trade
         secrets patentable or otherwise, which: (a) as of the Effective Date
         and/or during the Collaboration Term, is in the Control of ALNYLAM or
         its Affiliates, including without limitation, all technology,
         information, and material, including inventions, discoveries and
         know-how, patentable or otherwise, of ALNYLAM's scientific advisors and
         consultants which are Controlled by ALNYLAM or its Affiliates, and (b)
         is necessary or useful to MERCK for the Collaboration and/or for in
         vitro and/or in vivo target identification and/or target validation
         and/or for the research, development, manufacturing, marketing, use,
         import or sale of Therapeutic Collaboration Products within the
         Therapeutic Collaboration in the Territory including, but not limited
         to, knowledge related to (i) the RNAi pathway and mechanism of action
         in mammalian cells, (ii) informatics approaches to optimal siRNA design
         for targeting specific genes and minimizing off-target effects, (iii)
         optimal RNA chemistry for siRNA in vivo stability and delivery, (iv)
         bio-analytical methods for measurement of pharmacokinetics and
         biodistribution of siRNAs, and (v) RNAi delivery methods.

1.10     "ALNYLAM TARGET IDENTIFICATION AND TARGET VALIDATION RNAi PATENT
         RIGHTS" has the meaning set forth in Section 1.8 of this Agreement.

1.11     "ALNYLAM TECHNOLOGY COLLABORATION INVENTIONS" means any and all
         discoveries, improvements, processes, methods, protocols, formulas,
         data, Inventions, know-how and trade secrets, patentable or otherwise,
         arising from the Technology Collaboration and developed or invented
         solely by employees of ALNYLAM or its Affiliates or other persons not
         employed by MERCK acting on behalf of ALNYLAM during the Technology
         Collaboration Term and/or during the one (1) year period following the
         termination or expiration of the Technology Collaboration Term.

1.12     "ALNYLAM THERAPEUTIC COLLABORATION INVENTIONS" means any and all
         discoveries, improvements, processes, methods, protocols, formulas,
         data, Inventions, know-how and trade secrets, patentable or otherwise,
         arising from the Therapeutic Collaboration and developed or invented
         solely by employees of ALNYLAM or its Affiliates or other persons not
         employed by MERCK acting on behalf of ALNYLAM during the Therapeutic
         Collaboration Term and/or during the one (1) year period following the
         termination or expiration of the Therapeutic Collaboration Term,
         including but not limited to ALNYLAM-Assigned Therapeutic Collaboration
         Inventions (as defined in Section 2.7(d)).

1.13     "ALNYLAM THERAPEUTIC COLLABORATION IP" means any and all technology,
         information, material, know-how, including, but not limited to
         Inventions (including ALNYLAM Therapeutic Collaboration Inventions and
         ALNYLAM's rights in Joint Therapeutic Collaboration Inventions),
         discoveries, improvements, processes, methods, protocols, formulas,
         data, and trade secrets, patentable or otherwise, patents and patent
         applications, which: (a) are Controlled by ALNYLAM or its Affiliates as
         of the Effective Date or during the Collaboration Term, and (b) are
         necessary or useful to MERCK in

                                       4

<PAGE>

         connection with the Therapeutic Collaboration and/or in the research,
         development, manufacture, marketing, use, import or sale of Therapeutic
         Collaboration Products.

1.14     "ALNYLAM THERAPEUTIC RNAi PATENT RIGHTS" has the meaning set forth in
         Section 1.8 of this Agreement.

1.15     "CALENDAR QUARTER" means the respective periods of three (3)
         consecutive calendar months ending on March 31, June 30, September 30
         and December 31.

1.16     "CALENDAR YEAR" means each successive period of twelve (12) months
         commencing on January 1 and ending on December 31.

1.17     "CHANGE OF CONTROL" has the meaning set forth in Section 9.2 of this
         Agreement.

1.18     "CODE" has the meaning set forth in Section 8.2.2(c) of this Agreement.

1.19     "CO-EXCLUSIVE" means with respect to any license of rights hereunder,
         the grant of exclusive rights, but for the retention by the granting
         Party of the same rights for itself and/or its Affiliates.

1.20     "COLLABORATION" means the Technology Collaboration and the Therapeutic
         Collaboration, collectively.

1.21     "COLLABORATION TERM" means the duration of the Collaboration, as
         described more fully in Section 2.8.

1.22     "COMBINATION PRODUCT" means an RNAi Therapeutic Product combined with
         any other clinically active therapeutic ingredient. All references to
         RNAi Therapeutic Product in this Agreement shall be deemed to include
         Combination Product, to the extent applicable.

1.23     "COMPETING RNAi PRODUCT" has the meaning set forth in Section 7.3(a) of
         this Agreement.

1.24     "COMPLETE MERCK NON-DRUGGABLE TARGET INFORMATION" has the meaning set
         forth in Section 2.14.2(2) of this Agreement.

1.25     "CONTROL", "CONTROLS" OR "CONTROLLED BY" means, with respect to any
         item of or right under ALNYLAM RNAi Patent Rights, MERCK RNAi Patent
         Rights, ALNYLAM RNAi Technology, MERCK RNAi Technology, ALNYLAM
         Therapeutic Collaboration IP, or MERCK RNAi Novel Target IP, the
         possession of (whether by ownership or license, other than pursuant to
         this Agreement) the ability by a Party to grant access to, or a license
         or sublicense of, such items or right as provided for herein without
         violating the terms of any agreement or other arrangement with any
         Third Party existing at the time such Party would be required hereunder
         to grant the other Party such access or license or sublicense.

1.26     "DISPUTE" has the meaning set forth in Section 9.6.1 of this Agreement.

                                       5

<PAGE>

1.27     "EFFECTIVE DATE" has the meaning set forth in the preamble of this
         Agreement.

1.28     "EXCLUDED CLAIM" has the meaning set forth in Section 9.6.1 of this
         Agreement.

1.29     "EXTENDED THERAPEUTIC COLLABORATION TERM" has the meaning set forth in
         Section 1.87 of this Agreement.

1.30     "FILING" of an NDA means the acceptance by a Regulatory Authority of an
         NDA for filing.

1.31     "FIRST COMMERCIAL SALE" means, with respect to any Therapeutic
         Collaboration Product, the first sale for end use or consumption of
         such Therapeutic Collaboration Product in a country after all required
         approvals, including Marketing Authorization, have been granted by the
         Regulatory Authority of such country.

1.32     "FULL-TIME EQUIVALENT" or "FTE" means the equivalent of a full-time
         scientist's work time over a twelve-month period (including normal
         vacations, sick days and holidays). The portion of an FTE year devoted
         by a scientist to the Technology Collaboration shall be determined by
         dividing the number of full days (including full days consisting of
         multiple partial days) during any twelve-month period devoted by such
         scientist to the Technology Collaboration by the total number of
         working days (excluding vacations, sick days and holidays) during such
         twelve-month period.

1.33     "HUMAN MATERIALS" has the meaning set forth in Section 2.12 of this
         Agreement.

1.34     "IND" means an Investigational New Drug application, Clinical Study
         Application, Clinical Trial Exemption, or similar application or
         submission for approval to conduct human clinical investigations filed
         with or submitted to a Regulatory Authority in conformance with the
         requirements of such Regulatory Authority.

1.35     "IND-ENABLING GLP TOXICOLOGY STUDIES" means genotoxicity, acute
         toxicology, safety pharmacology, and sub-chronic toxicology studies in
         species that satisfy applicable regulatory requirements using
         applicable good laboratory practices which meet the standard necessary
         for submission as part of an IND filing with a Regulatory Authority.

1.36     "INFORMATION" means any and all information and data, including without
         limitation all ALNYLAM RNAi Technology and MERCK RNAi Technology, and
         all other scientific, pre-clinical, clinical, regulatory,
         manufacturing, marketing, financial and commercial information or data,
         whether communicated in writing or orally or by any other method, which
         is provided by one Party to the other Party in connection with this
         Agreement.

1.37     "INITIAL MERCK NON-DRUGGABLE TARGET INFORMATION" has the meaning set
         forth in Section 2.14.2(1) of this Agreement.

1.38     "INITIAL OPT-IN NEGOTIATION PERIOD" has the meaning set forth in
         Section 2.14.3.3 of this Agreement.

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<PAGE>

1.39     "INVENTION" means any process, method, composition of matter, article
         of manufacture, discovery or finding that is conceived and/or reduced
         to practice in the course of the Collaboration.

1.40     "JOINT COLLABORATION INVENTIONS" means Joint Technology Collaboration
         Inventions and Joint Therapeutic Collaboration Inventions,
         collectively.

1.41     "JOINT COLLABORATION PATENT RIGHTS" means any and all patent
         applications and patents in the Territory (which for the purposes of
         this Agreement shall be deemed to include certificates of invention and
         applications for certificates of invention) which claim, cover or
         relate to any Joint Collaboration Inventions. "Joint Collaboration
         Patent Rights" include, but are not limited to, those patent
         applications and patents which claim, cover or relate to Joint
         Technology Collaboration Inventions or Joint Therapeutic Collaboration
         Inventions; or are divisions, continuations, any portion of
         continuations-in-part that are themselves within the definition of
         Joint Collaboration Patent Rights, reissues, renewals, extensions,
         supplementary protection certificates, and the like of any covered
         patents and patent applications and foreign equivalents thereof.

1.42     "JOINT STEERING COMMITTEE" or "JSC" means the joint steering committee
         as more fully described in Section 2.4.

1.43     "JOINT TECHNOLOGY COLLABORATION INVENTIONS" means any and all
         discoveries, improvements, processes, methods, protocols, formulas,
         data, Inventions, know-how and trade secrets, patentable or otherwise,
         arising from the Technology Collaboration and developed or invented
         jointly by employees of MERCK and ALNYLAM or their Affiliates or others
         acting on behalf of MERCK and ALNYLAM during the Technology
         Collaboration Term and/or during the one (1) year period following the
         termination or expiration of the Technology Collaboration Term.

1.44     "JOINT THERAPEUTIC COLLABORATION INVENTIONS" means any and all
         discoveries, improvements, processes, methods, protocols, formulas,
         data, Inventions, know-how and trade secrets, patentable or otherwise,
         arising from the Therapeutic Collaboration and developed or invented
         jointly by employees of MERCK and ALNYLAM or their Affiliates or others
         acting on behalf of MERCK and ALNYLAM during the Therapeutic
         Collaboration Term and/or during the one (1) year period following the
         termination or expiration of the Therapeutic Collaboration Term.

1.45     "LIMMER PATENTS" means those patent rights set forth on Schedule 1.45
         of this Agreement.

1.46     "MARKETING AUTHORIZATION" means any and all approvals (including
         without limitation all applicable pricing and governmental
         reimbursement approvals) necessary to receive permission from the
         relevant Regulatory Authority to market and sell an RNAi Therapeutic
         Product in any country.

1.47     "MATERIALS" has the meaning set forth in Section 2.10 of this
         Agreement.

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<PAGE>

1.48     "MERCK-ASSIGNED THERAPEUTIC COLLABORATION INVENTIONS" has the meaning
         set forth in Section 2.7(d).

1.49     "MERCK BROAD RNAi PATENT RIGHTS" means any and all patent applications
         and patents in the Territory (which for the purposes of this Agreement
         shall be deemed to include certificates of invention and applications
         for certificates of invention and to exclude Joint Collaboration Patent
         Rights), which, as of the Effective Date and/or during the
         Collaboration Term, are Controlled by MERCK or Rosetta Inpharmatics LLC
         ("ROSETTA") or their wholly-owned subsidiaries and which are necessary
         or useful to ALNYLAM for the Technology Collaboration and/or for in
         vitro and/or in vivo target identification and/or target validation.
         MERCK Broad RNAi Patent Rights include but are not limited to those
         which: (i) claim, cover or relate to MERCK Technology Collaboration
         Inventions; or (ii) are divisions, continuations, any portions of
         continuations-in-part that are themselves within the definition of
         MERCK Broad RNAi Patent Rights, reissues, renewals, extensions,
         supplementary protection certificates, and the like of any covered
         patents and patent applications and foreign equivalents thereof. "MERCK
         Broad RNAi Patent Rights" shall include, without limitation, those
         patents and patent applications set forth in Schedule 1.49. The term
         "MERCK Broad RNAi Patent Rights" does not include any patents or patent
         applications relating to MERCK Non-Druggable Targets, including but not
         limited to patents or patent applications relating to MERCK RNAi Novel
         Target IP.

1.50     "MERCK BROAD RNAi TECHNOLOGY" means any and all technology,
         information, material, and know-how, including, but not limited to
         inventions (including MERCK Technology Collaboration Inventions and
         MERCK's rights in Joint Technology Collaboration Inventions),
         discoveries, improvements, processes, methods, protocols, formulas,
         data, and trade secrets, patentable or otherwise which: (a) as of the
         Effective Date and/or during the Collaboration Term, is in the Control
         of MERCK or ROSETTA or their wholly-owned subsidiaries, and (b) is
         necessary or useful to ALNYLAM for the Technology Collaboration and/or
         for in vitro and/or in vivo target identification and/or target
         validation including (i) data and methods for monitoring RNAi
         selectivity and potency, and (ii) approaches to optimal design of
         siRNAs, including but not limited to informatics approaches. "MERCK
         Broad RNAi Technology" does not include technology, information, or
         material, including inventions, discoveries and know-how, patentable or
         otherwise, relating to MERCK Non-Druggable Targets, including but not
         limited to MERCK RNAi Novel Target IP.

1.51     "MERCK COLLABORATION INVENTIONS" means MERCK Technology Collaboration
         Inventions and MERCK Therapeutic Collaboration Inventions, MERCK's
         interest in Joint Technology Collaboration Inventions, and MERCK's
         interest in Joint Therapeutic Collaboration Inventions, collectively.

1.52     "MERCK NON-DRUGGABLE TARGETS" means [**] Controlled by MERCK or its
         Affiliates and which MERCK deems to be [**]. Such targets [**] include
         targets for which [**].

         A MERCK Non-Druggable Target may also include:

                                       8

<PAGE>

         1. [**] for which [**] have been i[**], for example in [**];

         2. [**] whereby [**] has been [**]; and

         3. [**] where [**] in the [**].

         MERCK Non-Druggable Targets must be [**]; that is they must be targets
         for which: (a) MERCK [**] the target that is [**] which, [**], provides
         [**] the MERCK Non-Druggable Target, [**] (b) MERCK believes there are
         [**] of which would be [**] (i) by [**] the MERCK Non-Druggable Target
         [**], or (ii) by the [**] MERCK Non-Druggable Target [**] in the [**].

1.53     "MERCK PRODUCT AGREEMENT" has the meaning set forth in Section
         3.1.6(c).

1.54     "MERCK PRODUCT-SPECIFIC RNAi PATENT RIGHTS" means any and all patent
         applications and patents in the Territory (which for the purposes of
         this Agreement shall be deemed to include certificates of invention and
         applications for certificates of invention and exclude Joint
         Collaboration Patent Rights) which: (a) as of the Effective Date and/or
         during the Collaboration Term, are Controlled by MERCK or ROSETTA or
         their wholly-owned subsidiaries, and (b) are necessary or useful to
         ALNYLAM in connection with the research, development, manufacture,
         marketing, use, import or sale of a specific RNAi Therapeutic Product
         within the Therapeutic Collaboration. MERCK Product-Specific RNAi
         Patent Rights include but are not limited to those which: (i) claim,
         cover or relate to a specific RNAi Therapeutic Product within the
         Therapeutic Collaboration; or (ii) claim, cover or relate to MERCK
         Therapeutic Collaboration Inventions; or (iii) are divisions,
         continuations, any portions of continuations-in-part that are
         themselves within the definition of MERCK Product-Specific RNAi Patent
         Rights, reissues, renewals, extensions, supplementary protection
         certificates, and the like of any covered patents and patent
         applications and foreign equivalents thereof. "MERCK Product-Specific
         RNAi Patent Rights" include, without limitation, those patents and
         patent applications set forth in Schedule 1.54. The term "MERCK
         Product-Specific RNAi Patent Rights" does not include any patents or
         patent applications relating to MERCK Non-Druggable Targets, including
         but not limited to patents or patent applications relating to MERCK
         RNAi Novel Target IP.

1.55     "MERCK PRODUCT-SPECIFIC RNAi TECHNOLOGY" means any and all technology,
         information, material, and know-how, including, but not limited to
         inventions (including MERCK Therapeutic Collaboration Inventions and
         MERCK's rights in Joint Therapeutic Collaboration Inventions),
         discoveries, improvements, processes, methods, protocols, formulas,
         data, and trade secrets, patentable or otherwise which: (a) as of the
         Effective Date and/or during the Collaboration Term, is in the Control
         of MERCK or ROSETTA or their wholly-owned subsidiaries, and (b) is
         necessary or useful to ALNYLAM for the research, development,
         manufacturing, marketing, use, sale or import of a specific RNAi
         Therapeutic Product within the Therapeutic Collaboration, and (c) is
         not included in MERCK Broad RNAi Technology. The term "MERCK
         Product-Specific Technology" does not include technology, information,
         or material, including but not limited to

                                       9

<PAGE>

         inventions, discoveries and know-how, patentable or otherwise, relating
         to MERCK Non-Druggable Targets, including but not limited to MERCK RNAi
         Novel Target IP.

1.56     "MERCK RNAi NOVEL TARGET" means a MERCK Non-Druggable Target that
         ALNYLAM, in its sole discretion, deems to be of sufficient scientific
         interest and possesses sufficient intellectual property such that
         ALNYLAM elects to develop an RNAi Therapeutic Product directed at such
         MERCK Non-Druggable Target under the Therapeutic Collaboration. For
         purposes of clarity, the term "MERCK RNAi Novel Target," shall not
         include any Abandoned MERCK RNAi Novel Target.

1.57     "MERCK RNAi NOVEL TARGET IP" means any and all information, material,
         know-how, patents and patent applications Controlled by MERCK or
         ROSETTA or their wholly-owned subsidiaries as of the Effective Date
         and/or during the Collaboration Term, and that both: (i) are necessary
         or useful to ALNYLAM for research, development, manufacturing,
         marketing, use, import or sale of RNAi Therapeutic Products within the
         Therapeutic Collaboration, and (ii) claim, cover or relate to specific
         MERCK RNAi Novel Targets.

1.58     "MERCK RNAi PATENT RIGHTS" means MERCK Broad RNAi Patent Rights and
         MERCK Product-Specific Patent Rights, collectively. The term "MERCK
         RNAi Patent Rights" shall not include patents or patent applications
         that claim, cover or relate to MERCK Non-Druggable Targets or MERCK
         RNAi Novel Target IP.

1.59     "MERCK RNAi TECHNOLOGY" means MERCK Broad RNAi Technology and MERCK
         Product-Specific RNAi Technology, collectively.

1.60     "MERCK TECHNOLOGY COLLABORATION INVENTIONS" means any and all
         discoveries, improvements, processes, methods, protocols, formulas,
         data, Inventions, know-how and trade secrets, patentable or otherwise,
         arising from the Technology Collaboration and developed or invented
         solely by employees of MERCK or its Affiliates or other persons not
         employed by ALNYLAM acting on behalf of MERCK during the Technology
         Collaboration Term and/or during the one (1) year period following the
         expiration or termination of the Technology Collaboration Term.

1.61     "MERCK THERAPEUTIC COLLABORATION INVENTIONS" means any and all
         discoveries, improvements, processes, methods, protocols, formulas,
         data, Inventions, know-how and trade secrets, patentable or otherwise,
         arising from the Therapeutic Collaboration and developed or invented
         solely by employees of MERCK or its Affiliates or other persons not
         employed by ALNYLAM acting on behalf of MERCK during the Therapeutic
         Collaboration Term and/or during the one (1) year period following the
         expiration or termination of the Therapeutic Collaboration Term,
         including but not limited to MERCK-Assigned Therapeutic Collaboration
         Inventions (as defined in Section 2.7(d)).

1.62     "NDA" means a New Drug Application, Biologics License Application,
         Worldwide Marketing Application, Marketing Application Authorization,
         Section 510(k) filing or similar application or submission for
         Marketing Authorization of a Therapeutic Collaboration Product filed
         with a Regulatory Authority in a country or group of

                                       10

<PAGE>

         countries to obtain marketing approval for a biological, pharmaceutical
         or other therapeutic product in that country or in that group of
         countries.

1.63     "NET SALES" means the gross invoice price of a Therapeutic
         Collaboration Product sold by MERCK or its Related Parties or by
         ALNYLAM or its Related Parties to the first Third Party (other than a
         sublicensee of a Party) after deducting, if not previously deducted,
         from the amount invoiced or received:

         (a)      trade and quantity discounts actually given other than early
                  pay cash discounts;

         (b)      returns, rebates, chargebacks and other allowances actually
                  given;

         (c)      retroactive price reductions that are actually granted; and

         (d)      a fixed amount equal to [**] percent ([**]%) of the amount
                  invoiced to cover bad debt, sales or excise taxes, early
                  payment cash discounts, transportation and insurance, custom
                  duties, and other governmental charges.

         With respect to sales of Combination Products, Net Sales shall be
         calculated on the basis of the gross invoice price of the Therapeutic
         Collaboration Product(s) containing the same composition and
         concentration of RNAi oligonucleotide(s) or oligonucleotide-derivatives
         sold without other clinically active ingredients.

         In the event that the Therapeutic Collaboration Product is sold only as
         a Combination Product and not sold without other clinically active
         therapeutic ingredients, the Parties shall negotiate in good faith
         another basis on which to calculate Net Sales with respect to a
         Combination Product that fairly reflects the value of the Therapeutic
         Collaboration Product relative to the other clinically active
         therapeutic ingredients in the Combination Product, but in no event
         shall such calculation result in the gross invoice price on which to
         base Net Sales being less than [**] percent ([**]%) of the gross
         invoice price of such Therapeutic Combination Product.

         A percentage of the deductions set forth in paragraphs (a) through (d)
         above equal to the ratio of the Net Sales for the Therapeutic
         Collaboration Product to the Net Sales of the entire Combination
         Product will be applied in calculating Net Sales for a Combination
         Product.

1.64     "OPT-IN FEE" has the meaning set forth in Section 2.14.3.2.

1.65     "OPT-IN INFORMATION" has the meaning set forth in Section 2.14.3.2 and
         as provided in Schedule 2.14.3.2.

1.66     "OPT-IN NEGOTIATION PERIOD" has the meaning set forth in Section
         2.14.3.3.

1.67     "OPT-IN NOTICE" has the meaning set forth in Section 2.14.3.2.

1.68     "OPT-IN RIGHT" means MERCK's right, to be exercised upon the completion
         of IND-Enabling GLP Toxicology Studies and MERCK's receipt of all
         Opt-In Information from

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<PAGE>

         ALNYLAM, to elect to enter into a Therapeutic Collaboration Product
         Agreement with ALNYLAM for a Therapeutic Collaboration Product as part
         of the Therapeutic Collaboration, as described in Section 2.14.3.2.

1.69     "PARTY" means MERCK and/or ALNYLAM.

1.70     "PROVIDERS" has the meaning set forth in Section 2.12 of this
         Agreement.

1.71     "R&D COSTS" has the meaning set forth in Section 2.14.3.2.

1.72     "REGULATORY AUTHORITY" means any applicable government regulatory
         authority involved in granting approvals for the manufacturing,
         marketing, reimbursement and/or pricing of an RNAi Therapeutic Product
         in the Territory, including, in the United States, the United States
         Food and Drug Administration and any successor governmental authority
         having substantially the same function.

1.73     "RELATED PARTY" means the Party, its Affiliates and permitted
         sublicensees ,which term does not include wholesale distributors of the
         Party or its Affiliates who purchase Therapeutic Collaboration Products
         from such Party or its Affiliates in an arm's length transaction and
         who have no other obligation, including but not limited to a reporting
         obligation, to such Party or its Affiliates. For purposes of clarity,
         such wholesale distributors do not include those distributors whose
         obligations to such Party or Affiliate include responsibility for sales
         and/or marketing efforts in a Territory or sharing of costs and
         expenses with respect to sales and/or marketing on behalf of a Party or
         its Affiliates, which distributors shall be deemed to be permitted
         sublicensees for purposes of this definition.

1.74     "RIBOPHARMA" means RIBOPHARMA AG, a company organized under the laws of
         Germany and an Affiliate of ALNYLAM.

1.75     "RNAi TECHNOLOGY" means technology useful for in vitro and/or in vivo
         target identification and/or target validation using RNA interference.

1.76     "RNAi THERAPEUTIC PRODUCTS" means oligonucleotide- or oligonucleotide
         derivative-based therapeutic modalities for gene function modulation or
         other moieties effective in gene function modulation that function
         through RNA interference and which are discovered, derived or developed
         by ALNYLAM or any person or entity acting on its behalf, including its
         Affiliates, consultants and scientific advisors during the
         Collaboration, and which are directed at MERCK RNAi Novel Targets.
         "RNAi Therapeutic Products" include, but are not limited to, any and
         all: (i) ALNYLAM Therapeutic Collaboration Inventions that are (a)
         oligonucleotide- or oligonucleotide derivative-based therapeutic
         modalities for gene function modulation or (b) moieties which are
         effective in gene function modulation, and (c) function through RNA
         interference and are directed at MERCK RNAi Novel Targets; and (ii)
         therapeutic preparations of the RNAi Therapeutic Product in final form
         for sale by prescription, over-the-counter or any other method for
         therapeutic use, including, without limitation, any Combination
         Product.

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1.77     "STOCK PURCHASE AGREEMENT" has the meaning set forth in Section 5.1.3
         of this Agreement.

1.78     "SUBSEQUENT OPT-IN NEGOTIATION PERIODS" has the meaning set forth in
         Section 2.14.3.3 of this Agreement.

1.79     "TECHNOLOGY COLLABORATION" means the research activities undertaken by
         the Parties hereto as set forth in Article 2 and Schedule 2.1.

1.80     "TECHNOLOGY COLLABORATION MILESTONE" means the [**], as provided in
         Section 5.1.4, by ALNYLAM, or its Affiliates, or its permitted
         collaborators (as provided for in Sections 2.2 and 2.13) if but only if
         MERCK receives the same rights for in vitro and/or in vivo target
         identification and/or target validation as ALNYLAM and its Affiliates
         to any intellectual property relating to the Collaboration which is
         developed by ALNYLAM or its Affiliates or such permitted collaborators,
         during the Technology Collaboration Term, of [**] where [**] through
         [**], excluding, however, [**].

1.81     "TECHNOLOGY COLLABORATION TERM" means the duration of the Technology
         Collaboration and "Extended Technology Collaboration Term" means any
         period of the Technology Collaboration as it may be extended by mutual
         agreement of the Parties, as described more fully in Section 2.8.

1.82     "TECHNOLOGY MILESTONE DISPUTE" has the meaning set forth in Section
         5.1.4.

1.83     "TERRITORY" means all of the countries in the world, and their
         territories and possessions.

1.84     "THERAPEUTIC COLLABORATION" means the research, development and
         commercialization activities undertaken by the Parties as set forth in
         Article 2.

1.85     "THERAPEUTIC COLLABORATION PRODUCT" has the meaning set forth in
         Section 2.14.3.2.

1.86     "THERAPEUTIC COLLABORATION PRODUCT AGREEMENT" has the meaning set forth
         in Section 2.14.3.3 of this Agreement.

1.87     "THERAPEUTIC COLLABORATION TERM" means the duration of the Therapeutic
         Collaboration and "Extended Therapeutic Collaboration Term" means any
         period of the Therapeutic Collaboration as it may be extended by mutual
         agreement of the Parties, as described more fully in Section 2.8.

1.88     "THIRD PARTY" means an entity other than a Party and its Affiliates.

1.89     "THIRD PARTY PATENT LICENSES" has the meaning set forth in Section
         5.2.5 of this Agreement.

1.90     "VALID PATENT CLAIM" means a claim of: (a) an issued and unexpired
         patent included within the ALNYLAM RNAi Patent Rights, the MERCK RNAi
         Patent Rights, or the Joint Collaboration Patent Rights which (i)
         covers the manufacture, use, sale or import of a Therapeutic
         Collaboration Product; (ii) has not been revoked or held unenforceable
         or

                                       13

<PAGE>

         invalid by a decision of a court or other governmental agency of
         competent jurisdiction, which is not appealable or has not been
         appealed within the time allowed for appeal, and (iii) has not been
         abandoned, disclaimed, denied or admitted to be invalid or
         unenforceable through reissue, re-examination or disclaimer or
         otherwise, or (b) a patent application within the Territory, which
         covers the manufacture, use, sale or import of a Therapeutic
         Collaboration Product, included within the ALNYLAM RNAi Patent Rights,
         the MERCK RNAi Patent Rights or the Joint Collaboration Patent Rights
         that has been pending less than [**] years from the earliest date on
         which such patent application claims priority and such patent claim has
         not been cancelled, withdrawn or abandoned.

2.       COLLABORATION

2.1      GENERAL. ALNYLAM and MERCK shall engage in the Collaboration upon the
         terms and conditions set forth in this Agreement. The activities to be
         undertaken in the course of the Technology Collaboration are set forth
         in the workplan attached hereto as Schedule 2.1, which may be amended
         from time to time upon the mutual written agreement of authorized
         representatives of the Parties.

2.2      CONDUCT OF RESEARCH. Each Party or its Affiliates shall commit the
         following resources to carry out the activities set forth in Schedule
         2.1:

         -        First year of the Technology Collaboration Term -    [**] FTEs

         -        Second year of the Technology Collaboration Term -   [**] FTEs

         -        Third year of the Technology Collaboration Term -    [**] FTEs

         ALNYLAM and MERCK shall be entitled to utilize the services of Third
         Parties (including Third Party contract research organizations) to
         perform their respective Technology Collaboration activities; provided
         that each Party shall remain at all times fully liable for its
         respective responsibilities under the Technology Collaboration. Neither
         Party shall use Third Party contract resources to conduct part or all
         of its obligations under the Technology Collaboration unless the other
         Party's rights under the agreement with the Third Party contract
         research organization guarantee the non-contracting Party the same
         rights under this Agreement as if the contracting Party had done the
         work itself. Third Party collaborations shall be governed by the terms
         of Section 2.13.

2.2.1    MERCK FTE SUPPORT. Notwithstanding the above, MERCK may cease to
         provide FTEs commencing one year after the Effective Date by written
         notice to ALNYLAM specifying the date on which MERCK's FTEs will cease
         work, in which event the license grant from ALNYLAM to MERCK shall be
         modified as set forth in Section 3.1.1.1.

2.3      PRINCIPAL SCIENTISTS. The principal scientists for the Technology
         Collaboration are Dr. [**] for ALNYLAM and Dr. [**] for MERCK. The
         Technology Collaboration and all work assignments to be performed by
         ALNYLAM and MERCK shall be carried out under the direction and
         supervision of the principal scientists noted above. Each Party

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<PAGE>

         shall immediately notify the other Party in the event that the Party's
         principal scientist is not or will not direct or supervise the
         Technology Collaboration or leaves the Party's employ.

2.4      JOINT STEERING COMMITTEE. The Parties hereby establish a committee to
         facilitate the Technology Collaboration as follows:

2.4.1    COMPOSITION OF THE JOINT STEERING COMMITTEE. The Technology
         Collaboration shall be conducted under the direction of a joint
         steering committee (the "JSC") comprised of two (2) named
         representatives of MERCK and two (2) named representatives of ALNYLAM,
         one of whom shall be the Senior Vice President, Research and
         Development of ALNYLAM. Each Party shall appoint its respective
         representatives to the JSC from time to time, and may substitute one or
         more of its representatives, in its sole discretion, effective upon
         notice to the other Party of such change. These representatives shall
         have appropriate technical credentials, experience and knowledge, and
         ongoing familiarity with the Technology Collaboration. Additional
         representatives or consultants may from time to time, by mutual consent
         of the Parties, be invited to attend JSC meetings, subject to such
         representative's and consultant's written agreement to comply with the
         requirements of Section 4.1. Each Party shall bear its own expenses
         relating to attendance at such meetings by its representatives.

2.4.2    JSC CHAIRPERSON. The JSC Chairperson shall rotate every six (6) months
         between ALNYLAM and MERCK. The initial JSC Chairperson shall be a
         representative of ALNYLAM. The Chairperson's responsibilities shall
         include:

         1.       scheduling meetings at least quarterly, but more frequently if
                  the JSC determines it necessary;

         2.       setting agenda for meetings with solicited input from other
                  members;

         3.       delivering minutes to the JSC for review and approval; and

         4.       conducting effective meetings, including ensuring that
                  objectives for each meeting are set and achieved.

2.4.3    MEETINGS. The JSC shall meet in accordance with a schedule established
         by mutual written agreement of the Parties, but no less frequently than
         once per Calendar Quarter, with the location for such meetings
         alternating between ALNYLAM and MERCK facilities (or such other
         locations as is determined by the JSC). Alternatively, the JSC may meet
         by means of teleconference, videoconference or other similar
         communications equipment, but at least two meetings per year shall be
         conducted in person.

2.4.4    JSC RESPONSIBILITIES. The JSC shall have the following responsibilities
         with respect to the Technology Collaboration:

         1.       oversight of all activities relating to the Technology
                  Collaboration;

         2.       approving annual workplans, timelines, goals and objectives;

         3.       determining each Party's responsibilities under the workplans;

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         4.       monitoring the progress of the Technology Collaboration,
                  including reviewing relevant data;

         5.       considering issues of priority;

         6.       monitoring the diligence of each Party in performing its
                  obligations hereunder;

         7.       identifying and prioritizing academic collaborations for
                  review by the appropriate level of management of ALNYLAM and
                  MERCK;

         8.       approving any material changes to workplans;

         9.       discussing the content of the data package to be provided to
                  the JSC to enable the JSC to determine if the Technology
                  Collaboration Milestone has been achieved pursuant to Section
                  5.1.4, provided, however, that there is no obligation on the
                  JSC to agree to the final content of the data package prior to
                  submission to the JSC; and

         10.      considering and advising on technical issues that arise.

         The JSC shall attempt to resolve any and all disputes relating to the
         Technology Collaboration by unanimous consensus; provided, however,
         that all issues relating to budgets, expenditures or other economic
         matters shall be made by the appropriate level of management of the
         Parties and the JSC shall not have final decision-making authority
         regarding such matters.

         In the event the JSC is unable to reach a unanimous consensus with
         respect to any Dispute, then the two (2) senior members of the JSC, one
         from MERCK and one from ALNYLAM, shall attempt to resolve such Dispute.
         If the senior members of the JSC are unable to resolve such Dispute,
         then the Dispute shall be resolved in accordance with Section 9.6.1.

2.5      EXCHANGE OF INFORMATION. In accordance with the provisions of Article
         3, upon execution of this Agreement and on an ongoing basis during the
         Collaboration Term:

         (a)      ALNYLAM shall disclose to MERCK all ALNYLAM RNAi Technology
                  that is Controlled by ALNYLAM or its Affiliates as of the
                  Effective Date and/or during the first [**] years of the
                  Collaboration Term which has not been previously disclosed and
                  shall provide updates, at least quarterly, with regard to
                  ALNYLAM RNAi Technology that is Controlled by ALNYLAM or its
                  Affiliates as of the Effective Date and/or during the first
                  [**] years of the Collaboration Term, and ALNYLAM RNAi Patent
                  Rights that are Controlled by ALNYLAM or its Affiliates as of
                  the Effective Date and/or during the first [**] years of the
                  Collaboration Term, including but not limited to any and all
                  ALNYLAM RNAi Patent Rights filings related thereto, and
                  ALNYLAM Therapeutic Collaboration IP that is Controlled by
                  ALNYLAM or its Affiliates as of the Effective Date and/or
                  during the first [**] years of the Collaboration Term,
                  including but not limited to any and all ALNYLAM RNAi Patent
                  Rights filings related thereto;

         (b)      MERCK shall disclose to ALNYLAM all MERCK Broad RNAi
                  Technology that is Controlled by MERCK or ROSETTA or their
                  wholly-owned subsidiaries as of the Effective Date and/or
                  during the first [**] years of the Collaboration Term and

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                  MERCK Product-Specific RNAi Technology that is Controlled by
                  MERCK or ROSETTA or their wholly-owned subsidiaries as of the
                  Effective Date and/or during the first [**] years of the
                  Collaboration Term which has not been previously disclosed and
                  shall provide updates, at least quarterly, with regard to such
                  MERCK Broad RNAi Technology that is Controlled by MERCK or
                  ROSETTA or their wholly-owned subsidiaries as of the Effective
                  Date and/or during the first [**] years of the Collaboration
                  Term and MERCK Product-Specific RNAi Technology that is
                  Controlled by MERCK or ROSETTA or their wholly-owned
                  subsidiaries as of the Effective Date and/or during the first
                  [**] years of the Collaboration Term and MERCK Broad RNAi
                  Patent Rights that are Controlled by MERCK or ROSETTA or their
                  wholly-owned subsidiaries as of the Effective Date and/or
                  during the first [**] years of the Collaboration Term,
                  including but not limited to any and all MERCK RNAi Patent
                  Rights filings related thereto; and

         (c)      each Party shall disclose to the other any and all Joint
                  Collaboration Inventions and Joint Collaboration Patent Rights
                  not previously disclosed and shall provide updates, at least
                  quarterly, with regard to such Joint Collaboration Inventions.
                  Disclosures required by this Section 2.5 shall be subject to
                  the confidentiality and non-use obligations of Third Party
                  agreements and the confidentiality provisions of Section 4.1
                  of this Agreement.

2.6      RECORDS AND REPORTS.

2.6.1    RECORDS. Each Party shall maintain records, in sufficient detail and in
         good scientific manner appropriate for patent and regulatory purposes,
         which shall fully and properly reflect all work done and results
         achieved in the performance of the Collaboration by such Party.

2.6.2    COPIES AND INSPECTION OF RECORDS. Each Party shall have the right,
         during normal business hours and upon reasonable notice, to inspect and
         copy all records of the other Party referred to in Section 2.6.1
         related to the Technology Collaboration and/or each Therapeutic
         Collaboration Product with respect to which such Party has elected to
         co-develop and co-promote pursuant to Section 2.14.3 or for which such
         Party has received an exclusive license pursuant to Section 3.1.5 or
         Section 3.1.6. The record-reviewing Party shall maintain such records
         and the information disclosed therein in confidence in accordance with
         Section 4.1. The record-reviewing Party shall have the right to arrange
         for its employees and/or consultants involved in the activities
         contemplated hereunder to visit the offices and laboratories of the
         record-keeping Party, and any of its Third Party contractors as
         permitted under Section 2.2, during normal business hours and upon
         reasonable notice, to discuss the Technology Collaboration work and its
         results in detail with the technical personnel and consultants of the
         record-keeping Party. Upon request, the record-keeping Party shall
         provide copies of the records described in Section 2.6.1 above.

2.6.3    REPORTS.

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2.6.3.1  TECHNOLOGY COLLABORATION. Within thirty (30) days following the end of
         each Calendar Quarter during the Technology Collaboration Term, each
         Party shall provide to the other Party a written progress report in
         English which shall describe the work performed to date by such Party
         on the Technology Collaboration, provide an evaluation of the work by
         such Party performed in relation to the goals, deliverables and
         timelines of the Technology Collaboration, and provide such other
         information required by the Technology Collaboration or reasonably
         requested by the other Party relating to the progress of the goals,
         deliverables, timelines or performance of the Technology Collaboration,
         including the status and results of Third Party Collaborations covered
         by Section 2.13.

2.6.3.2  THERAPEUTIC COLLABORATION. At least two (2) times a year during the
         Therapeutic Collaboration Term, two (2) named representatives of MERCK
         and two (2) named representatives of ALNYLAM shall meet to exchange
         information relating to the Therapeutic Collaboration, to discuss
         possible changes to Schedule 2.14.3.2 based on interactions with
         Regulatory Authorities, and the provision by ALNYLAM to MERCK of a
         brief, written summary progress report in English which shall describe
         the work performed to date on the Therapeutic Collaboration, the
         progress of the development of all RNAi Therapeutic Products and
         Therapeutic Collaboration Products that are not yet the subject of a
         Therapeutic Collaboration Product Agreement, a MERCK Product Agreement
         or an ALNYLAM Product Agreement. Each Party shall appoint its
         respective representatives from time to time, and may substitute one or
         more of its representatives, in its sole discretion, effective upon
         notice to the other Party of such change. These representatives shall
         have appropriate technical credentials, experience and knowledge, and
         ongoing familiarity with the Therapeutic Collaboration. Additional
         representatives or consultants may from time to time, by mutual consent
         of the Parties, be invited to attend meetings, subject to such
         representative's and consultant's written agreement to comply with the
         requirements of Section 4.1.

2.7      COLLABORATION INVENTIONS.

         The entire right, title and interest in:

         (a)      ALNYLAM Technology Collaboration Inventions and ALNYLAM
                  Therapeutic Collaboration Inventions shall be owned solely by
                  ALNYLAM;

         (b)      MERCK Technology Collaboration Inventions and MERCK
                  Therapeutic Collaboration Inventions shall be owned solely by
                  MERCK;

         (c)      Joint Collaboration Inventions shall be owned jointly by
                  ALNYLAM and MERCK; and

         (d)      In the event MERCK, solely or jointly with ALNYLAM, makes any
                  discovery, improvement, or Invention with respect to a
                  Therapeutic Collaboration Product after receiving the Opt-In
                  Information for such Therapeutic Collaboration Product, and

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                  prior to the earlier of ALNYLAM's opt-out pursuant to Section
                  2.14.3.3.1 or the execution of a Therapeutic Collaboration
                  Agreement or an ALNYLAM Product Agreement or a MERCK Product
                  Agreement or the expiration or termination of the Therapeutic
                  Collaboration Term, then MERCK shall assign the same to
                  ALNYLAM and it shall be an "ALNYLAM-ASSIGNED THERAPEUTIC
                  COLLABORATION INVENTION" and shall be included within the
                  definition of an ALNYLAM Therapeutic Collaboration Invention.
                  In the event ALNYLAM, solely or jointly with MERCK, makes any
                  discovery, improvement, or Invention with respect to a MERCK
                  Non-Druggable Target after receiving the Initial MERCK
                  Non-Druggable Target Information for such MERCK Non-Druggable
                  Target, and prior to its election either: (i) to select such
                  MERCK Non-Druggable Target as a MERCK RNAi Novel Target or
                  (ii) to decline to do so and ALNYLAM's return to MERCK of all
                  information and materials relating to the MERCK Non-Druggable
                  Target (as provided in Section 2.14.2), then ALNYLAM shall
                  assign the same to MERCK and it shall be a "MERCK-ASSIGNED
                  THERAPEUTIC COLLABORATION INVENTION" and shall be included
                  within the definition of a MERCK Therapeutic Collaboration
                  Invention.

         ALNYLAM shall promptly disclose to MERCK the development, making,
         conception or reduction to practice of ALNYLAM Technology Collaboration
         Inventions and Joint Collaboration Inventions and MERCK shall promptly
         disclose to ALNYLAM the development, making, conception or reduction to
         practice of MERCK Technology Collaboration Inventions and Joint
         Collaboration Inventions.

2.8      COLLABORATION TERM. Except as otherwise provided herein, the term of
         the Collaboration shall commence on the Effective Date and continue
         until the end of the Therapeutic Collaboration Term as set forth below
         ("COLLABORATION TERM"). The Technology Collaboration shall commence on
         the Effective Date and continue for a period of three years
         ("TECHNOLOGY COLLABORATION TERM"), and the term of the Therapeutic
         Collaboration shall commence on the one year anniversary of the
         Effective Date and continue for a period of four years and thereafter
         until (a) all Opt-In Negotiation Periods with respect to all
         Therapeutic Collaboration Products hereunder have expired and/or
         resulted in the execution of a Therapeutic Collaboration Agreement, a
         MERCK Product Agreement or an ALNYLAM Product Agreement, and (b)
         ALNYLAM has notified MERCK that there are no MERCK RNAi Novel Targets
         that have not either become the subject of such an agreement or become
         an Abandoned MERCK RNAi Novel Target ("THERAPEUTIC COLLABORATION
         TERM"). The Parties may extend the term of the Collaboration, the
         Technology Collaboration and/or the Therapeutic Collaboration by mutual
         written agreement of authorized representatives of the Parties, and
         shall, in such case, amend Schedule 2.1 as applicable.

2.9      COMPLIANCE. Each Party shall conduct the Collaboration in accordance
         with all applicable laws, rules and regulations, including, without
         limitation, all current governmental regulatory requirements concerning
         good laboratory practices. In addition, if animals are used in research
         hereunder, each Party shall comply with the Animal Welfare Act or any
         other applicable local, state, national and international laws or
         regulations relating to the care and use of laboratory animals. The
         Parties encourage each other to use the highest standards, such as
         those set forth in the Guide for the Care

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<PAGE>

         and Use of Laboratory Animals (NRC, 1996), for the humane handling,
         care and treatment of such research animals. Any animals which are used
         in the course of the Collaboration, or products derived from those
         animals, such as eggs or milk, will not be used for food purposes, nor
         will these animals be used for commercial breeding purposes. Each Party
         shall notify the other Party in writing of any deviations from
         applicable regulatory or legal requirements. Each Party hereby
         certifies that it will not and has not employed or otherwise used in
         any capacity the services of any person debarred under Section 21 USC
         335a in performing any services hereunder.

2.10     MATERIALS. Each Party shall provide the other Party with sufficient
         quantities of the materials set forth in Schedule 2.10 ("MATERIALS"),
         as updated from time to time, solely for the purposes of carrying out
         the Parties' respective activities under the Technology Collaboration
         in accordance with the terms of this Agreement. Each Party acknowledges
         and agrees that Materials received from the other Party are not to be
         used in humans. In addition, none of the Materials received from the
         other Party, or any derivatives, analogs, modifications or components
         thereof, shall be transferred, delivered or disclosed to any Third
         Party, without the prior written approval of the Party which provided
         the Materials, other than a permitted collaborator under Section 2.13,
         a permitted Third Party under Section 2.2, or a Third Party performing
         services on behalf of a Party in the development of a Therapeutic
         Collaboration Product. Any unused Materials shall be, at the providing
         Party's option, either returned to the providing Party or destroyed in
         accordance with the providing Party's instructions.

2.11     EXCLUSIVE EFFORTS. Except as provided in Sections 2.13 and 3.1.1,
         during the Technology Collaboration Term, ALNYLAM and RIBOPHARMA and
         their Affiliates shall not enter into any agreement with a Third Party
         to develop RNAi Technology for use in in vitro and/or in vivo target
         identification and/or target validation; provided, however, that
         ALNYLAM and RIBOPHARMA and their Affiliates may enter into a
         collaboration with a Third Party, the primary purpose of which is the
         development of therapeutic products using RNA interference and, if RNAi
         Technology is developed therein for use in in vitro and/or in vivo
         target identification and/or target validation, then it may only be
         developed in the course of developing such therapeutic products.

         Notwithstanding the foregoing, each of ALNYLAM and RIBOPHARMA and their
         wholly-owned subsidiaries may, in its sole discretion, grant
         non-exclusive licenses under the Limmer Patents for the purpose of in
         vitro and/or in vivo target identification and/or target validation
         solely to Third Parties:

         (i)      with whom neither ALNYLAM nor RIBOPHARMA nor any of their
                  Affiliates has a collaboration or strategic alliance
                  agreement, or

         (ii)     with whom ALNYLAM or RIBOPHARMA or any of their Affiliates has
                  a collaboration or strategic alliance agreement, which has as
                  its primary purpose the development of therapeutic products
                  using RNA interference and, if RNAi Technology is developed
                  therein for use in in vitro and/or in vivo target
                  identification and/or target validation, then it may only be
                  developed in the course of developing such therapeutic
                  products, or

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<PAGE>

         (iii)    with whom ALNYLAM or RIBOPHARMA or any of their Affiliates has
                  a collaboration or strategic alliance agreement which does not
                  have in vitro and/or in vivo target identification and/or
                  target validation as a purpose.

2.12      USE OF HUMAN MATERIALS. If any human cell lines, tissue, human
          clinical isolates or similar human-derived materials ("HUMAN
          MATERIALS") have been or are to be collected and/or used in the
          Collaboration, each Party represents and warrants (i) that it has
          complied, or shall comply, with all applicable laws, guidelines and
          regulations relating to the collection and/or use of the Human
          Materials, and (ii) that it has obtained, or shall obtain, all
          necessary approvals and appropriate informed consents, in writing, for
          the collection and/or use of such Human Materials. Each Party shall
          provide documentation of such approvals and consents upon the other
          Party's request. Each Party further represents and warrants that such
          Human Materials may be used as contemplated in this Agreement without
          any obligation to the individuals or entities ("PROVIDERS") who
          contributed the Human Materials, including, without limitation, any
          obligation of compensation to such Providers or any other Third Party
          for the intellectual property associated with, or commercial use of,
          the Human Materials for any purposes.

2.13     THIRD PARTY COLLABORATIONS. In addition to the right to utilize the
         services of Third Parties to perform Technology Collaboration
         activities pursuant to Section 2.2, during the Technology Collaboration
         Term, ALNYLAM and MERCK agree that it may be necessary or useful to
         enter into Third Party collaborations which provide technology,
         information, data or know-how, patentable or otherwise, which is
         necessary or useful for MERCK and/or ALNYLAM to perform its obligations
         under the Technology Collaboration. Such Third Party collaborations
         shall not conflict with the terms and conditions of this Agreement,
         including but not limited to Sections 2.11, 2.13 and 3.1.1, and shall
         be structured consistently with ALNYLAM and RIBOPHARMA's obligations
         and rights pursuant to this Agreement, including but not limited to
         Sections 2.11, 2.13 and 3.1.1. In the event that any such Third Party
         collaborations are contemplated in connection with the Technology
         Collaboration, the JSC shall discuss, subject to Third Party
         confidentiality obligations, whether to enter into such Third Party
         collaborations. The costs of such Third Party collaborations shall be
         borne by the Party(ies) entering into the agreement and such agreements
         shall include confidentiality and non-use provisions which are no less
         stringent than those set forth in Section 4.1 of this Agreement.

         The Parties shall use good faith efforts to ensure that, to the extent
         possible, all such Third Party collaborations shall provide that any
         and all data and results, discoveries and inventions, whether
         patentable or not, arising out of the Third Party collaboration may be
         used by bona fide collaborators of the Party entering into the Third
         Party collaboration agreement. In addition, the Party entering into
         such Third Party collaborations shall use reasonable efforts to obtain
         a right to sublicense to the other Party and its Affiliates any
         intellectual property arising out of the Third Party collaboration for
         use in connection with the Collaboration.

2.14     THERAPEUTIC COLLABORATION.

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2.14.1   GOAL. The goal of the Therapeutic Collaboration is to develop RNAi
         Therapeutic Products for disease-associated targets which are not
         amenable to therapeutic intervention by conventional small molecule
         chemistry. The activities to be undertaken in the course of the
         Therapeutic Collaboration for each MERCK RNAi Novel Target shall be set
         forth in a detailed workplan promptly after ALNYLAM has selected such
         MERCK RNAi Novel Target as provided in Section 2.14.2(3).

2.14.2   PROVISION, SELECTION AND ABANDONMENT OF MERCK NON-DRUGGABLE TARGETS.
         During the Therapeutic Collaboration Term, MERCK shall provide to
         ALNYLAM a minimum of [**] MERCK Non-Druggable Targets which are
         candidates for RNAi Therapeutic Products during the first [**] of each
         of the first [**] years of the Therapeutic Collaboration Term,
         beginning with the year starting September 1, 2004, in accordance with
         the procedures set forth below. ALNYLAM shall notify MERCK, within [**]
         of receiving the Complete MERCK Non-Druggable Target Information (as
         defined below) for the last MERCK Non-Druggable Target received by
         ALNYLAM during each year of the Therapeutic Collaboration Term for
         which ALNYLAM requests the Complete MERCK Non-Druggable Target
         Information, if it chooses to develop an RNAi Therapeutic Product
         directed at any or all of such MERCK Non-Druggable Targets (whereupon
         such MERCK Non-Druggable Target chosen by ALNYLAM for development shall
         be a "MERCK RNAi NOVEL TARGET"). After selecting a MERCK RNAi Novel
         Target, ALNYLAM shall use commercially reasonable efforts to develop an
         RNAi Therapeutic Product directed at such MERCK RNAi Novel Target.

         ALNYLAM may at any time notify MERCK that it has stopped work on a
         particular MERCK RNAi Novel Target because the target is no longer
         scientifically or commercially interesting to ALNYLAM ("ABANDONED MERCK
         RNAi NOVEL TARGET"). Upon such abandonment, ALNYLAM and its Affiliates:
         (a) shall immediately return to MERCK all information (including
         Information), data and materials (including all MERCK intellectual
         property) relating to the Abandoned MERCK RNAi Novel Target, including,
         but not limited to that which was provided pursuant to Schedules
         2.14.2(1) and 2.14.2(2), (b) shall have no rights to the Abandoned
         MERCK RNAi Novel Target, and (c) shall be prohibited from researching,
         developing or commercializing products, either alone or in
         collaboration with another party, directed at the Abandoned MERCK RNAi
         Novel Target or any fragment or common genetic variant thereof that
         results from a point mutation in, or a single nucleotide polymorphism
         with respect to, such Abandoned MERCK RNAi Novel Target for a period of
         [**] commencing on the date of notification to MERCK of the abandonment
         by ALNYLAM.

         With regard to the provision of MERCK Non-Druggable Targets to ALNYLAM
         by MERCK and notification to MERCK by ALNYLAM of its interest in
         selecting such MERCK Non-Druggable Targets, the following step-wise
         process shall apply:

         (1)      For each MERCK Non-Druggable Target provided by MERCK to
                  ALNYLAM, MERCK shall initially disclose to an individual
                  specified by ALNYLAM a limited amount of information as
                  provided in Schedule 2.14.2(1) ("INITIAL MERCK NON-DRUGGABLE
                  TARGET INFORMATION").

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         (2)      Within [**] of receiving the Initial MERCK Non-Druggable
                  Target Information for the third MERCK Non-Druggable Target,
                  ALNYLAM shall notify MERCK if it wants to view the complete
                  MERCK Non-Druggable Target information relating to any or all
                  of the [**] MERCK Non-Druggable Targets provided in such year
                  as provided in Schedule 2.14.2(2) ("COMPLETE MERCK
                  NON-DRUGGABLE TARGET INFORMATION"), and MERCK will provide the
                  Complete MERCK Non-Druggable Target Information to an
                  individual specified by ALNYLAM within [**] of receipt of such
                  notice from ALNYLAM. If ALNYLAM has not received all Complete
                  MERCK Non-Druggable Target Information set forth in Schedule
                  2.14.2(2), or any portion thereof, ALNYLAM shall notify MERCK
                  of same, which notice shall specify any missing Complete MERCK
                  Non-Druggable Target Information or any portion thereof; and
                  MERCK shall, promptly after receipt of such notice, provide
                  any missing Complete MERCK Non-Druggable Target Information
                  identified in the notice to ALNYLAM. "Complete MERCK
                  Non-Druggable Target Information" shall include all
                  information, materials and/or data listed on Schedule
                  2.14.2(2) which is in MERCK's or ROSETTA's or their
                  fully-owned subsidiaries' possession (either by ownership or
                  license) and is directly relevant to the MERCK Non-Druggable
                  Target.

         (3)      Within [**] of receiving the Complete MERCK Non-Druggable
                  Target Information for the last MERCK Non-Druggable Target
                  received by ALNYLAM during each year for which ALNYLAM
                  requests the Complete MERCK Non-Druggable Target Information,
                  ALNYLAM shall notify MERCK in writing if it selects any of the
                  MERCK Non-Druggable Targets as a MERCK RNAi Novel Target.

         In the event that ALNYLAM reviews the Complete MERCK Non-Druggable
         Target Information for a MERCK Non-Druggable Target and then elects not
         to select it as a MERCK RNAi Novel Target, ALNYLAM and its Affiliates
         shall (a) immediately return to MERCK all information (including
         Information), data and materials (including all MERCK intellectual
         property) relating to the MERCK Non-Druggable Target, including, but
         not limited to that which was provided pursuant to Schedules 2.14.2(1)
         and 2.14.2(2), (b) have no rights to the MERCK Non-Druggable Target,
         and (c) be prohibited from researching, developing or commercializing
         products, either alone or in collaboration with another party, directed
         at such MERCK Non-Druggable Target or any fragment or common genetic
         variant thereof that results from a point mutation in, or a single
         nucleotide polymorphism with respect to, such MERCK Non-Druggable
         Target, for a period of [**] commencing on the date of notification to
         MERCK of ALNYLAM's decision not to select such MERCK Non-Druggable
         Target as a MERCK RNAi Novel Target.

         In the event that ALNYLAM selects a MERCK Non-Druggable Target as a
         MERCK RNAi Novel Target, MERCK shall be prohibited from researching,
         developing or commercializing therapeutic products that involve the use
         of RNA interference against such MERCK RNAi Novel Target, either alone
         or in collaboration with another party, unless and until the earlier
         of: (1) ALNYLAM has notified MERCK that such MERCK RNAi Novel Target is
         an Abandoned MERCK RNAi Novel Target, or (2) the Agreement has been
         terminated by MERCK pursuant to Section 8.2.1(a), or (3) ALNYLAM fails
         to use commercially reasonable efforts to develop an RNAi Therapeutic
         Product directed at

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         such MERCK RNAi Novel Target as provided for in Section 2.14.2, or (4)
         [**] years following ALNYLAM's provision to MERCK of Opt-In Information
         and MERCK's decision not to "opt-in" on co-development of such
         Therapeutic Collaboration Product, provided, however, that nothing in
         this paragraph shall limit the rights granted to ALNYLAM in Section
         3.1.3.

2.14.3   OPT-IN.

2.14.3.1 DEVELOPMENT OF MERCK RNAi NOVEL TARGETS. ALNYLAM shall fund and be
         responsible for conducting all research and development of MERCK RNAi
         Novel Targets for discovery and development of RNAi Therapeutic
         Products as set forth herein and in the workplan developed pursuant to
         Section 2.14.1 through the completion of IND-Enabling GLP Toxicology
         Studies, at which time MERCK may exercise its Opt-In Right as set forth
         below. ALNYLAM shall not use Third Party contract resources to conduct
         part or all of its research obligations under the Therapeutic
         Collaboration unless ALNYLAM's rights under the agreement with the
         Third Party contract research organization are sufficient to guarantee
         MERCK the same rights under this Agreement as if ALNYLAM had done the
         work itself. At the time of negotiating an agreement for Third Party
         contract resources, the Parties agree to discuss a possible royalty due
         to a Third Party contract manufacturer for development and transfer of
         a manufacturing process.

2.14.3.2 OPT-IN PROCESS. Within [**] of completing the IND-Enabling GLP
         Toxicology Studies for any RNAi Therapeutic Product, ALNYLAM shall
         provide MERCK with all information, materials and data listed on
         Schedule 2.14.3.2 (provided that, with respect to those categories
         normally required for an IND filing, such information, materials or
         data may be omitted if the omission is approved by the relevant
         Regulatory Authority for an IND filing) ("OPT-IN INFORMATION") to
         enable MERCK to evaluate and decide whether to "opt-in" on
         co-development of such RNAi Therapeutic Product discovered by ALNYLAM
         (any RNAi Therapeutic Product for which ALNYLAM provides the Opt-In
         Information, whether or not chosen by MERCK, a "THERAPEUTIC
         COLLABORATION PRODUCT"). Notwithstanding the above, "Opt-In
         Information" shall include all information, materials and/or data
         listed on Schedule 2.14.3.2 which is in ALNYLAM's or its Affiliate's
         possession (either by ownership or license) and relating to the RNAi
         Therapeutic Product.

         MERCK shall have a period of [**] after receiving from ALNYLAM all
         Opt-In Information relating to the Therapeutic Collaboration Product in
         which to exercise its Opt-In Right with regard to such Therapeutic
         Collaboration Product by written notice ("OPT-IN NOTICE") to ALNYLAM.
         If MERCK has not received all Opt-In Information set forth in Schedule
         2.14.3.2, or any portion thereof (other than the materials and data
         which may be omitted pursuant to the first sentence of this Section
         2.14.3.2), MERCK shall notify ALNYLAM of same, which notice shall
         specify any missing Opt-In Information or any portion thereof; and
         ALNYLAM shall, promptly after receipt of such notice, provide any
         missing Opt-In Information identified in the notice to MERCK. If MERCK
         does not deliver such Opt-In Notice to ALNYLAM in such [**] period,
         then MERCK shall be deemed to have declined to exercise its Opt-

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<PAGE>

         In Right and ALNYLAM shall have no further obligation to MERCK with
         respect to such Therapeutic Collaboration Product, except as set forth
         in Section 5.2.1(a) of this Agreement. In the event that MERCK does not
         deliver such Opt-In Notice to Alnylam, MERCK and its Affiliates shall
         (a) immediately return to ALNYLAM all information (including
         Information), data and materials (including all ALNYLAM intellectual
         property) relating to the Therapeutic Collaboration Product, including,
         but not limited to that which was provided pursuant to Schedule
         2.14.3.2.

         Upon MERCK's giving an Opt-In Notice to ALNYLAM, MERCK shall deposit
         into an escrow account a fee of [**] Dollars ($[**]) (the "OPT-IN-FEE")
         plus [**] percent ([**]%) of the FTE and out-of-pocket research costs
         which ALNYLAM incurred in developing the MERCK RNAi Novel Target from
         the date ALNYLAM elected to develop the MERCK RNAi Novel Target until
         the date of delivery of the Opt-In Information to MERCK ("R&D COSTS").
         If the Parties fail to enter into a Therapeutic Collaboration Product
         Agreement or a MERCK Product Agreement, then the total Opt-In Fee and
         R&D Costs shall be returned promptly to MERCK. If the Parties enter
         into a Therapeutic Collaboration Product Agreement or if the Parties
         enter into a MERCK Product Agreement, then MERCK: (1) shall cause the
         Opt-In Fee and the R&D Costs to be promptly released within [**] of the
         execution thereof from such escrow account and delivered to ALNYLAM,
         and (2) shall pay to ALNYLAM [**]percent ([**]%) of the FTE and
         out-of-pocket research costs incurred by ALNYLAM from the date of
         delivery of all Opt-In Information to MERCK until the effective date of
         the Therapeutic Collaboration Product Agreement or MERCK Product
         Agreement, as the case may be, within [**] of receiving such
         information from ALNYLAM.

2.14.3.3 THERAPEUTIC COLLABORATION PRODUCT AGREEMENT. After MERCK provides
         ALNYLAM with the applicable Opt-In Notice, the Parties shall negotiate
         in good faith a definitive agreement to co-develop and co-promote a
         Therapeutic Collaboration Product ("THERAPEUTIC COLLABORATION PRODUCT
         AGREEMENT"). The provisions of any Therapeutic Collaboration Product
         Agreement shall address the sharing of expenses and of net profits.
         Such Therapeutic Collaboration Product Agreement shall contain terms
         substantially similar to those set forth in Schedule 2.14.3.3. The
         Therapeutic Collaboration Product Agreement with respect to the first
         Therapeutic Collaboration Product that is entered into by the Parties
         shall be completed and executed within [**] of ALNYLAM's receipt of
         MERCK's Opt-In Notice ("INITIAL OPT-IN NEGOTIATION PERIOD"). The
         Parties may mutually agree to extend the Initial Opt-In Negotiation
         Period. Each additional Therapeutic Collaboration Product Agreement
         entered into by the Parties, subsequent to the first Therapeutic
         Collaboration Product Agreement between the Parties shall be completed
         and executed by the Parties within [**] of ALNYLAM's receipt of the
         relevant MERCK Opt-In Notice, unless otherwise agreed by the Parties
         ("SUBSEQUENT OPT-IN NEGOTIATION PERIODS") (the Initial and Subsequent
         Opt-In Negotiation Periods shall each be referred to as an "OPT-IN
         NEGOTIATION PERIOD" and collectively referred to as the "OPT-IN
         NEGOTIATION PERIODS").

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<PAGE>

           During each Opt-In Negotiation Period, the Parties shall establish an
           Interim Joint Development Committee, comprised of an equal number of
           representatives from MERCK and ALNYLAM, to monitor and advise on the
           development of the relevant Therapeutic Collaboration Product;
           provided, however, that ALNYLAM shall be responsible for continuing
           the development of the Therapeutic Collaboration Product, including
           filing the IND and initiating clinical trials, and ALNYLAM shall have
           final decision-making authority with respect thereto during the
           relevant Opt-In Negotiation Period and may proceed with continuing
           development of the Therapeutic Collaboration Product without
           requiring a decision of the Interim Joint Development Committee.

           The Parties shall act in good faith to reach reasonable commercial
           terms during the Opt-In Negotiation Periods. If the Parties do not
           enter into a Therapeutic Collaboration Product Agreement during any
           Opt-In Negotiation Period, then the unresolved issues shall be
           submitted to the President of MERCK Research Laboratories and the CEO
           of ALNYLAM for resolution. If such President and CEO cannot reach an
           agreement regarding the unresolved issues, then such issues shall be
           submitted to arbitration in accordance with Section 9.6.3.

2.14.3.3.1 ALNYLAM'S OPT-OUT RIGHT. With respect to each Therapeutic
           Collaboration Product, during the first [**] of any Initial Opt-In
           Negotiation Period or Subsequent Opt-In Negotiation Period, ALNYLAM
           shall have the right to "opt-out" of co-developing and co-promoting
           such Therapeutic Collaboration Product, in which case MERCK may
           proceed to develop and promote such Therapeutic Collaboration Product
           independently without ALNYLAM, subject to Sections 5.2.1(b) and 3.1.6
           and the other terms and conditions of this Agreement and ALNYLAM
           shall: (a) immediately cease development of such Therapeutic
           Collaboration Product, (b) immediately return to MERCK all
           information (including Information), data and materials (including
           all MERCK intellectual property) relating to such Therapeutic
           Collaboration Product, (c) have no rights to the MERCK RNAi Novel
           Target against which such Therapeutic Collaboration Product is
           directed, (d) be prohibited from researching, developing or
           commercializing products, either alone or in collaboration with
           another party, directed at such MERCK RNAi Novel Target until the
           earlier of: (1) the Agreement has been terminated by ALNYLAM pursuant
           to Section 8.2.1(a), or (2) MERCK fails to use commercially
           reasonable efforts to develop such Therapeutic Collaboration Product
           directed at such MERCK RNAi Novel Target, or (3) [**] years following
           its notice to MERCK that it has elected to "opt-out" of the
           co-development and co-promotion of such Therapeutic Collaboration
           Product, provided, however, that nothing in this paragraph shall
           limit the rights granted to MERCK in Article 3.

2.15     PAYMENTS TO THIRD PARTIES RESULTING FROM SUBLICENSES. During the
         Collaboration Term, ALNYLAM and MERCK agree that it may be necessary or
         useful to enter into license agreements with a Third Party which
         provide technology, patentable or otherwise, which is necessary or
         useful for MERCK and/or ALNYLAM to perform its obligations under the
         Collaboration. Such Third Party license agreements shall not grant
         rights to any Third Party that conflict with the terms and conditions
         of this Agreement, including

                                       26

<PAGE>

         but not limited to Sections 2.11, 2.15 and 3.1.1, and shall be
         structured consistently with the Parties' obligations and rights
         hereunder. The costs of such Third Party license agreements shall be
         borne by the Party(ies) entering into the agreement and such agreements
         shall include confidentiality and non-use provisions which are no less
         stringent than those set forth in Section 4.1 of this Agreement. The
         Party entering into such Third Party license agreement shall use
         commercially reasonable efforts to obtain a right to sublicense to the
         other Party and its Affiliates any intellectual property licensed under
         or arising out of the Third Party license agreement for use in
         connection with the Collaboration and shall offer the other Party such
         a sublicense. In the event that either Party is obligated to make a
         payment (other than a royalty payment) to a Third Party under a license
         agreement with respect to the sublicense of rights to the other Party
         hereunder, the Party receiving the sublicense shall reimburse the other
         Party for such payments which are solely attributable to the grant of
         such sublicense. The Parties agree that this Section 2.15 shall not
         apply to any agreement entered into by either Party or its Affiliates
         prior to the Effective Date of this Agreement.

3.       LICENSES

3.1      LICENSE GRANTS.

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<PAGE>

3.1.1    ALNYLAM TARGET IDENTIFICATION AND TARGET VALIDATION PATENT RIGHTS,
         ALNYLAM RNAi PATENT RIGHTS AND ALNYLAM RNAi TECHNOLOGY. ALNYLAM hereby
         grants to MERCK a royalty-free license in the Territory, with a right
         to sublicense to its Affiliates, to the rights set forth below:

         (a)      under ALNYLAM Target Identification and Target Validation RNAi
                  Patent Rights, and

         (b)      under ALNYLAM's interest in Joint Collaboration Patent Rights
                  and Joint Collaboration Inventions, and

         (c)      under ALNYLAM Technology Collaboration Inventions, and

         (d)      to ALNYLAM RNAi Technology, and

         (e)      under ALNYLAM-Assigned Therapeutic Collaboration Inventions;

         which license: (1) shall include and be Co-exclusive for (a) through
         (e) that are Controlled by ALNYLAM or its Affiliates: (A) during the
         Technology Collaboration Term, and (B) with regard to Joint
         Collaboration Inventions and ALNYLAM Collaboration Inventions, during
         the one (1) year period following the termination or expiration of the
         Technology Collaboration Term, and (2) shall include and, to the extent
         not Co-exclusive under (1) (A), be non-exclusive for (a) through (e)
         that are owned and Controlled by ALNYLAM or its Affiliates during the
         fourth and fifth years following the Effective Date:

         (i)      during the Collaboration Term to perform its obligations under
                  the Collaboration; and

         (ii)     during and after the Collaboration Term for the sole purpose
                  of in vitro and/or in vivo target identification and/or target
                  validation research relating to drug discovery and/or
                  development activities of MERCK and/or its Affiliates,
                  including in collaborations with Third Parties in which MERCK
                  and/or its Affiliates has any rights to discoveries made;

         provided, however, that ALNYLAM shall retain the right, during and
         after the Collaboration Term, including the right to sublicense to its
         Affiliates (except as otherwise set forth in Section 3.1.8), to
         practice the ALNYLAM RNAi Patent Rights, ALNYLAM's interest in Joint
         Collaboration Patent Rights and under ALNYLAM Technology Collaboration
         Inventions and ALNYLAM RNAi Technology (excluding ALNYLAM Therapeutic
         Collaboration Inventions which are RNAi Therapeutic Products) for: (1)
         internal research purposes, including without limitation, in vitro
         and/or in vivo target identification and/or target validation research,
         and (2) in collaborations with Third Parties the primary purpose of
         which is the development of therapeutic products using RNA interference
         and, if RNAi Technology is developed therein for use in in vitro and/or
         in vivo target identification and/or target validation, then it may
         only be developed in the course of developing such therapeutic
         products.

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<PAGE>

         Notwithstanding the foregoing, ALNYLAM's retained rights during the
         Collaboration Term to practice any and all of such ALNYLAM Target
         Identification and Target Validation RNAi Patent Rights, ALNYLAM RNAi
         Patent Rights, ALNYLAM's interest in Joint Collaboration Patent Rights,
         ALNYLAM Technology Collaboration Inventions, and/or ALNYLAM RNAi
         Technology in collaboration with Third Parties shall not include the
         right to perform in vitro and/or in vivo target identification and/or
         target validation research for Third Parties unless such research is
         performed in the course of a Third Party collaboration permitted under
         subsection (2) of the preceding paragraph.

         Notwithstanding any other provisions of this Agreement, the license
         grant to MERCK under ALNYLAM-Assigned Collaboration Inventions shall be
         perpetual.

3.1.1.1  TERMINATION OF MERCK FTE SUPPORT. If MERCK ceases to provide the
         required FTEs commencing [**] after the Effective Date as provided in
         Section 2.2.1, then: (1) the license grants provided by ALNYLAM to
         MERCK under Section 3.1.1 shall become non-exclusive, and (2) if MERCK
         has not paid the Technology Collaboration Milestone, then the license
         grant provided by ALNYLAM to MERCK in Section 3.1.1 shall be modified
         as follows: the definitions of ALNYLAM RNAi Patent Rights, ALNYLAM RNAi
         Technology and ALNYLAM Technology Collaboration Inventions shall be
         modified to exclude intellectual property rights Controlled by ALNYLAM
         or its Affiliates which come into the Control of Alnylam or its
         Affiliates more than one (1) year after the date specified in MERCK's
         notice under Section 2.2.1 of this Agreement; provided, however, that,
         if MERCK pays the Technology Collaboration Milestone at any time after
         MERCK ceases to provide the required FTEs as set forth in the first
         sentence of this paragraph, then the definitions of ALNYLAM RNAi Patent
         Rights, ALNYLAM RNAi Technology and ALNYLAM Technology Collaboration
         Inventions shall be modified to only exclude intellectual property
         rights Controlled by ALNYLAM or its Affiliates which come into the
         Control of ALNYLAM or its Affiliates after the later of: (1) the
         earlier of: (a) the date upon which MERCK paid the Technology
         Collaboration Milestone, or (b) the date upon which a Technology
         Milestone Dispute relating to the Technology Collaboration Milestone
         which was paid by MERCK was submitted to arbitration pursuant to
         Section 9.7, or (2) [**] after the date specified in MERCK's notice
         under Section 2.2.1 of this Agreement, and ALNYLAM and its Affiliates
         shall immediately disclose and provide to MERCK all applicable
         intellectual property not previously disclosed, including ALNYLAM RNAi
         Patent Rights, ALNYLAM RNAi Technology, and ALNYLAM Technology
         Collaboration Inventions.

3.1.2    MERCK BROAD RNAi PATENT RIGHTS, MERCK BROAD RNAi TECHNOLOGY, MERCK
         PRODUCT-SPECIFIC RNAi PATENT RIGHTS AND MERCK PRODUCT-SPECIFIC RNAi
         TECHNOLOGY. MERCK hereby grants to ALNYLAM a non-exclusive,
         royalty-free license in the Territory with a right to sublicense its
         Affiliates (except as set forth in Section 3.1.8):

         (i)      under MERCK Broad RNAi Patent Rights that are Controlled by
                  MERCK or ROSETTA or their wholly-owned subsidiaries as of the
                  Effective Date and/or during the first [**] years of the
                  Collaboration Term; MERCK-Assigned Therapeutic

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<PAGE>

                  Collaboration Inventions; MERCK's interest in Joint
                  Collaboration Patent Rights; and MERCK Broad RNAi Technology
                  that is Controlled by MERCK or ROSETTA or their wholly-owned
                  subsidiaries as of the Effective Date and/or during the first
                  [**] years of the Collaboration Term, during the Collaboration
                  Term solely to perform its obligations under the
                  Collaboration; and

         (ii)     under MERCK Product-Specific RNAi Patent Rights that are
                  Controlled by MERCK or ROSETTA or their wholly-owned
                  subsidiaries as of the Effective Date and/or during the first
                  [**] years of the Collaboration Term, MERCK Product-Specific
                  RNAi Technology that is Controlled by MERCK or ROSETTA or
                  their wholly-owned subsidiaries as of the Effective Date
                  and/or during the first [**] years of the Collaboration Term,
                  and MERCK's interest in Joint Therapeutic Collaboration Patent
                  Rights, during the Therapeutic Collaboration Term solely to
                  perform its obligations under the Therapeutic Collaboration
                  with regard to a specific RNAi Therapeutic Product within the
                  Therapeutic Collaboration; and

         (iii)    under MERCK Broad RNAi Patent Rights that are Controlled by
                  MERCK or ROSETTA or their wholly-owned subsidiaries as of the
                  Effective Date and/or during the first [**] years of the
                  Collaboration Term, MERCK Broad RNAi Technology that is
                  Controlled by MERCK or ROSETTA or their wholly-owned
                  subsidiaries as of the Effective Date and/or during the first
                  [**] years of the Collaboration Term, MERCK's interest in
                  Joint Collaboration Patent Rights, and MERCK-Assigned
                  Therapeutic Collaboration Inventions, during and after the
                  Collaboration Term for the sole purpose of research
                  (including, without limitation, for internal in vitro and/or
                  in vivo target validation and/or target identification
                  research), development, manufacture, use, import or sale of
                  therapeutic products based on RNA interference by ALNYLAM, its
                  Affiliates, or its Third Party collaborators.

         For the avoidance of doubt, it is acknowledged that, with regard to
         research and development activities under Sections 3.1.2(i)-(iii), such
         license grant shall apply only to research and development activities
         using RNA interference.

         ALNYLAM's license under MERCK-Assigned Therapeutic Collaboration
         Inventions shall be perpetual.

         The Parties agree that neither ALNYLAM nor its Affiliates have the
         right to sublicense any MERCK intellectual property, including MERCK
         RNAi Patent Rights, MERCK's interest in Joint Collaboration Patent
         Rights, and/or MERCK RNAi Technology to any Third Party other than as
         provided in Section 3.1.5. The Parties further agree that neither
         ALNYLAM nor its Affiliates have the right to provide any Third Party
         with MERCK RNAi Technology, MERCK RNAi Patent Rights, or MERCK's
         interest in Joint Collaboration Patent Rights as part of a research
         collaboration unless the primary purpose of such collaboration is the
         development of therapeutic products using RNA interference and, if RNAi
         Technology is developed therein for use in in vitro and/or in vivo
         target identification and/or target validation, then it may only be
         developed in the course of developing such therapeutic products;
         provided, further that, under no circumstance other than pursuant to
         Section 3.1.5(a) or an ALNYLAM Product

                                       30

<PAGE>

         Agreement, shall ALNYLAM or its Affiliates provide any Third Party with
         MERCK Product-Specific RNAi Technology or MERCK Product-Specific RNAi
         Patent Rights.

3.1.3    MERCK RNAi NOVEL TARGET IP. MERCK hereby grants ALNYLAM a worldwide,
         royalty-free, Co-exclusive license, with the right to sublicense its
         Affiliates (except as otherwise set forth in Section 3.1.8), to MERCK
         RNAi Novel Target IP Controlled by MERCK or ROSETTA or their
         wholly-owned subsidiaries solely to perform its obligations under the
         Therapeutic Collaboration during the Therapeutic Collaboration Term
         (for the avoidance of doubt, it is acknowledged that, with regard to
         research and development activities, such license grant shall apply
         only to research and development activities using RNA interference).

3.1.4    MERCK AND ALNYLAM CO-DEVELOP AND CO-COMMERCIALIZE A THERAPEUTIC
         COLLABORATION PRODUCT. If MERCK exercises its Opt-In Right pursuant to
         Section 2.14.3 and the Parties enter into a Therapeutic Collaboration
         Product Agreement for a specific Therapeutic Collaboration Product,
         then, as part of the Therapeutic Collaboration Product Agreement:

         (a)      ALNYLAM will grant to MERCK a worldwide, royalty-free,
                  Co-exclusive license, sublicensable to its Affiliates, to any
                  and all ALNYLAM RNAi Technology, ALNYLAM Collaboration
                  Inventions, ALNYLAM Therapeutic Collaboration IP, and ALNYLAM
                  RNAi Patent Rights, solely to perform its obligations under
                  the Therapeutic Collaboration Product Agreement to develop and
                  commercialize such Therapeutic Collaboration Product; and

         (b)      MERCK will grant to ALNYLAM a worldwide, royalty-free,
                  Co-exclusive license, sublicenseable to its Affiliates (except
                  as otherwise set forth in Section 3.1.8), to any and all MERCK
                  RNAi Technology, MERCK RNAi Patent Rights, MERCK Collaboration
                  Inventions and MERCK RNAi Novel Target IP which are Controlled
                  by MERCK or ROSETTA or their wholly-owned subsidiaries, solely
                  to perform its obligations under the Therapeutic Collaboration
                  Product Agreement to develop and commercialize such
                  Therapeutic Collaboration Product (for the avoidance of doubt,
                  it is acknowledged that, with regard to research and
                  development activities, such license grant shall apply only to
                  research and development activities using RNA interference).

3.1.5    ALNYLAM DEVELOPS THERAPEUTIC COLLABORATION PRODUCT WITHOUT MERCK. If
         MERCK elects, pursuant to Section 2.14.3, not to opt-in on development
         and commercialization of a specific Therapeutic Collaboration Product
         with ALNYLAM or if the relevant Opt-In Negotiation Periods expire
         without any action taken by MERCK, then:

         (a)      MERCK will grant to ALNYLAM a worldwide, royalty-bearing,
                  exclusive license, with the right to sublicense, to any and
                  all MERCK Product-Specific RNAi Technology, MERCK Broad RNAi
                  Technology, MERCK RNAi Novel Target IP, MERCK Product-Specific
                  RNAi Patent Rights and MERCK Broad RNAi Patent Rights which
                  are Controlled by MERCK or ROSETTA or their wholly-owned

                                       31

<PAGE>

                  subsidiaries and MERCK's interest in Joint Collaboration
                  Patent Rights which are applicable to the specific Therapeutic
                  Collaboration Product solely to research, develop,
                  manufacture, use, import, sell and commercialize such
                  Therapeutic Collaboration Product (for the avoidance of doubt,
                  it is acknowledged that such license grant shall apply only to
                  such Therapeutic Collaboration Product and shall not apply to
                  any other product, and shall apply only to research and
                  development activities using RNA interference); and

         (b)      ALNYLAM shall pay MERCK the royalties as provided in Section
                  5.2.1(a); and

         (c)      The Parties shall enter into an agreement with respect to such
                  license and royalties and patent ownership, patent
                  prosecution, patent enforcement and such other matters as the
                  Parties may agree upon (an "ALNYLAM PRODUCT AGREEMENT"). Such
                  agreement will contain the terms set forth in Sections
                  3.1.5(a), 5.2.1(a), 5.2.1(c) and 5.2.2 through 5.5 and will be
                  negotiated in the manner set forth in the last paragraph of
                  Section 2.14.3.3, with unresolved issues resolved as set forth
                  therein.

3.1.6    MERCK DEVELOPS A THERAPEUTIC COLLABORATION PRODUCT WITHOUT ALNYLAM. If
         MERCK elects, pursuant to Section 2.14.3, to opt-in on development and
         commercialization of a specific Therapeutic Collaboration Product but
         ALNYLAM "opts-out" of developing and commercializing such Therapeutic
         Collaboration Product with MERCK pursuant to Section 2.14.3.3.1, then
         with respect to each such Therapeutic Collaboration Product:

         (a)      ALNYLAM will grant to MERCK a worldwide, royalty-bearing,
                  exclusive license, with the right to sublicense, to any and
                  all ALNYLAM RNAi Technology, ALNYLAM Collaboration Inventions,
                  ALNYLAM Therapeutic Collaboration IP, ALNYLAM RNAi Patents and
                  ALNYLAM's interest in Joint Collaboration Patent Rights which
                  are applicable to the Therapeutic Collaboration Product solely
                  to research, develop, manufacture, use, import, sell and
                  commercialize such Therapeutic Collaboration Product (for the
                  avoidance of doubt, it is acknowledged that such license shall
                  apply only to such Therapeutic Collaboration Product and shall
                  not apply to any other product);

         (b)      MERCK shall pay ALNYLAM the royalties as provided in Section
                  5.2.1(b); and

         (c)      The Parties will enter into an agreement with respect to such
                  license and royalties and patent ownership, patent
                  prosecution, patent enforcement and such other matters as the
                  Parties may agree upon (a "MERCK PRODUCT AGREEMENT"). Such
                  agreement will contain the terms set forth in Sections
                  3.1.6(a), 5.2.1(b), 5.2.1(c) and 5.2.2 through 5.5 and will be
                  negotiated in the manner set forth in the last paragraph of
                  Section 2.14.3.3, with unresolved issues resolved as set forth
                  therein.

3.1.7    JOINT COLLABORATION INVENTIONS. Each Party shall have the right to
         practice and to license to Third Parties any Joint Collaboration
         Inventions except to the extent either has Co-exclusive or exclusive
         rights hereunder, and/or under a Therapeutic Collaboration Product
         Agreement, an ALNYLAM Product Agreement or a MERCK Product

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<PAGE>

         Agreement; provided, however, that ALNYLAM does not have the right to
         license to Third Parties or to any Affiliate excluded under Section
         3.1.8 any Joint Collaboration Invention for the purpose of target
         identification and/or target validation research except in a
         collaboration with Third Parties in which the primary purpose of such
         collaboration is the development of therapeutic products using RNA
         interference and, if RNAi Technology is developed therein for use in in
         vitro and/or in vivo target identification and/or target validation,
         then it may only be developed in the course of developing such
         therapeutic products.

3.1.8    ALNYLAM AFFILIATE RESTRICTIONS. For purposes of subsections 3.1.1 (but
         not 3.1.1.1), 3.1.2, 3.1.3, 3.1.4 and 3.1.7, where noted, the term
         "Affiliate" with respect to ALNYLAM shall not include any corporation
         or business entity of which any of the securities or other ownership
         interests representing the equity, the voting stock or general
         partnership interest are owned, controlled or held, directly or
         indirectly, by ALNYLAM and of which [**] percent ([**]%) or more of the
         securities or other ownership interests representing the equity or
         voting stock or general partnership interest are owned, controlled or
         held by a pharmaceutical company, a biotechnology company, or a group
         of such companies acting in concert, having annual sales revenues in
         the aggregate amount of [**] U.S. dollars ($[**]) or by any investment
         entity affiliated with any such pharmaceutical or biotechnology
         company.

4.       CONFIDENTIALITY AND PUBLICATION

4.1      NONDISCLOSURE OBLIGATION. All Information disclosed by one Party to the
         other Party hereunder shall be maintained in confidence by the
         receiving Party and shall not be disclosed to a non-Party or used for
         any purpose except as set forth herein without the prior written
         consent of the disclosing Party, except to the extent that such
         Information:

         (a)      is known by receiving Party at the time of its receipt, and
                  not through a prior disclosure by the disclosing Party, as
                  documented by the receiving Party's business records;

         (b)      is properly in the public domain;

         (c)      is subsequently disclosed to the receiving Party by a Third
                  Party who may lawfully do so and is not under an obligation of
                  confidentiality to the disclosing Party;

         (d)      is developed by the receiving Party independently of
                  Information received from the disclosing Party, as documented
                  by the receiving Party's business records;

         (e)      is deemed necessary by a Party to be disclosed to Related
                  Parties, agents, consultants, and/or other Third Parties for
                  any and all purposes such Party and its Affiliates deem
                  necessary or advisable in the ordinary course of business in
                  accordance with this Agreement on the condition that such
                  Third Parties agree to be bound by the confidentiality and
                  non-use obligations contained this Agreement; provided the
                  term of confidentiality for such Third Parties shall be no
                  less than seven (7) years.

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<PAGE>

         Any combination of features or disclosures shall not be deemed to fall
         within the foregoing exclusions merely because individual features are
         published or available to the general public or in the rightful
         possession of the receiving Party unless the combination itself and
         principle of operation are published or available to the general public
         or in the rightful possession of the receiving party.

         Notwithstanding the obligations of confidentiality and non-use set
         forth above, a receiving Party may provide Information disclosed to it
         to (a) governmental or other regulatory agencies in order to obtain
         patents or to gain or maintain approval to conduct clinical trials or
         to market Therapeutic Collaboration Products; provided, that, such
         disclosure shall be subject to the prior written consent of the Party
         whose Information is intended to be disclosed (which consent shall not
         be unreasonably withheld), and such Information shall be disclosed only
         to the extent reasonably necessary to obtain patents or authorizations,
         (b) governmental or other regulatory agencies to the extent required by
         law or by the requirements of any nationally-recognized securities
         exchange, quotation system or over-the-counter market on which such
         Party has its securities listed or traded, (c) any actual or
         prospective investors, lenders and other financing sources, provided,
         however, that neither the Party nor its Affiliates shall disclose the
         work plan or any portion thereof to such persons or entities, and (d)
         actual or prospective collaborators or strategic partners who are
         obligated to keep such information confidential; provided, however,
         that the Party and/or its Affiliates shall only disclose to actual or
         prospective collaborators and strategic partners the general subject
         matter of this Agreement, the licenses granted hereunder, the
         exclusivity provision set forth in Section 2.11, the provisions of
         Article 4 and the patent provisions as set forth in Article 7.

         If a Party is required by judicial or administrative process to
         disclose Information that is subject to the non-disclosure provisions
         of this Section 4.1 or Section 4.2, such Party shall promptly inform
         the other Party of the disclosure that is being sought in order to
         provide the other Party an opportunity to challenge or limit the
         disclosure obligations. Information that is disclosed by judicial or
         administrative process shall remain otherwise subject to the
         confidentiality and non-use provisions of this Section 4.1 and Section
         4.2, and the Party disclosing Information pursuant to law or court
         order shall take all steps reasonably practical, including without
         limitation seeking an order of confidentiality, to ensure the continued
         confidential treatment of such Information.

4.2      PUBLICATION. MERCK and ALNYLAM each acknowledge the other Party's
         interest in publishing the results of its research in order to obtain
         recognition within the scientific community and to advance the state of
         scientific knowledge. Each Party also recognizes the mutual interest in
         obtaining valid patent protection and in protecting business interests
         and trade secret information. Consequently, except for disclosures
         permitted pursuant to Section 4.1, either Party, its employees or
         consultants wishing to make a publication, or a disclosure to a Third
         Party relating to the Collaboration, shall deliver to the other Party a
         copy of the proposed written publication or an outline of an oral
         disclosure at least thirty (30) days prior to submission for
         publication or presentation. The reviewing Party shall have the right
         (a) to propose modifications to the publication or presentation for
         patent reasons, trade secret reasons or business reasons, or (b) to
         request a reasonable delay in publication or presentation in order to
         protect patentable

                                       34

<PAGE>

         information. If the reviewing Party requests a delay, the publishing
         Party shall delay submission or presentation for a period of sixty (60)
         days to enable patent applications protecting each Party's rights in
         such information to be filed in accordance with Article 7 below. Upon
         expiration of such sixty (60) days, the publishing Party shall be free
         to proceed with the publication or presentation. If the reviewing Party
         requests modifications to the publication or presentation, the
         publishing Party shall edit such publication to prevent disclosure of
         trade secret or proprietary business information prior to submission of
         the publication or presentation.

4.3      PUBLICITY/USE OF NAMES. No disclosure of the existence of, or the terms
         of, this Agreement may be made by either Party, and no Party shall use
         the name, trademark, trade name or logo of the other Party or its
         employees in any publicity, news release or disclosure relating to this
         Agreement or its subject matter, without the prior express written
         permission of the other Party, except as may be required by law or
         expressly permitted by the terms hereof.

         Notwithstanding the foregoing, within five (5) business days following
         the execution of this Agreement by both Parties, the Parties shall
         agree in writing upon a press release and ALNYLAM may thereafter issue
         such press release publicizing the Collaboration. Upon MERCK's prior
         written agreement as to the text of the release, which agreement shall
         be executed within ten (10) business days of MERCK's receipt of such
         press release and shall not be unreasonably withheld, ALNYLAM may also
         issue a press release announcing the achievement of the Technology
         Collaboration Milestone. Once any press release or any other written
         statement is approved in writing by both Parties, either Party may make
         subsequent public disclosure of the information contained in such press
         release or other written statement without the further approval of the
         other Party.

5.       PAYMENTS; ROYALTIES AND REPORTS

5.1      PAYMENTS.

5.1.1    SIGNATURE PAYMENT. Within twenty (20) days of the Effective Date, MERCK
         shall pay ALNYLAM HOLDING Two Million Dollars ($2,000,000.00).

5.1.2    MAINTENANCE FEE. MERCK shall pay ALNYLAM HOLDING a maintenance fee of
         [**] Dollars ($[**]) per annum for a period of [**] years upon the
         terms and conditions contained herein. The first installment of [**]
         Dollars ($[**]) shall be payable within [**] of the Effective Date and
         the second installment of [**] Dollars ($[**]) shall be payable within
         [**] of the Effective Date.

                                       35

<PAGE>

5.1.3    EQUITY INVESTMENT. Upon the terms and conditions set forth in the Stock
         Purchase Agreement between the Parties and dated as of the Effective
         Date (the "STOCK PURCHASE AGREEMENT"), MERCK shall purchase Five
         Million Dollars ($5,000,000.00) of ALNYLAM HOLDING Series C Convertible
         Preferred Stock at the purchase price per share set forth in the Stock
         Purchase Agreement.

5.1.4    MILESTONE PAYMENTS. Subject to the terms and conditions of this
         Agreement, MERCK shall pay to ALNYLAM HOLDING a milestone payment of
         [**] Dollars ($[**]), and shall purchase [**] Dollars ($[**]) of
         ALNYLAM HOLDING Series C Convertible Preferred Stock upon the terms and
         conditions set forth in the Stock Purchase Agreement upon ALNYLAM's
         achievement of the Technology Collaboration Milestone.

         ALNYLAM shall notify the JSC and shall prepare and deliver a data
         package for presentation to the JSC when ALNYLAM determines that it has
         achieved the Technology Collaboration Milestone. Within fifteen (15)
         business days following receipt of such data package, the JSC shall
         convene to review the data package and determine whether the data is
         sufficient to conclude that the Technology Collaboration Milestone has
         been achieved. If the JSC determines that there is not sufficient data
         to support the conclusion that the Technology Collaboration Milestone
         has been achieved, the JSC shall provide written notice to ALNYLAM of
         same, which notice shall specify all additional data that the JSC
         determines in good faith is necessary to make the data package
         sufficient to conclude that the Technology Collaboration Milestone has
         been achieved. Thereafter, ALNYLAM shall either submit the additional
         data to the JSC or notify the JSC that the sufficiency of the data is
         in dispute. Any additional data provided by ALNYLAM at the JSC's
         request shall be reviewed by the JSC within ten (10) business days
         following the JSC's receipt thereof.

         If the JSC determines there is sufficient data to support the
         conclusion that the Technology Collaboration Milestone has been
         achieved, the MERCK members of the JSC shall have thirty (30) days to
         conduct an internal review of the data package with MERCK's management
         and promptly thereafter and in any event no later than ten (10)
         business days following the expiration of MERCK's internal review
         period, the JSC shall determine whether the Technology Collaboration
         Milestone has been achieved. If the JSC determines that the Technology
         Milestone has been achieved, then MERCK shall make the milestone
         payment and purchase the Series C Convertible Preferred Stock as set
         forth in this Section 5.1.4 within ten (10) business days of such
         determination. If MERCK or ALNYLAM disputes the sufficiency of the data
         presented to the JSC or the determination of the JSC as to whether the
         Technology Collaboration Milestone has been achieved or the JSC fails,
         or the MERCK members of the JSC fail, to take action within the time
         periods above, then the Parties shall be deemed to have a Technology
         Milestone Dispute (the "TECHNOLOGY MILESTONE DISPUTE") which shall be
         resolved as follows: In the event of a Technology Milestone Dispute,
         the Parties agree that such Technology Milestone Dispute shall be
         submitted to the President of MERCK Research Laboratories and the CEO
         of ALNYLAM for resolution. If such President and CEO cannot reach an
         agreement regarding the Technology Milestone Dispute within thirty (30)
         days, then it shall be submitted to arbitration by either Party
         pursuant to Section 9.7 of this Agreement. The milestone payments shall
         be payable only upon the initial achievement

                                       36

<PAGE>

         of the Technology Collaboration Milestone and no amounts shall be due
         hereunder for subsequent or repeated achievement of such milestone.

5.1.5    USE OF PROCEEDS. ALNYLAM shall use all payments received from MERCK
         pursuant to this Section 5.1 solely for the purpose of funding its
         proposed business operations, including the subject matter of this
         Agreement, which focus on RNAi Technology and development of drugs
         based on RNA interference. Such payments are not creditable against any
         future payments by MERCK to ALNYLAM.

5.2      ROYALTIES.

5.2.1    ROYALTIES PAYABLE BY THE PARTIES. Subject to the terms and conditions
         of this Agreement, the royalty-paying Party shall pay to the
         royalty-receiving Party the following royalties on a country-by-country
         basis for Net Sales of each Therapeutic Collaboration Product by the
         royalty-paying Party or its Related Parties pursuant to the provisions
         of Section 5.2.1(c):

         (a)      ALNYLAM DEVELOPS A THERAPEUTIC COLLABORATION PRODUCT WITHOUT
                  MERCK. If MERCK elects, pursuant to Section 2.14.3, not to
                  opt-in on development and commercialization of a Therapeutic
                  Collaboration Product with ALNYLAM or the relevant Opt-In
                  Negotiation Period expires, then (1) in the event that the
                  MERCK Non-Druggable Target against which the Therapeutic
                  Collaboration Product is directed satisfies clause (a) of the
                  definition of MERCK Non-Druggable Target and MERCK has the
                  belief set forth in clause (b) of such definition, then
                  ALNYLAM shall pay MERCK the following royalty rates with
                  respect to such Therapeutic Collaboration Product and (2) in
                  the event that such MERCK Non-Druggable Target satisfies
                  clause (a) of the definition, but MERCK does not have the
                  belief set forth in clause (b) of such definition, then
                  ALNYLAM shall pay MERCK one-half of the applicable royalty
                  rate set forth below with respect to such Therapeutic
                  Collaboration Product:


<TABLE>
<CAPTION>
  Annual Net Sales of Therapeutic
       Collaboration Product                           Royalty on Annual Net Sales
       ---------------------                           ---------------------------
<S>                                                    <C>
Portion of Annual Net Sales < or = $[**]                           [**]%

Portion of Annual Net Sales > $[**]                                [**]%

Portion of Annual Net Sales > $[**]                                [**]%

Portion of Annual Net Sales > $[**]                                [**]%
</TABLE>


         (b)      MERCK DEVELOPS A THERAPEUTIC COLLABORATION PRODUCT WITHOUT
                  ALNYLAM. If MERCK elects pursuant to Section 2.14.3, to opt-in
                  on development and commercialization of a Therapeutic
                  Collaboration Product but ALNYLAM opts-out of development and
                  commercialization of such Therapeutic Collaboration Product

                                       37

<PAGE>

                  with MERCK, then MERCK shall pay ALNYLAM the following royalty
                  rates with respect to such Therapeutic Collaboration Product:


<TABLE>
<CAPTION>
  Annual Net Sales of Therapeutic
       Collaboration Product                            Royalty on Annual Net Sales
       ---------------------                            ---------------------------
<S>                                                     <C>
Portion of Annual Net Sales < or = $[**]                            [**]%

Portion of Annual Net Sales > $[**]                                 [**]%

Portion of Annual Net Sales > $[**]                                 [**]%

Portion of Annual Net Sales > $[**]                                 [**]%
</TABLE>


         (c)      GENERAL TERMS. Royalties on each Therapeutic Collaboration
                  Product at the rates set forth in Section 5.2.1(a) and (b)
                  shall be effective as of the date of First Commercial Sale of
                  such Therapeutic Collaboration Product in a country and shall
                  continue until the later of (i) the expiration of the last
                  Valid Patent Claim covering the manufacture, use, sale or
                  import of the Therapeutic Collaboration Product in the country
                  of sale, or (ii) the tenth (10th) anniversary of the First
                  Commercial Sale in such country, subject to the following
                  conditions:

                  (x)      that only one royalty shall be due with respect to
                           the same unit of Therapeutic Collaboration Product;

                  (y)      that no royalties shall be due upon the sale or other
                           transfer among a Party or its Related Parties, but in
                           such cases the royalty shall be due and calculated
                           upon the Party's or its Related Party's Net Sales to
                           the first independent Third Party; and

                  (z)      no royalties shall accrue on the disposition of
                           Therapeutic Collaboration Product in reasonable
                           quantities by a Party or its Related Parties as
                           samples (promotion or otherwise) or as donations (for
                           example, to non-profit institutions or government
                           agencies for a non-commercial purpose).

5.2.2    ROYALTY PAYABLE UNDER MANAGED PHARMACEUTICAL CONTRACT. It is understood
         by the Parties that a Party may sell Therapeutic Collaboration Product
         to an independent Third Party (such as a retailer or wholesaler) and
         may subsequently perform services relating to a Therapeutic
         Collaboration Product and other products under a managed pharmaceutical
         benefits contract or other similar contract. In such cases, it is
         agreed by the Parties that Net Sales shall be based on the average
         invoice price at which similar quantities of such Therapeutic
         Collaboration Product are sold in the country in question to Third
         Parties without providing such services.

5.2.3    CHANGE IN SALES PRACTICES. The Parties acknowledge that during the term
         of this Agreement, the royalty-paying Party's sales practices for the
         marketing and distribution of Therapeutic Collaboration Product may
         change to the extent to which the calculation of the payment for
         royalties on Net Sales may become impractical or even impossible. In

                                       38

<PAGE>

         such event the Parties agree to meet and discuss in good faith new ways
         of compensating the royalty-receiving Party to the extent currently
         contemplated under Section 5.2.1.

5.2.4    COMPULSORY LICENSES. If a compulsory license is granted to a Third
         Party with respect to a Therapeutic Collaboration Product in any
         country in the Territory with a royalty rate lower than the applicable
         royalty rate set forth in Section 5.2.1, then the royalty rate to be
         paid by the royalty-paying Party on Net Sales in that country under
         Section 5.2.1 shall be reduced to the rate paid by the compulsory
         licensee.

5.2.5    THIRD PARTY LICENSES. In the event the sale by one Party or its Related
         Parties of a Therapeutic Collaboration Product results in an obligation
         of the other Party to pay royalties or milestones to a Third Party
         under a license that is sublicensed hereunder, then the selling Party
         shall reimburse the other Party for such royalty or milestone. In the
         event that (i) a Party is required to reimburse the other pursuant to
         the preceding sentence, or (ii) one or more patent licenses (other than
         patent licenses for delivery devices, delivery systems, formulations,
         excipients and product components other than the active pharmaceutical
         ingredients), from Third Parties are required by MERCK or its Related
         Parties or ALNYLAM or its Related Parties in order to make, have made,
         use, offer to sell, sell or import a Therapeutic Collaboration Product
         (hereinafter "THIRD PARTY PATENT LICENSES"), [**]percent ([**]%) of the
         consideration: (1) required to be reimbursed pursuant to the first
         sentence of this section or actually paid under such Third Party Patent
         Licenses by MERCK or its Related Parties or ALNYLAM or its Related
         Parties for sale of such Therapeutic Collaboration Product in a
         country, or (2) by a Party pursuant to the last sentence of Section
         2.14.3.1 of this Agreement, for a Calendar Quarter shall be creditable
         against the royalty payments due the royalty-receiving Party by the
         royalty-paying Party with respect to the sale of such Therapeutic
         Collaboration Products in such country in such Calendar Quarter;
         provided, however, that in no event shall the royalties owed by the
         royalty-paying Party to the royalty-receiving Party for such Calendar
         Quarter in such country be reduced by more than [**] percent ([**]%).

5.2.6    REPORTS; PAYMENT OF ROYALTY. During the term of the Agreement following
         the First Commercial Sale of each Therapeutic Collaboration Product,
         the royalty-paying Party shall furnish to the royalty-receiving Party a
         quarterly written report for the Calendar Quarter showing the quantity
         of each Therapeutic Collaboration Product sold in each country (as
         measured in grams of active pharmaceutical ingredient), the gross sales
         of such Therapeutic Collaboration Product in each country, total
         deductions for such Therapeutic Collaboration Product for each country
         permitted by Section 1.63, the Net Sales in each country of such
         Therapeutic Collaboration Product subject to royalty payments sold by
         the royalty-paying Party or its Related Parties in the Territory during
         the reporting period and the royalties payable under this Agreement.
         Reports shall be due on the forty-fifth (45th) day following the close
         of each Calendar Quarter. Royalties shown to have accrued by each
         royalty report shall be due and payable on the date such royalty report
         is due. The royalty-paying Party shall keep complete and accurate
         records in sufficient detail to enable the royalties payable hereunder
         to be determined.

                                       39

<PAGE>

5.3      AUDITS.

         (a)      Upon the written request of the royalty-receiving Party and
                  not more than once in each Calendar Year, the royalty-paying
                  Party and/or its Related Parties shall permit an independent
                  certified public accounting firm of nationally-recognized
                  standing selected by the royalty-receiving Party and
                  reasonably acceptable to the royalty-paying Party, at the
                  royalty-receiving Party's expense except as set forth below,
                  to have access during normal business hours to such of the
                  records of the royalty-paying Party as may be reasonably
                  necessary to verify the accuracy of the royalty reports
                  hereunder for any year ending not more than thirty-six (36)
                  months prior to the date of such request. The accounting firm
                  shall disclose to the royalty-receiving Party only whether the
                  royalty reports are correct or incorrect and the specific
                  details concerning any discrepancies. No other information
                  shall be provided to the royalty-receiving Party.

         (b)      If such accounting firm identifies a discrepancy made during
                  such period, the appropriate Party shall pay the other Party
                  the amount of the discrepancy within twenty (20) days of the
                  date the royalty-receiving Party delivers to the
                  royalty-paying Party such accounting firm's written report so
                  concluding, or as otherwise agreed by the Parties in writing.
                  Such written report shall be binding upon the Parties. The
                  fees charged by such accounting firm shall be paid by the
                  royalty-receiving Party, unless such discrepancy represents an
                  underpayment of the lesser of one million U.S. dollars
                  ($1,000,000) or five percent (5%) of the total amounts due
                  hereunder, in which case such fees shall be paid by the
                  royalty-paying Party.

         (c)      The royalty-paying Party shall include in each sublicense
                  granted by it pursuant to this Agreement a provision requiring
                  the sublicensee to make reports to the royalty-paying Party,
                  to keep and maintain records of sales made pursuant to such
                  sublicense and to grant access to such records by the
                  royalty-receiving Party's independent accountant to the same
                  extent required of the royalty-paying Party under this
                  Agreement. Upon the expiration of thirty-six (36) months
                  following the end of any year, the calculation of royalties
                  payable with respect to such year shall be binding and
                  conclusive upon the royalty-receiving Party, and the
                  royalty-paying Party and its sublicensees shall be released
                  from any further liability or accountability with respect to
                  royalties for such year.

         (d)      Unless an audit for such year has been commenced upon the
                  expiration of thirty-six (36) months following the end of any
                  year, the calculation of royalties payable with respect to
                  such year shall be binding and conclusive upon both the
                  royalty-receiving Party and the royalty-paying Party, and the
                  royalty-paying Party and its Related Parties shall be released
                  from any further liability or accountability with respect to
                  royalties for such year.

         (e)      The royalty-receiving Party shall treat all financial
                  information subject to review under this Section 5.3 or under
                  any sublicense agreement in accordance with the
                  confidentiality and non-use provisions of this Agreement, and
                  shall cause its accounting firm to enter into an acceptable
                  confidentiality agreement with the

                                       40

<PAGE>

                  royalty-paying Party and/or its Related Parties obligating it
                  to retain all such information in confidence pursuant to such
                  confidentiality agreement.

5.4      PAYMENT EXCHANGE RATE. All payments to be made under this Agreement
         shall be made in United States dollars and may be paid by check made to
         the order of the receiving Party or bank wire transfer in immediately
         available funds to such bank account in the United States designated in
         writing by the receiving Party from time to time. In the case of sales
         outside the United States (i) by MERCK and its Related Parties, the
         rate of exchange to be used in computing the amount of currency
         equivalent in United States dollars due shall be made at the rate of
         exchange utilized by MERCK in its worldwide accounting system,
         prevailing on the third to the last business day of the month preceding
         the month in which such sales are recorded, and (ii) by ALNYLAM and its
         Related Parties, the rate of exchange to be used in computing the
         amount of currency equivalent in United States dollars due shall be
         made at the prevailing commercial rate of exchange for purchasing
         dollars with such foreign currency as published in the Wall Street
         Journal for the close of the last business day of the calendar quarter
         for which the relevant royalty payment is to be made by ALNYLAM.

5.5      INCOME TAX WITHHOLDING. If laws, rules or regulations require
         withholding of income taxes or other taxes imposed upon payments set
         forth in this Article 5, the paying Party shall make such withholding
         payments as required and subtract such withholding payments from the
         payments set forth in this Article 5. The paying Party shall submit
         appropriate proof of payment of the withholding taxes to the receiving
         Party within a reasonable period of time. At the request of the
         receiving Party, the royalty-paying Party shall, at its cost, give the
         royalty-receiving Party such reasonable assistance, which shall include
         the provision of appropriate certificates of such deductions made
         together with other supporting documentation as may be required by the
         relevant tax authority, to enable the royalty-receiving Party to claim
         exemption from such withholding or other tax imposed or obtain a
         repayment thereof or reduction thereof and shall upon request provide
         such additional documentation from time to time as is reasonably
         required to confirm the payment of tax.

6.       REPRESENTATIONS AND WARRANTIES

6.1      MUTUAL REPRESENTATIONS AND WARRANTIES. Each Party represents and
         warrants to the other Party that as of the Effective Date of this
         Agreement:

         (a)      It is duly-organized and validly existing under the laws of
                  its jurisdiction of incorporation or formation, and has full
                  corporate or other power and authority to enter into this
                  Agreement and to carry out the provisions hereof.

         (b)      It is duly-authorized to execute and deliver this Agreement
                  and to perform its obligations hereunder, and the person or
                  persons executing this Agreement on its behalf has been
                  duly-authorized to do so by all requisite corporate action.

                                       41

<PAGE>

         (c)      This Agreement is legally binding upon it, enforceable in
                  accordance with its terms. Except as set forth in Section
                  6.1(c) of Schedule 6 to this Agreement, the execution,
                  delivery and performance of this Agreement by it does not
                  conflict with any agreement, instrument or understanding, oral
                  or written, to which it is a party and by which it may be
                  bound.

         (d)      Except as set forth in Section 6.1(d) of Schedule 6 to this
                  Agreement, It has not, and will not during the term of this
                  Agreement, grant any right to any Third Party which would
                  conflict with the rights granted to the other Party hereunder.
                  It has (or will have at the time performance is due)
                  maintained and will maintain and keep in full force and effect
                  all agreements (including license agreements) and filings
                  (including patent filings) necessary to perform its
                  obligations hereunder.

6.2      ALNYLAM REPRESENTATIONS AND WARRANTIES. ALNYLAM represents and warrants
         to MERCK that as of the Effective Date of this Agreement:

         (a)      To the best of ALNYLAM's knowledge, the ALNYLAM RNAi Patent
                  Rights and ALNYLAM RNAi Technology exist and are not invalid
                  or unenforceable, in whole or in part;

         (b)      Except as set forth in Section 6.2(b) of Schedule 6 to this
                  Agreement, it has not previously assigned, transferred,
                  conveyed or otherwise encumbered its right, title and interest
                  in the ALNYLAM RNAi Patent Rights or the ALNYLAM RNAi
                  Technology in a manner that conflicts with any rights granted
                  to MERCK hereunder; and

         (c)      Except as set forth in Section 6.2(c) of Schedule 6, there are
                  no claims, judgments or settlements against or owed by ALNYLAM
                  or pending or threatened claims or litigation relating to the
                  ALNYLAM RNAi Patent Rights or the ALNYLAM RNAi Technology.

6.3      MERCK REPRESENTATIONS AND WARRANTIES. MERCK represents and warrants to
         ALNYLAM that as of the Effective Date of this Agreement:

         (a)      to the best of MERCK's knowledge, the MERCK RNAi Patent Rights
                  and the patent rights within the MERCK RNAi Novel Target IP
                  and MERCK RNAi Technology exist and are not invalid or
                  unenforceable, in whole or in part;

         (b)      it has not previously assigned, transferred, conveyed or
                  otherwise encumbered its right, title and interest in the
                  MERCK RNAi Patent Rights, MERCK Novel Target IP or the MERCK
                  RNAi Technology in a manner that conflicts with the rights
                  granted to ALNYLAM hereunder; and

         (c)      there are no claims, judgments or settlements against or owed
                  by MERCK or pending or threatened claims or litigation
                  relating to the MERCK RNAi Patent Rights, MERCK RNAi Novel
                  Target IP or the MERCK RNAi Technology.

                                       42

<PAGE>

6.4      ASSIGNMENT BY INVENTORS. ALNYLAM shall cause and ensure that each and
         every ALNYLAM employee, agent or representative, including consultants
         and scientific advisors, working on the Collaboration has assigned or
         will assign to ALNYLAM his/her rights to Inventions. MERCK shall cause
         and ensure that each and every MERCK employee, agent or representative,
         including consultants and scientific advisors, working on the
         Collaboration has assigned or will assign to MERCK his/her rights to
         Inventions.

6.5      INDEMNIFICATION.

         (a)      MERCK shall indemnify, hold harmless, and defend ALNYLAM, its
                  Affiliates and their respective directors, officers, employees
                  and agents from and against any and all claims, suits, losses,
                  liabilities, damages, costs, fees and expenses (including
                  reasonable attorneys' fees) arising out of or resulting from
                  the exercise of any rights, under this Agreement by MERCK, its
                  Affiliates and their respective sublicensees. This
                  indemnification shall include, but is not limited to, any and
                  all claims alleging product liability in connection with
                  Therapeutic Collaboration Products. This indemnification
                  excludes claims against ALNYLAM by any Third Party for
                  infringement of such Third Party's intellectual property
                  rights resulting from MERCK's exercise in accordance with the
                  terms of this Agreement of any intellectual property rights
                  granted by ALNYLAM hereunder. Furthermore, MERCK shall have no
                  obligation to indemnify ALNYLAM to the extent that the claim,
                  suit, loss, liability, damage, cost, fee or expense arises out
                  of or results from the negligence, willful misconduct or
                  breach of the terms of this Agreement of or by ALNYLAM, its
                  Affiliates, or their directors, officers, employees,
                  consultants, scientific advisors or agents.

         (b)      ALNYLAM shall indemnify, hold harmless, and defend MERCK, its
                  Affiliates and their respective directors, officers, employees
                  and agents from and against any and all claims, suits, losses,
                  liabilities, damages, costs, fees and expenses (including
                  reasonable attorneys' fees) arising out of or resulting from
                  the exercise of any rights under this Agreement by ALNYLAM,
                  its Affiliates and their respective sublicensees. This
                  indemnification shall include, but is not limited to, any and
                  all claims alleging product liability in connection with
                  Therapeutic Collaboration Products. This indemnification
                  excludes claims against MERCK by any Third Party for
                  infringement of such Third Party's intellectual property
                  rights resulting from ALNYLAM's exercise in accordance with
                  the terms of this Agreement of any intellectual property
                  rights granted by MERCK hereunder. Furthermore, ALNYLAM shall
                  have no obligation to indemnify MERCK to the extent that the
                  claim, suit, loss, liability, damage, cost, fee or expense
                  arises out of or results from the negligence, willful
                  misconduct or breach of the terms of this Agreement of or by
                  MERCK, its Affiliates, or their directors, officers,
                  employees, consultants, scientific advisors or agents.

7.       PATENT PROVISIONS

7.1      FILING, PROSECUTION AND MAINTENANCE OF PATENTS. Except as otherwise
         provided in Schedule 2.14.3.3, the Parties agree that:

                                       43

<PAGE>

         (a)      ALNYLAM or RIBOPHARMA has the sole responsibility, to, at
                  ALNYLAM's or RIBOPHARMA's discretion, file, conduct ex parte
                  and inter partes prosecution and maintain in the Territory,
                  the ALNYLAM RNAi Patent Rights owned by ALNYLAM or licensed by
                  RIBOPHARMA to ALNYLAM and licensed to MERCK under this
                  Agreement; and

         (b)      MERCK has the sole responsibility, to, at its discretion,
                  file, conduct ex parte and inter partes prosecution and
                  maintain in the Territory the MERCK RNAi Patent Rights and the
                  patent rights contained in the MERCK RNAi Novel Target IP
                  licensed to ALNYLAM under this Agreement.

         provided, however, that, with respect to Joint Collaboration
         Inventions, ALNYLAM shall have the first right to file, conduct ex
         parte and inter partes prosecution and maintain patent applications and
         patents for such Joint Collaboration Inventions. With respect to Joint
         Collaboration Inventions, ALNYLAM may elect not to file, conduct ex
         parte and inter partes prosecution and/or maintain patent applications
         and patents and, if so, MERCK, and/or a law firm acting on its behalf,
         shall have the right to file, conduct ex parte and inter partes
         prosecution and maintain/or patent applications and patents, as
         applicable.

         In each case above, with respect to Joint Collaboration Inventions, (a)
         the filing Party shall: (i) give the non-filing Party an opportunity to
         review the text of the applications, (ii) consult with the non-filing
         Party with respect thereto and give good faith consideration to the
         requests and suggestions of the non-filing Party with respect to the
         filing thereof, (iii) supply the non-filing Party with a copy of the
         application as filed, together with notice of its filing date and
         serial number, and (iv) shall keep the other Party advised on at least
         a quarterly basis of the status of the actual and prospective patent
         filings; and (b) the prosecuting Party shall give the non-prosecuting
         Party copies of all correspondence from and to the U.S. and all other
         patent offices related to the prosecution of patents or patent
         applications covering such Joint Collaboration Inventions and give good
         faith consideration to the requests and suggestions of the
         non-prosecuting Party with respect to the prosecution thereof.

         ALNYLAM shall promptly give notice to MERCK of the grant, lapse,
         revocation, surrender, invalidation or abandonment of any ALNYLAM RNAi
         Patent Rights licensed to MERCK.

         MERCK shall promptly give notice to ALNYLAM of the grant, lapse,
         revocation, surrender, invalidation or abandonment of any MERCK RNAi
         Patent Rights and patent rights contained in MERCK RNAi Novel Target IP
         licensed to ALNYLAM.

         With respect to all filings, ex parte and inter partes prosecution and
         maintenance hereunder (including, without limitation, any interference,
         opposition, reexamination or reissue proceeding), the filing,
         prosecuting or maintaining Party shall be responsible for payment of
         all costs and expenses related to such filings, prosecution or
         maintenance; provided, however, that, with respect to Joint Technology
         Collaboration Inventions, the Parties shall equally share all costs and
         expenses related to such filings, prosecution or 

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<PAGE>

         maintenance. With respect to patent applications or patents for Joint
         Collaboration Inventions, if the Party which files, begins ex parte or
         inter partes prosecution or maintenance, elects to abandon or otherwise
         cease filing, ex parte or inter partes prosecution or maintenance, and
         the other Party elects to continue, then the continuing Party shall
         bear all expenses from the time it takes over the filing, ex parte or
         inter partes prosecution or maintenance.

7.2      INTERFERENCE, OPPOSITION, REEXAMINATION AND REISSUE. Except as
         otherwise provided in Schedule 2.14.3.3, the Parties agree that:

         (a)      ALNYLAM shall, within ten (10) days of learning of such event,
                  inform MERCK of any request for, or filing or declaration of,
                  any interference, opposition or reexamination or reissue
                  relating to ALNYLAM RNAi Patent Rights.

         (b)      MERCK shall, within ten (10) days of learning of such event,
                  inform ALNYLAM of any request for, or filing or declaration
                  of, any interference, opposition, or reexamination or reissue
                  relating to MERCK RNAi Patent Rights and patent rights
                  contained in MERCK RNAi Novel Target IP.

         (c)      In connection with any interference with a Third Party patent
                  or patent application, opposition by a Third Party and not on
                  behalf of the other Party, reissue, or reexamination
                  proceeding (other than one instituted by the other Party)
                  relating to ALNYLAM RNAi Patent Rights, MERCK RNAi Patent
                  Rights, MERCK RNAi Novel Target IP, or Joint Collaboration
                  Patent Rights, MERCK and ALNYLAM shall cooperate fully and
                  shall provide each other with any information or assistance
                  that either may reasonably request. Each Party shall keep the
                  other Party informed of developments in any such action or
                  proceeding to the extent permissible by law and to the extent
                  allowed by a written agreement with a Third Party under which
                  a Party has obtained rights to the applicable patent rights.

7.3      ENFORCEMENT AND DEFENSE.

         (a)      ALNYLAM shall give MERCK notice of: (i) any infringement of
                  (x) Joint Collaboration Patent Rights relating to in vitro
                  and/or in vivo target validation and/or target identification;
                  and/or (y) ALNYLAM RNAi Patent Rights relating to in vitro
                  and/or in vivo target validation and/or target identification
                  that are (A) Controlled by ALNYLAM or its Affiliates and (B)
                  licensed co-exclusively or exclusively hereunder to MERCK by
                  ALNYLAM, and/or (ii) any misappropriation or misuse of ALNYLAM
                  RNAi Technology relating to in vitro and/or in vivo target
                  validation and/or target identification that is (A) Controlled
                  by ALNYLAM or its Affiliates and (B) licensed co-exclusively
                  or exclusively hereunder to MERCK by ALNYLAM, that may come to
                  ALNYLAM's attention. MERCK and ALNYLAM shall thereafter
                  consult and cooperate fully to determine a course of action,
                  including, but not limited to, the commencement of legal
                  action by either or both MERCK and/or ALNYLAM, to terminate
                  any infringement of such ALNYLAM RNAi Patent Rights or such
                  Joint Collaboration Patent Rights or any misappropriation or
                  misuse of such ALNYLAM RNAi Technology. However, ALNYLAM, upon
                  prompt written notice to MERCK,

                                       45

<PAGE>

                  shall have the first right to initiate and prosecute such
                  legal action at its own expense and in the name of ALNYLAM and
                  MERCK, and to control the defense of any declaratory judgment
                  action relating to such ALNYLAM RNAi Patent Rights or such
                  Joint Collaboration Patent Rights or such ALNYLAM RNAi
                  Technology at its own expense. ALNYLAM shall promptly inform
                  MERCK if it elects not to exercise such first right and MERCK
                  shall thereafter have the right to either initiate and
                  prosecute such action or to control the defense of such
                  declaratory judgment action in the name of MERCK and, if
                  necessary, ALNYLAM, only with respect to an infringement of
                  Joint Collaboration Patent Rights through the conduct of in
                  vitro and/or in vivo target identification and/or target
                  validation. Each Party shall have the right to be represented
                  by counsel of its own choice. For the avoidance of doubt, it
                  is agreed that MERCK shall have no right to initiate or
                  prosecute any action or control the defense of any declaratory
                  judgment action with respect to any ALNYLAM RNAi Patent Right
                  or misuse or misappropriation of ALNYLAM RNAi Technology.

                  ALNYLAM agrees that, in the event a Therapeutic Collaboration
                  Product becomes subject to a MERCK Product Agreement, and an
                  ALNYLAM RNAi Patent Right is infringed by a Third Party by the
                  sale of a therapeutic product using RNA interference against
                  the same MERCK RNAi Novel Target as such Therapeutic
                  Collaboration Product (a "COMPETING RNAi PRODUCT") then if (a)
                  there is no patent right Controlled by MERCK and no Joint
                  Collaboration Patent Right that can be asserted against the
                  alleged infringement, and (b) ALNYLAM does not assert at least
                  one ALNYLAM RNAi Patent Right against such alleged
                  infringement, then MERCK's license to such Therapeutic
                  Collaboration Product will become royalty-free in countries in
                  which the Competing RNAi Product is sold, for as long as such
                  Competing RNAi Product is being sold in such country. The
                  foregoing provision will be reflected in each MERCK Product
                  Agreement.

                  With respect to any action or defense provided for in this
                  paragraph (a), ALNYLAM shall not admit the invalidity or
                  unenforceability of any MERCK RNAi Patent Rights, MERCK RNAi
                  Novel Target IP or Joint Collaboration Patent Rights without
                  the prior written consent of MERCK.

         (b)      In the event that ALNYLAM elects not to initiate and prosecute
                  an action as provided in paragraph (a), and MERCK elects to do
                  so, the costs of any action to terminate such infringement of
                  Joint Collaboration Patent Rights, including without
                  limitation the costs of any legal action commenced or the
                  defense of any declaratory judgment, shall be borne by MERCK.
                  No suit or negotiation arising from such action may be settled
                  by MERCK without prior written notice to ALNYLAM. With respect
                  to any action or defense provided for in this paragraph (b),
                  MERCK shall not admit the invalidity or unenforceability of
                  any ALNYLAM RNAi Patent Rights or Joint Collaboration Patent
                  Rights without the written consent of ALNYLAM.

         (c)      For any such action to terminate any infringement of Joint
                  Collaboration Patent Rights relating to in vitro and/or in
                  vivo target validation and/or target identification, in the
                  event that MERCK is unable to initiate or prosecute such
                  action solely in its

                                       46

<PAGE>

                  own name, ALNYLAM will join such action voluntarily and will
                  execute and cause its Affiliates to execute all documents
                  necessary for MERCK to initiate litigation to prosecute and
                  maintain such action, at the expense of MERCK. In connection
                  with any action, MERCK and ALNYLAM will cooperate fully and
                  will provide each other with any information or assistance
                  that either may reasonably request. Each Party shall keep the
                  other informed of developments in any action or proceeding, to
                  the extent permissible by law.

         (d)      Any recovery obtained by either or both MERCK and ALNYLAM in
                  connection with or as a result of any action contemplated by
                  this section, whether by settlement or otherwise, shall be
                  shared in order as follows:

                  (i)      the Party which initiated and prosecuted the action
                           shall recoup all of its costs and expenses incurred
                           in connection with the action;

                  (ii)     the other Party shall then, to the extent possible,
                           recover its costs and expenses incurred in connection
                           with the action; and

                  (iii)    the amount of any recovery remaining shall then be
                           allocated between the Parties as follows: (1) [**]
                           percent ([**]%) of the remaining amount to the Party
                           prosecuting such action and (2) [**] percent ([**]%)
                           to the other Party.

7.4      PATENT TERM RESTORATION. The Parties hereto shall cooperate with each
         other in obtaining patent term restoration or supplemental protection
         certificates or their equivalents in any country in the Territory where
         applicable to ALNYLAM RNAi Patent Rights, Joint Collaboration Patent
         Rights, and patent rights contained in MERCK RNAi Novel Target IP and
         MERCK RNAi Patent Rights. The Parties shall mutually agree upon any
         elections to be made with respect to obtaining such patent term
         restoration with regard to Joint Collaboration Patent Rights.

8.       TERM AND TERMINATION

8.1      TERM AND EXPIRATION. This Agreement shall be effective as of the
         Effective Date and, unless terminated earlier pursuant to Sections 8.2
         or 8.3 below, this Agreement shall continue in effect until expiration
         of all royalty obligations hereunder and under all Therapeutic
         Collaboration Product Agreements, ALNYLAM Product Agreements and MERCK
         Product Agreements. Upon expiration of this Agreement, the Parties'
         licenses pursuant to Section 3.1 shall become fully paid-up, perpetual
         licenses.

8.2      TERMINATION FOR CAUSE.

8.2.1    CAUSE FOR TERMINATION. This Agreement may be terminated at any time
         during the term of the Agreement:

         (a)      upon written notice by either Party if the other Party is in
                  breach of its material obligations hereunder by causes and
                  reasons within its control and has not cured such breach
                  within ninety (90) days after notice requesting cure of the
                  breach; provided,

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<PAGE>

                  however, in the event of a good faith dispute with respect to
                  the existence of a material breach, the ninety (90) day cure
                  period shall be tolled until such time as the Dispute is
                  resolved pursuant to Section 9.6 hereof; or

         (b)      by either Party upon the filing or institution of bankruptcy,
                  reorganization, liquidation or receivership proceedings, or
                  upon an assignment of a substantial portion of the assets for
                  the benefit of creditors by the other Party; provided,
                  however, in the case of any involuntary bankruptcy or
                  receivership proceeding such right to terminate shall only
                  become effective if the Party consents to the involuntary
                  bankruptcy, receivership or such proceeding is not dismissed
                  within ninety (90) days after the filing thereof.

8.2.2    EFFECT OF TERMINATION FOR CAUSE OR FOR CHANGE OF CONTROL.

         (a)      If MERCK terminates this Agreement under Section 8.2.1(a) or
                  terminates the Technology Collaboration or the Therapeutic
                  Collaboration or both pursuant to Section 9.2, the licenses
                  granted by ALNYLAM to MERCK pursuant to Section 3.1.1 shall
                  survive such termination. In addition,

                  (i)      not later than thirty (30) days after the date of
                           such termination, each Party shall return or cause to
                           be returned to the other Party all Information in
                           tangible form received from the other Party and all
                           copies thereof and ALNYLAM shall return to or cause
                           to be returned to MERCK all substances or
                           compositions delivered or provided by MERCK, as well
                           as any other Materials provided by MERCK in any
                           medium, except that each Party may retain all
                           Information, substances, compositions and materials
                           relevant to licenses and rights it retains hereunder
                           and may retain one copy of Information in its
                           confidential files for record purposes;

                  (ii)     MERCK shall have the right to continue to exercise
                           its rights to opt-in to develop any and all
                           Therapeutic Collaboration Products as set forth in
                           Section 2.14.3 and the licenses granted by MERCK to
                           ALNYLAM in Sections 3.1.2 and 3.1.3 shall survive
                           solely with respect to such Therapeutic Collaboration
                           Products;

                  (iii)    all then-existing Therapeutic Collaboration Product
                           Agreements, ALNYLAM Product Agreements or MERCK
                           Product Agreements shall continue in effect;

                  (iv)     with regard to termination pursuant to Section
                           8.2.1(a), ALNYLAM shall return to MERCK and cease to
                           work on, all MERCK RNAi Novel Targets and RNAi
                           Therapeutic Products for which the Opt-In Information
                           has not yet been provided by ALNYLAM to MERCK; and,

                  (v)      with regard to termination pursuant to Section 9.2,
                           then: (x) ALNYLAM may continue to work on MERCK RNAi
                           Novel Targets that it has designated as such pursuant
                           to Section 2.14.2(3) by notice to MERCK prior to the
                           date on which ALNYLAM notified MERCK of such Change
                           of Control, subject to MERCK's Opt-In Rights, and the
                           licenses granted by MERCK to

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<PAGE>

                           ALNYLAM in Sections 3.1.2 and 3.1.3 shall survive
                           with respect to such MERCK RNAi Novel Targets, and
                           (y) all Opt-In Negotiation Periods shall continue,
                           and the licenses granted by MERCK to ALNYLAM in
                           Sections 3.1.2 and 3.1.3 shall survive with respect
                           to Therapeutic Collaboration Products subject to such
                           Opt-In Negotiation Periods.

         (b)      If ALNYLAM terminates this Agreement under Section 8.2.1(a),
                  the licenses granted by MERCK to ALNYLAM pursuant to Section
                  3.1.2 and 3.1.3 shall survive such termination. In addition,

                  (i)      not later than thirty (30) days after the date of
                           such termination, each Party shall return or cause to
                           be returned to the other Party all Information,
                           substances, compositions and materials in tangible
                           form received from the other Party and all copies
                           thereof, except that each Party may retain all
                           Information relevant to licenses and rights it
                           retains hereunder and may retain one copy of
                           Information in its confidential files for record
                           purposes;

                  (ii)     ALNYLAM shall continue to have the right to develop
                           without MERCK, but subject to royalty payments to
                           MERCK, as specified in Section 5.2.1(a), Therapeutic
                           Collaboration Products then subject to an Opt-In
                           Negotiation Period;

                  (iii)    all then existing Therapeutic Collaboration Product
                           Agreements, ALNYLAM Product Agreements and MERCK
                           Product Agreements shall continue in effect; and

                  (iv)     ALNYLAM shall have the right to develop without MERCK
                           any and all MERCK RNAi Novel Targets which ALNYLAM
                           has designated as such pursuant to Section 2.14.2(3)
                           by notice to MERCK prior to the termination date,
                           subject to royalty payments to MERCK as specified in
                           Section 5.2.1(a) on the same basis as if the product
                           was a Therapeutic Collaboration Product.

         (c)      If this Agreement is terminated by MERCK pursuant to Section
                  8.2.1(b) due to the rejection of this Agreement by or on
                  behalf of ALNYLAM under Section 365 of the United States
                  Bankruptcy Code (the "CODE"), all licenses and rights to
                  licenses granted under or pursuant to this Agreement by
                  ALNYLAM to MERCK are, and shall otherwise be deemed to be, for
                  purposes of Section 365(n) of the Code, licenses of rights to
                  "intellectual property" as defined under Section 101(35A) of
                  the Code. The Parties agree that MERCK, as a licensee of such
                  rights under this Agreement, shall retain and may fully
                  exercise all of its rights and elections under the Code, and
                  that upon commencement of a bankruptcy proceeding by or
                  against ALNYLAM under the Code, MERCK shall be entitled to a
                  complete duplicate of or complete access to (as MERCK deems
                  appropriate) any such intellectual property and all
                  embodiments of such intellectual property. Such intellectual
                  property and all embodiments thereof shall be promptly
                  delivered to MERCK (i) upon any such commencement of a
                  bankruptcy proceeding upon written request therefore by MERCK,
                  unless ALNYLAM elects to continue to perform all of its
                  obligations under

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<PAGE>

                  this Agreement, or (ii) if not delivered under (i) above, upon
                  the rejection of this Agreement by or on behalf of ALNYLAM
                  upon written request therefore by MERCK. The foregoing
                  provisions of subsection 8.2.2(c) are without prejudice to any
                  rights MERCK may have arising under the Code or other
                  applicable law.

         (d)      If this Agreement is terminated by ALNYLAM pursuant to Section
                  8.2.1(b) due to the rejection of this Agreement by or on
                  behalf of MERCK under Section 365 of the Code, the provisions
                  of subparagraph (c) shall apply mutatis mutandis.

8.3      EFFECT OF EXPIRATION OR TERMINATION; SURVIVAL. Expiration or
         termination of the Agreement shall not relieve the Parties of any
         obligation accruing prior to such expiration or termination. Any
         expiration or termination of this Agreement shall be without prejudice
         to the rights of either Party against the other accrued or accruing
         under this Agreement prior to expiration or termination, including,
         without limitation, the obligation to pay royalties for Therapeutic
         Collaboration Products sold prior to such expiration or termination.
         The provisions of Section 4.1 shall survive the expiration or
         termination of the Agreement and with respect to the obligations of the
         Parties shall continue in effect for seven (7) years. In addition, the
         provisions of Articles 1, 7 and 8, and Sections 2.7, 2.10, 2.15, 5.4,
         5.5, 9.3 through 9.18 shall survive any expiration or termination of
         this Agreement. Except as set forth in this Article 8, upon termination
         or expiration of this Agreement all other rights and obligations cease.

9.       MISCELLANEOUS

9.1      FORCE MAJEURE. Neither Party shall be held liable to the other Party
         nor be deemed to have defaulted under or breached the Agreement for
         failure or delay in performing any obligation under this Agreement when
         such failure or delay is caused by or results from causes beyond the
         reasonable control of the affected Party including, but not limited to,
         embargoes, war, acts of war (whether war be declared or not),
         insurrections, riots, civil commotions, strikes, lockouts or other
         labor disturbances, fire, floods, or other acts of God, or acts,
         omissions or delays in acting by any governmental authority or the
         other Party. The affected Party shall notify the other Party of such
         force majeure circumstances as soon as reasonably practical, and shall
         promptly undertake all reasonable efforts necessary to cure such force
         majeure circumstances.

9.2      ASSIGNMENT/CHANGE OF CONTROL. Except as provided in this Section 9.2,
         this Agreement may not be assigned or otherwise transferred, nor may
         any right or obligation hereunder be assigned or transferred, by either
         Party without the consent of the other Party. MERCK may, without
         ALNYLAM's consent, assign this Agreement and its rights and obligations
         hereunder in whole or in part to a MERCK Affiliate or in whole in
         connection with a Change of Control (as defined below) upon twenty (20)
         days prior written notification to ALNYLAM. ALNYLAM may, without
         MERCK's consent, assign this Agreement and its rights and obligations
         hereunder in whole or in part to any wholly-owned subsidiary of ALNYLAM
         or RIBOPHARMA (except as provided below) or in whole (except as
         provided below) in connection with a Change of Control; provided,
         however, that: (a) ALNYLAM must notify MERCK at least twenty (20) days

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<PAGE>

         prior to completion of any such Change of Control, (b) MERCK shall have
         the right, at any time after receipt of such notice but prior to the
         end of the twenty (20) day period, to notify ALNYLAM of the termination
         of the Technology Collaboration, the Therapeutic Collaboration
         (including MERCK's obligation to deliver additional MERCK Non-Druggable
         Targets), or both, (c) all ALNYLAM Product Agreements and MERCK Product
         Agreements shall continue and each Therapeutic Collaboration Product
         Agreement shall remain in effect or terminate as provided therein, (d)
         ALNYLAM may continue to work on MERCK RNAi Novel Targets which it
         designated as such pursuant to Section 2.14.2(3) by notice to MERCK
         prior to the date on which ALNYLAM notified MERCK of the Change of
         Control, subject to MERCK's Opt-In Rights, and (e) all Opt-In
         Negotiation Periods shall continue. Upon such assignment or Change of
         Control, MERCK's obligation to provide royalty reports pursuant to
         Section 5.2.6 shall be limited to reporting Net Sales for each country
         and MERCK's total worldwide royalty obligations.

         Notwithstanding the foregoing, the rights of any permitted assignee of
         ALNYLAM's rights to practice any of MERCK's intellectual property,
         including but not limited to MERCK RNAi Patent Rights, MERCK RNAi
         Technology and MERCK RNAi Novel Target IP, shall remain subject to the
         limitations set forth in this Agreement. Any permitted assignee shall
         assume all obligations of its assignor under this Agreement. Any
         attempted assignment not in accordance with this Section 9.2 shall be
         void. For purposes of this Section 9.2, a "CHANGE OF CONTROL" of a
         Party shall be deemed to occur if such Party is involved in a merger,
         reorganization or consolidation in which its shareholders immediately
         prior to such transaction would hold less than fifty percent (50%) of
         the securities or other ownership or voting interests representing the
         equity of the surviving entity immediately after such merger,
         reorganization or consolidation, or if there is a sale of all or
         substantially all of such Party's assets or business relating to this
         Agreement, or if a "Health Company Acquirer" (as defined below)
         effectively acquires control of the management and policies of such
         Party. A "HEALTH COMPANY ACQUIRER" is a pharmaceutical company,
         biotechnology company, or group of such companies acting in concert,
         with annual sales of human pharmaceutical products greater than [**]
         U.S. dollars ($[**]).

9.3      SEVERABILITY. If any one or more of the provisions contained in this
         Agreement is held invalid, illegal or unenforceable in any respect, the
         validity, legality and enforceability of the remaining provisions
         contained herein shall not in any way be affected or impaired thereby,
         unless the absence of the invalidated provision(s) adversely affects
         the substantive rights of the Parties. The Parties shall in such an
         instance use their best efforts to replace the invalid, illegal or
         unenforceable provision(s) with valid, legal and enforceable
         provision(s) which, insofar as practical, implement the purposes of
         this Agreement.

9.4      NOTICES. All notices which are required or permitted hereunder shall be
         in writing and sufficient if delivered personally, sent by facsimile
         (and promptly confirmed by personal delivery, registered or certified
         mail or overnight courier), sent by nationally-recognized overnight
         courier or sent by registered or certified mail, postage prepaid,
         return receipt requested, addressed as follows:

         If to ALNYLAM, to:                  ALNYLAM PHARMACEUTICALS, INC. and
                                             ALNYLAM HOLDING CO.

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<PAGE>

                                             790 Memorial Drive
                                             Suite 202
                                             Cambridge, MA 02139
                                             Attention: Chief Executive Officer
                                             Facsimile No.: (617) 252-0011

                     and:                    MINTZ, LEVIN, COHN, FERRIS, GLOVSKY
                                             AND POPEO, P.C.
                                             One Financial Center
                                             Boston, MA 02111
                                             Attention: Jeffrey M. Wiesen
                                             Facsimile No.: (617) 542-2241

         If to MERCK, to:                    MERCK & CO., INC.
                                             One Merck Drive
                                             P.O. Box 100, WS3A-65
                                             Whitehouse Station, NJ 08889-0100
                                             Attention: Office of Secretary
                                             Facsimile No.: (908) 735-1246

                     and:                    MERCK & CO., INC.
                                             One Merck Drive
                                             P.O. Box 100, WS2A-30
                                             Whitehouse Station, NJ 08889-0100
                                             Attention: Chief Licensing Officer
                                             Facsimile: (908) 735-1214

         or to such other address as the Party to whom notice is to be given may
         have furnished to the other Party in writing in accordance herewith.
         Any such notice shall be deemed to have been given: (a) when delivered
         if personally delivered or sent by facsimile on a business day; (b) on
         receipt if sent by nationally-recognized overnight courier; and/or (c)
         on receipt if sent by mail.

9.5      APPLICABLE LAW. The Agreement shall be governed by and construed in
         accordance with the laws of the State of New York and the patent laws
         of the United States without reference to any rules of conflict of laws
         or renvoi.

9.6      DISPUTE RESOLUTION.

9.6.1    The Parties shall negotiate in good faith and use reasonable efforts to
         settle any dispute, controversy or claim arising from, or related to,
         this Agreement or to the breach hereof, and to resolve any disagreement
         between the Parties with respect to any Therapeutic Collaboration
         Product Agreement, MERCK Product Agreement or ALNYLAM Product
         Agreement, except as provided below and in Section 9.7 (collectively,
         "DISPUTE"). In particular, the CEO of ALNYLAM and the Executive
         Vice-President of Worldwide Basic Research for MERCK shall attempt to
         resolve all Disputes except as otherwise provided for in Section 9.7
         below. In the event that the CEO and the Executive Vice-

                                       52

<PAGE>

         President cannot reach an agreement regarding a Dispute, and a Party
         wishes to pursue the matter, each such Dispute that is not an "Excluded
         Claim" shall be finally resolved by binding arbitration in accordance
         with the Commercial Arbitration Rules and Supplementary Procedures for
         Large Complex Disputes of the American Arbitration Association ("AAA")
         and Section 9.6.2 below, and judgment on the arbitration award may be
         entered in any court having jurisdiction thereof. As used in this
         Section 9.6, the term "EXCLUDED CLAIM" shall mean a dispute that
         concerns (a) the validity or infringement of a patent, trademark or
         copyright, or (b) any antitrust, anti-monopoly or competition law or
         regulation, whether or not statutory.

9.6.2    FULL ARBITRATION. Except as provided in Section 9.6.3, the arbitration
         shall be conducted by a panel of three (3) persons experienced in the
         pharmaceutical business who are independent of both Parties and neutral
         with respect to the Dispute presented for arbitration. Within thirty
         (30) days after initiation of arbitration, each Party shall select one
         person to act as arbitrator and the two Party-selected arbitrators
         shall select a third arbitrator within thirty (30) days of their
         appointment. If the arbitrators selected by the Parties are unable or
         fail to agree upon the third arbitrator, the third arbitrator shall be
         appointed by the AAA. The place of arbitration shall be New York, New
         York, and all proceedings and communications shall be in English.

         (a)      Either Party may apply to the arbitrators for interim
                  injunctive relief until the arbitration award is rendered or
                  the controversy is otherwise resolved. Either Party also may,
                  without waiving any remedy under this Agreement, seek from any
                  court having jurisdiction any injunctive or provisional relief
                  necessary to protect the rights or property of that Party
                  pending the arbitration award. The arbitrators shall have no
                  authority to award punitive or any other type of damages not
                  measured by a Party's compensatory damages. Each Party shall
                  bear its own costs and expenses and attorneys' fees, and the
                  Party that does not prevail in the arbitration proceeding
                  shall pay the arbitrators' and any administrative fees of
                  arbitration.

         (b)      Except to the extent necessary to confirm an award or as may
                  be required by law, neither a Party nor an arbitrator may
                  disclose the existence, content, or results of an arbitration
                  without the prior written consent of both Parties. In no event
                  shall an arbitration be initiated after the date when
                  commencement of a legal or equitable proceeding based on the
                  dispute, controversy or claim would be barred by the
                  applicable New York statute of limitations.

         (c)      The Parties agree that, in the event of a Dispute over the
                  nature or quality of performance under this Agreement, neither
                  Party may terminate the Agreement until final resolution of
                  the Dispute through arbitration or other judicial
                  determination. The Parties further agree that any payments
                  made pursuant to this Agreement pending resolution of the
                  Dispute shall be refunded if an arbitrator or court determines
                  that such payments are not due.

         (d)      The Parties hereby agree that any disputed performance or
                  suspended performances pending the resolution of the
                  arbitration that the arbitrator determines to be required

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<PAGE>

                  to be performed by a Party must be completed within a
                  reasonable time period following the final decision of the
                  arbitrator.

         (e)      The Parties hereby agree that any monetary payment to be made
                  by a Party pursuant to a decision of the arbitrator shall be
                  made in United States dollars, free of any tax or other
                  deduction. The Parties further agree that the decision of the
                  arbitrator shall be the sole, exclusive and binding remedy
                  between them regarding determination of the matters presented
                  to the arbitrator.

9.6.3    "BASEBALL STYLE" ARBITRATION. If the Parties cannot otherwise agree
         upon reasonable commercial terms during the Opt-In Negotiation Periods
         for any Therapeutic Collaboration Agreement as provided in Section
         2.14.3.3, or any MERCK Product Agreement or ALNYLAM Product Agreement,
         then such matters, shall be determined by binding arbitration pursuant
         to this Section 9.6.3 by one (1) independent, neutral arbitrator who is
         (i) mutually-acceptable to the Parties, and (ii) an expert in the
         pharmaceutical industry. If the Parties are unable to agree upon a
         mutually-acceptable arbitrator, the arbitrator shall be an independent
         expert as described in the preceding sentence selected by the AAA
         encompassing New York, New York. Except as set forth in this Section
         9.6.3, any arbitration of a Dispute pursuant to this Section 9.6.3
         shall be governed by the Commercial Arbitration Rules and Supplementary
         Procedures for Large Complex Disputes of the AAA. The place of
         arbitration shall be New York, New York, and all proceedings and
         communications shall be in English.

         (a)      Either Party may apply to the arbitrator for interim
                  injunctive relief until the arbitration award is rendered or
                  the controversy is otherwise resolved. Either Party also may,
                  without waiving any remedy under this Agreement, seek from any
                  court having jurisdiction any injunctive or provisional relief
                  necessary to protect the rights or property of that Party
                  pending the arbitration award. Each Party shall bear its own
                  attorneys' fees. Except to the extent necessary to confirm an
                  award or as may be required by law, neither a Party nor an
                  arbitrator may disclose the existence, content, or results of
                  an arbitration without the prior written consent of both
                  Parties. In no event shall an arbitration be initiated after
                  the date when commencement of a legal or equitable proceeding
                  based on the dispute, controversy or claim would be barred by
                  the applicable New York statute of limitations.

         (b)      The Parties hereby agree that any disputed performance or
                  suspended performances pending the resolution of the
                  arbitration that the arbitrator determines to be required to
                  be performed by a Party must be completed within a reasonable
                  time period following the final decision of the arbitrator.

         (c)      The Parties further agree that the decision of the arbitrator
                  shall be the sole, exclusive and binding remedy between them
                  regarding determination of the matters presented to the
                  arbitrator.

9.6.4    For arbitration of Disputes subject to Section 9.6.3, each Party to the
         arbitration shall prepare and submit a written proposal setting forth
         its proposed commercial terms, which must include, without change, the
         terms set forth in Schedule 2.14.3.3, Section 3.1.5 or

                                       54

<PAGE>

         3.1.6, as applicable, Section 5.2.1 (a) or (b) as applicable, and other
         terms agreed upon hereunder in the negotiation preceding the submission
         to arbitration, together with a written explanation setting forth the
         reasons for its position. After the arbitrator has received written
         proposals from both Parties, the arbitrator shall forward a copy of the
         other Party's proposal to each. Each Party shall have thirty (30) days
         to prepare and submit a written rebuttal to such proposal and may then
         amend its original proposal. Each Party shall have the right to make
         oral presentations or present evidence as determined by the arbitrator
         during the arbitration proceeding. The arbitrator shall select the
         proposal of one of the Parties as his/her decision, and shall not have
         the authority to render any substantive decision other than to so
         select in its entirety the summary or proposal of one Party or the
         other. Each Party shall bear its own costs and expenses and attorneys
         fees. The administrative and arbitrator's fees shall be paid by the
         non-prevailing Party. The arbitrator shall be directed that any
         arbitration subject to Section 9.6.3 shall be completed within three
         (3) months from the filing of notice of a request for such arbitration.
         The arbitration proceedings and the decision shall not be made public
         without the joint consent of the Parties and each Party shall maintain
         the confidentiality of such proceedings and decision unless otherwise
         permitted by the other Party.

9.7      TECHNOLOGY MILESTONE ARBITRATION. In the event of a Technology
         Milestone Dispute, the Parties shall mutually select a single,
         independent, neutral arbitrator who shall have sufficient scientific
         background and experience, including, without limitation, expertise in
         RNA interference, to make a reasonable scientific determination as to
         whether the Technology Milestone has been achieved. If the Parties are
         unable to reach agreement within fifteen (15) business days after
         submission to arbitration under Section 5.1.4 on the selection of an
         arbitrator, then either or both Parties shall immediately request the
         AAA of New York, New York to select an arbitrator with such scientific
         background, experience and expertise as set forth herein. Except as set
         forth in this Section 9.7, any arbitration of the Technology Milestone
         Dispute shall be governed by the Commercial Arbitration Rules and
         Supplementary Procedures for Large Complex Disputes of the AAA. The
         place of arbitration shall be New York, New York, and all proceedings
         and communications shall be in English.

         For arbitration of the Technology Milestone Dispute subject to this
         Section 9.7, each Party shall prepare and submit one written summary of
         such Party's position and any relevant evidence with respect to the
         Technology Milestone Dispute to the arbitrator within thirty (30) days
         of the selection of the arbitrator. Upon receipt of such summaries from
         each Party, the arbitrator shall provide copies of the same to the
         other Party. Within fifteen (15) days of the delivery of such
         summaries, each Party shall submit a written rebuttal of the other
         Party's summary and may then amend its original summary. Oral
         presentations during the arbitration proceeding for any Technology
         Milestone Dispute shall not be permitted unless otherwise requested by
         the arbitrator. The arbitrator shall make a final decision with respect
         to a Technology Milestone Dispute within thirty (30) days following
         receipt of the last of such rebuttal statements submitted by the
         Parties.

         (a)      Either Party may apply to the arbitrator for interim
                  injunctive relief until the arbitration award is rendered or
                  the controversy is otherwise resolved. Either Party also may,
                  without waiving any remedy under this Agreement, seek from any
                  court

                                       55

<PAGE>

                  having jurisdiction any injunctive or provisional relief
                  necessary to protect the rights or property of that Party
                  pending the arbitration award. Each Party shall bear its own
                  costs and expenses and attorneys' fees. The administrative and
                  arbitrator's fees shall be reimbursed and/or paid by the
                  non-prevailing Party.

         (b)      Except to the extent necessary to confirm an award or as may
                  be required by law, neither Party nor the arbitrator may
                  disclose the existence, content, or results of an arbitration
                  without the prior written consent of both Parties. In no event
                  shall an arbitration be initiated after the date when
                  commencement of a legal or equitable proceeding based on the
                  dispute, controversy or claim would be barred by the
                  applicable New York statute of limitations.

         (c)      The Parties agree that, in the event of a Technology Milestone
                  Dispute, neither Party may terminate the Agreement until final
                  resolution of the Technology Milestone Dispute through
                  arbitration or other judicial determination. The Parties
                  further agree that any payments made pursuant to this
                  Agreement made pending resolution of the Dispute shall be
                  refunded if the arbitrator or court determines that such
                  payments are not due.

         (d)      The Parties hereby agree that if the arbitrator determines
                  that the Technology Collaboration Milestone has been met,
                  MERCK shall pay the milestone payment under Section 5.1.4
                  within ten (10) business days of the arbitrator's
                  determination.

         (e)      The Parties hereby agree that any payment to be made by a
                  Party pursuant to a decision of the arbitrator shall be made
                  in United States dollars, free of any tax or other deduction.
                  The Parties further agree that the decision of the arbitrator
                  shall be the sole, exclusive and binding remedy between them
                  regarding determination of the matters presented to the
                  arbitrator.

9.8      ENTIRE AGREEMENT; AMENDMENTS. The Agreement contains the entire
         understanding of the Parties with respect to the Collaboration and
         licenses granted hereunder. All express or implied agreements and
         understandings, either oral or written, with regard to the
         Collaboration and the licenses granted hereunder are superseded by the
         terms of this Agreement. The Agreement (including Schedules hereto) may
         be amended, or any term hereof modified, only by a written instrument
         duly-executed by authorized representatives of both Parties hereto.

9.9      HEADINGS. The captions to the Articles and Sections hereof are not a
         part of the Agreement, but are merely for convenience to assist in
         locating and reading the several Articles and Sections hereof.

9.10     INDEPENDENT CONTRACTORS. It is expressly agreed that ALNYLAM and MERCK
         shall be independent contractors and that the relationship between
         ALNYLAM and MERCK shall not constitute a partnership, joint venture or
         agency. ALNYLAM shall not have the authority to make any statements,
         representations or commitments of any kind, or to take any action,
         which shall be binding on MERCK, without the prior written consent of
         MERCK, and MERCK shall not have the authority to make any statements,

                                       56

<PAGE>

         representations or commitments of any kind, or to take any action,
         which shall be binding on ALNYLAM without the prior written consent of
         such Party.

9.11     WAIVER. The waiver by either Party hereto of any right hereunder, or of
         the failure of the other Party to perform, or of a breach by the other
         Party, shall not be deemed a waiver of any other right hereunder or of
         any other breach or failure by such other Party whether of a similar
         nature or otherwise.

9.12     CUMULATIVE REMEDIES. No remedy referred to in this Agreement is
         intended to be exclusive, but each shall be cumulative and in addition
         to any other remedy referred to in this Agreement or otherwise
         available under law.

9.13     WAIVER OF RULE OF CONSTRUCTION. Each Party has had the opportunity to
         consult with counsel in connection with the review, drafting and
         negotiation of this Agreement. Accordingly, the rule of construction
         that any ambiguity in this Agreement shall be construed against the
         drafting Party shall not apply.

9.14     COUNTERPARTS. The Agreement may be executed in two or more
         counterparts, each of which shall be deemed an original, but all of
         which together shall constitute one and the same instrument.

9.15     WARRANTY DISCLAIMER. EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS
         AGREEMENT, NEITHER PARTY MAKES ANY WARRANTY WITH RESPECT TO ANY
         TECHNOLOGY, GOODS, SERVICES, RIGHTS OR OTHER SUBJECT MATTER OF THIS
         AGREEMENT AND HEREBY DISCLAIMS ALL IMPLIED WARRANTIES OF
         MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE AND NONINFRINGEMENT
         WITH RESPECT TO ANY AND ALL OF THE FOREGOING.

9.16     LIMITATION OF LIABILITY. UNLESS RESULTING FROM A PARTY'S WILLFUL
         MISCONDUCT OR EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN THIS AGREEMENT,
         NEITHER PARTY WILL BE LIABLE WITH RESPECT TO ANY SUBJECT MATTER OF THIS
         AGREEMENT UNDER ANY CONTRACT, NEGLIGENCE, STRICT LIABILITY OR OTHER
         LEGAL OR EQUITABLE THEORY FOR (I) ANY INDIRECT, INCIDENTAL, SPECIAL,
         CONSEQUENTIAL OR PUNITIVE DAMAGES OR LOST PROFITS, OR (II) COST OF
         PROCUREMENT OF SUBSTITUTE GOODS, TECHNOLOGY OR SERVICES.

9.17     BINDING EFFECT. As of the Effective Date, this Agreement shall be
         binding upon and inure to the benefit of the Parties and their
         respective permitted successors and permitted assigns.

9.18     NO THIRD PARTY BENEFICIARIES. Except as expressly contemplated herein,
         no Third Party, including any employee of any Party to this Agreement,
         shall have or acquire any rights by reason of this Agreement.

         [THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK]

                                       57

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         IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first set forth above.

         MERCK & CO., INC.                        ALNYLAM HOLDING CO.

         BY: Raymond V. Gilmartin                 BY: /s/ John Maraganore
             __________________________               __________________________
               [NAME]                                   [NAME]

         TITLE: Chairman, President & CEO         TITLE: President and CEO

         DATE:_________________________           DATE:_________________________

         ALNYLAM PHARMACEUTICALS, INC.

         BY: /s/ John Maraganore
             __________________________ 
               [NAME]

         TITLE:  President and CEO

         DATE:_________________________

                                       58

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                                  SCHEDULE 1.8

                           ALNYLAM RNAi PATENT RIGHTS

A.       ALNYLAM Therapeutic RNAi Patent Rights


<TABLE>
<CAPTION>
CASE NO.     FILING DATE    INT. PUB. NO.    SERIAL NO.
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<TABLE>
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[**]* Under ALNYLAM's rights from MIT, Whitehead Institute for Biomedical
Research, and Garching Innovation GmbH.

** Explicitly excluding claims No. 30-47 and the equivalent claims in any patent
applications and patents resulting from this PCT application.

*** Under ALNYLAM's co-ownership rights.

**** Licenses for applicable ALNYLAM Therapeutic RNAi Patent Rights shall be
granted for each specific Therapeutic Collaboration Product under each
Therapeutic Collaboration Product Agreement or MERCK Product Agreement upon the
execution thereof pursuant to Section 3.1.4 or 3.1.6, respectively.

                                       61

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                              SCHEDULE 1.8 (CONT'D)

                           ALNYLAM RNAi PATENT RIGHTS

B.       ALNYLAM Target Identification and Target Validation RNAi Patent Rights

EXCLUDED FROM THESE PATENT RIGHTS ARE THE SHARP, TUSCHL, ZAMORE & BARTEL PATENT
APPLICATION WO 01/75164, AND ITS FAMILY MEMBERS AND THE TUSCHL, ELBASHIR &
LENDECKEL PATENT APPLICATION WO 02/44321 AND ITS FAMILY MEMBERS


<TABLE>
<CAPTION>
CASE NO.     FILING DATE    INT. PUB. NO.    SERIAL NO.
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                                       62

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                                       63

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                                  SCHEDULE 1.45

                                 LIMMER PATENTS


<TABLE>
<CAPTION>
CASE NO.     FILING DATE    INT. PUB. NO.    SERIAL NO.
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                                       64

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any divisions, continuations, continuations-in-part thereof, any patents issuing
thereon and any reissues, reexams, renewals, extensions, supplementary
protection certificates and the like of any such patents or patent applications
and all foreign equivalents thereof

                                       65

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                                  SCHEDULE 1.49

                         MERCK BROAD RNAi PATENT RIGHTS


<TABLE>
<CAPTION>
TITLE           FILING DATE     INT. PUB. NO.   SERIAL NO.
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                                       66

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                                  SCHEDULE 1.54

                    MERCK PRODUCT-SPECIFIC RNAi PATENT RIGHTS

                                      [**]

                                       67

<PAGE>

                                  SCHEDULE 2.1

                        TECHNOLOGY COLLABORATION WORKPLAN

BACKGROUND:

MERCK is interested in developing and exploiting genetic knockdown technologies
to validate potential therapeutic targets in vivo. ALNYLAM is developing RNA
interference (RNAi) technology to use directly as a therapeutic. Both parties
could benefit from a collaborative effort that seeks to improve RNAi technology.
The collaboration will consist of two phases: an optimization phase and an
implementation phase. The aims of this collaboration are:

Phase I: Optimization (Years [**])

1)       Understand the [**] in vitro.

2)       Develop [**] in vivo.

3)       Develop [**].

4)       Develop [**] in vivo. 

5)       [**] in vitro and in vivo [**].

Phase II: Implementation (Years [**])

1)       Continue [**] in vitro. (if necessary)

2)       Apply knowledge [**] in vivo.

3)       Continue [**] in vivo.

4)       Develop [**] in vivo. 

5)       Evaluation of [**] efficacy.

PHASE I

IN VITRO [**] (MERCK AND ALNYLAM)

Aim 1a. Identification of [**] efficacy and specificity [**]

The current rules for [**] of the specific target. Efforts will be made [**].
MERCK proposes to [**] based on MERCK's prior experience. [**] will likely have
[**]. [**] will be designed [**] will be performed by MERCK's [**]. [**] will be
provided by ALNYLAM, who will [**]. [**] will be assessed by [**]. [**] will be
determined by [**] by MERCK. [**] will be quantitated by [**]. In addition, the
[**] will be assessed by [**]. All data will be evaluated by [**] the most [**]
amount [**].

In addition to the [**]indicated above, MERCK will [**]. [**] will be developed
to [**]. This [**] allows [**]. As this system is [**] can be [**]. [**] will be
subjected to [**]. These studies will [**] for in vivo studies, as well as [**]
to subject to [**] in vitro.

                                       68

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Aim 1b. (cont.) [**].

ALNYLAM's [**] will introduce [**]. Such [**]include, but are not limited to,
[**] that may [**] to the [**]. [**]will be subjected to [**]. [**] will
determine whether [**]. [**] of the [**] will determine whether these [**].

         1. [**]

[**] will improve the [**]. This approach will be [**]. [**] will also [**].
[**] will be [**]. [**] will be [**] with the [**]. To this end, we will
determine the [**].

         2. [**]

         [**] will improve the [**]. [**] will include [**].

         3. [**]

         ALNYLAM will also determine the [**] (such as [**] etc.,), [**], on the
         [**] achieved.

                                       69

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IN VIVO OPTIMIZATION (ALNYLAM)

Aim 2. [**] in vivo [**].

The development of [**]. [**] will include [**]. To identify [**], we will
generate [**]s. These will be [**]. The most [**] in vivo is to [**].

[**] that the [**] to the [**] and to the [**] of the [**]. Additionally, the
[**] for the [**]. Finally, the [**]can be [**], allowing for [**] in the [**].

[**] and will be used for [**] will be performed, by MERCK, [**] in vitro [**]
will be obtained. [**] in vitro [**] will be [**] with [**] will be tested for
efficacy in vivo [**]. Initial studies will utilize [**]. [**] activities in Aim
1 of in vitro [**] will be applied to the [**] for in vivo analysis.

For in vivo experiments, techniques will be developed[**]. These [**] techniques
will be developed in consultation with MERCK.

         1. [**]

This [**] is distributed throughout [**] in the [**] in the [**].

         2. [**]

This [**] which is [**] to the [**] in the liver [**] such as [**].

         3. [**]

This [**] and shows [**] in the [**] can be [**] in the [**] can be [**] in the
[**] such as [**] in the [**].

         4. [**]

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This [**] and shows [**] in the [**] can be [**] in these [**] making [**]Recent
published reports have demonstrated in vivo efficacy [**] could be [**], as was
described in the literature, [**].

         5.  [**]

[**] can be generated [**]. Upon [**] can be monitored [**]. As is true for the
above models, the [**].

Aim 3. Identify [**] in vitro and in vivo models.

As a first step, [**] will be tested for their stability in vitro. [**] will be
[**] and possibly [**].

         1. [**]

Will introduce [**] at the end of each strand

         2. [**]

These [**] are more [**] than the [**] having [**] will be [**].

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         3. [**]

[**] are expected to [**]. Appropriate [**]will be placed at the [**].

         4. [**]

Placement of [**] such as [**] and will be [**].

Aim 4a. [**].

Additional [**] will be used to [**] that will [**]. These [**] and will be [**]
with an [**] will be evaluated [**] in vivo.

         1. [**]

[**] is expected to improve [**] will deliver [**] may be required [**].

         2. [**]

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[**] are expected to have [**] is expected to [**]. [**] should be sufficient.

3. [**] will be used to deliver [**] should be sufficient.

Aim 4b. Identify [**] as well as [**]

         [**]

[**] are expected to target [**]. With appropriate [**] such as [**] is
     expected. Similarly, [**] is expected to [**]

         2. [**]

[**] will improve the [**] from the [**].

Aim 5. Correlate [**]effectiveness in vitro and in vivo with [**].

[**] as proposed in Aims 1, 3 and 4 above will be evaluated for [**].

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PHASE II

IN VITRO [**]

Aim 1. Identification of [**]. (Will be continued from Phase I only if
necessary.)

The experiments described in Phase I are designed to cover [**]. Based on the
results of Phase I, it may be de