<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, [**] LICENSED PRODUCTS which are paid by
COMPANY, (ii) [**], (iii) [**], and (iv) [**]. No deductions shall be made for
[**]. NET SALES shall occur on the date of 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

<PAGE>

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

                                                      Alnylam; GI 2716, 2782 ZTM
                                                           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