`Unterminated string constant` error for the valid code about babylon HOT 1 CLOSED

This one was not obvious to me at first either, but this isn't a Babylon issue, you're getting just what you asked for, whether it's what you intended or not :P

The backslashes in your example are never making it to Babel, they are getting processed by the template literal up front. You'd either need

var code = `
var multilinestring = "x\\n\\
#";
`

or

var code = String.raw`
var multilinestring = "x\n\
#";
`

from babylon.