Investor Alert

May 7, 2020, 5:03 p.m. EDT


(EDGAR Online via COMTEX) -- ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed here. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this section as well as factors described in Part II, Item 1A - "Risk Factors" and "Special Note Regarding Forward-Looking Statements" included elsewhere in this Quarterly Report on Form 10-Q. Overview Dicerna Pharmaceuticals, Inc. ("we", "us," "our," "the Company," or "Dicerna") is a biopharmaceutical company focused on discovering, developing, and commercializing medicines that are designed to leverage ribonucleic acid interference ("RNAi") to selectively silence genes that cause or contribute to disease. Using our proprietary RNAi technology platform, GalXC(TM), Dicerna is committed to developing RNAi-based therapies with the potential to treat both rare and more prevalent diseases. By reducing the level Table o f Contents of disease-causing genes of the liver, Dicerna's GalXC platform has the potential to safely target conditions that are difficult to treat with other modalities. Continually innovating, Dicerna is also exploring new applications of RNAi technology beyond the liver, targeting additional tissues and enabling new therapeutic applications. In addition to our own pipeline of core discovery and clinical candidates, Dicerna has established collaborative relationships with some of the world's leading pharmaceutical companies, including Alnylam Pharmaceuticals, Inc. ("Alnylam"), Novo Nordisk A/S ("Novo"), Roche, Eli Lilly and Company ("Lilly"), Alexion Pharmaceuticals, Inc. (together with its affiliates, "Alexion"), and Boehringer Ingelheim International GmbH ("BI"). Between Dicerna and our collaborative partners, we currently have more than 20 active discovery, preclinical, or clinical programs focused on rare, cardiometabolic, viral, chronic liver, and complement-mediated diseases, as well as neurodegeneration and pain. All of our GalXC drug discovery and development efforts are based on the therapeutic modality of RNAi, a highly potent and specific mechanism for silencing the activity of a targeted gene. In this naturally occurring biological process, double-stranded RNA molecules induce the enzymatic destruction of the messenger ribonucleic acid ("mRNA") of a target gene that contains sequences that are complementary to one strand of the therapeutic double-stranded RNA molecule. Our approach is to design proprietary double-stranded RNA molecules that have the potential to engage the enzyme Dicer and initiate an RNAi process to silence a specific target gene. Our GalXC RNAi platform utilizes a proprietary structure of double-stranded RNA molecules. For our current clinical programs, our GalXC RNAi platform has been configured for subcutaneous delivery to the liver. Due to the enzymatic nature of RNAi, a single GalXC molecule incorporated into the RNAi machinery can destroy hundreds or thousands of mRNAs from the targeted gene. The GalXC RNAi platform supports Dicerna's long-term strategy to retain a full or substantial ownership stake in our programs, subject to the evaluation of potential licensing opportunities as they may arise, and to invest internally in programs for diseases with focused patient populations, such as certain rare diseases. These certain rare disease programs, which include our nedosiran and A1AT product(s) programs, represent opportunities that we believe carry a relatively higher probability of success, with genetically and molecularly defined disease markers, high unmet medical need, a limited number of centers of excellence to facilitate reaching these patients, and the potential for more rapid clinical development paths to regulatory approval. For more complex diseases with multiple gene dysfunctions and/or larger patient populations, we plan to pursue collaborations that can provide the enhanced scale, resources, and commercial infrastructure required to maximize these prospects. We currently view our operations and manage our business as one segment which encompasses the discovery, research, and development of treatments based on our RNAi technology platform. The COVID-19 pandemic has resulted in slower enrollment in our clinical trials, and we have undertaken efforts to mitigate potential impacts to our business including those related to conducting clinical trials and managing our supply chain. We believe we have sufficient capital to fund the execution of our current clinical and operating plans into 2023. Current supply of Dicerna's investigational medicines is sufficient to support ongoing clinical trials. Based on current evaluations, Dicerna's supply chains continue to appear intact at this time to meet our foreseeable 2020 clinical, nonclinical, and chemistry, manufacturing, and control ("CMC") supply demands across all programs. We have undertaken efforts to mitigate potential future impacts to the supply chain by increasing our stock of critical starting materials required to meet our needs and our collaborative partners' needs through mid-2021 and by identifying and engaging alternative suppliers. We continue to be alert to the potential for disruptions that could arise from COVID-19 and remain in close contact with suppliers. Please refer to the "Financial Operations Overview" section below for specific anticipated effects on our financial statement line items. Executive Summary Our results of operations for and liquidity and capital resources as of the three months ended March 31, 2020 include the following: In January 2020, we entered into a 125-month non-cancelable real property lease agreement for 61,282 square feet of office space in Lexington, Massachusetts. We currently anticipate this lease commencing during the fourth quarter of 2020. In January 2020, we received a $200.0 million upfront payment from Roche associated with a collaboration agreement executed in October 2019 to which we were a party. The agreement with Roche is to progress RG6346, the investigational therapy in Phase 1 clinical development, toward worldwide development and commercialization as well as an option for the companies to collaborate in the discovery, development, and commercialization of oligonucleotide therapeutics intended for the treatment of chronic hepatitis B virus ("HBV") infection. In January 2020, we received a $175.0 million upfront payment from Novo associated with a collaboration agreement executed in November 2019 to which we were a party. The agreement with Novo is for the use of the Company's Table o f Contents proprietary GalXC(TM) platform to progress novel therapies for the treatment of liver-related cardiometabolic diseases towards clinical development and commercialization. Revenue from collaborative arrangements during the three months ended March 31, 2020 reflects $19.3 million, $9.6 million, $2.7 million, $1.6 million, and $0.8 million from the Roche, Lilly, Alexion, Novo, and BI collaborations, respectively, compared to $2.2 million, $0.5 million, and $0.4 million related to the BI, Lilly, and Alexion collaborations, respectively, during the three months ended March 31, 2019. In addition, in April 2020, we and Alnylam entered into a collaboration and license agreement (the "Alnylam Collaboration Agreement") and a patent cross-license agreement (the "Alnylam Cross-License Agreement"). Under the Alnylam Collaboration Agreement, we and Alnylam will work to develop and commercialize investigational RNAi therapeutics for the treatment of alpha-1 antitrypsin ("A1AT") deficiency-associated liver disease ("alpha-1 liver disease"). Under the Alnylam Cross-License Agreement, we and Alnylam will cross-license our respective intellectual property related to Alnylam's lumasiran and our nedosiran investigational programs for the treatment of primary hyperoxaluria ("PH"). The non-exclusive license agreement provides for Alnylam to pay mid- to high-single-digit royalties to Dicerna based on global net sales of lumasiran and for Dicerna to pay low-single-digit royalties to Alnylam on global net sales of nedosiran. The non-exclusive cross-license agreement ensures that each party has the freedom to develop and commercialize its respective product candidate. Development Programs In choosing which development programs to internally advance, we apply the scientific, clinical, and commercial criteria that we believe allow us to best leverage our GalXC RNAi platform and maximize value. Using our GalXC RNAi technology, and applying the criteria of our development focus, we have created a pipeline of core therapeutic programs for development by Dicerna. For opportunities that were not selected as a core program opportunity, we have sought partners to fund the discovery, and subsequently drive the development of, these non-core opportunities in exchange for upfront payments, milestone payments, royalties on product sales, and potentially other economic and operational arrangements. Our current collaborations with Novo, Lilly, Alexion, and BI resulted from this effort. For core programs targeting rare diseases, we intend to develop these programs internally through approval, subject to partnership opportunities that arise, such as our collaboration with Alnylam. For core programs targeting larger populations, we may seek development partners, such as our collaboration with Roche on RG6346, under various economic and operational arrangements. Together, our core program pipeline and our pipeline of non-core collaborative programs constitute a broad and growing therapeutic pipeline that we believe may result in multiple valuable approved products based on our GalXC technology. In addition to the programs listed in our pipeline, we are exploring a variety of potential programs involving gene targets in the liver, CNS, and other tissues, which we may elevate in the future to be either a core program or a non-core collaborative program. Under our collaborations with Novo, Roche, and Lilly, our collaborators have rights to nominate additional programs for discovery by Dicerna and subsequent development by the nominating collaborator, and which will become part of our non-core pipeline. Our four core programs are: nedosiran for the treatment of PH, RG6346 for the treatment of HBV infection, DCR-A1AT and ALN-AAT02 for the treatment of alpha-1 liver disease, and a program for the treatment of a common disease involving the liver. We conduct clinical trials in various countries around the world, including the U.S. and other areas heavily impacted by the COVID-19 pandemic. As a result, and based on the most recent updates from clinical sites impacted by these measures, the Company has reevaluated its previous expectations related to clinical development milestones. The tables below set forth the state of development of our various GalXC RNAi platform product candidates as of May 7, 2020. [[Image Removed: drna-20200331_g1.jpg]] Table o f Contents [[Image Removed: drna-20200331_g2.jpg]]

Status of Dicerna Programs

May 07, 2020

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