Investor Alert

Aug. 6, 2020, 7:14 a.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 silencing disease-causing genes, Dicerna's GalXC platform has the potential to address conditions that are difficult to treat with other modalities. Initially focused on hepatocytes, Dicerna has continued to innovate and is exploring new applications of its 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 Novo Nordisk A/S ("Novo"), Roche, Eli Lilly and Company ("Lilly"), Alexion Pharmaceuticals, Inc. (together with its affiliates, "Alexion"), Boehringer Ingelheim International GmbH ("BI"), and Alnylam Pharmaceuticals, Inc. ("Alnylam"). 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 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 GalNAc-mediated 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 and other proprietary RNAi delivery technologies support 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 or diseases with well-characterized genetic targets. 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. Executive Summary Our results of operations for and liquidity and capital resources as of the six months ended June 30, 2020 include the following: In January 2020, we entered into a non-cancelable real property lease agreement for 61,282 square feet of office space at 75 Hayden Avenue in Lexington, Massachusetts. The original term is estimated to commence during the fourth quarter of 2020 and is for 125 months with options to extend the term for two additional successive periods of five years thereafter. The aggregate total fixed rent is approximately $41.8 million. 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, and includes 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 April 2020, Roche selected its first target under the research and development portion of the agreement. Table of Contents 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 proprietary GalXC platform to progress novel therapies for the treatment of liver-related cardiometabolic diseases towards clinical development and commercialization. In February 2020, we issued and sold approximately $40.0 million of shares of our common stock to a single institutional investor through our "at-the-market" sales facility with Cowen and Company, LLC. In this transaction, we sold an aggregate of 2,077,500 shares of common stock at a price of $19.25 per share, resulting in approximately $39.2 million after a deduction of approximately $0.8 million in sales commissions. The shares in the offering were sold pursuant to a shelf registration statement declared effective by the Securities and Exchange Commission ("SEC") on May 31, 2018 and a prospectus supplement filed with the SEC on June 1, 2018. 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. In June 2020, the Food and Drug Administration ("FDA") granted rare pediatric disease designation for nedosiran for the treatment of PH. Under the FDA's rare pediatric disease designation program, the FDA may grant a priority review voucher to a Sponsor who receives a product approval for a "rare pediatric disease." Subject to FDA approval of nedosiran for the treatment of PH, we would be eligible to receive a voucher that may be redeemed to receive priority review for a subsequent marketing application for a different product candidate or which could be sold or transferred. 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. The current supply of Dicerna's investigational medicines continues to be sufficient to support ongoing clinical trials. Based on current evaluations, Dicerna's supply chain continues to appear intact at this time and able to meet expected 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. The following table provides a summary of revenue recognized for the three and six months ended June 30, 2020 and June 30, 2019:

                                        THREE MONTHS ENDED                           SIX MONTHS ENDED
                                             JUNE 30,                                    JUNE 30,
                                        2020           2019          2020               2019
                       Novo         $   2,447       $     -       $  4,052       $            -
                       Roche           20,677             -         39,984                    -
                       Lilly            9,487         2,539         19,069                3,072
                       Alexion          7,063         1,082          9,825                1,503
                       BI                 774         2,061          1,546                4,214
                       Total        $  40,448       $ 5,682       $ 74,476       $        8,789

In addition, in July 2020, we entered into the first amendment to the 75 Hayden Avenue lease. The 75 Hayden amendment expands the square footage leased under the 75 Hayden Avenue lease to contain a total of 91,728 rentable square feet. The 75 Hayden Avenue lease amendment increases monthly base rent by an average of $0.2 million per month.

Status of Dicerna Programs

Our current core GalXC RNAi platform development programs are as follows:

Table of Contents

Aug 06, 2020


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