DICERNA PHARMACEUTICALS, INC. 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. OverviewDicerna 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 silence selectively genes that cause or contribute to disease. Using our proprietary GalXC™ and GalXC-Plus™ RNAi technologies, 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 disease-causing genes in the liver, Dicerna has continued to innovate and is exploring new applications of its RNAi technology with GalXC-Plus, which expands the functionality and application of our flagship liver-based GalXC technology to tissues and cell types outside the liver and has the potential to treat diseases across multiple therapeutic areas. 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 cardiometabolic, viral, chronic liver, and complement-mediated diseases, as well as neurodegenerative diseases and pain. Most of our drug discovery and development efforts are based on the therapeutic modality of RNAi, a highly potent, natural, and specific mechanism that can be directed to reduce expression of a target gene. In this naturally occurring biological process, a short, synthetic, double-stranded RNA duplex induces the enzymatic destruction of the messenger ribonucleic acid ("mRNA") of a target gene that contains sequences complementary to one strand of a double-stranded RNA. Our approach is to design proprietary RNA molecules that have the potential to engage the enzyme Dicer and direct the endogenous cellular RNAi machinery to silence a specific therapeutic target gene. Our GalXC technology utilizes a proprietary GalNAc-mediated conjugate to cause the liver to efficiently internalize our synthetic RNA molecules. In contrast, our GalXC-Plus technology incorporates new chemistries and secondary structures designed to enable the targeting of genes in tissues and cell types beyond the liver. Our current clinical programs utilize the GalXC technology. Our GalXC-Plus technology utilizes modified RNA structures and various fully synthetic conjugated ligands for delivery to non-liver tissues and is used in a number of our preclinical programs. Due to the enzymatic nature of RNAi, a single GalXC or GalXC-Plus 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. 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. 30 -------------------------------------------------------------------------------- Table of Contents Executive Summary The following table provides a summary of revenue recognized for the three and nine months endedSeptember 30, 2021 (amounts in thousands): THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, 2021 SEPTEMBER 30, 2021 Novo $ 20,276 $ 33,588 Roche 18,563 58,408 Lilly 20,695 42,993 Alexion 3,220 13,524 BI 200 3,381 Total $ 62,954 $ 151,894
Payments received from our collaboration partners during the three and nine
months ended
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2021 SEPTEMBER 30, 2021
Novo $ 31 $ 27,638
Roche 977 28,829
Lilly 577 11,356
Alexion 177 5,386
BI 225 3,317
Total $ 1,987 $ 76,526
Our results of operations for and liquidity and capital resources as of the nine
months ended September 30, 2021 include the following:
• In February 2021 , Lilly notified us of their decision to extend for an
additional year the initial research collaboration term for the extrahepatic
targets subject to our collaboration and license agreement with Lilly (the
"Lilly Collaboration Agreement"). Under the Lilly Collaboration Agreement, Lilly
has the option to extend the three-year initial research collaboration term for
these extrahepatic targets for up to three consecutive one-year periods. This
first extension allows the research program for these extrahepatic targets under
the Lilly Collaboration Agreement to continue through October 2022 .
•In March 2021 , Roche initiated RG6346 in a Roche-sponsored Phase 2 combination
trial for the treatment of chronic hepatitis B ("HBV") infection, which entitled
us to a $25.0 million milestone payment under our collaboration and license
agreement with Roche (the "Roche Collaboration Agreement"). We received this
payment in the second quarter of 2021.
•In April 2021 , we announced that Royalty Pharma plc ("Royalty Pharma") had
acquired our royalty interest in Alnylam's OXLUMO (lumasiran) for an upfront
cash payment of $180.0 million and up to $60.0 million in contingent sales-based
milestone payments.
•In May 2021 , we announced that BI had accepted a GalXC RNAi candidate for
advancement under the collaborative research and license agreement with BI (the
"BI Agreement") as amended and supplemented by the Additional Target Agreement
(the "ATA"). Acceptance of the DCR-LIV2 compound as a development candidate
triggered a single-digit multimillion-dollar milestone payment to Dicerna, which
we received and recognized in full in the second quarter of 2021.
•In May 2021 , the U.S. Food and Drug Administration ("FDA") accepted the
Investigational New Drug ("IND") application filed by Lilly for LY3819469,
targeting the LPA gene as a potential treatment for cardiometabolic diseases,
triggering a $10.0 million payment to Dicerna under the Lilly Collaboration
Agreement. We received this payment in the second quarter of 2021.
•We believe we have sufficient capital, along with anticipated milestone and
other payments from existing collaborations, to fund the execution of our
current clinical and operating plans into 2025.
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COVID-19 Update
On March 11, 2020 , the World Health Organization ("WHO") declared the spread of
COVID-19 a pandemic. The global spread of COVID-19 or its variants, and measures
taken in response to the pandemic or the easing of such measures, which continue
to evolve, has created and will likely continue to create significant
volatility, uncertainty, and economic disruption worldwide. Governments in
affected regions have implemented, and may continue to implement, various
measures in response to the pandemic, including safety precautions which include
quarantines, travel restrictions, business closures and operational
restrictions, and other public health safety measures.
During 2020, we were impacted by mandatory work from home edicts directed by
local governments in the jurisdictions in which we operate. However, essential
work exemptions continued to permit critical research and development and
laboratory activities for limited personnel. These exemptions enabled some
continued discovery research and activities supporting our collaborative
agreements and our own programs. In response to the COVID-19 pandemic and
measures introduced by these local governments, we implemented additional
workplace protocols to increase the safety of our essential workers, and as such
edicts eased, of those employees choosing to return to our offices during the
COVID-19 pandemic. Externally, the COVID-19 pandemic has resulted in some
challenges impacting our preclinical studies, such as in reserving slots, CRO
staffing re-prioritization, and accessing non-human primates ("NHPs") and
laboratory supplies for such studies, as well as some challenges impacting our
clinical trials, such as slower site initiation/activation and enrollment, CRO
staffing re-prioritization, and mandatory lockdowns in certain jurisdictions in
which our clinical trials are planned or operate.
We have undertaken efforts to mitigate potential impacts to our business
including those related to conducting clinical trials and managing our supply
chain. Our operating results could be affected by delays in or suspensions of
clinical development of our product candidates associated with COVID-19, which
have impacted and may continue to impact global healthcare systems, our
preclinical studies and clinical trials, such as we have seen in the nedosiran
and belcesiran studies, as well as delays in the supply chain related to
COVID-19. For example, in 2020, there were delays related to several nedosiran
PHYOX programs and the belcesiran clinical trial in healthy volunteers as a
result of COVID-19. As a result, and based on the most recent updates from
clinical sites impacted by COVID-19 and precautionary measures related to the
pandemic, we regularly evaluate our expectations related to clinical development
milestones. We continue to be alert to the potential for disruptions that could
arise from COVID-19 or its variants and monitor the FDA's and other health
authorities' guidance for the conduct of clinical trials during this time.
We conduct clinical trials in various countries around the world, including the
United States ("U.S.") and other areas heavily impacted by the ongoing COVID-19
pandemic. The current supply of our investigational medicines is sufficient to
support ongoing and planned clinical trials. Based on current evaluations, our
supply chain continues to appear intact to meet at least the next 18 months of
clinical, nonclinical, commercial, 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 the needs of our
collaboration partners into 2023 and by identifying and engaging alternative
suppliers. We continue to be alert to the potential for disruptions that could
arise from COVID-19 or its variants and remain in close contact with suppliers.
It is difficult to predict what the lasting impact of the pandemic will be, and
what the impact might be if we or any of the third parties with whom we engage
were to experience additional shutdowns or other prolonged business disruptions.
Our ability to conduct our business in the manner and on the timelines presently
planned could have a material adverse impact on our business, results of
operations, and financial condition. In addition, depending on the duration and
impact of the recurrence or resurgence of COVID-19 cases or continued evolution
of further strains of COVID-19 or its variants, and depending on where the
infection rates are highest, and including the ability of regulators to continue
ensuring the timely review and approval of regulatory applications, our
business, results of operations, and financial condition may be negatively
impacted. We will continue to monitor developments as we deal with the
disruptions and uncertainties relating to the ongoing COVID-19 pandemic. Please
refer to the "Financial Operations Overview" section below for specific
anticipated effects on our financial statement line items.
Our GalXC Platform
The GalXC RNAi Platform
Dicerna's GalXC platform consists of our liver-targeted GalXC technology and our
GalXC-Plus technology for tissues outside the liver. Each utilizes a set of
proprietary double-stranded RNA structures capable of inducing RNAi and
associated chemical modifications and additions to these structures that enhance
their properties and help confer useful "drug-like" properties. Our
RNAi-inducing RNA structures consist of two strands of RNA. One of these
strands, called the guide strand, is complementary to the mRNA sequence of the
gene one is seeking to inhibit. The other strand, called the passenger strand,
includes sequences complementary to the guide strand, forming a double-stranded
RNA duplex with it. In the case of our GalXC and GalXC-Plus technologies,
additional sequences may be added to the passenger strand, including a four-base
sequence, known as a tetraloop, which is designed to enhance
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stability and engineer out immunostimulatory activity and can serve as an
attachment point for various chemical additions that can facilitate delivery to
diverse tissues.
GalXC RNAi Technology Targeted to the Liver
To target the liver, we conjugate the tetraloop region of our GalXC molecules to
a simple natural sugar, GalNAc, that is specifically recognized by a receptor on
the surface of liver hepatocytes. This leads to internalization, ultimately
enabling the GalXC molecules to access the RNAi machinery inside the hepatocyte
and deliver our targeted oligonucleotide to the RNA-induced silencing complex
("RISC"). Due to the efficiency of this process, a full human dose may be
administered via a single subcutaneous injection.
GalXC-Plus RNAi Technology for Tissues Outside the Liver
For delivering to tissues outside the liver and/or cell types other than
hepatocytes, we have continued to innovate our GalXC platform using modified
structures, chemistries, and conjugated delivery moieties. Referred to as
GalXC-Plus, these proprietary technological advances extend our expertise in
RNAi silencing to address new tissues and organs outside the liver and to
non-hepatocyte cells in the liver, while retaining key pharmacological features
from GalXC.
Development Approach
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 and GalXC-Plus RNAi technologies and maximize value. Using
our GalXC RNAi technology, and applying the criteria of our development focus,
we have created a pipeline of core liver-targeted therapeutic programs for
development by Dicerna. For opportunities that were not selected as core program
opportunities, 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.
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 and GalXC-Plus technologies.
In addition to the programs listed in our pipeline, we are exploring a variety
of potential programs involving gene targets in diverse tissues addressable with
our GalXC and GalXC-Plus technologies. Some of these programs may be elevated 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, which will become part of our
collaborative pipeline. In the case of our collaboration with Novo, we retain
rights to opt in to deeper participation, including enhanced economic rights, at
defined points in clinical development, for two programs nominated by Novo.
Our four current core GalXC development programs are: nedosiran for the
treatment of primary hyperoxaluria ("PH"), RG6346 for the treatment of chronic
HBV infection, belcesiran (formerly DCR-A1AT) for the treatment of alpha-1
antitrypsin deficiency-associated liver disease ("AATLD"), and DCR-AUD for the
treatment of alcohol use disorder ("AUD").
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The table below sets forth the stages of development of our various GalXC and
GalXC-Plus RNAi technology product candidates as of November 9, 2021 :
[[Image Removed: drna-20210930_g2.jpg]]
Research
We continue to advance our GalXC RNAi platform as it is applied to therapeutic
targets expressed in hepatocytes using GalNAc conjugates for both our
collaborative research and development programs and our internal liver-targeted
programs. All current Dicerna collaborations include one or more liver-targeted
applications of the GalXC RNAi technology.
In addition, we are exploring applications of our GalXC-Plus RNAi technology
against therapeutic gene targets expressed in tissues other than the liver,
including targets expressed in the central nervous system ("CNS"), muscle
tissue, adipose tissue, tumor-associated immune cells, and other tissues. We
have achieved significant gene target knockdown (i.e., reduction in the
expression of target mRNA activity and disease biomarker activity) in multiple
cell types and regions of the CNS and other extrahepatic tissues, in both
rodents and NHPs. These extrahepatic applications are based on proprietary
modifications to our well-characterized, clinical-stage GalXC platform that
enable extrahepatic delivery and pharmacological activity.
In August 2020 , we first presented preclinical data related to our GalXC-Plus
RNAi technology in the CNS, skeletal muscle, and adipose tissues. Results from
preclinical studies demonstrated consistent and durable CNS-wide target mRNA
knockdown using novel constructs regardless of route of administration
(intrathecal [IT] or intracisterna magna [ICM]), and reduction in target mRNA in
skeletal muscle and adipose tissue using optimized chemistries, resulting in
equivalent and potentially highly durable target knockdown regardless of dosing
regimens.
In March 2021 , we presented new preclinical data related to our GalXC-Plus
technology demonstrating its potential to deliver deep and sustained mRNA
knockdown against prespecified gene targets across the CNS and to specific CNS
cell types. Data from a preclinical mouse study showed that a single dose of an
unconjugated GalXC-Plus molecule engineered to silence mRNA produced by the
ALDH2 gene, a widely occurring and common genetic test target, resulted in
dose-dependent reductions of up to 92% knockdown in target mRNA across the CNS
that lasted through the trial conclusion at 28 days. GalXC-Plus delivered
similar mRNA reductions in NHP studies after a single dose, resulting in up to
90% target mRNA silencing after 28 days. There were no adverse observations for
any GalXC-Plus cohort in these trials. Additional preclinical data demonstrated
the degree and distribution of GalXC-Plus silencing of ?-tubulin III (Tubb3
gene; expressed in neurons and associated with various cancers) and two
undisclosed gene targets expressed by astrocytes and oligodendrocytes,
respectively, using unconjugated and various conjugated GalXC-Plus payloads:
•Oligodendrocytes: There was a clear reduction of target mRNA in
oligodendrocytes across the brain and spinal cord of rodents following a single,
lumbar intrathecal or intracisternal GalXC-Plus dose with up to 80% target mRNA
silencing after seven days. In NHPs, there was a clear dose-related relationship
between GalXC-Plus intracisternal administration and target mRNA reduction with
up to 85% target mRNA reduction maintained for approximately three months. There
were no adverse observations for any GalXC-Plus cohort in these trials.
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•Astrocytes: GalXC-Plus demonstrated a clear reduction in target mRNA in mouse
astrocytes after a single lumbar intrathecal injection. An ongoing preclinical
study also shows durable control of target mRNA expression, with up to 80%
target mRNA reduction maintained for at least 160 days. The durability in
rodents was independent of the initial magnitude of target knockdown.
•Neurons: The flexibility of the GalXC-Plus technology enabled additional
conjugations to optimize delivery to neuronal cells, resulting in clear,
CNS-wide reductions (up to 95%) in neuronal-specific Tubb3 mRNA after a single
lumbar intrathecal dose in mice. Comparisons of target knockdown potency across
astrocyte and neuronal cells using multiple GalXC-Plus conjugate modifications
indicated the potential for complementary and tunable knockdown across multiple
CNS cell types.
Status of Dicerna Programs
We conduct clinical trials in various countries around the world, including the
U.S. and other areas heavily impacted by the ongoing COVID-19 pandemic. Given
the fluid nature of the COVID-19 pandemic and its variants, the measures
implemented by governments in these countries and actions taken by clinical
trial sites continue to evolve. As a result, and based on the most recent
updates from clinical sites impacted by COVID-19 and precautionary measures
related to the ongoing pandemic, we regularly evaluate our expectations related
to clinical development milestones.
As a result, our current status and expected upcoming milestones for our core
GalXC RNAi platform development programs are as follows:
Nedosiran for Primary Hyperoxaluria
Nedosiran is the only RNAi drug candidate evaluated in clinical trials as a
potential treatment for PH type 1 ("PH1"), PH type 2 ("PH2"), and PH type 3
("PH3") and is our most advanced product candidate utilizing the proprietary
GalXC RNAi technology platform. PH is a family of ultra-rare, life-threatening
genetic disorders that initially manifest with complications in the kidneys.
These genetic mutations cause enzyme deficiencies that result in the
overproduction of a substrate called oxalate. Abnormal production and
accumulation of oxalate leads to recurrent kidney stones, diffuse deposits of
calcium oxalate in the kidneys (nephrocalcinosis), and chronic kidney disease
that may progress to end-stage renal disease requiring intensive dialysis.
Genetic studies suggest approximately 8,500 people in the U.S. are affected by
PH, and researchers estimate that more than 80% of patients remain undiagnosed.
The FDA granted Breakthrough Therapy Designation to nedosiran for the treatment
of patients with PH1. There is currently only one approved therapy available
specifically for the treatment of patients with PH1.
As PH is characterized by overproduction of oxalate in the liver, patients with
PH are predisposed to the development of recurrent urinary tract (urolithiasis)
and kidney (nephrolithiasis) stones, composed of calcium oxalate crystals formed
from the excess oxalate. Stone formation is accompanied by nephrocalcinosis of
some patients with PH, which produces tubular toxicity, inflammation, and renal
damage. This injury is compounded by the effects of renal calculi-related
obstruction, frequent superimposed infections, and damage due to procedures
needed to relieve stone-related obstruction. Compromised renal function
eventually results in the accumulation of oxalate in a wide range of organs
including the skin, bones, eyes, and heart. In the most severe cases, symptoms
start in the first year of life. A combined liver-kidney transplant may be
undertaken to resolve PH1 or PH2, but it is an invasive solution with limited
availability and high morbidity that requires lifelong immune suppression to
prevent organ rejection.
PH encompasses three genetically distinct, autosomal-recessive, inborn errors of
glyoxylate metabolism characterized by the overproduction of oxalate. PH1, PH2,
and PH3 are each characterized by a specific enzyme deficiency. PH1 is caused by
a deficiency of glyoxylate-aminotransferase, PH2 is caused by a deficiency of
glyoxylate reductase/hydroxypyruvate reductase, and PH3 is caused by a
deficiency of 4-hydroxy-2-oxoglutarate aldolase. The last step in the production
of oxalate in the liver involves the enzyme product of the LDHA gene. Our
nedosiran product candidate seeks to block production of the lactate
dehydrogenase enzyme by silencing the LDHA gene.
PHYOX™1 Single-Ascending-Dose Study
Data from the completed PHYOX1 trial, a Phase 1 single-ascending-dose study of
nedosiran in healthy volunteers and study participants with PH1 or PH2, showed
that nedosiran was generally well tolerated in healthy volunteers and PH
participants, and no serious safety concerns were identified in this study. In
addition, nedosiran administration was associated with normalization or
near-normalization of urinary oxalate ("Uox") levels in 14 of 18 (78%)
participants with PH1 or PH2 following a single dose. We define normal and
near-normal (1.3x normal) Uox as below 0.46 mmol/1.73m2 BSA/24 hr and from 0.46
to 0.6 mmol/1.73m2 BSA/24 hr, respectively.
PHYOX2 Multidose, Double-Blind, Randomized, Placebo-Controlled Pivotal Trial
PHYOX2 was a Phase 2 multidose, double-blind, placebo-controlled pivotal trial
designed to evaluate the efficacy, safety, and tolerability of nedosiran over
six months in participants aged six years and older who have PH1 or PH2. This
global trial includes
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countries across North America , Europe , and other regions, including Japan ,
Australia, and New Zealand . Participants were randomized 2:1 to a fixed monthly
dose of nedosiran or placebo administered once monthly by subcutaneous
injection. The primary endpoint of the study was the percent change from
baseline in area under the curve of 24-hour Uox excretion between Days 90 and
180. The key secondary endpoint was percentage of PH1 and PH2 patients achieving
normalization or near-normalization on at least two consecutive visits from Day
90 to Day 180.
In August 2021 , we announced positive top-line results from the pivotal PHYOX2
clinical trial of nedosiran. Nedosiran achieved the primary endpoint in the
PHYOX2 trial, demonstrating a statistically significant reduction from baseline
in Uox excretion compared to placebo (p<0.0001). The study also achieved the key
secondary endpoint, with a significantly higher proportion of patients
administered nedosiran achieving and sustaining normal or near-normal Uox at two
or more consecutive visits after Day 90 compared to placebo (p=0.0025). Uox
reductions were significant in participants with PH1 while participants with PH2
(5 nedosiran and 1 placebo) showed inconsistent results in this trial. Nedosiran
was generally well tolerated in the study with an overall adverse event profile
consistent with previously reported data from PHYOX trials.
PHYOX3 Long-Term, Multidose, Open-Label Extension Study
Following positive Phase 1 data from PHYOX1 in 2019, we received clearance to
proceed with the pivotal trial (PHYOX2) and PHYOX3, a long-term, multidose,
open-label, extension study of nedosiran in PH. Unlike the PHYOX2 trial, which
requires screening and enrollment of new participants, patients with intact
renal function are permitted to transition into the PHYOX3 trial from any
previous nedosiran trial in which they have participated and have completed.
The primary endpoint of PHYOX3 is to evaluate the impact of monthly nedosiran
administration on the annual rate of decline in estimated glomerular filtration
rate, a measure of kidney function. The PHYOX3 trial will also evaluate the
long-term effect of nedosiran on Uox excretion, new stone formation, progression
of nephrocalcinosis, and the potential to enable the gradual decrease or
elimination of patients' supportive hyperhydration therapies.
PHYOX4 Single Dose, Randomized, Placebo-Controlled, Double-Blind Trial
The PHYOX4 trial was a Phase 1 randomized, placebo-controlled, double-blind
multicenter study designed to evaluate the safety and tolerability of a single
subcutaneous dose of nedosiran compared to placebo in patients with PH3.
Enrollment in the PHYOX4 trial began in January 2021 and the first patient was
dosed in February 2021 . We completed dosing in June 2021 .
In October 2021 , we announced top-line results from the PHYOX4 clinical trial of
nedosiran. Nedosiran achieved the primary endpoint in the PHYOX4 trial,
demonstrating safety and tolerability results consistent with previously
reported studies in the PHYOX clinical development program. Patients
administered nedosiran also showed a trend in Uox reductions; however, these
reductions did not meet the prespecified secondary efficacy endpoint criteria of
a 30% decrease from baseline in 24-hour Uox excretion on two consecutive visits.
All reported adverse events ("AEs") were mild and determined to be unrelated to
nedosiran treatment. No serious AEs were reported in this study.
Additional PHYOX Trials: PHYOX7, PHYOX8, and PHYOX-OBX
At this time, the status of additional PHYOX trials is as follows:
•PHYOX7: Enrollment in a study of patients with PH1 or PH2 and severe renal
impairment, including those on dialysis, began in the first quarter of 2021 and
patient dosing is underway.
•PHYOX8: An open-label study of patients with PH1 or PH2 aged 0-5 years with
relatively intact renal function is ongoing.
•PHYOX-OBX: Enrollment in this observational study began in the third quarter of
2021 in participants with PH3 to evaluate the association between Uox excretion
and the rate of kidney stone formation.
Other Key Nedosiran Activities
In August 2021 , we announced that we were refining our nedosiran strategy to
focus on seeking approval for nedosiran in PH1 and our plans to pursue global
out-licensing opportunities for nedosiran.
We remain focused on submitting a New Drug Application ("NDA") to the FDA for
nedosiran in PH1. Subject to ongoing pre-NDA interactions with the FDA, we are
adjusting our planned submission content and currently expect the timing for
submission of the NDA to move from the fourth quarter of this year to the first
quarter of 2022. As there is currently an approved therapy for the treatment of
PH1, we do not anticipate a priority review for nedosiran.
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RG6346 for Chronic Hepatitis B Virus Infection
RG6346 is our GalXC RNAi product candidate for the treatment of chronic HBV
infection. HBV is the world's most common serious liver infection and affects an
estimated 300 million people worldwide. Chronic HBV infection is characterized
by the presence of the HBV surface antigen ("HBsAg") for six months or more.
We are conducting a Phase 1 randomized, placebo-controlled, double-blind study
to evaluate the safety and tolerability of RG6346 in healthy volunteers and in
patients with non-cirrhotic chronic HBV. Secondary objectives of the study
include characterization of the pharmacokinetic profile of RG6346 and evaluation
of preliminary pharmacodynamic effects on markers of HBV antiviral efficacy,
including reductions of HBsAg and HBV DNA levels in blood. The Phase 1 clinical
trial is divided into three phases or groups:
•Group A is a single-ascending-dose arm in which 30 healthy volunteers received
a dose of RG6346.
•Group B is a single-dose arm in which eight participants with chronic HBV who
are naïve to nucleoside analog ("NUC") therapy received a 3.0 mg/kg dose of
RG6346 or placebo.
•Group C is a multiple-ascending-dose arm in which RG6346 (1.5, 3.0, or 6.0
mg/kg) or placebo was administered to 18 participants with chronic HBV who are
already being treated with NUCs.
In an effort to be optimally positioned to develop and commercialize RG6346 in
combination with other novel drugs, we entered into the Roche Collaboration
Agreement in October 2019 . Under the terms of the agreement, we are leading the
development of RG6346 through the current Phase 1 trial. Roche intends to
further develop RG6346 and initiated RG6346 in a Roche-sponsored Phase 2
combination trial for the treatment of chronic HBV infection in March 2021 . The
Phase 2 platform trial will evaluate the efficacy and safety of RG6346 in
combination with multiple additional agents with novel mechanisms of action,
including standard of care nucleos(t)ide therapy and in triple combinations with
pegylated interferon alfa-2a, Roche's novel investigational agents, core protein
allosteric modulator ("CpAM") or TLR7 agonist.
Belcesiran (DCR-A1AT) for Alpha-1 Antitrypsin Deficiency-Associated Liver
Disease
Our GalXC RNAi product candidate for the treatment of AATLD, belcesiran, is
currently being tested in Phase 1 and Phase 2 clinical studies. AAT deficiency
is a rare genetic condition caused by mutations in the SERPINA1 gene that
results in disease of the liver and lungs. AAT protein is produced in
hepatocytes and circulates in the bloodstream; AAT protects the lungs and other
parts of the body by neutralizing neutrophil elastase, an enzyme that fights
infection but can also damage healthy tissues if not adequately regulated by
AAT.
The majority of people with severe AAT deficiency are homozygous for the Z
allele (PiZZ genotype). In the liver, misfolding of the mutant Z-AAT protein
causes the protein to aggregate in liver cells, leading to liver injury,
including fibrosis, cirrhosis, and hepatocellular carcinoma. Recent epidemiology
research indicates that approximately 120,000 individuals in Europe and 63,000
individuals in the U.S. carry this ZZ genotype; the genotype occurs most
frequently in individuals of Northern European descent. An estimated 10% or more
of adults with AAT deficiency develop clinically meaningful liver disease, and
recent research suggests that AATLD is both underrecognized and underdiagnosed.
People with AAT deficiency may also develop lung disease, including emphysema.
AATLD can affect infants, children, and adults. Liver transplantation is
currently the only effective treatment for AATLD.
Our Phase 1 trial of belcesiran is an ongoing placebo-controlled study designed
to evaluate the safety and tolerability of single doses of belcesiran when
administered to healthy adult participants. Secondary objectives are to
characterize the pharmacokinetic profile of belcesiran and to evaluate the
preliminary pharmacodynamic effects on serum AAT protein concentrations.
Data from an interim analysis announced in July 2021 of the four completed
active-treatment dose cohorts (0.1, 1.0, 3.0, and 6.0 mg/kg) showed
dose-dependent reductions in serum AAT with administration of a single dose of
belcesiran. In this analysis, belcesiran was found to have an acceptable safety
profile and was generally well tolerated. Dosing in the final 12.0 mg/kg dose
cohort in this trial has been completed. We plan to present data from this Phase
1 study at the American Association for the Study of Liver Diseases ("AASLD")
The Liver Meeting® taking place November 12-15, 2021 .
We initiated dosing in the Phase 2 trial of belcesiran in June 2021 . The
ESTRELLA Phase 2 trial is a randomized, multidose, double-blind,
placebo-controlled trial evaluating the safety, tolerability, pharmacokinetics,
and pharmacodynamics of belcesiran in adult participants with AATLD. The study
includes a 24-week cohort and a 48-week cohort to be conducted in parallel, each
with up to 27 participants who have a diagnosis of PiZZ-type AAT deficiency and
AATLD.
DCR-AUD for Alcohol Use Disorder
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We are currently pursuing development of DCR-AUD, an investigational therapy for
subcutaneous administration based on Dicerna's GalXC technology, for the
treatment of alcohol use disorder ("AUD"). DCR-AUD is designed to specifically
knock down ALDH2 gene expression in the liver, which plays a key role in alcohol
metabolism. The targeted ALDH2 mRNA knockdown in the liver by DCR-AUD may help
individuals with AUD avoid harmful levels of alcohol use.
AUD is a chronic condition characterized by compulsive alcohol use, loss of
control over alcohol use, and a negative emotional state when not using alcohol.
A range of medical, psychological, social, economic, and personal problems are
associated with AUD. It is estimated that more than 14 million adults in the
U.S. are living with AUD. With nearly 100,000 deaths annually, it is one of the
leading preventable causes of death in the U.S. Globally, AUD affects
approximately 283 million people, according to the WHO .
AUD is often undiagnosed and untreated. Of the more than 14 million individuals
in the U.S. with AUD, fewer than 1.4 million received AUD treatment of any kind,
including psychosocial support, and only a fraction of these received medication
to treat their disorder. This presents a significant opportunity for a
therapeutic option that can help those with AUD achieve their individual
treatment goals.
We received IND clearance from the FDA for DCR-AUD and initiated a Phase 1 trial
in September 2021 to evaluate the safety and tolerability of single ascending
fixed doses of DCR-AUD in healthy volunteers. We plan to share interim data from
this trial later in 2022.
Collaborative Program Updates
Eli Lilly and Company
During the second quarter of 2020, Lilly selected LY3819469, a GalXC molecule
for the second collaboration target in cardiometabolic diseases, for advancement
into preclinical development. In May 2021 , the FDA accepted the IND application
filed by Lilly for LY3819469, targeting the LPA gene as a potential treatment
for cardiometabolic diseases, triggering a $10.0 million payment to Dicerna. We
received this payment in the second quarter of 2021, and dosing in this Phase 1
clinical trial of LY3819469 began in June 2021 . Three additional GalXC
molecules, DCR-CM3, DCR-CM4, and DCR-LLY10, are currently in preclinical
development. Dicerna estimates that Lilly will file an IND for DCR-CM4 in the
first quarter of 2022. IND/CTA filings under the Lilly Collaboration Agreement
are the responsibility of Lilly and are at their discretion.
Lilly filed an IND and initiated a Phase 1 study of LY3561774, a GalXC molecule
for the first collaboration target in cardiometabolic diseases that targets the
ANGPTL3 gene for the treatment of dyslipidemia, in the fourth quarter of 2020.
As a result of this filing, we achieved a milestone associated with the first
filing of an IND with the FDA, triggering a $10.0 million payment to us.
In February 2021 , Lilly notified us of their decision to extend for an
additional year the initial research collaboration term for the extrahepatic
targets subject to the Lilly Collaboration Agreement. Under the agreement
between the companies, Lilly has the option to extend the three-year initial
research collaboration term for these extrahepatic targets for up to three
consecutive one-year periods. This first extension allows the research program
for these extrahepatic targets under the collaboration between the two companies
to continue through October 2022 .
Novo Nordisk
During the fourth quarter of 2020, Novo nominated its first candidate under the
Novo Collaboration Agreement. Pursuant to the agreement, upon achievement of
proof of principle of the first nominated candidate, Dicerna earned a $2.5
million milestone, which we received in February 2021 . Also during the fourth
quarter of 2020, Dicerna met its obligation to deliver GalXC molecules for a
defined number of targets for the first year of the Novo Collaboration
Agreement, entitling us to a $25.0 million payment. This payment was received in
February 2021 .
Roche
In March 2021 , Roche initiated RG6346 in a Roche-sponsored Phase 2 combination
trial for the treatment of chronic HBV infection, which entitled us to a $25.0
million milestone payment under the Roche Collaboration Agreement, which we
received in the second quarter of 2021.
Boehringer Ingelheim
In May 2021 , we announced that BI accepted a GalXC RNAi candidate for
advancement under the BI Agreement, as amended and supplemented by the ATA, for
the discovery and development of novel therapies for the treatment of chronic
liver diseases. Acceptance of the DCR-LIV2 compound as a development candidate
triggered a single-digit multimillion-dollar milestone payment to
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Dicerna, which we received and recognized in full in the second quarter of 2021.
DCR-LIV2 will be evaluated for the treatment of nonalcoholic steatohepatitis
("NASH"), a chronic liver disease for which there are no approved therapeutic
interventions.
Critical Accounting Policies and Significant Judgments and Estimates
Our discussion and analysis of our financial condition and results of operations
is based on our condensed consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the U.S.
The preparation of our condensed consolidated financial statements requires us
to make estimates and apply judgments that affect the reported amounts of assets
and liabilities and the disclosure of contingent assets and liabilities as of
the date of the condensed consolidated financial statements, as well as the
revenue and expenses incurred during the reported periods. We base our estimates
on historical experience and on various other factors that we believe are
reasonable under the circumstances. Actual results may differ from these
estimates and could have a material impact on our condensed consolidated
financial statements.
The critical accounting policies that we believe impact significant judgments
and estimates used in the preparation of our financial statements presented in
this report are described in "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Critical Accounting Policies and
Significant Judgments and Estimates" in our Annual Report on Form 10-K filed
with the SEC on February 26, 2021 . There have been no significant changes to our
critical accounting policies as disclosed in our most recently filed Annual
Report on Form 10-K during the nine months ended September 30, 2021 .
Recent Accounting Pronouncements
A summary of significant recent accounting pronouncements that we have adopted
or expect to adopt is included in Note 1 - Description of Business and Basis of
Presentation to our condensed consolidated financial statements (see Part I,
Item 1 - "Financial Statements" of this Quarterly Report on Form 10-Q).
Financial Operations Overview
Revenue
Our revenue to date has been generated primarily through research funding,
license fees and other upfront payments, option exercise fees, milestone
payments, and preclinical development activities, along with research activities
under our research collaboration and license arrangements with Novo, Roche,
Lilly, Alexion, and BI. We have not generated any commercial product revenue,
nor do we expect to generate any material product revenue in the near-term.
In the future, we may generate revenue from a combination of research and
development payments, license fees and other upfront payments, milestone
payments, product sales, and royalties in connection with our current or future
collaborations with partners, and product sales from our internally developed
products. We expect that any revenue we generate will fluctuate in future
periods as a result of the timing of our or our collaborators' achievement of
preclinical, clinical, regulatory, and commercialization milestones, to the
extent achieved, the timing and amount of any payments to us relating to such
milestones, and the extent to which any of our product candidates are approved
and successfully commercialized by us or a collaborator. Delays in or changes to
the research and development plans and timelines related to our collaboration
agreements are likely due to the ongoing COVID-19 pandemic. Because we recognize
the majority of our collaboration revenue on a cost-to-cost measure of progress,
revenues recognized in the near-term may be lower than originally anticipated
and could be recognized over an extended period of time as a result.
Research and development expenses
Research and development expenses consist of costs associated with our research
activities, including discovery and development of our molecules and drug
delivery technologies, clinical and preclinical development activities, and
research and development activities under our research collaboration and license
agreements. Our research and development expenses include:
•direct research and development expenses incurred under arrangements with third
parties, such as contract research organizations, contract manufacturing
organizations, and consultants;
•platform-related expenses, including discovery research, lab supplies, license
fees, and consultants;
•employee-related expenses, including salaries, benefits, and stock-based
compensation expense; and
•facilities, depreciation, and other allocated expenses, which include direct
and allocated expenses for rent, maintenance of facilities, and information
technology; depreciation of leasehold improvements and equipment; and laboratory
and other supplies.
We expense research and development costs as they are incurred. We account for
non-refundable advance payments for goods and services that will be used in
future research and development activities as expenses when the service has been
performed or when
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the goods have been received. A significant portion of our research and
development costs are not tracked by project, as they benefit multiple projects
or our technology platform.
Delays in or changes to our research and development plans and timelines, which
impact both our internal and external resources, have occurred and may continue
to occur due to the COVID-19 pandemic. During 2020, we were internally impacted
by mandatory work from home edicts directed by the local governments in the
jurisdictions in which we operate. However, essential work exemptions continued
to permit critical research and development and laboratory activities for
limited personnel. Those exemptions enabled some continued discovery research
and activities supporting our collaborative agreements and our own programs.
Externally, a number of our clinical trial sites have delayed and may continue
to delay trial-related activities as a result of COVID-19 or its variants. Any
of these factors could cause the timing of the research and development expenses
we expect to incur to shift into later periods and have the potential to cause
us to expend more funds than originally contemplated as a result of needing to
extend clinical development activities.
General and administrative expenses
General and administrative expenses includes employee-related expenses
consisting of salaries and related benefits, including stock-based compensation,
related to our executive, finance, legal, business development, and support
functions. Other general and administrative expenses include travel expenses,
professional legal fees, audit, tax, and other professional services, and
allocated information technology and facility-related costs not otherwise
included in research and development expenses. General and administrative
expenses also included costs associated with Dicerna's previously planned
strategy to commercialize nedosiran in the U.S. ourselves, if approved, and
partner with a third party for other major markets outside of the U.S. However,
based on inconsistent results observed in the PH2 subtype of patients included
in our PHYOX2 pivotal study, we now plan to pursue commercial out-licensing
opportunities to commercialize nedosiran in major markets including the U.S. ,
subject to approvals.
Delays in or changes to our research and development plans and timelines due to
the COVID-19 pandemic may also impact our support functions, which could cause
the timing of certain general and administrative expenses we expect to incur to
shift into later periods.
Other income (expense)
In April 2021 , we announced that Royalty Pharma had acquired our royalty
interest in Alnylam's OXLUMO (lumasiran) for an upfront cash payment of
$180.0 million , which was received in April 2021 , and up to $60.0 million in
contingent sales-based milestone payments.
Other income (expense) primarily consists of mark-to-market changes in the value
recorded for the derivative liability established for contingent royalty and
milestone payments that may be owed to Alnylam in the future under the terms of
the collaboration agreement between the parties. Other income (expense) also
includes income recognized from the upfront payment from Royalty Pharma plc,
interest income, and interest expense. Interest income consists of income earned
on our cash and cash equivalents, held-to-maturity investments, and restricted
cash equivalents. We expect that interest income will continue to decrease due
to recent decreases in interest rates.
Provision for income taxes
Provision for income taxes primarily represents the estimated amount of U.S.
federal tax payable not expected to be fully offset by any tax attributes.
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Results of Operations
Comparison of the Three and Nine Months Ended September 30, 2021 and 2020
The following table summarizes the results of our operations for the periods
indicated (amounts in thousands, except percentages):
THREE MONTHS ENDED
SEPTEMBER 30,
2021 2020 $ CHANGE % CHANGE
Revenue $ 62,954 $ 48,875 $ 14,079 28.8 %
Operating expenses:
Research and development 61,232 54,814 6,418 11.7 %
General and administrative 21,994 16,961 5,033 29.7 %
Total operating expenses 83,226 71,775 11,451 16.0 %
Loss from operations (20,272) (22,900) 2,628 (11.5) %
Other income (expense):
Interest income 128 1,055 (927) (87.9) %
Interest expense (4) (5) 1 (20.0) %
Other income, net 3,886 1 3,885 *
Total other income, net 4,010 1,051 2,959 281.5 %
Loss before income taxes (16,262) (21,849) 5,587 (25.6) %
Provision for income taxes (810) - (810) (100.0) %
Net loss $ (17,072) $ (21,849) $ 4,777 (21.9) %
NINE MONTHS ENDED
SEPTEMBER 30,
2021 2020 $ CHANGE % CHANGE
Revenue $ 151,894 $ 123,351 $ 28,543 23.1 %
Operating expenses:
Research and development 173,389 151,361 22,028 14.6 %
General and administrative 68,128 53,549 14,579 27.2 %
Total operating expenses 241,517 204,910 36,607 17.9 %
Loss from operations (89,623) (81,559) (8,064) 9.9 %
Other income (expense):
Interest income 519 5,397 (4,878) (90.4) %
Interest expense (12) (15) 3 (20.0) %
Other income, net 2,620 16 2,604 *
Total other income, net 3,127 5,398 (2,271) (42.1) %
Loss before income taxes (86,496) (76,161) (10,335) 13.6 %
Provision for income taxes (1,356) - (1,356) (100) %
Net loss $ (87,852) $ (76,161) $ (11,691) 15.4 %
* Percentage change not meaningful
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Revenue
The following table provides a summary of revenue recognized (amounts in
thousands):
THREE MONTHS ENDED
SEPTEMBER 30,
2021 2020 $ CHANGE % CHANGE
Novo $ 20,276 $ 3,552 $ 16,724 470.8 %
Roche 18,563 18,686 (123) (0.7) %
Lilly 20,695 12,073 8,622 71.4 %
Alexion 3,220 13,639 (10,419) (76.4) %
BI 200 925 (725) (78.4) %
Total $ 62,954 $ 48,875 $ 14,079 28.8 %
NINE MONTHS ENDED
SEPTEMBER 30,
2021 2020 $ CHANGE % CHANGE
Novo $ 33,588 $ 7,604 $ 25,984 341.7 %
Roche 58,408 58,670 (262) (0.4) %
Lilly 42,993 31,142 11,851 38.1 %
Alexion 13,524 23,464 (9,940) (42.4) %
BI 3,381 2,471 910 36.8 %
Total $ 151,894 $ 123,351 $ 28,543 23.1 %
Dicerna receives cash in the form of upfront, milestone, and reimbursement
payments from its collaboration partners. However, except for BI, upfront
payments received are typically recognized as revenue over time, as revenue from
Dicerna's collaboration partners is recognized on a cost-to-cost measure of
progress. As a result, the amount of revenue Dicerna recognizes each period is
directly correlated with the amount of services performed during the period.
Revenue increased $14.1 million for the three months ended September 30, 2021
compared to the same period in 2020, primarily reflecting increased services
provided and changes in estimated services to be performed under the
collaboration agreement with Novo.
The increase in revenue for the nine months ended September 30, 2021 is
primarily attributable to an increase in services provided and changes in
estimated services to be performed under the collaboration agreement with Novo.
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Research and development expenses
The following table summarizes our research and development expenses incurred
during the periods indicated (amounts in thousands, except percentages):
THREE MONTHS ENDED
SEPTEMBER 30,
2021 2020 $ CHANGE % CHANGE
Belcesiran direct research and development
expenses $ 4,090 $ 2,998 $ 1,092 36.4 %
Nedosiran direct research and development
expenses 13,420 11,255 2,165 19.2 %
Partner and remaining core programs direct
research and development expenses 9,443 15,314 (5,871) (38.3) %
Total direct research and development expenses 26,953 29,567 (2,614) (8.8) %
Platform-related and discovery research
expenses 6,832 3,843 2,989 77.8 %
Employee-related expenses 19,279 18,483 796 4.3 %
Facilities, depreciation, and other expenses 8,168 2,921 5,247 179.6 %
Total $ 61,232 $ 54,814 $ 6,418 11.7 %
NINE MONTHS ENDED
SEPTEMBER 30,
2021 2020 $ CHANGE % CHANGE
Belcesiran direct research and development
expenses $ 11,218 $ 12,026 $ (808) (6.7) %
Nedosiran direct research and development
expenses 33,772 28,013 5,759 20.6 %
Partner and remaining core programs direct
research and development expenses 32,367 44,718 (12,351) (27.6) %
Total direct research and development expenses 77,357 84,757 (7,400) (8.7) %
Platform-related and discovery research
expenses 16,264 10,488 5,776 55.1 %
Employee-related expenses 58,665 47,359 11,306 23.9 %
Facilities, depreciation, and other expenses 21,103 8,757 12,346 141.0 %
Total $ 173,389 $ 151,361 $ 22,028 14.6 %
Research and development expenses increased $6.4 million for the three months
ended September 30, 2021 compared to the three months ended September 30, 2020
primarily due to a $5.2 million increase in facilities, depreciation, and other
expenses. The increase in facilities-related expenses, which include information
technology expenses, is the result of our expansion into new locations in both
Massachusetts and Colorado .
Research and development expenses increased $22.0 million for the nine months
ended September 30, 2021 compared to the nine months ended September 30, 2020
primarily due to a $12.3 million increase in facilities, depreciation, and other
expenses, which includes information technology expenses, in the nine months
ended September 30, 2021 . Research and development expenses were also impacted
by an $11.3 million increase in employee compensation-related expenses. Both
increases in employee compensation and facilities-related expenses are the
result of our increased headcount and expansion into new locations in
Massachusetts and Colorado .
We expect our overall research and development expenses to continue to increase
for the foreseeable future as we ramp our clinical manufacturing activities,
continue clinical activities associated with our core product candidates, and
continue activities under our existing collaboration agreements.
General and administrative expenses
General and administrative expenses were $22.0 million and $17.0 million for the
three months ended September 30, 2021 and 2020, respectively. The $5.0 million
increase for the three months ended September 30, 2021 is primarily due to a
$1.9 million increase in rent expense due to spaces within our newest Lexington,
MA facility commencing in the fourth quarter of 2020 and second quarter of 2021
and a $1.7 million increase in software costs in the three months ended
September 30, 2021 .
General and administrative expenses were $68.1 million and $53.5 million for the
nine months ended September 30, 2021 and 2020, respectively. The $14.6 million
increase for the nine months ended September 30, 2021 is primarily due to a $6.5
million increase in professional consulting services primarily due to costs
associated with the OXLUMO royalty interest sale. In addition, general and
administrative expenses increased $3.8 million due to additional rent expense
associated with the 2021 lease
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commencement of our newest Lexington, MA facility and $2.8 million due to
employee-related compensation as a result of an increase in general and
administrative headcount necessary to support our expanding pipeline and
collaboration agreements.
We expect routine general and administrative expenses to remain comparable with
prior periods, reflecting the change to our commercialization strategy for
nedosiran.
Liquidity and Capital Resources
Overview
We have historically funded our operations primarily through the public offering
and private placement of our securities and consideration received from our
collaborative arrangements with Novo, Roche, Lilly, Alexion, and BI. As of
September 30, 2021 , we had cash and cash equivalents and held-to-maturity
investments of $646.6 million compared to $568.8 million as of December 31,
2020 .
In February 2020 , we issued and sold an aggregate of approximately $40.0 million
of shares of our common stock to a single institutional investor pursuant to our
common stock Sales Agreement with Cowen and Company, LLC as the sales agent. 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 net proceeds of 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 SEC on May 31, 2018 and a prospectus
supplement filed with the SEC on June 1, 2018 .
In April 2021 , we received an $180.0 million upfront payment from the sale of
our royalty interest in Alnylam's OXLUMO (lumasiran) to Royalty Pharma.
Payments received from our collaboration partners during the three and nine
months ended September 30, 2021 were as follows (amounts in thousands):
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2021 SEPTEMBER 30, 2021
Novo $ 31 $ 27,638
Roche 977 28,829
Lilly 577 11,356
Alexion 177 5,386
BI 225 3,317
Total $ 1,987 $ 76,526
Payments received from our collaboration partners during the three and nine
months ended
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 2020 SEPTEMBER 30, 2020
Novo $ - $ 175,000
Roche 1,981 201,981
Alexion - 15,094
BI - 260
Total $ 1,981 $ 392,335
We believe that our cash, cash equivalents, held-to-maturity investments, and
anticipated milestones and other payments from existing collaborators provide us
with sufficient resources to continue our planned operations and clinical
activities into 2025.
On May 6, 2021 , we entered into a Sales Agreement with Cowen and Company, LLC ,
as sales agent, to provide for the offering, issuance, and sale by us of up to
$200.0 million of our common stock from time to time, including in
"at-the-market" offerings under our universal shelf registration statement on
Form S-3 that we filed on November 7, 2019 . Under the at-the-market facility,
the sales agent is entitled to be compensated in an amount of up to 3.0% of the
gross proceeds from sales of our common stock.
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Cash flows
The following table shows a summary of our condensed consolidated cash flows for
the periods indicated (amounts in thousands):
NINE MONTHS ENDED
SEPTEMBER 30,
2021 2020
Net cash provided by operating activities
Operating activities Net cash provided by operating activities decreased$154.1 million in the nine months endedSeptember 30, 2021 compared to the nine months endedSeptember 30, 2020 , primarily due to a$177.4 million decrease in deferred revenue due to increased services performed under our collaboration agreements and a$166.8 million decrease in contract receivables, largely due to the upfront cash payment received from Roche inJanuary 2020 in connection with our collaboration agreement. These decreases were partially offset by a$179.6 million increase in deferred income associated with the upfront payment received from Royalty Pharma inApril 2021 . Investing activities Net cash used in investing activities decreased$167.0 million in the nine months endedSeptember 30, 2021 compared to the nine months endedSeptember 30, 2020 , primarily due to a$136.3 million decrease in purchases of held-to-maturity investments for the nine months endedSeptember 30, 2021 , as the comparable period in the prior year reflected an increased cash balance from the Novo and Roche upfront payments available for purchases. In addition, there was a$31.5 million increase in maturities of investments. Financing activities Net cash provided by financing activities for the nine months endedSeptember 30, 2021 decreased$27.9 million compared to the nine months endedSeptember 30, 2020 . The decrease was primarily due to the receipt of$39.2 million in net proceeds inFebruary 2020 from the private placement of our common stock, which was partially offset by a$13.2 million increase in proceeds received from the exercise of stock options. Funding requirements We expect that our primary uses of capital will be for third-party clinical research and development services and manufacturing costs; compensation and related expenses; laboratory and related supplies; legal and other regulatory expenses; and general overhead costs. Because of the numerous risks and uncertainties associated with the development and commercialization of our product candidates and the extent to which we may enter into additional collaborations with third parties to participate in their development and commercialization, we are unable to estimate the amounts of capital outlays and operating expenditures associated with our anticipated development activities. However, based on our current operating plan, we believe that our available cash, cash equivalents, held-to-maturity investments, and anticipated milestone and other payments from existing collaborations will be sufficient to fund the execution of our current clinical and operating plans into 2025. We based this estimate on assumptions that may prove to be incorrect, and we could utilize our available capital resources sooner than we currently expect. In addition, for the year endingDecember 31, 2021 , we forecast receiving$83.0 million in cash from our collaborations, including anticipated milestone achievement, based on the current terms in our collaboration agreements and anticipated timing of development in our programs covered by such collaborations.$76.5 million of this amount was received in the first nine months of 2021. There can be no assurance that we will actually receive such payments under our collaboration agreements. Our forecast of the period of time through which our financial resources will be adequate to support our operations is a forward-looking statement that involves risks and uncertainties, and actual results could vary materially as a result of a number of factors. Our future capital requirements are difficult to forecast and will depend on many factors, including: •the potential receipt of any milestone payments under the Novo Collaboration Agreement, Roche Collaboration Agreement, Lilly Collaboration Agreement, Alexion Collaboration Agreement, BI Agreements, Alnylam Collaboration Agreement, and the Royalty Pharma plc agreement; •the terms and timing of any other collaboration, licensing, and other arrangements that we may establish; •the initiation, progress, timing, and completion of preclinical studies and clinical trials for our current and future potential product candidates, including the impact of COVID-19 or its variants on our ongoing and planned research and development efforts; 45 -------------------------------------------------------------------------------- Table of Contents •our alignment with the FDA on regulatory approval requirements; •the impact of COVID-19 or its variants on the operations of key governmental agencies, such as the FDA, which may delay the development of our current product candidates or any future product candidates; •the number and characteristics of product candidates that we pursue; •the outcome, timing, and cost of regulatory approvals; •delays that may be caused by changing regulatory requirements; •the cost and timing of hiring new employees to support our continued growth; •the costs involved in filing and prosecuting patent applications and enforcing and defending patent claims; •the costs of filing and prosecuting intellectual property rights and enforcing and defending any intellectual property-related claims; •the costs of responding to and defending ourselves against complaints and potential litigation; •the costs and timing of procuring clinical and commercial supplies for our product candidates; •the extent to which we acquire or in-license other product candidates and technologies; and •the extent to which we acquire or invest in other businesses, product candidates, or technologies. Until such time, if ever, that we generate significant product revenue, we expect to finance our future cash needs through a combination of public or private equity offerings, debt financings, royalty stream monetization, and research collaboration and license agreements. Please see the risk factors set forth in Part II, Item 1A - "Risk Factors" in this Quarterly Report on Form 10-Q for additional risks associated with our substantial capital requirements. Contractual Obligations and Commitments The following is a summary of our contractual obligations as ofSeptember 30, 2021 (amounts in thousands): Payments Due By Period* More Than More Than 1 Year and 3 Years and Less Than Less Than Less Than More Than Total 1 Year 3 Years 5 Years 5 Years Operating lease obligations$ 86,604 $ 9,513 $ 21,662 $ 22,981 $ 32,448 Finance lease obligations$ 196 $ 64 $ 120
$ 12 $ -
____________________________
* Represents future minimum lease payments under our existing non-cancelable operating leases for our offices and laboratory space and our finance lease for equipment. We have obligations to make future payments to licensors that become due and payable on the achievement of certain development, regulatory, and commercial milestones. We have not included any such potential obligations on our condensed consolidated balance sheets since the achievement and timing of these milestones were not probable or estimable as ofSeptember 30, 2021 . Off-Balance Sheet Arrangements As ofSeptember 30, 2021 , we did not have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as "special purpose" entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes. 46
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