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 on the functionality and application of our flagship liver-based GalXC technology, yet 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. These certain rare disease programs, which include our nedosiran and alpha-1 antitrypsin ("AAT") 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/or 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 continue 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. 27 -------------------------------------------------------------------------------- Table of Contents Executive Summary The following table provides a summary of revenue recognized for the three months endedMarch 31, 2021 (amounts in thousands): THREE MONTHS ENDED MARCH 31, 2021 Novo $ 6,612 Roche 25,611 Lilly 7,563 Alexion 7,817 Total $ 47,603
Payments received from our collaboration partners during the three months ended
THREE MONTHS ENDED
MARCH 31, 2021
Novo 27,500
Roche 1,750
Lilly 685
Alexion 2,411
BI 567
Total $ 32,913
Our results of operations for and liquidity and capital resources as of the
three months ended March 31, 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 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 .
•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.
•We believe we have sufficient capital, along with the proceeds from our April
2021 royalty financing transaction and anticipated milestone and other payments
from existing collaborations, to fund the execution of our current clinical and
operating plans into 2024.
In April 2021 , we announced that Royalty Pharma plc 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.
COVID-19 Update
On March 11, 2020 , the World Health Organization declared the spread of COVID-19
a pandemic. The global spread of COVID-19 has created significant volatility,
uncertainty, and economic disruption worldwide. Governments in affected regions
have implemented, and may continue to implement, safety precautions which
include quarantines, travel restrictions, business closures, and other public
health safety measures.
Throughout 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. Those exemptions enabled some
continued discovery research and activities supporting our collaborative
agreements and our own programs. Externally, 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. Our operating results could be
affected by delays or suspensions of clinical development associated with
COVID-19, which have impacted and may continue to impact global healthcare
systems and our trial sites' enrollment in our clinical trials, such as we have
seen in the nedosiran and belcesiran studies, and delays in the supply chain
related to COVID-19. We continue to be alert to
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the potential for disruptions that could arise from COVID-19 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 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 12 months of
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 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.
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 other strains causing COVID-19, and depending on where the infection rates
are highest, and including the ability of regulators to continue ensuring the
timely review and approval of 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
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 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 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, we have continued to innovate our
GalXC platform using modified structures, chemistries, and conjugated 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,
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 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. 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.
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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
non-core 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").
We conduct clinical trials in various countries around the world, including the
U.S. and other areas heavily impacted by the 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 12 months of clinical,
nonclinical, and 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 2021 and by identifying and engaging
alternative suppliers. 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.
The table below sets forth the stages of development of our various GalXC RNAi
platform product candidates as of May 6, 2021 :
[[Image Removed: drna-20210331_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 nonhuman primates. These extrahepatic applications are based on
proprietary modifications to our well-characterized, clinical-stage GalXC
platform that enable extrahepatic delivery and pharmacological activity.
On August 6, 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
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skeletal muscle and adipose tissue using optimized chemistries, resulting in
equivalent and potentially highly durable target knockdown regardless of dosing
regimens.
On March 30, 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 non-human primate 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.
•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
Our current core GalXC RNAi platform development programs are as follows:
Nedosiran for Primary Hyperoxaluria
Nedosiran is our lead investigational product candidate for the treatment of PH
type 1 ("PH1"), PH type 2 ("PH2"), and PH type 3 ("PH3") and is derived from our
GalXC platform technology. PH is a family of ultra-rare, life-threatening
genetic liver disorders characterized by the overproduction of oxalate, a highly
insoluble metabolic end-product that is eliminated from the body mainly by the
kidneys. In patients with PH, the kidneys are unable to eliminate fully the
large amount of oxalate that is produced. This accumulation of oxalate
compromises the renal system, which may result in severe damage to the kidneys
and other organs.
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.
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 diffuse deposits of
calcium oxalate in the kidneys (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 can eventually result 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. Based on
the evaluation of genome sequence databases, there may be as many as 16,000
people with PH in the U.S. and major European countries.
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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 is a Phase 2 multidose, double-blind, 2:1 randomized, placebo-controlled
pivotal trial of nedosiran delivered as a once-monthly subcutaneous injection in
participants six years and older who have PH1 or PH2. This global trial includes
countries across North America , Europe , and other regions, including Japan ,
Australia, and New Zealand . The primary endpoint of the study is the percent
change from baseline in area under the curve of 24-hour Uox excretion between
Days 90 and 180. Enrollment in the PHYOX2 trial has been completed globally, and
we anticipate the last patient to complete this study in the second quarter of
2021. We expect to report top-line results from the study in mid-2021.
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 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.
Additional PHYOX Trials: PHYOX4, PHYOX7, PHYOX8, and PHYOX-OBX
Given the fluid nature of the COVID-19 pandemic and the evolving and
extraordinary actions undertaken by clinical trial sites globally, we continue
to evaluate our clinical plans related to nedosiran. At this time, the status of
additional PHYOX trials is as follows:
•PHYOX4: Enrollment in a study of patients with PH3 began in January 2021 and
the first patient was dosed in February 2021 . We anticipate top-line results
from the study in the third quarter of 2021.
•PHYOX7: Enrollment in a study of patients with PH1 or PH2 and severe renal
impairment, including those in dialysis, began in the first quarter of 2021 and
we recently dosed the first patient.
•PHYOX8: An open-label study of patients with PH1 or PH2 aged 0-5 years with
relatively intact renal function is expected to begin in the second quarter of
2021.
•PHYOX-OBX: We initiated an observational study in the third quarter of 2020 in
participants with PH3 to evaluate the association between Uox excretion and the
rate of kidney stone formation. Enrollment of participants in this study is
expected in the first half of 2021.
We anticipate submitting a New Drug Application ("NDA") in the fourth quarter of
2021.
Commercial readiness activities continue across the organization to ensure the
timing of appropriate infrastructure, processes, and capabilities to support
Dicerna's evolution to a fully integrated biopharmaceutical company. The primary
focus is on U.S. commercialization infrastructure for nedosiran and the Medical
Affairs and Commercial teams that have been established. Additional
infrastructure and commercialization activities are paced to the PHYOX programs
and NDA preparations. Outside the U.S. , active discussions for regional and/or
multinational commercial collaboration partners are underway.
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.
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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.
To be optimally positioned to develop and commercialize RG6346 in combination
with other novel drugs, we entered into a research collaboration and licensing
agreement with Roche 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 with the overall goal of developing a
combination regimen to achieve a functional cure of chronic HBV in combination
with additional Roche product candidates.
Roche 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 different mechanisms of action, including standard of
care nucleos(t)ide therapy and in triple combinations with pegylated interferon
alfa-2a, Roche's core protein allosteric modulator ("CpAM") inhibitor or Roche's
novel investigational 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 a Phase 1 clinical study. AAT deficiency is a rare,
genetic, inherited condition that can lead to liver disease in children and
adults and lung disease in adults. The condition is caused by mutations in the
SERPINA1 gene. In people with AATLD, the liver produces an abnormal version of
the AAT protein, which is prone to aggregation in the liver. This accumulation
of mutated AAT in the liver can lead to liver disease. Individuals with AATLD
also have an increased risk of having lung disease.
Research suggests that people who have the pair of gene variants called "ZZ" are
most commonly identified as having AATLD. 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 more/most frequently in
individuals of Northern European descent. Although most individuals with this
pair will not develop liver disease, some will. It is estimated that 10% or more
of these individuals may have AATLD, and recent research suggests that AATLD is
both underrecognized and underdiagnosed. 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. We
initiated a Phase 2 trial of belcesiran and expect to report initial data from
the Phase 1 trial in healthy volunteers in mid-year 2021.
DCR-AUD for Alcohol Use Disorder
We are currently pursuing development of DCR-AUD, an investigational therapy
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. ALDH2 mRNA knockdown
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 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 World Health Organization .
AUD is often undiagnosed and untreated. Of the 14 million individuals in the
U.S. with AUD, only about 1.4 million received AUD treatment of any kind,
including psychosocial support, while only 10% of these - or roughly 140,000
people - received medication to treat their disorder, presenting a significant
opportunity for a therapeutic option that can help those with AUD achieve their
individual treatment goals.
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Our goal is to file an Investigational New Drug ("IND") application in mid-2021
and initiate a subsequent Phase 1 single-ascending-dose trial in healthy
volunteers in the third quarter of 2021.
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 disease that targets the
LPA gene, for advancement into preclinical development. We expect an IND filing
for LY3819469 by Lilly in the second quarter of 2021. Another GalXC molecule,
DCR-CM4, is 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 disease 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, entitling us to a $10.0 million payment.
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.
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 three months ended March 31, 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).
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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 April 2021 , we announced that Royalty Pharma had acquired our royalty
interest in Alnylam's OXLUMO 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.
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 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 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 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. Internally, throughout 2020, we were
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. We also anticipate that the timing of hiring additional personnel may
shift into later periods than initially anticipated. Externally, a number of our
clinical trial sites have delayed and may continue to delay trial-related
activities as a result of COVID-19. 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 primarily consist of salaries and related
benefits, including stock-based compensation, related to our executive, finance,
legal, business development, commercial, 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 expense also includes costs
associated with our planned commercialization for nedosiran. As our market
readiness activities ramp up,
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we expect significant and increasing costs associated with commercialization,
largely due to the hiring of a sales force and implementation of systems and
processes to support a commercial product.
Delays in or changes to our research and development plans and timelines due to
the COVID-19 pandemic may also impact our support functions and the timing of
hiring additional personnel, which could cause the timing of certain general and
administrative expenses we expect to incur to shift into later periods.
Other (expense) income
Other (expense) income primarily consists of expense 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 (expense) income also includes interest income.
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.
Results of Operations
Comparison of the Three Months Ended March 31, 2021 and 2020
The following table summarizes the results of our operations for the periods
indicated (amounts in thousands, except percentages):
THREE MONTHS ENDED
MARCH 31,
2021 2020 $ CHANGE % CHANGE
Revenue $ 47,603 $ 34,028 $ 13,575 39.9 %
Operating expenses:
Research and development 56,038 43,171 12,867 29.8 %
General and administrative 20,672 16,023 4,649 29.0 %
Total operating expenses 76,710 59,194 17,516 29.6 %
Loss from operations (29,107) (25,166) (3,941) 15.7 %
Other income (expense):
Interest income 280 2,613 (2,333) (89.3) %
Interest expense (4) (4) - - %
Other (expense) income (1,134) 65 (1,199) *
Total other (expense) income (858) 2,674 (3,532) (132.1) %
Net loss $ (29,965) $ (22,492) $ (7,473) 33.2 %
* Percentage change not meaningful
Revenue
The following table provides a summary of revenue recognized (amounts in
thousands):
THREE MONTHS ENDED
MARCH 31,
2021 2020 $ CHANGE % CHANGE
Novo $ 6,612 $ 1,605 $ 5,007 312.0 %
Roche 25,611 19,307 6,304 32.7 %
Lilly 7,563 9,582 (2,019) (21.1) %
Alexion 7,817 2,762 5,055 183.0 %
BI - 772 (772) (100.0) %
Total $ 47,603 $ 34,028 $ 13,575 39.9 %
Revenue primarily includes amounts recognized on upfront and milestone payments.
The increase in revenue for the three months ended March 31, 2021 is primarily
attributable to an increase in services performed under the collaboration
agreement with Roche, as well as under the Alexion and Novo collaboration
agreements. All three agreements are recognized as revenue on a cost-to-cost
measure of progress method.
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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
MARCH 31,
2021 2020 $ CHANGE % CHANGE
Belcesiran direct research and development
expenses $ 3,230 $ 4,957 $ (1,727) (34.8) %
Nedosiran direct research and development
expenses 9,971 7,538 2,433 32.3 %
Partner and remaining core programs direct
research and development expenses 12,226 10,890 1,336 12.3 %
Total direct research and development expenses $ 25,427 $ 23,385 $ 2,042 8.7 %
Platform-related expenses 4,733 3,498 1,235 35.3 %
Employee-related expenses 20,204 13,490 6,714 49.8 %
Facilities, depreciation, and other expenses 5,674 2,798 2,876 102.8 %
Total $ 56,038 $ 43,171 $ 12,867 29.8 %
Research and development expenses increased $12.9 million for the three months
ended March 31, 2021 compared to the three months ended March 31, 2020 primarily
due to a $6.7 million increase in employee-related expenses, which includes
salaries, benefits, and stock-based compensation. The increase in
employee-related expenses is the result of an increase in research and
development headcount necessary to support our expanding pipeline and
collaboration agreements. Research and development expenses were also impacted
by a $2.4 million increase in direct research and development expenses for
nedosiran due to the ramp up of activities leading toward our planned
commercialization. Direct research and development expenses include expenses
incurred under arrangements with third parties, such as contract research
organizations, contract manufacturing organizations, and consultants.
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 $20.7 million and $16.0 million for the
three months ended March 31, 2021 and 2020, respectively. The $4.6 million
increase for the three months ended March 31, 2021 is primarily due to a $2.1
million increase in employee-related compensation, including salaries, benefits,
and stock-based compensation, due to an increase in headcount necessary to
support our growing operations. In addition, professional consulting services
increased $1.4 million in the three months ended March 31, 2021 .
We expect general and administrative expenses to continue to increase in the
foreseeable future, largely due to investments in staffing and market readiness
activities.
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
March 31, 2021 , we had cash and cash equivalents and held-to-maturity
investments of $544.9 million compared to $568.8 million as of December 31,
2020 .
On February 6, 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 .
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Payments received from our collaboration partners during the three months ended
March 31, 2021 were as follows (amounts in thousands):
THREE MONTHS ENDED
MARCH 31, 2021
Novo $ 27,500
Roche 1,750
Lilly 685
Alexion 2,411
BI 567
Total $ 32,913
Payments received from our collaboration partners during the three months ended
THREE MONTHS ENDED
MARCH 31, 2020
Novo $ 175,000
Roche 200,000
Alexion 94
BI 260
Total $ 375,354
We believe that our cash, cash equivalents, held-to-maturity investments, the
proceeds from our April 2021 royalty financing transaction, and anticipated
milestones and other payments from existing collaborators provide us with
sufficient resources to continue our planned operations and clinical activities
into 2024. In April 2021 , we received an $180.0 million upfront payment from the
sale of our royalty interest in Alnylam's OXLUMO to Royalty Pharma.
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.
Cash flows
The following table shows a summary of our condensed consolidated cash flows for
the periods indicated (amounts in thousands):
THREE MONTHS ENDED
MARCH 31,
2021 2020
Net cash (used in) provided by operating activities $ (26,700) $ 321,084
Net cash provided by (used in) investing activities $ 52,886 $ (266,520)
Net cash provided by financing activities $ 6,158 $ 39,768
Operating activities Net cash (used in) provided by operating activities changed$347.8 million in the three months endedMarch 31, 2021 compared to the three months endedMarch 31, 2020 , primarily due to a$181.9 million decrease in contract receivables, largely due to the upfront cash payment received from Roche inJanuary 2020 in connection with our collaboration agreement, and a$174.6 million decrease in deferred revenue from our collaboration agreements. 38 -------------------------------------------------------------------------------- Table of Contents Investing activities Net cash provided by (used in) investing activities increased$319.4 million in the three months endedMarch 31, 2021 compared to the three months endedMarch 31, 2020 . The increase in net cash provided by (used in) investing activities primarily relates to a$195.4 million decrease in purchases of held-to-maturity investments for the three months endedMarch 31, 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$126.0 million increase in maturities of investments. Financing activities Net cash provided by financing activities for the three months endedMarch 31, 2021 decreased$33.6 million compared to the three months endedMarch 31, 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. Funding requirements We expect that our primary uses of capital will continue to be commercialization readiness and launch activities, subject to approval of our development candidates; 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, the proceeds from ourApril 2021 royalty financing transaction, and anticipated milestone and other payments from existing collaborations will be sufficient to fund the execution of our current clinical and operating plans into 2024. 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 over$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. 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, and Alnylam Collaboration Agreement and the potential payment of any royalties under the Alnylam Collaboration 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 on our ongoing and planned research and development efforts and the timing of a potential commercial launch date for nedosiran; •our alignment with the FDA on regulatory approval requirements; •the impact of COVID-19 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 39 -------------------------------------------------------------------------------- Table of Contents •the extent to which we acquire or invest in other businesses, product candidates, or technologies. Until such time, if ever, that we generate 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 There have been no material changes to our contractual obligations and commitments reported in our 2020 Annual Report on Form 10-K. 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 ofMarch 31, 2021 . Off-Balance Sheet Arrangements As ofMarch 31, 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.
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