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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
______________________________
Form 10-Q
______________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from                  to                 
Commission File Number: 001-36281
______________________________
https://cdn.kscope.io/1c30cdec6d204c82e0788d8891cc5258-drna-20210630_g1.jpg
DICERNA PHARMACEUTICALS, INC.
(Exact name of registrant as specified in its charter)
______________________________
Delaware
20-5993609
(State or other jurisdiction of
incorporation or organization)
(IRS Employer
Identification No.)
75 Hayden Avenue
Lexington, MA
02421
(Address of principal executive offices)
(Zip code)

(617) 621-8097
(Registrant’s telephone number, including area code)
______________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.0001 Par ValueDRNAThe Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days)    Yes ☑  No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☑    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,”


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“smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
 
Accelerated filer
Non-accelerated filer
 
Smaller reporting company
 
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).   Yes      No ☑
As of August 2, 2021, there were 77,734,172 shares of the registrant’s common stock, par value $0.0001 per share, outstanding.



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DICERNA PHARMACEUTICALS, INC.
INDEX TO FORM 10-Q
Page

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of this Quarterly Report on Form 10-Q. In some cases, you can identify forward-looking statements by terminology such as “may,” “could,” “will,” “would,” “should,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “intend,” “predict,” “seek,” “contemplate,” “project,” “continue,” “potential,” “ongoing,” “goal,” or the negative of these terms or other comparable terminology. These forward-looking statements include, but are not limited to, statements about:
future conduct of the business of the Company, its preclinical studies, clinical programs, and operations, including in relation to the COVID-19 pandemic;
the research and development plans and timelines related to the Company’s clinical programs, including the opportunity to enroll, continue, or resume clinical studies that are slowed or halted by the COVID-19 pandemic;
the initiation, timing, progress, and results of our preclinical studies and Investigational New Drug Applications, Clinical Trial Applications, New Drug Applications, and other regulatory submissions;
our alignment with the United States (“U.S.”) Food and Drug Administration on regulatory approval requirements;
identification and development of product candidates for the treatment of additional disease indications;
obtaining and maintaining regulatory approval of any of our product candidates;
the rate and degree of market acceptance of any approved product candidates;
our strategy for, and the commercialization of any approved product candidates;
our ability to maintain existing and establish additional collaborations and retain commercial rights with respect to some or all of our product candidates in the collaborations;
the execution of our business model and strategic plans for our business, technologies, and product candidates;
how long we expect to maintain liquidity to fund our planned level of operations and our ability to obtain additional funds for our operations and growth;
our estimates of our expenses, ongoing losses, future revenue, and capital requirements;
obtaining, maintaining, and defending intellectual property protection for our technologies and product candidates and our freedom to operate our business without infringing the intellectual property rights of others;
our reliance on third parties to conduct our preclinical development studies or any clinical trials;
the continued manufacture and supply of raw materials and components for the Company’s clinical and development programs, the availability of any of which could be significantly impaired by the COVID-19 pandemic;
our ability to attract and retain qualified key management and personnel;
our dependence on our existing collaborators, Novo Nordisk A/S, Roche, Eli Lilly and Company, Alexion Pharmaceuticals, Inc., Boehringer Ingelheim International GmbH, and Alnylam Pharmaceuticals, Inc. for developing, obtaining regulatory approval for, and commercializing product candidates in the collaborations;
our receipt and timing of any potential milestone payments or royalties under our existing research collaborations and license agreements or any future arrangements with our existing collaboration partners or any other collaborators;
the impact of changes in the government and agency leadership positions in connection with the 2020 presidential election as well as future election cycles;
our financial performance; and
developments relating to our competitors or our industry.
These statements relate to future events or to our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by these forward-looking statements. Factors that may cause actual results to differ materially from current expectations include, among other things, those set forth in Part II, Item 1A – “Risk Factors” below and for the reasons described elsewhere in this Quarterly Report on Form 10-Q. Any forward-looking statement in this Quarterly Report on Form 10-Q reflects our current view with respect to future events and is subject to these and other risks, uncertainties, and assumptions relating to our operations, results of operations, industry, and future growth. Given these uncertainties,
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you should not place undue reliance on these forward-looking statements. Except as required by law, we assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future.
This Quarterly Report on Form 10-Q also contains estimates, projections, and other information concerning our industry, our business, and the markets for certain drugs, including data regarding the estimated size of those markets, their projected growth rates, and the incidence of certain medical conditions. Information that is based on estimates, forecasts, projections, or similar methodologies is inherently subject to uncertainties, and actual events or circumstances may differ materially from events and circumstances reflected in this information. Unless otherwise expressly stated, we obtained these industry, business, market, and other data from reports, research surveys, studies, and similar data prepared by third parties, industry, medical and general publications, government data, and similar sources. In some cases, we do not expressly refer to the sources from which these data are derived.
Except where the context otherwise requires, in this Quarterly Report on Form 10-Q, “we,” “us,” “our,” “Dicerna,” and the “Company” refer to Dicerna Pharmaceuticals, Inc. and, where appropriate, its consolidated subsidiaries.
Trademarks
This Quarterly Report on Form 10-Q includes trademarks, service marks, and trade names owned by us or other companies. All trademarks, service marks, and trade names included in this Quarterly Report on Form 10-Q are the property of their respective owners. Solely for convenience, the trademarks, service marks, and trade names in this report may be referred to without the ® and ™ symbols, but such references should not be construed as any indicator that their respective owners will not assert, to the fullest extent under applicable law, their rights thereto.
Risk Factor Summary
Our business is subject to numerous risks and uncertainties. These risks represent challenges to the successful implementation of our strategy and to the growth and future profitability of our business. These risks include, but are not limited to, the following:
Business interruptions resulting from the coronavirus disease (COVID-19) outbreak or similar public health crises could cause a disruption to the development of our product candidates and adversely impact our business.
We will need to raise substantial additional funds to advance development of our product candidates and we cannot guarantee that we will have sufficient funds available in the future to develop and commercialize our current or future product candidates. Raising additional funds may cause dilution to our stockholders, restrict our operations, or require us to relinquish control over our technologies or product candidates.
Our approach to the discovery and development of innovative therapeutic treatments based on novel technologies is unproven and may not result in marketable products.
The market may not be receptive to our product candidates based on a novel therapeutic modality, and we may not generate any future revenue from the sale or licensing of product candidates.
Our product candidates are in varied stages of development, including some in early stages, and may fail or suffer delays that materially and adversely affect their commercial viability.
Breakthrough Therapy Designation by the FDA may not actually lead to a faster development or regulatory review or approval process.
The approval of our planned marketing application for nedosiran may be delayed due to the failure to satisfy FDA regulatory requirements, resulting in changes to or a delay in the commercial launch of nedosiran.
We are dependent on our collaboration partners for the successful development of some product candidates and, therefore, are subject to the efforts of these partners and our ability to successfully collaborate with these partners.
Because we rely on third-party manufacturing and supply partners, our supply of research and development, preclinical studies, and clinical trial materials may become limited or interrupted or may not be of satisfactory quantity or quality, and if the third parties on which we depend do not perform as contractually required, our development programs could be delayed with materially adverse effects on our business, financial condition, results of operations, and prospects.
Interim and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available or as additional analyses are conducted and as the data are subject to audit and verification procedures that could result in material changes in the final data.
We may be unable to successfully commercialize our product candidates if we are unable to develop sales, marketing, and distribution capabilities on our own or enter into agreements with third parties to perform these functions on acceptable terms, if at all.
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We may be unable to successfully commercialize product candidates if the regulatory-approved labeling for our product candidates does not enable us to appropriately differentiate our products from competitive products.
Price controls imposed in foreign markets and downward pricing pressure in the U.S. may adversely affect our future profitability.
Our current operations are largely concentrated in one location and any events affecting this location may have material adverse consequences.
We may be unable to protect our intellectual property rights throughout the world.
We may be unable to obtain U.S. or foreign regulatory approval and, as a result, may be unable to commercialize our product candidates.
Our ability to obtain reimbursement or funding from the federal government may be impacted by possible reductions in federal spending and our ability to maintain such reimbursement or funding may be impacted due to our failure to satisfy federal requirements with respect thereto.
Recent federal legislation and actions by state and local governments may permit reimportation of drugs from foreign countries into the U.S., including foreign countries where the drugs are sold at lower prices than in the U.S., which could materially adversely affect our operating results.
Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Any inability to attract and retain qualified key management and personnel would impair our ability to implement our business plan.
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PART I. FINANCIAL INFORMATION
ITEM 1.    FINANCIAL STATEMENTS

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DICERNA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands, except share data)
JUNE 30,
2021
DECEMBER 31,
2020
ASSETS
CURRENT ASSETS:
Cash and cash equivalents$221,210 $126,023 
Held-to-maturity investments, current371,755 442,820 
Restricted cash equivalents, current 744 
Contract receivables3,147 34,713 
Prepaid expenses and other current assets 20,380 14,403 
Total current assets616,492 618,703 
NONCURRENT ASSETS:
Property and equipment, net23,593 17,546 
Right-of-use operating assets, net74,400 60,843 
Restricted cash equivalents, noncurrent5,618 5,618 
Held-to-maturity investments, noncurrent116,599  
Other noncurrent assets1,790 5,136 
Total noncurrent assets222,000 89,143 
TOTAL ASSETS$838,492 $707,846 
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable$12,829 $7,901 
Accrued expenses and other current liabilities 29,577 28,061 
Lease liability, current3,946 3,439 
Deferred revenue, current160,200 138,537 
Deferred income, current1,098  
Total current liabilities207,650 177,938 
NONCURRENT LIABILITIES:
Lease liability, noncurrent61,203 48,744 
Deferred revenue, noncurrent268,606 336,236 
Deferred income, noncurrent178,708  
Derivative liability7,750 6,000 
Other noncurrent liabilities3,501 1,174 
Total noncurrent liabilities519,768 392,154 
TOTAL LIABILITIES727,418 570,092 
COMMITMENTS AND CONTINGENCIES (NOTE 11)
STOCKHOLDERS’ EQUITY:
Preferred stock, $0.0001 par value – 5,000,000 shares authorized; no shares issued or outstanding at June 30, 2021 or December 31, 2020
  
Common stock, $0.0001 par value – 150,000,000 shares authorized; 77,601,552 and 75,757,213 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively
8 8 
Additional paid-in capital819,909 775,809 
Accumulated deficit(708,843)(638,063)
Total stockholders’ equity111,074 137,754 
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$838,492 $707,846 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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DICERNA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except share and per share data)

THREE MONTHS ENDED
JUNE 30,
SIX MONTHS ENDED
JUNE 30,
2021202020212020
Revenue$41,337 $40,448 $88,940 $74,476 
Operating expenses:
Research and development56,119 53,376 112,157 96,547 
General and administrative25,462 20,565 46,134 36,588 
Total operating expenses81,581 73,941 158,291 133,135 
Loss from operations(40,244)(33,493)(69,351)(58,659)
Other income (expense):
Interest income111 1,729 391 4,342 
Interest expense(4)(6)(8)(10)
Other (expense) income(132)(50)(1,266)15 
Total other (expense) income(25)1,673 (883)4,347 
Loss before income taxes(40,269)(31,820)(70,234)(54,312)
Provision for income taxes(546) (546) 
Net loss$(40,815)$(31,820)$(70,780)$(54,312)
Net loss per share – basic and diluted$(0.53)$(0.43)$(0.92)$(0.74)
Weighted average common shares outstanding – basic and diluted77,029,763 74,001,126 76,644,786 73,460,252 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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DICERNA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(Unaudited)
(in thousands, except share data)

SIX MONTHS ENDED
JUNE 30, 2021
COMMON
STOCK
ADDITIONAL
PAID-IN
CAPITAL
ACCUMULATED
DEFICIT
TOTAL
STOCKHOLDERS’
EQUITY
SHARESAMOUNT
BALANCE – January 1, 202175,757,213 $8 $775,809 $(638,063)$137,754 
Exercises of common stock options707,723 — 7,616 — 7,616 
Vesting of restricted stock units177,950 — — — — 
Shares withheld to cover taxes upon restricted stock unit vesting(59,012)— (1,414)— (1,414)
Stock-based compensation expense— — 12,413 — 12,413 
Net loss— — — (29,965)(29,965)
BALANCE – March 31, 202176,583,874 8 794,424 (668,028)126,404 
Exercises of common stock options and sales of common stock under Employee Stock Purchase Plan957,564 — 12,314 — 12,314 
Vesting of restricted stock units73,073 — — — — 
Shares withheld to cover taxes upon restricted stock unit vesting(12,959)— (462)— (462)
Stock-based compensation expense— — 13,633 — 13,633 
Net loss— — — (40,815)(40,815)
BALANCE – June 30, 202177,601,552 $8 $819,909 $(708,843)$111,074 
SIX MONTHS ENDED
JUNE 30, 2020
COMMON
STOCK
ADDITIONAL
PAID-IN
CAPITAL
ACCUMULATED
DEFICIT
TOTAL
STOCKHOLDERS’
EQUITY
SHARESAMOUNT
BALANCE – January 1, 202071,573,196 $7 $677,504 $(525,316)$152,195 
Exercises of common stock options128,373 — 588 — 588 
Stock-based compensation expense— — 8,527 — 8,527 
Proceeds from issuance of common stock, net of commissions and offering costs of $904
2,077,500 — 39,088 — 39,088 
Net loss— — — (22,492)(22,492)
BALANCE – March 31, 202073,779,069 7 725,707 (547,808)177,906 
Exercises of common stock options and sales of common stock under Employee Stock Purchase Plan542,256 — 5,876 — 5,876 
Stock-based compensation expense— — 10,206 — 10,206 
Net loss— — — (31,820)(31,820)
BALANCE – June 30, 202074,321,325 $7 $741,789 $(579,628)$162,168 
The accompanying notes are an integral part of these condensed consolidated financial statements. 
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DICERNA PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
SIX MONTHS ENDED
JUNE 30,
20212020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss$(70,780)$(54,312)
Adjustments to reconcile net loss to net cash provided by operating activities:
Stock-based compensation expense26,046 18,733 
Change in fair value of derivative liability1,750  
Depreciation and amortization expense2,487 1,066 
Accretion (amortization) of premium on investments1,965 (302)
Non-cash lease expense5,550 3,640 
Other42 (5)
Changes in operating assets and liabilities:
Deferred revenue(45,967)117,243 
Deferred income179,806  
Prepaid expenses and other assets(4,481)(11,988)
Accounts payable4,810 2,035 
Contract receivables31,566 200,342 
Accrued expenses and other liabilities3,525 7,536 
Lease liability(4,182)(4,564)
Net cash provided by operating activities132,137 279,424 
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturities of held-to-maturity investments344,000 254,000 
Purchases of held-to-maturity investments(391,498)(529,041)
Purchases of property and equipment(8,223)(3,358)
Other 15 
Net cash used in investing activities(55,721)(278,384)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock, net of placement agent commissions 39,192 
Payments of common stock offering costs (104)
Payments for minimum statutory tax withholding related to net share settlement of equity awards(1,876) 
Proceeds from exercises of stock options19,925 6,550 
Other(22)(24)
Net cash provided by financing activities18,027 45,614 
NET INCREASE IN CASH, CASH EQUIVALENTS, AND RESTRICTED CASH EQUIVALENTS94,443 46,654 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH EQUIVALENTS – Beginning of period132,385 156,710 
CASH, CASH EQUIVALENTS, AND RESTRICTED CASH EQUIVALENTS – End of period$226,828 $203,364 
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SIX MONTHS ENDED
JUNE 30,
20212020
SUPPLEMENTAL CASH FLOW INFORMATION:
NONCASH OPERATING ACTIVITIES
Right-of-use assets acquired through operating leases$15,302 $1,101 
NONCASH INVESTING ACTIVITIES
Property and equipment purchases included in accounts payable and accrued expenses$177 $446 
NONCASH FINANCING ACTIVITIES
Right-of-use assets acquired through financing leases$ $48 

The following table provides a reconciliation of cash, cash equivalents, and restricted cash equivalents reported within the condensed consolidated balance sheets to the amounts shown in the condensed consolidated statements of cash flows:
SIX MONTHS ENDED
JUNE 30,
20212020
Cash and cash equivalents$221,210 $197,801 
Restricted cash equivalents, noncurrent5,618 5,563 
Total cash, cash equivalents, and restricted cash equivalents shown in the condensed consolidated statements of cash flows$226,828 $203,364 
The accompanying notes are an integral part of these condensed consolidated financial statements.
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DICERNA PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(amounts in thousands, except share and per share data and where otherwise noted)
1.    DESCRIPTION OF BUSINESS AND BASIS OF PRESENTATION
Business
Dicerna Pharmaceuticals, Inc. (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 the Company’s 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 the Company’s 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 the Company’s 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 its collaborative partners, the Company currently has 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.
COVID-19
On March 11, 2020, the World Health Organization declared the spread of the novel coronavirus (“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 and into 2021, Dicerna was impacted by mandatory work from home edicts directed by local governments in the jurisdictions in which the Company operates. 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 the Company’s collaborative agreements and its own programs. Externally, the COVID-19 pandemic has resulted in some challenges in reserving slots for preclinical studies and accessing non-human primates for such studies, as well as slower enrollment in the Company’s clinical trials. Dicerna has undertaken efforts to mitigate potential impacts to our business including those related to conducting clinical trials and managing our supply chain. The Company continues to be alert to the potential for disruptions that could arise from COVID-19 or its variants and monitors the Food and Drug Administration’s (“FDA”) and other health authorities’ guidance for the conduct of clinical trials during this time.
Current supply of Dicerna’s investigational medicines is sufficient to support ongoing and planned clinical trials. Based on current evaluations, Dicerna’s supply chains continue 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. The Company has undertaken efforts to mitigate potential future impacts to the supply chain by increasing its stock of critical starting materials required to meet its needs and its collaborative partners’ needs through 2022 and by identifying and engaging alternative suppliers. The Company continues to be alert to the potential for disruptions that could arise from COVID-19 or its variants, including on account of United States (“U.S.”) government utilization of its Defense Production Act authorities, and remains 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 the Company or any of the third parties with whom it engages were to experience additional shutdowns or other prolonged business disruptions. The Company’s ability to conduct its business in the manner and on the timelines presently planned could have a material adverse impact on the Company’s 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 applications, the Company’s business, results of operations, and financial condition may be negatively impacted. The Company will continue to monitor developments as it deals with the disruptions and uncertainties relating to the COVID-19 pandemic.
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Basis of presentation
These condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) along with the rules and regulations of the Securities and Exchange Commission for interim financial information, and include the accounts of Dicerna Pharmaceuticals, Inc. and its wholly owned subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. The year-end condensed consolidated balance sheet data were derived from audited financial statements but do not include all disclosures required by GAAP to constitute a complete set of financial statements. These condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments, which include only normal recurring adjustments necessary for a fair statement of the Company’s financial position at June 30, 2021 and its results of operations, changes in stockholders’ equity, and cash flows for the interim periods ended June 30, 2021 and 2020. These unaudited condensed consolidated interim financial statements should be read in conjunction with the Company’s audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020. The results of operations for the three and six months ended June 30, 2021 are not necessarily indicative of the results to be expected for the year ending December 31, 2021, for any other interim period, or for any other future year.
Significant judgments and estimates
The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the Company’s condensed consolidated financial statements, as well as the revenues and expenses incurred during the reporting periods. On an ongoing basis, the Company evaluates judgments and estimates, including those related to revenue recognition, deferred income, stock-based compensation, the derivative liability, and accrued expenses. The Company bases its estimates on historical experience and on various other factors that the Company believes are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not apparent from other sources. Changes in estimates are reflected in reported results for the period in which they become known. Actual results could differ materially from those estimates.
Recent accounting pronouncements
In December 2019, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2019-12, Simplifying the Accounting for Income Taxes, amending accounting guidance that simplifies the accounting for income taxes as part of its initiative to reduce complexity in the accounting standards. The amendments eliminate certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The amendments also clarify and simplify other aspects of the accounting for income taxes. For public business entities, ASU 2019-12 is required to be adopted effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company adopted ASU 2019-12 on January 1, 2021 and it did not have a material impact on its financial statements or related disclosures.
Summary of significant accounting policies
There have been no changes to the significant accounting policies disclosed in the Company’s most recent Annual Report on Form 10-K.
2.    NET LOSS PER SHARE
The Company computes basic net loss per common share by dividing net loss by the weighted average number of common shares outstanding. In periods of net income, the Company’s accounting policy includes allocating a proportional share of net income to participating securities, as determined by dividing total weighted average participating securities by the sum of the total weighted average common shares and participating securities (the “two-class method”). Participating securities have the effect of diluting both basic and diluted earnings per share during periods of income. During periods when the Company incurs a net loss, the Company does not allocate a loss to participating securities because they have no contractual obligation to share in the losses of the Company. The Company computes diluted net loss per common share after giving consideration to the dilutive effect of stock options and nonvested restricted stock units that are outstanding during the period, except where such non-participating securities would be anti-dilutive.
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The outstanding securities presented below were excluded from the calculation of net loss per share because such securities would have been anti-dilutive due to the Company’s net loss per share during the periods ending on the dates presented:
JUNE 30,
2021
JUNE 30,
2020
Options to purchase common stock14,307,555 15,109,939 
Nonvested restricted stock units1,221,426 887,355 
Total15,528,981 15,997,294 
3.    HELD-TO-MATURITY INVESTMENTS
A summary of the Company’s held-to-maturity investments is presented below:
JUNE 30, 2021
DESCRIPTION
AMORTIZED
COST
GROSS
UNREALIZED
HOLDING
GAINS
GROSS
UNREALIZED
HOLDING
LOSSES
FAIR
VALUE
U.S. Treasury securities maturing in one year or less
$371,755 $39 $(13)$371,781 
U.S. Treasury securities maturing in greater than one year116,599  (34)116,565 
Total$488,354 $39 $(47)$488,346 

DECEMBER 31, 2020
DESCRIPTION
AMORTIZED
COST
GROSS
UNREALIZED
HOLDING
GAINS
GROSS
UNREALIZED
HOLDING
LOSSES
FAIR
VALUE
U.S. Treasury securities maturing in one year or less
$442,820 $163 $(12)$442,971 
The Company’s policy is not to measure an allowance for credit losses for interest receivable and to write off any uncollectible interest receivable as a reversal of interest income in the period in which it determines the interest will not be collected. The Company did not write off any interest receivable during the three and six months ended June 30, 2021 and 2020.
The contractual terms of these investments do not permit the issuer to settle the securities at a price less than the amortized cost bases of the investments. The Company does not intend to sell its investments and has the intent and ability to hold its investments until they mature.
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4.    FAIR VALUE MEASUREMENTS
A summary of the Company’s assets and liabilities that are measured or disclosed at fair value on a recurring basis is presented below:
JUNE 30, 2021
DESCRIPTION
TOTAL FAIR VALUELEVEL 1LEVEL 2LEVEL 3
Financial assets
Cash equivalents
Money market funds$220,835 $220,835 $ $ 
Held-to-maturity investments
U.S. Treasury securities488,346  488,346  
Restricted cash equivalents
Money market funds5,618 5,618   
Total financial assets$714,799 $226,453 $488,346 $ 
Financial liabilities
Derivative liability$7,750 $ $ $7,750 
Total financial liabilities$7,750 $ $ $7,750 
DECEMBER 31, 2020
DESCRIPTION
TOTAL FAIR VALUELEVEL 1LEVEL 2LEVEL 3
Financial assets
Cash equivalents
Money market funds$126,006 $126,006 $ $ 
Held-to-maturity investments
U.S. Treasury securities442,971  442,971  
Restricted cash equivalents
Money market funds6,362 6,362   
Total financial assets$575,339 $132,368 $442,971 $ 
Financial liabilities
Derivative liability$6,000 $ $ $6,000 
Total financial liabilities$6,000 $ $ $6,000 
The Company’s cash equivalents and restricted cash equivalents, which are held in money market funds, are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets as of June 30, 2021 and December 31, 2020. Restricted cash equivalents represent money market investments which secure letters of credit established in connection with the Company’s facility leases.
The Company’s held-to-maturity investments bore interest at the prevailing market rates for instruments with similar characteristics and therefore the amortized cost approximated fair value. These financial instruments were classified within Level 2 of the fair value hierarchy because the inputs to the fair value measurements were valued using observable inputs as of June 30, 2021 and December 31, 2020.
The Company does not enter into derivative financial instruments for speculative or trading purposes. The Company has a derivative liability associated with certain contingent payments under our collaboration agreement with Alnylam, which is classified within Level 3 of the fair value hierarchy because the fair value utilizes unobservable inputs for which there is no market data and therefore requires the Company to develop its own assumptions. Such assumptions include the probability of success of development, the probability that Alnylam exercises its commercialization option, the timing of regulatory approval and the first commercial sale, and the volume of sales.
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The following table presents a rollforward of activity associated with the derivative liability during the six months ended June 30, 2021:
CONTINGENT PAYMENT DERIVATIVE LIABILITY
Balance, January 1, 2021$(6,000)
Expense recognized in other (expense) income due to remeasurement of fair value of the liability(1,500)
Balance, March 31, 2021(7,500)
Expense recognized in other (expense) income due to remeasurement of fair value of the liability(250)
Balance, June 30, 2021$(7,750)
It is our policy to recognize transfers between levels of the fair value hierarchy, if any, at the end of the reporting period; however, there have been no such transfers during the periods presented.
As of June 30, 2021 and December 31, 2020, the Company’s contract receivables, accounts payable, and accrued expenses approximated their estimated fair values because of the short-term nature of these financial instruments.
5.    PREPAID EXPENSES AND OTHER CURRENT ASSETS
Prepaid expenses and other current assets consist of the following:
JUNE 30,
2021
DECEMBER 31, 2020
Prepaid clinical, contract research, and manufacturing costs$11,107 $9,651 
Interest receivable1,868 1,345 
Prepaid insurance1,749 817 
Other prepaid expenses and other current assets5,656 2,590 
Prepaid expenses and other current assets $20,380 $14,403 
6.    COLLABORATIVE RESEARCH AND LICENSE AGREEMENTS
Alnylam collaboration and patent cross-license agreements
Background
On April 3, 2020, the Company and Alnylam (collectively, the “parties”) entered into a Collaboration and License Agreement (the “A1AT Agreement”) and a Patent Cross License Agreement (the “PH Agreement”). Pursuant to the A1AT Agreement, Dicerna will lead efforts on investigational RNAi therapeutics for the treatment of alpha-1 antitrypsin (“AAT”) deficiency (“AATD”)-associated liver disease (“AATLD”). Pursuant to the PH Agreement, the parties completed a cross-license of their respective intellectual property for Alnylam’s lumasiran and Dicerna’s nedosiran investigational programs for the treatment of primary hyperoxaluria (“PH”). No upfront cash consideration was exchanged in either transaction.
Pursuant to the A1AT Agreement, Alnylam’s AAT product (ALN-AAT02, or the “Alnylam Product”) and Dicerna’s AAT product (belcesiran, or the “Dicerna Product”) were to be explored for the treatment of AATLD. Under the A1AT Agreement, the Company obtained an exclusive worldwide license to Alnylam’s intellectual property to exploit the Alnylam Product. Dicerna assumed responsibility for the development of both the Alnylam Product and the Dicerna Product at its cost. Dicerna selected belcesiran to advance in development for the treatment of patients with AATLD. At the completion of Phase 3, Alnylam has the no-cost opportunity to opt-in to commercialize belcesiran in countries outside the U.S. where it already has a commercialization infrastructure in place (the “Commercialization Option”). If Alnylam exercises its Commercialization Option, the parties will share future development costs. Further, each party will pay tiered royalties to the other party based on a percentage of net product sales generated in its territory ranging from low single-digits to high teens. In the event Alnylam waives its Commercialization Option, the Company will retain worldwide rights to commercialize belcesiran in exchange for payments upon the satisfaction of certain milestones, up to an aggregate of $45.0 million, and royalties will be payable to Alnylam based on net product sales in the low to mid-single-digits. As a result of these uncertain payments the Company may owe to Alnylam, the Company has recorded a derivative liability on the condensed consolidated balance sheets as of June 30, 2021 and December 31, 2020. The A1AT Agreement is subject to customary termination provisions, and the Company may terminate the A1AT Agreement at any time without cause following the notice period described in the A1AT Agreement.
Pursuant to the PH Agreement, the parties granted to each other a perpetual non-exclusive cross-license to their respective intellectual property related to their respective PH treatment investigational programs to ensure that each party has the freedom to develop and
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commercialize its respective product with Alnylam’s lumasiran targeting glycolate oxidase (“GO”) for the treatment of PH type 1 and Dicerna’s nedosiran targeting lactate dehydrogenase A (“LDHA”) for the treatment of PH types 1, 2, and 3. Each party will have sole discretion concerning the research and development of its products in the field. In exchange for the license, Alnylam is required to pay mid- to high-single-digit royalties to Dicerna based on global net sales of lumasiran and Dicerna is required to pay low-single-digit royalties to Alnylam on global net sales of nedosiran. The PH Agreement cannot be terminated by either party for the other party’s breach. However, either party may terminate the PH Agreement or may reduce the royalty payable to the other party upon a patent-related challenge by the other party unless the challenge is withdrawn and no longer pending within the time periods specified in the PH Agreement. Further, the PH Agreement will terminate upon the expiration of the last-to-expire patent rights licensed thereunder.
In April 2021, pursuant to an agreement with Royalty Pharma plc (“Royalty Pharma”), the Company received a $180.0 million upfront payment from the sale of Dicerna’s royalty interest in Alnylam’s net sales of OXLUMO (lumasiran). The upfront payment was recorded as deferred income upon receipt. Under this agreement, the Company is also eligible to receive up to $60.0 million in contingent sales-based milestone payments. Refer to Note 7 - Royalty Pharma Financing for further details.
Accounting Analysis
The Company determined that the A1AT Agreement and the PH Agreement represent separate agreements for accounting purposes, as the transactions have different commercial objectives, the consideration under each contract is not dependent upon the price or performance of the other contract, and the goods or services under each contract are separate performance obligations.
A1AT Agreement
The Company concluded that the A1AT Agreement was within the scope of Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers, as the provision of research and development services is considered an output of the entity’s ordinary activities in exchange for consideration.
The Company identified a single performance obligation under the A1AT Agreement, which consists of the provision of certain nonclinical and clinical services through the completion of the Phase 1 clinical trial for any product.
The Company determined that the transaction price at inception of the A1AT Agreement consists of non-cash consideration in the form of the license received from Alnylam. The Company determined that the fair value of the non-cash consideration (the license received from Alnylam) is insignificant given the early-stage development status of the Alnylam Product and the related risks associated with developing a commercial product. The sales-based royalties that Dicerna may be entitled to receive in the event that Alnylam exercises its Commercialization Option have been excluded from the transaction price and will be recognized only if Alnylam exercises its Commercialization Option and the related sales occur.
As described above, Dicerna may be required to pay contingent milestones and royalties to compensate Alnylam for the license provided under the agreement. Given the uncertainty associated with these contingent payments, the Company established a derivative liability for these payments and recognized $6.0 million of other expense in the period ended December 31, 2020. In the six months ended June 30, 2021, the Company recognized an additional $1.75 million of other expense associated with this liability.
The Company has recorded development costs incurred under the A1AT Agreement as research and development expenses in the Company’s condensed consolidated statement of operations.
PH Agreement
The Company concluded that the PH Agreement is within the scope of ASC 610, Other Income – Gains and Losses from the Derecognition of Nonfinancial Assets, as the exchange of non-exclusive licenses is considered an exchange of non-financial assets outside the ordinary scope of business. Pursuant to ASC 610-20, the Company applied the guidance in ASC 606 to determine if a contract exists, identify the distinct non-financial assets, and determine when control transfers and, therefore, when to derecognize the asset. Additionally, the Company applied the measurement principles of ASC 606 to determine the amount of consideration, if any, to include in the calculation of the gain or loss for the non-financial asset.
The Company determined that it transferred control of a non-financial asset (the non-exclusive license granted to Alnylam) at contract inception. Applying the non-cash consideration guidance in ASC 606, the Company further determined that the fair value of the non-financial asset received (the non-exclusive license from Alnylam) was insignificant. Therefore, the Company concluded that no gain or loss would be recorded related to the PH Agreement at contract inception.
The Company has recorded costs related to its PH program as research and development expenses in the Company’s condensed consolidated statement of operations.

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Novo collaboration and share purchase agreements
Background
On November 15, 2019, Dicerna and Novo entered into a Collaboration and License Agreement (the “Novo Collaboration Agreement”). Under the terms of the Novo Collaboration Agreement, the Company and Novo seek to use GalXC to explore more than 30 gene targets associated with liver disease with the goal of delivering multiple clinical candidates for disorders including chronic liver disease, non-alcoholic steatohepatitis (“NASH”), type 2 diabetes, obesity, and rare diseases. The Company will conduct and fund discovery and preclinical development to clinical candidate selection for each liver cell target. Novo will be responsible for all further development and the commercialization of each candidate selected for development, with the Company manufacturing clinical candidates selected for Phase 1-related clinical development, subject to reimbursement for its manufacturing costs. In addition, the Company will assist Novo with the Investigational New Drug (“IND”) filing for the first development candidate. The Company also retains the ability to opt in to co-development of a total of two programs during clinical development in Phases 1-3, subject to limitations in the event of a change in control. If the Company exercises a co-development option, it also has an option to co-promote the product in the United States, subject to limitations in the event of a change in control of the Company. Additionally, the Company may lead the development and commercialization of two programs targeting orphan liver diseases, with Novo retaining the ability to opt in to both programs in Phases 1-3. The Company and Novo will share in profits and losses for the Company’s orphan liver and Novo products should both parties elect to co-develop.
The Company is working exclusively with Novo during the research collaboration period on the discovery, research, development, and commercialization of hepatocyte targets subject to certain exclusions including those targets subject to the Company’s existing partnerships, and Novo is, during a specified discovery period, working exclusively with the Company in any new research and development of compounds and products directed to collaboration targets using small interfering RNA (“siRNA”) conjugated to the sugar N-acetyl-D-galactosamine (“GalNAc”) to reduce the expression of specific target genes in the liver. Under the Novo Collaboration Agreement, the Company is providing Novo with exclusive and non-exclusive licenses and manufacturing support to enable Novo to commercialize products derived from or containing compounds developed pursuant to such agreement.
Under the terms of the Novo Collaboration Agreement, Novo paid the Company an upfront payment of $175.0 million, which was subject to delivery of target information, in January 2020. The Company is also eligible to receive an additional $75.0 million ($25.0 million at the end of each of the first three years of the Novo Collaboration Agreement), contingent upon the Company delivering GalXC molecules for a defined number of targets, and additional payments totaling up to approximately $357.5 million per target upon achievement of specified development, regulatory, and commercial milestones. In addition, Novo will pay the Company mid-single-digits to mid-teens royalties on product sales on a country-by-country and product-by-product basis until the later of 10 years after the date of first commercial sale of each product in such country, expiration of specified patent rights in such country, or the expiration of specified regulatory exclusivity in such country for GalXC products, subject to royalty step-down provisions set forth in the agreement.
In connection with the Novo Collaboration Agreement, the Company and Novo entered into the Novo Share Issuance Agreement on November 15, 2019, pursuant to which Novo purchased 2,279,982 shares (the “Novo Shares”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”), at a purchase price of $21.93 per share, for an aggregate purchase price of approximately $50.0 million.
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 the Company received in February 2021. Also during the fourth quarter of 2020, Novo confirmed that Dicerna met its annual obligation to deliver GalXC molecules for a defined number of targets for the first year of the Novo Collaboration Agreement, entitling the Company to a $25.0 million payment, which the Company received in February 2021.
Accounting Analysis
The Novo Collaboration Agreement and the Novo Share Issuance Agreement (collectively, “the Novo Agreements”) were executed on the same date and negotiated as a package. Management therefore concluded that the Novo Agreements are to be combined for accounting purposes and concluded that Novo is a customer in this arrangement pursuant to the revenue recognition guidance.
The Company identified contract promises under the agreement for the license of intellectual property and know-how rights for selected gene targets and research and development services to develop a clinical candidate for each selected gene target, including manufacturing activities. The Company may also be required to provide research and development services for an unspecified number of targets, with the goal of the collaboration being to develop clinical candidates for each of the selected gene targets. The Company determined that the license and research and development services were not capable of being distinct or distinct within the context of the contract. The research and development services to be provided by Dicerna are specialized in nature, specifically with respect to the Company’s therapeutic expertise related to RNAi and the Company’s GalXC conjugates. In addition, there is an interdependent
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relationship between the contract promises. As such, the Company concluded that there is a single identified combined performance obligation consisting of a license and research and development services.
The Company may be required to perform certain additional services after Novo’s nomination of a development candidate. These services include Phase 1-related activities, such as manufacturing through the approval of an IND application for a development candidate, research and development activities to support the filing of an IND application for the first development candidate, and other development services to support Novo’s development activities related to any development candidates. The Company will be reimbursed by Novo for these additional services. Because the provision of these additional goods and services are conditional on Novo electing to nominate a development candidate, the Company has concluded that these goods and services represent customer options and are not considered performance obligations.
The total transaction price for the Novo Agreements is $256.7 million, consisting of the total $175.0 million upfront compensation, the $75.0 million additional aggregate payments described above (payable in equal annual payments of $25.0 million), a $4.2 million premium on the sale of shares under the Novo Share Issuance Agreement, and a $2.5 million milestone earned in the fourth quarter of 2020 for achieving proof of principle for the first candidate. The Company applied equity accounting guidance to measure the $45.8 million recorded in equity upon the issuance of the shares. The upfront payment of $175.0 million was payable to the Company upon the delivery of a bioinformatics package and mapping plan for at least one of the initial targets selected by Novo and was paid in January 2020. If the Novo Collaboration Agreement is terminated prior to the third anniversary of its effective date, the Company is entitled to 80% of the outstanding and unearned annual payments. The Company assumed that the mapped targets will be delivered and that the contract will not be canceled. The Company has experience with mapping targets, and therefore, concluded that such amount does not need to be constrained. Accordingly, the Company included the $75.0 million of additional payments in the transaction price.
The Company used the most likely amount method to estimate variable consideration and estimated that the most likely amount for each potential future preclinical, development, and regulatory variable consideration milestone payment under this agreement was zero, as the achievement of those milestones is uncertain and highly susceptible to factors outside of the Company’s control. Accordingly, all potential future milestones were excluded from the transaction price. Management reevaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and adjusts the transaction price as necessary. Sales-based royalties, including milestone payments based on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the royalties relate. The Company will recognize such revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Revenue associated with the performance obligation is being recognized as services are provided using a cost-to-cost measure of progress method. The transfer of control occurs over time, as the Company’s performance does not create an asset with alternative use, and the Company has an enforceable right to payment for performance completed to date. In management’s judgment, this input method is the best measure of progress towards satisfying the performance obligation and reflects a faithful depiction of the transfer of goods and services.
The aggregate amount of the transaction price allocated to the Company’s unsatisfied or partially unsatisfied performance obligations under the Novo Collaboration Agreement at June 30, 2021 was $229.6 million. As of June 30, 2021, the Company expected to recognize the balance of deferred revenue over the remaining portion of the five-year research term, or four years, which may be extended for up to two years.
Roche collaboration agreement
Background
On October 30, 2019, the Company and Roche entered into a Collaboration and License Agreement (the “Roche Collaboration Agreement”). Under the terms of the Roche Collaboration Agreement, the Company and Roche seek to progress RG6346, the companies’ investigational therapy in clinical development, toward worldwide development and commercialization. The Roche Collaboration Agreement also provides an option for the companies to collaborate in the discovery, development, and commercialization of oligonucleotide therapeutics intended for the treatment of hepatitis B virus (“HBV”).
The Roche Collaboration Agreement requires that Dicerna complete the ongoing Phase 1 clinical trial, including additional Phase 1 cohorts that were requested by Roche for which Roche will reimburse the Company for the cost of the additional cohorts. Roche will lead the post-Phase 1 development and commercialization of the RG6346 program. Roche also had until receipt of interim Phase 1 data from the RG6346 Phase 1 study (but no later than December 31, 2020) to initiate a research and development collaboration with the Company to pursue up to five targets selected by Roche, (each a “Selected Target”), which are intended primarily to treat HBV. Under an amendment to the Roche Collaboration Agreement in June 2020, Roche and Dicerna agreed to extend the date for nomination of targets from December 31, 2020 to January 15, 2021, subject to further potential extension by the parties due to the
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COVID-19 global pandemic shutdowns. Under an additional amendment to the Roche Collaboration Agreement in May 2021, Roche and Dicerna further agreed to extend the date for nomination of the targets to June 15, 2021. In April 2020, Roche nominated the first target, and as of the three months ended June 30, 2021, Roche had nominated three of the up to five targets under the research and development portion of the Roche Collaboration Agreement. Under the terms of the Roche Collaboration Agreement, the goal of such research and development collaboration will be to select compounds developed by the Company or Roche for Roche’s continued development and commercialization. The Company’s and Roche’s research and early development organizations will work exclusively with each other during the research and development collaboration period on the discovery, research, and development of such targets selected by Roche, which includes the performance of certain services by Dicerna. Under the Roche Collaboration Agreement, the Company is providing Roche with exclusive and non-exclusive licenses to support Roche’s activities and to enable Roche to commercialize products derived from or containing compounds developed pursuant to such agreement.
Under the terms of the Roche Collaboration Agreement, Roche paid the Company a non-refundable upfront payment of $200.0 million in January 2020. The Company is also eligible to receive additional payments totaling up to approximately $1.47 billion, which includes payments upon achievement of specified development, regulatory, and commercial milestones. In addition, Roche will pay the Company up to mid-teens percent royalties on worldwide product sales. Royalties are payable until the later of 10 years after first commercial sale of each product in a country, expiration of patent rights in a country, or for products containing RG6346 in a given country, the expiration of data or regulatory exclusivity, subject to certain royalty step-down provisions set forth in the agreement. In addition, the Company has an option to co-fund the development of products under the agreement and, if exercised, receive high-twenties to mid-thirties royalty rates on net sales of products in the U.S. If the Company exercises the co-funding option, it also has an option to co-promote products containing RG6346 in the U.S.
Accounting Analysis
The Company concluded that Roche is a customer in this arrangement pursuant to the revenue recognition guidance. The Company identified contract promises under the agreement for (i) the license of intellectual property and know-how rights related to the lead compound, (ii) research and development services to complete the Phase 1 study associated with the lead compound, (iii) lead compound transfer activities, (iv) manufacturing of clinical supply for the lead compound Phase 1 study, and (v) Roche’s option to receive additional goods and services related to the research and development collaboration. The Company determined that the Roche Collaboration Agreement contains two performance obligations consisting of: (i) a combined performance obligation that includes a license, related development and manufacturing services to complete the Phase 1 study, and manufacturing obligations through the completion of the Phase 1 study related to the lead compound (the “RG6346 Performance Obligation”), and (ii) a material right to enter into a research and development collaboration to develop additional targets. While evaluating contract promises to determine whether each was capable of being distinct and distinct within the context of the contract, management considered the specialized nature of the services to be provided by Dicerna, specifically with respect to the Company’s therapeutic expertise related to RNAi and the Company’s GalXC conjugates and the interdependent relationship between the contract promises. As such, the Company concluded that the promises of the license and research and development services related to the lead compound were not distinct from each other. Accordingly, these promises were combined into one performance obligation, the RG6346 Performance Obligation. Upon Roche’s exercise of its option to enter into the research and development collaboration for which no additional consideration was received, Roche had the right to nominate up to five additional targets. For each target nominated, Roche received a license to the Selected Target, for which the Company will perform research services through clinical candidate selection. The Company concluded that, upon Roche’s nomination of a target, the license and related research services through clinical candidate selection for each Selected Target represents a combined performance obligation, which is separate from the RG6346 Performance Obligation. The Company is not required to perform services on more than three Selected Targets at any time. Roche also had the right to replace up to three Selected Targets if a clinical candidate could not be identified during the research term.
The total transaction price for the Roche Collaboration Agreement is $232.1 million, consisting of the $200.0 million upfront payment, a $25.0 million milestone payment associated with Roche’s initiation of RG6346 in a Phase 2 combination trial, and the estimated reimbursement from Roche related to the additional cohorts. The Company used the most likely amount method to estimate the amount of reimbursement, which was considered variable consideration. As reimbursement will be made as the Company performs the related services, the Company concluded that such amount does not need to be constrained, and therefore, included the full amount of the estimated reimbursement by Roche in the transaction price.
The Company also estimated that the most likely amount for each potential future development and regulatory variable consideration milestone payment under this agreement was zero at contract inception, as the achievement of those milestones was uncertain and highly susceptible to factors outside of the Company’s control. Accordingly, all potential future milestones were initially excluded from the transaction price. Management reevaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and adjusts the transaction price as necessary. Sales-based royalties, including milestone payments based on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the royalties relate. The Company will recognize such revenue at the later of (i) when the related sales
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occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
The Company allocated the current $232.1 million transaction price to the performance obligations on a relative standalone selling price basis. The Company estimated the standalone selling price for the lead compound performance obligation using the adjusted market assessment approach, whereby the Company adjusted comparable third-party transactions to reflect the stage of development of the Company’s asset. To determine the estimated standalone selling price of the material right, the Company estimated the standalone selling price of the underlying performance obligations included in the material right and estimated the probability of Roche exercising such underlying performance obligations. The Company concluded that the research and development collaboration material right contained (i) five material rights to receive a selected target license and related research and development services, and (ii) three material rights to receive a replacement selected target license and related research and development services. Upon the nomination of a target, the Selected Target license and related research services through clinical candidate selection are accounted for as a combined performance obligation. The value of the material right related to the Selected Target is included in the transaction price for the combined performance obligation. The variable consideration related to the reimbursement from Roche for the additional Phase 1 cohorts and any milestones and royalties that are achieved will be allocated specifically to the lead compound performance obligation, as this variable consideration relates specifically to the Company’s satisfaction of the lead compound performance obligation and such allocation has been determined to be consistent with the allocation objective of the revenue recognition guidance.
Revenue associated with the lead compound performance obligation is recognized as services are provided using a cost-to-cost measure of progress method. The transfer of control occurs over time, as the Company’s performance does not create an asset with alternative use, and the Company has an enforceable right to payment for performance completed to date. In management’s judgment, this input method is the best measure of progress towards satisfying the performance obligation and reflects a faithful depiction of the transfer of goods and services. The transaction price allocated to the research and development collaboration material right is recognized based on the timing of recognition of the underlying performance obligations that comprise the material right, or upon expiry of the material right if such right is not exercised.
The aggregate amount of the transaction price allocated to the Company’s unsatisfied or partially unsatisfied performance obligations under the Roche Collaboration Agreement at June 30, 2021 was $122.1 million. As of June 30, 2021, the Company expects to recognize the balance of deferred revenue during the research term of up to five years.
Lilly collaboration and share purchase agreements
Background
On October 25, 2018, the Company entered into a Collaboration and License Agreement with Lilly (the “Lilly Collaboration Agreement”) for the discovery, development, and commercialization of potential new medicines in the areas of cardiometabolic disease, neurodegenerative diseases, and pain. Under the terms of the Lilly Collaboration Agreement, the Company and Lilly will use the Company’s proprietary GalXC RNAi technology to progress new drug targets toward clinical development and commercialization. In addition, the Company and Lilly will collaborate on non-liver (i.e., extrahepatic) tissues, including neural tissues.
The Company will work exclusively with Lilly in the neurodegenerative disease and pain fields, with the exception of mutually agreed upon orphan indications. Additionally, the Company will work exclusively with Lilly on select targets in the cardiometabolic field. Under the Lilly Collaboration Agreement, the Company will provide Lilly with exclusive and non-exclusive licenses to support the companies’ activities and to enable Lilly to commercialize products derived from or containing compounds developed pursuant to such agreement. The Lilly Collaboration Agreement provides for three initially named hepatocyte targets, and the Company and Lilly developed research programs with the goal of researching and developing multiple lead candidates directed to each of these initial targets. The Lilly Collaboration Agreement contemplates in excess of ten targets.
Lilly paid the Company a non-refundable upfront payment of $100.0 million. The Company is also eligible to receive up to $350.0 million per target in development and commercialization milestones, in addition to a $5.0 million payment, which will become due for each of the extrahepatic targets when a product candidate achieves proof of principle in an animal model. In addition, the Company is eligible to earn mid-single- to low-double-digit royalties on product sales on a country-by-country and product-by-product basis until the later of expiration of patent rights in a country, the expiration of data or regulatory exclusivity in such country, or 10 years after the first product sale in such country, subject to certain royalty step-down provisions set forth in the agreement.
Simultaneously with the entry into the Lilly Collaboration Agreement, the Company and Lilly entered into a Share Purchase Agreement (the “Lilly Share Issuance Agreement”), pursuant to which Lilly purchased 5,414,185 shares of the Company’s common stock at $18.47 per share, for an aggregate purchase price of $100.0 million. The Lilly Share Issuance Agreement is to be combined with the Lilly Collaboration Agreement (together, the “Combined Agreements”) for accounting purposes.
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During the fourth quarter of 2020, Dicerna achieved a milestone associated with the first filing of an IND application for LY3561774, targeting the ANGPTL3 gene for the treatment of dyslipidemia, with the FDA, entitling the Company to a $10.0 million payment. The Company received this payment in the fourth quarter of 2020.
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.
During the second quarter of 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. The Company received this payment in the second quarter of 2021.
Accounting Analysis
The Company concluded that Lilly is a customer in this arrangement. As such, the element of the arrangement unrelated to the issuance of the shares falls within the scope of the revenue recognition guidance. The Company identified contract promises under the Combined Agreements for licenses of intellectual property and know-how rights, associated research and development services for targets and for exploration of new applications of the Company’s RNAi technology to non-liver targets, and participation on a joint steering committee. The Company determined that the contract promises were not separately identifiable and were not distinct or distinct within the context of the contract due to the specialized nature of the services to be provided by Dicerna, specifically with respect to the Company’s therapeutic expertise related to RNAi and the Company’s GalXC conjugates, and the interdependent relationship between the contract promises. As such, the Company concluded that there was a single identified combined performance obligation. The total transaction price for the Combined Agreements is $168.7 million, consisting of the total $100.0 million upfront compensation, $48.7 million premium on the sale of shares under the Lilly Share Issuance Agreement, and $10.0 million milestones for the achievement of each of the IND filings. The Company applied equity accounting guidance to measure the $51.3 million recorded in equity upon the issuance of the shares.
The Company used the most likely amount method to estimate variable consideration and estimated that the most likely amount for each potential future development milestone payment under this agreement was zero, as the achievement of those milestones is uncertain and highly susceptible to factors outside of the Company’s control. Accordingly, all potential future milestones were excluded from the transaction price. Management reevaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and adjusts the transaction price as necessary. Sales-based royalties, including milestone payments based on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the royalties relate. The Company will recognize such revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Revenue associated with the performance obligation will be recognized as services are provided using a cost-to-cost measure of progress method. The transfer of control occurs over time and, in management’s judgment, this input method is the best measure of progress towards satisfying the performance obligation and reflects a faithful depiction of the transfer of goods and services.
The aggregate amount of the transaction price allocated to the Company’s unsatisfied or partially unsatisfied performance obligations under the Lilly Collaboration Agreement at June 30, 2021 was $93.0 million. As of June 30, 2021, the Company expected to recognize the majority of this amount over the remaining research term of the agreement, which is expected to extend through the fourth quarter of 2022.
Alexion collaboration and equity agreements
Background
On October 22, 2018, the Company and Alexion entered into a Collaborative Research and License Agreement (the “Alexion Collaboration Agreement”). The Alexion Collaboration Agreement is for the joint discovery and development of RNAi therapies for complement-mediated diseases. The Company and Alexion will collaborate on the discovery and development of two subcutaneously delivered GalXC candidates, currently in preclinical development, for the treatment of complement-mediated diseases with potential global commercialization by Alexion. The Company will lead the joint discovery and research efforts through the preclinical stage, and Alexion will lead development efforts beginning with Phase 1 studies. The Company will be responsible for manufacturing of the GalXC candidates through the completion of Phase 1, and certain related costs will be paid by Alexion. Alexion will be solely responsible for the manufacturing of any product candidate subsequent to the completion of Phase 1. The Alexion Collaboration Agreement provides Alexion with exclusive worldwide licenses as well as development and commercial rights to the GalXC RNAi
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molecules developed in the collaboration in exchange for development and approval-related milestones, sales milestones, and royalties on future product sales.
Alexion paid the Company a non-refundable upfront payment of $22.0 million. The Alexion Collaboration Agreement also provides for potential additional payments to the Company of up to $600.0 million from proceeds from target option exercises and development and sales milestones, as defined in the agreement, which includes: (i) option exercise fees of up to $20.0 million, representing $10.0 million for each of the targets selected; (ii) development milestones of up to $105.0 million for each product; and (iii) aggregate sales milestones of up to $160.0 million. Alexion also agreed to pay the Company mid-single- to low-double-digit royalties on potential product sales on a country-by-country, product-by-product basis until the later of the expiration of patent rights in a country, the expiration of market or regulatory exclusivity in such country, or 10 years after the first product sale in such country, subject to certain royalty step-down provisions set forth in the agreement.
Simultaneously with the entry into the Alexion Collaboration Agreement, the Company and Alexion entered into a Share Purchase Agreement (the “Alexion Share Issuance Agreement”), pursuant to which Alexion purchased 835,834 shares of the Company’s common stock at $17.95 per share at issuance, for an aggregate purchase price of $15.0 million. Management concluded that the Alexion Share Issuance Agreement was to be combined with the Alexion Collaboration Agreement (together, the “Alexion Agreements”) for accounting purposes. With respect to the $15.0 million of cash received upon issuance of the shares, the Company applied equity accounting guidance to measure the $9.1 million recorded in equity upon the issuance of the shares, and the remaining $5.9 million was included as a component of the transaction price attributable to the revenue arrangement.
Accounting Analysis
The Company concluded that Alexion is a customer in this arrangement, and as such, the element of the arrangement unrelated to the issuance of the shares falls within the scope of the revenue recognition guidance. The Company identified the following promises under the arrangement: (i) the grant of licenses of intellectual property and know-how rights; (ii) the option to select additional targets; (iii) the option to perform validation testing on additional targets; (iv) associated research and development services for the initial and, as applicable, additional targets; and (v) participation in the joint steering committee. The Company concluded that the research and development services were not capable of being distinct from the research and development licenses, and were not distinct within the context of the contract, and should therefore be combined into a single performance obligation for each program. The Company considered the level of Alexion’s therapeutic expertise specifically related to RNAi, as well as Alexion’s know-how of the Company’s GalXC conjugates, and concluded that Alexion cannot benefit from the granted license on its own or together with other resources that are readily available to Alexion, including relationships with oligonucleotide vendors who synthesize GalXC conjugates under contract with the Company. The Company also concluded that, while participation on the joint steering committee was capable of being distinct, participation is not distinct from the research and development services within the context of the contract, as they are both inputs to the combined output of a target that successfully achieves IND approval. As a result, the combination of the license of intellectual property together with the provision of research and development services and participation on the joint steering committee together represent the highest level of goods and services that can be deemed distinct.
Additionally, the Company determined that the options to select additional targets and to perform validation testing on additional targets were not priced at a discount and, as such, do not provide Alexion with material rights. Based on management’s assessments, the Company identified a single performance obligation, namely, the combined license and research and development services, for each of the two initially nominated targets.
The Alexion Collaboration Agreement transaction price is $51.1 million, consisting of the $22.0 million upfront payment, the $5.9 million equity premium identified upon issuance of the shares, as described above, $19.5 million in aggregate contingent milestone payments that were either received or probable of achievement and under the Company’s control, and $3.7 million of variable consideration for certain manufacturing initiatives reimbursed by Alexion.
The Company used the most likely amount method to estimate variable consideration and estimated that the most likely amount for each potential future development milestone payment under this agreement was zero, as the achievement of those milestones is uncertain and highly susceptible to factors outside of the Company’s control. Accordingly, such milestones were initially excluded from the transaction price. Management reevaluates the transaction price at the end of each reporting period and as uncertain events are resolved or other changes in circumstances occur and adjusts the transaction price as necessary. Sales-based royalties, including milestone payments based on the level of sales, were also excluded from the transaction price, as the license is deemed to be the predominant item to which the royalties relate. The Company will recognize such revenue at the later of (i) when the related sales occur, or (ii) when the performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied).
Revenue associated with the performance obligation is being recognized as services are provided using an input method based on a cost-to-cost measure of progress. The transfer of control occurs over time and, in management’s judgment, this input method is the
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best measure of progress towards satisfying the performance obligations and reflects a faithful depiction of the transfer of goods and services.
In November 2019, the Company and Alexion amended the Alexion Collaboration Agreement (the “Alexion Amendment”) to clarify funding of certain manufacturing costs for each of the two initial targets and increased milestone payments for the additional targets if Alexion exercised its options for the two additional targets.
In December 2019, Alexion exercised its options for the exclusive rights to two additional targets within the complement pathway for the discovery and development of GalXC molecules. These exercises expanded the companies’ existing research collaboration and license agreement to now encompass four targets within the complement pathway. In connection with the option exercises, Alexion paid Dicerna a total of $20.0 million, or $10.0 million in option exercise fees per additional new target, that are being recognized into revenue as the related services are performed.
The Company concluded that the Alexion Amendment modified the original agreement, as the transaction price was changed as a result of Dicerna assuming responsibility for certain manufacturing costs associated with the initial targets. For accounting purposes, the exercise of the options created a separate new arrangement from the Alexion Collaboration Agreement for the two new targets.
The Company concluded that Alexion is a customer in the Alexion Amendment. The Company identified the following promises under the Alexion Amendment: (i) the grant of licenses of intellectual property and know-how rights, and (ii) associated research and development services for the additional targets. The Company concluded that the research and development services were not capable of being distinct from the licenses and were not distinct within the context of the contract, and should therefore be combined into a single performance obligation for each program. Similar to the initial targets, the Company considered the level of Alexion’s therapeutic expertise specifically related to RNAi, as well as Alexion’s know-how of the Company’s GalXC conjugates, and concluded that Alexion could not benefit from the granted license on its own or together with other resources that are readily available to Alexion. As a result, the combination of the license of intellectual property together with the provision of research and development services represents the highest level of goods and services that can be deemed distinct. Based on management’s assessments, the Company identified a single performance obligation, namely, the combined license and research and development services, for each of the two additional targets. The transaction price of the Alexion Amendment was determined to be $35.0 million, consisting of the $20.0 million in option exercise fees and $15.0 million in aggregate contingent milestone payments that were probable of achievement and under the Company’s control.
The aggregate amount of the transaction price allocated to the Company’s unsatisfied or partially unsatisfied performance obligations under the Alexion Agreements at June 30, 2021 was $39.2 million. As of June 30, 2021, the Company expects the majority of deferred revenue to be recognized through the third quarter of 2023.
The following table provides a summary of revenue recognized for the Alexion Agreement and the Alexion Amendment:
THREE MONTHS ENDED
JUNE 30,
SIX MONTHS ENDED
JUNE 30,
2021202020212020
Alexion Agreement$2,316 $5,792 9,505 $7,914 
Alexion Amendment171 1,271 799 1,911 
Total$2,487 $7,063 $10,304 $9,825 

The following tables provide a summary of deferred revenue balances for the Alexion Agreement and the Alexion Amendment:
JUNE 30, 2021
CURRENTNONCURRENTTOTAL
Alexion Agreement$6,951 $3,166 $10,117 
Alexion Amendment1,303 27,736 29,039 
Total$8,254 $30,902 $39,156 
DECEMBER 31, 2020
CURRENTNONCURRENTTOTAL
Alexion Agreement$9,216 $7,528 $16,744 
Alexion Amendment9,464 20,323 29,787 
Total$18,680 $27,851 $46,531 
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BI agreement and related amendment
BI agreement – Background
On October 27, 2017, the Company entered into a collaborative research and license agreement with BI (the “BI Agreement”), pursuant to which the Company and BI jointly research and develop product candidates for the treatment of chronic liver disease using GalXC. The BI Agreement is for the development of product candidates against one target gene with an option for BI to add the development of product candidates that target a second gene (the “Second Target”). Pursuant to the BI Agreement, Dicerna granted BI a worldwide license in connection with the research and development of such product candidates and transferred certain intellectual property rights of the selected product candidates to BI for clinical development and commercialization. Dicerna also may provide assistance to BI to help BI further develop selected product candidates. BI paid Dicerna a non-refundable upfront payment of $10.0 million for the first target. BI also agreed to reimburse Dicerna certain third-party expenses of $0.3 million.
Under the BI Agreement, the Company would have been eligible to receive potential development and commercial milestones as well as royalty payments on potential global net sales, subject to certain adjustments related to the first target, had BI determined to continue development of that target. BI’s Second Target option provided for an option fee payment of $5.0 million and success-based development and commercialization milestones and royalty payments to Dicerna.
BI agreement – Accounting Analysis
The Company concluded that BI is a customer in this arrangement, and as such, the arrangement falls within the scope of the revenue recognition guidance. The Company identified the following promises under the contract: the license of intellectual property and conducting agreed-upon research program services. The Company concluded that the license and research and development services are not capable of being distinct and are not distinct within the context of the contract; therefore, the Company considers these to be one performance obligation. The Company concluded that the option underlying the transfer of future licenses and potential associated research for any not-yet-known target gene is not a performance obligation of the contract at inception because the option fee reflects the standalone selling price of the option, and therefore, the option is not considered to be a material right. The Company considered the level of BI’s therapeutic expertise specifically related to RNAi, as well as BI’s know-how with regard to the Company’s GalXC conjugates, and concluded that BI cannot benefit from the granted license on its own or together with other resources that are readily available to BI, including relationships with oligonucleotide vendors who synthesize GalXC conjugates under contract with the Company. As a result, the combination of the license of intellectual property together with the provision of research and development support services represents the highest level of goods and services that can be deemed distinct.
Based on management’s evaluation, the $10.0 million non-refundable upfront fee and the $0.3 million agreed-upon reimbursable third-party expenses constituted the amount of the consideration to be included in the transaction price and were allocated to the performance obligation identified. None of the development milestones were included in the transaction price during the period, since none of such milestone amounts were within the control of the Company and were not considered probable to occur until confirmed by BI, at BI’s sole discretion. Any consideration related to commercial sales-based milestones related to the first target (including royalties) would have been recognized at the later of (i) when the related sales occurred, or (ii) when the performance obligation to which some or all of the royalty had been allocated had been satisfied (or partially satisfied).
The $10.3 million transaction price for the first target was recognized through July 2019, which was the point when the Company’s obligation to provide research support services to BI for the first target ended. Related revenue was recognized on a straight-line basis, which was, in management’s judgment, an appropriate measure of progress toward satisfying the performance obligation.
BI agreement-related amendment – Background
In October 2018, BI exercised its Second Target option, which entitled the Company to a non-refundable payment of $5.0 million and reimbursement of $0.7 million for certain third-party expenses. The terms of the Second Target option exercise and related rights and obligations associated with the Second Target were agreed to in an Additional Target Agreement (the “ATA”), as amended, which was entered into on December 31, 2018.
Under the terms of the ATA, BI is responsible for future clinical development and commercialization of candidate products for the Second Target. Additionally, during the term of the research program, BI will reimburse the Company for certain expenses. The Company is eligible to receive up to $170.0 million in potential development and commercial milestones related to the Second Target. The Company is also eligible to receive tiered royalty payments on potential global net sales, subject to certain adjustments, in the mid-single digits. Except as otherwise set forth in the ATA, development of the Second Target is subject to the terms of the original BI Agreement.
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BI agreement-related amendment – Accounting Analysis
The exercise of the Second Target option on December 31, 2018 through the ATA created a new arrangement for accounting purposes, and management determined that the $5.0 million exercise price with the $0.7 million of reimbursable expenses was representative of the standalone selling price. Consistent with the reasons described related to the first target, management concluded that the non-refundable Second Target option exercise fee (akin to an upfront payment) and reimbursable expenses constituted the amount of the consideration to be included in the transaction price and were allocated to the single performance obligation. The basis for the conclusions regarding the treatment of development and sales-based milestones associated with the Second Target are consistent with those associated with the initial combined performance obligation under the BI Agreement. Management reevaluates the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
Consistent with the first target, revenue is recognized on a straight-line basis, which is in management’s judgment an appropriate measure of progress toward satisfying the performance obligation. The Company began recognizing the $5.7 million transaction price as revenue in January 2019 and continued through November 2020, which was the point when the Company’s obligation to provide research support services to BI for the Second Target ended. In May 2021, the Company announced that BI had accepted a GalXC RNAi candidate for advancement under the ATA. Acceptance of the DCR-LIV2 compound as a development candidate triggered a single-digit multimillion-dollar milestone payment to Dicerna, which the Company received and recognized in full in the second quarter of 2021. There were no unsatisfied performance obligations under the BI ATA at June 30, 2021.
In addition to establishing the terms of the Second Target option exercise, the ATA also amended the BI Agreement to provide the parties the opportunity to consider the development of product candidates targeting a further additional target gene (the “Third Target Option”). Per the ATA, if BI elects to exercise the Third Target Option following Dicerna’s presentation of data for a new product candidate, the parties must also agree to a research work plan and budget for the additional gene and negotiate development and commercialization milestones and royalty payments to the Company, and upon such agreement and consummation of such exercise, BI would make an option fee payment to the Company of $5.0 million. This option exercise fee is consistent with the Second Target option exercise fee, which management concluded was representative of the standalone selling price. If BI chooses to exercise the Third Target Option, the Company will be responsible for the discovery and initial profiling of the product candidates, including primary preclinical studies, synthesis, and delivery. BI will be responsible for evaluating and selecting the product candidates for further development. If BI selects one or more product candidates, it will be responsible for further preclinical development, clinical development, manufacturing, and commercialization of those products. If the Third Target Option is exercised, such exercise would result in a new arrangement for accounting purposes, as the licensing rights and research and development services underlying the Third Target Option are distinct from those associated with the first and Second Targets.
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Revenue summary
The following table provides a summary of revenue recognized:
THREE MONTHS ENDED
JUNE 30,
SIX MONTHS ENDED
JUNE 30,
2021202020212020
Novo$6,700 $2,447 $13,312 $4,052 
Roche14,234 20,677 39,845 39,984 
Lilly14,735 9,487 22,298 19,069 
Alexion2,487 7,063 10,304 9,825 
BI3,181 774 3,181 1,546 
Total$41,337 $40,448 $88,940 $74,476 
The following tables provide a summary of deferred revenue balances:
JUNE 30, 2021
CURRENTNONCURRENTTOTAL
Novo$36,829 $142,795 $179,624 
Roche62,022 55,019 117,041 
Lilly53,095 39,890 92,985 
Alexion8,254 30,902 39,156 
Total$160,200 $268,606 $428,806 

DECEMBER 31, 2020
CURRENTNONCURRENTTOTAL
Novo$30,169 $162,630 $192,799 
Roche49,493 81,273 130,766 
Lilly40,195 64,482 104,677 
Alexion18,680 27,851 46,531 
Total$138,537 $336,236 $474,773 
The Company recognized the following revenues as a result of changes in contract liability balances:
THREE MONTHS ENDED
JUNE 30,
SIX MONTHS ENDED
JUNE 30,
2021202020212020
Amounts included in deferred revenue at the beginning of the period (1)
$31,947 $38,595 $60,260 $65,278 
Performance obligations satisfied (or partially satisfied) in previous reporting periods (2)
$6,431 $1,011 $20,188 $2,004 

(1) The Company determines the revenue recognized in each period from contract liabilities by first attributing revenue to the     individual contract liability balance outstanding at the beginning of the period. If additional consideration is received on those contracts in subsequent periods, we assume all revenue recognized in the reporting period first applies to the beginning contract liability as opposed to the new consideration for the period.

(2) Relates to changes in estimated costs for the Company’s future performance obligations and estimated variable consideration
7.     ROYALTY PHARMA FINANCING
Pursuant to the PH Agreement between Dicerna and Alnylam that was signed in 2020, Dicerna became entitled to royalties on worldwide net product sales of Alnylam’s PH product, OXLUMO™ (lumasiran). Under the terms of the PH Agreement, Dicerna was entitled to royalties in the mid- to high-single-digits based on OXLUMO global net sales. Refer to Note 6 – Collaborative Research And License Agreements for further information.
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In April 2021, the Company sold its right to receive royalties from sales of OXLUMO to Royalty Pharma plc for an upfront cash payment of $180.0 million and up to $60.0 million in contingent sales-based milestone payments. The Company evaluated the arrangement to determine whether the upfront payment should be accounted for as debt or deferred income and determined that, as none of the criteria for classification as debt had been met, the proceeds from the upfront payment should be recorded as deferred income on the condensed consolidated balance sheets. The Company applies the “units-of-revenue” method of recognition of this income in the condensed consolidated statements of operations, and such amounts are recorded in other (expense) income.
8.    STOCK-BASED COMPENSATION
The Company has classified stock-based compensation in its condensed consolidated statements of operations as follows:
THREE MONTHS ENDED
JUNE 30,
SIX MONTHS ENDED
JUNE 30,
2021202020212020
Research and development expenses
$7,143 $4,578 $13,577 $8,881 
General and administrative expenses
6,490