| Item 1.01 | Entry into a Material Definitive Agreement. |
On October 25, 2018, Dicerna Pharmaceuticals, Inc. (the “Company”) and Eli Lilly and Company (“Lilly”) entered into a Collaboration and License Agreement (the “Lilly Collaboration Agreement”). The Lilly Collaboration Agreement is for the discovery, development, and commercialization of potential new medicines in the areas of cardio-metabolic disease, neurodegeneration, and pain. Under the terms of the Lilly Collaboration Agreement, the Company and Lilly will seek to use the Company’s proprietary GalXC™ RNAi technology platform to progress new drug targets toward clinical development and commercialization. In addition, the Company and Lilly will collaborate to develop a new nucleic acid platform technology to generate next-generation oligonucleotide therapeutic agents.
The Lilly Collaboration Agreement provides that the Company will work exclusively with Lilly in the neurodegeneration 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 cardio-metabolic field. Under the Lilly Collaboration Agreement, the Company will provide Lilly with exclusive andnon-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 contemplates in excess of 10 targets.
Under the terms of the Lilly Collaboration Agreement, Lilly will pay the Company anon-refundable,non-creditable upfront payment of $100.0 million, with Lilly making a concurrent $100.0 million equity investment in the Company pursuant to a share issuance agreement between the parties (the “Lilly Share Issuance Agreement”). Under the Lilly Collaboration Agreement, the Company is also eligible to receive up to approximately $350.0 million per target in development and commercialization milestones, in addition to a $5.0 million payment due when the firstnon-hepatocyte target achieves proof of principle. In addition, the Lilly Collaboration Agreement also provides that Lilly will pay to the Companymid-single tolow-double digit royalties on product sales on acountry-by-country andproduct-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.
The Lilly Collaboration Agreement includes various representations, warranties, covenants, indemnities, and other customary provisions. Lilly may terminate the Lilly Collaboration Agreement at any time without cause following a90-day notice period. Either party may terminate the Lilly Collaboration Agreement in the event of an uncured material breach of the other party. The Lilly Collaboration Agreement is subject to clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), and other customary closing conditions.
Lilly Share Issuance Agreement
In connection with the Lilly Collaboration Agreement, the Company and Lilly entered into the Lilly Share Issuance Agreement on October 25, 2018, pursuant to which the Company agreed to issue to Lilly 5,414,185 shares (the “Lilly Shares”) of the Company’s common stock, par value $0.0001 per share (“Common Stock”), at a purchase price of $18.47 per share, for an aggregate purchase price of approximately $100.0 million. The issuance of the Lilly Shares is subject to clearance under the HSR Act and other customary closing conditions. The Lilly Share Issuance Agreement contains customary representations, warranties, and covenants of each party. The Lilly Share Issuance Agreement will automatically terminate if the Lilly Collaboration Agreement is terminated prior to the closing of the transactions contemplated by the Lilly Share Issuance Agreement.
Pursuant to the terms of the Lilly Share Issuance Agreement, Lilly may not, without the prior approval of the Company or except in the case of a third party tender offer, dispose of any of the Lilly Shares for a nine-month period of time commencing on the closing date of the Lilly Share issuance. Additionally, under the Lilly Share Issuance Agreement, Lilly may participate in some public offerings and private placements of the Company, subject to share ownership requirements and other limitations set forth in the Lilly Share Issuance Agreement.
The foregoing summaries are qualified in their entirety by reference to the Lilly Collaboration Agreement and Lilly Share Issuance Agreement (together, the “Agreements”). The Company will seek confidential treatment from the Securities and Exchange Commission for portions of the Lilly Collaboration Agreement. The Agreements, subject to such confidential treatment with respect to the Lilly Collaboration Agreement, will be filed as exhibits to the Company’s Annual Report on Form10-K for the year ended December 31, 2018.
