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Dicerna Pharmaceuticals Inc – IPO: ‘FWP’ on 1/29/14 re: Dicerna Pharmaceuticals Inc

On:  Wednesday, 1/29/14, at 10:54am ET   ·   Accession #:  1193125-14-25714   ·   File #:  333-193150

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  As Of                Filer                Filing    For·On·As Docs:Size              Issuer               Agent

 1/29/14  Dicerna Pharmaceuticals Inc       FWP                    1:148K Dicerna Pharmaceuticals Inc       RR Donnelley/FA

Document/Exhibit                   Description                      Pages   Size 

 1: FWP         Free Writing Prospectus                             HTML    125K 

Issuer Free Writing Prospectus dated January 29, 2014

Filed Pursuant to Rule 433

Relating to the Preliminary Prospectus dated January 21, 2014 and

Registration Statement No. 333-193150

DICERNA PHARMACEUTICALS, INC.

This free writing prospectus relates only to the shares of common stock described below and should be read together with the preliminary prospectus, dated January 21, 2014 (Preliminary Prospectus), included in Amendment No. 2 to the Registration Statement on Form S-1 (File No. 333-193150) of Dicerna Pharmaceuticals, Inc., relating to its initial public offering of common stock. The Preliminary Prospectus has been updated by Amendment No. 4 to the Registration Statement filed with the Securities and Exchange Commission (SEC) on January 29, 2014. A copy of the most recent preliminary prospectus included in Amendment No.  4 to the Registration Statement can be accessed through the following link: http://www.sec.gov/Archives/edgar/data/1399529/000119312514025536/d662742ds1a.htm.

This free writing prospectus contains certain information set forth in Amendment No. 4 to the Registration Statement and updates and, to the extent inconsistent therewith or prepared based on assumptions that are inconsistent with the information below, supersedes the information contained in the Preliminary Prospectus. All references to captions correspond to the Preliminary Prospectus unless otherwise specified. The information set forth in this free writing prospectus primarily relates to an increase in our assumed initial public offering price to $14.00 per share, an increase in the shares of our common stock to be offered to 6,000,000 shares, an increase in the shares of common stock that may be purchased by the underwriters upon the exercise of their option to purchase additional shares, if any, to up to 900,000 shares, changes relating to the listing of common stock on The NASDAQ Global Select Market, updates to the proposed participation in the offering by certain of our existing stockholders, including certain affiliates of our directors, changes in response to comments from the staff of the SEC (Staff) set forth in a letter dated as of January 27, 2014, changes made in connection with a letter submitted by the Company to the SEC concurrently with the filing of Amendment No. 4 to the Registration Statement, an increase in the shares of common stock reserved for issuance pursuant to future awards under our 2014 Performance Incentive Plan to 1,900,000 shares, revisions of certain provisions in our amended and restated bylaws and other changes summarized below. As used in this free writing prospectus, unless otherwise noted, “we,” “us,” “our” and the “Company” refer to Dicerna Pharmaceuticals, Inc. and, where appropriate, its consolidated subsidiary.

The following summarizes the information contained in Amendment No. 4 to the Registration Statement and supplements and updates the information contained in the Preliminary Prospectus.

The Company has filed a registration statement (including a preliminary prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the preliminary prospectus in that registration statement and other documents the Company has filed with the SEC for more complete information about the Company and this offering. You may get these documents for free by visiting EDGAR on the SEC website at www.sec.gov. Alternatively, a copy of the preliminary prospectus may be obtained from the offices of: Jefferies LLC, Attention: Equity Syndicate Prospectus Department, 520 Madison Avenue, 12th Floor, New York, NY 10022, telephone: (877) 547-6340, e-mail: Prospectus_Department@Jefferies.com; Leerink Partners LLC, Attention: Syndicate Department, One Federal Street, 37th Floor, Boston, MA, 02110, or by email at Syndicate@Leerink.com, or by phone at 800-808-7525; or Stifel, Nicolaus & Company, Incorporated, One Montgomery Street, Suite 3700, San Francisco, California 94104, Attention: Syndicate, (415) 364-2720.

EXHIBIT A

SUMMARY FINANCIAL AND OTHER DATA

The disclosure set forth on page 9 of the Preliminary Prospectus under the heading “Summary Financial and Other Data” has been updated by replacing the table on page 9 of the Preliminary Prospectus and the footnotes thereto in their entirety with the following.

EXHIBIT B

CAPITALIZATION

The disclosure set forth in the Preliminary Prospectus under the heading “Capitalization” has been replaced in its entirety with the following.

The following table sets forth our cash and cash equivalents and capitalization as of September 30, 2013:

The information below is illustrative only. Our cash and cash equivalents and capitalization following the closing of this offering will be adjusted based on the actual initial public offering price and other terms of this offering determined at the pricing of this offering. You should read this table in conjunction with our financial statements and related notes and the sections titled “Selected Historical Financial Information and Other Data,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Use of Proceeds” and “Description of Capital Stock” appearing elsewhere in this prospectus.

The number of shares of common stock issued and outstanding actual, pro forma and pro forma as adjusted in the table above excludes the following shares as of September 30, 2013 (giving effect to the reverse stock split effected by us on July 25, 2013):

EXHIBIT C

RISK FACTORS

The disclosure set forth on page 34 of the Preliminary Prospectus under the heading “Risk Factors—Risk Related to Our Common Stock and This Offering—You will experience immediate and substantial dilution as a result of this offering and may experience additional dilution in the future” has been updated by replacing, in its entirety, the first sentence of the paragraph below such heading with the following.

If you purchase common stock in this offering, assuming a public offering price of $14.00 set forth on the cover of this prospectus, you will incur immediate and substantial dilution of $6.61 per share, representing the difference between the assumed initial public offering price of $14.00 per share and our pro forma net tangible book value per share as of September 30, 2013 after giving effect to this offering and the conversion of all outstanding shares of our preferred stock upon the closing of this offering.

DILUTION

The disclosure set forth in the Preliminary Prospectus in the section titled “Dilution” has been replaced in its entirety with the following.

If you invest in our common stock, your interest will be diluted to the extent of the difference between the public offering price per share of our common stock that you pay and the pro forma as adjusted net tangible book value per share of our common stock after this offering. Net tangible book value per share is determined by dividing our total tangible assets less our total liabilities by the number of shares of common stock outstanding. Our historical net tangible book value as of September 30, 2013 was $47.7 million, or $1,696.83 per share, based on 28,093 shares of common stock outstanding as of September 30, 2013. Our pro forma net tangible book value as of September 30, 2013 was $48.1 million, or $4.53 per share, based on the total number of shares of our common stock outstanding as of September 30, 2013, after giving effect to the automatic conversion of all outstanding shares of our preferred stock as of September 30, 2013 into an aggregate of 10,589,434 shares of common stock immediately prior to the completion of this offering.

Net tangible book value dilution per share represents the difference between the amount per share paid by new investors who purchase shares from us in this offering and the pro forma net tangible book value per share of common stock immediately after completion of this offering. As of September 30, 2013, after giving effect to our sale of 6,000,000 shares of common stock in this offering at an assumed initial offering price of $14.00 per share set forth on the cover page of this prospectus, and after deducting estimated underwriting discounts and commissions and estimated offering expenses that we must pay, our pro forma as adjusted net tangible book value would have been $122.9 million, or $7.39 per share. This represents an immediate increase in pro forma net tangible book value of $2.86 per share to existing stockholders, and an immediate dilution in pro forma net tangible book value of $6.61 per share to new investors purchasing shares in this offering. The table below illustrates this per share dilution as of September 30, 2013.

If the underwriters exercise their option to purchase additional shares in full, our pro forma as adjusted net tangible book value will increase to $7.68 per share, representing an increase to existing holders of $3.15 per share, and there will be an immediate dilution of $6.32 per share to new investors.

Each $1.00 increase (decrease) in the assumed public offering price of $14.00 per share would increase (decrease) our pro forma as adjusted net tangible book value after this offering by $0.3 per share, and the dilution to new investors by $0.7 per share, assuming the number of shares offered by us, as set forth on the cover page of this prospectus, remains the same and after deducting the estimated underwriting discounts and commissions and estimated offering expenses that we must pay.

The following table sets forth, on a pro forma as adjusted basis as of September 30, 2013, the number of shares of common stock purchased or to be purchased from us, the total consideration paid or to be paid and the average price per share paid or to be paid by existing holders of common stock and by new investors, at an assumed initial public offering price of $14.00 per share, before deducting estimated underwriting discounts and commissions and estimated offering expenses that we must pay.

The foregoing discussion and tables are based on the number of shares of common stock outstanding as of September 30, 2013 (taking into account the conversion of our preferred stock outstanding as of September 30, 2013, which will occur automatically upon the completion of this offering), and exclude:

If the underwriters exercise their option to purchase additional shares of our common stock in full, our existing stockholders would own 60.6 percent and our new investors would own 39.4 percent of the total number of shares of our common stock outstanding upon completion of this offering. The total consideration paid by our existing stockholders would be approximately $110.8 million, or 53.4 percent, and the total consideration paid by our new investors would be $96.6 million, or 46.6 percent.

EXHIBIT D

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The disclosure set forth under the heading “Stock-based compensation and common stock valuation” in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Preliminary Prospectus has been updated by replacing, in its entirety, the footnote immediately below the table on page 58 with the following.

The disclosure set forth under the heading “Stock-based compensation and common stock valuation” in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Preliminary Prospectus has been updated by replacing, in its entirety, the first two sentences of the first paragraph below the table on page 58 with the following.

Based on an assumed initial public offering price of $14.00 per share, the aggregate intrinsic value of the stock options granted on September 24, 2013 and outstanding as of September 30, 2013 was $14.8 million, of which $0.7 million and $14.1 million related to the stock options that were vested and unvested, respectively, at that date. Based on an assumed initial public offering price of $14.00 per share, the aggregate intrinsic value of the stock options granted on September 24, December 4 and December 30, 2013 and outstanding as of December 31, 2013 was $17.0 million, of which $1.4 million and $15.6 million related to stock options that were vested and unvested, respectively, at that date.

The disclosure set forth under the heading “Stock-based compensation and common stock valuation” in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been updated by replacing the second paragraph below the table on page 62 in its entirety with the following three paragraphs.

In applying the market approach to estimate our aggregate future enterprise value under the option pricing model scenario, as described previously, it was assumed that a liquidity event would occur in 2.50 years. The selected enterprise value utilized in the option pricing model scenario was based on the July 30, 2013 Series C preferred stock financing. In the Series C preferred stock financing, we issued and sold 8,142,891 shares of Series C preferred stock at a purchase price of $7.00 per share for aggregate proceeds of $57.0 million. The Series C preferred stock financing was an arm’s length transaction with terms, including purchase price, negotiated between us and three investors that, prior to the Series C preferred stock financing, were not related parties and did not hold any shares or other interests in us.

As of June 30, 2013, we had cash and cash equivalents of approximately $1.8 million, which would have allowed us to continue operations for less than two months. As we were running out of cash and existing investors expressed an unwillingness to invest additional capital, we pursued capital from new investors. In July 2013, we negotiated the Series C preferred stock financing with the three new investors. The terms of the financing required significant dilution to existing investors, management and other existing equity holders, by effecting a one-for-25 reverse split of our Series A and Series B preferred stock and a one-for-250 reverse split of our common stock. We used the back-solve method to determine the value of our common stock as of August 31, 2013, which we considered an appropriate method for such determination as we had completed the recapitalization on July 25, 2013 as a condition to closing of our Series C preferred stock financing.

All of the shares of Series C preferred stock were sold and issued at $7.00 per share, about half of which were purchased by the new investors and the other half by some of our existing stockholders. We also issued 428,526 shares of Series C preferred stock on the same day in satisfaction of a $3.0 million bridge loan then outstanding. Holders of Series C preferred stock are entitled to senior rights, preferences and privileges as compared to our common stock, including a dividend preference as, if and when declared by the board of directors, a liquidation preference and a redemption right.

The disclosure set forth under the heading “Stock-based compensation and common stock valuation” in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been updated by replacing, in their entirety, the three bullet points on pages 62 to 63 relating to primary factors contributing to the decrease of the estimated per share fair value of our common stock from $15.00 per share to $3.42 per share with the following five bullet points.

The disclosure set forth on page 64 under the heading “Stock option grants on December 4, 2013 and December 30, 2013” in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” has been updated by adding the following sentence after the third sentence in the paragraph below such heading.

The valuation concluded that, with such contemporaneous information, the fair value of our common stock as of December 31, 2013 was $7.42 per share primarily due to feedback from investment bankers that the Company has an increased probability of executing a successful initial public offering in the first quarter of 2014 and feedback from investment bankers that public investors could potentially price the Company’s common stock in the range of $11.00 to $13.00 per share in such an initial public offering.

NOTES TO FINANCIAL STATEMENTS

The discussion of the weighted-average grant date fair value of stock options set forth in the paragraph immediately below the second table on page F-21 in the Notes to Financial Statements of the Preliminary Prospectus has been revised by adding the wording “Using the Black-Scholes option-pricing model” at the beginning of the first sentence of that paragraph such that the first sentence reads as follows.

Using the Black-Scholes option-pricing model, the weighted-average grant date fair value of stock options granted during the years ended December 31, 2011 and 2012 and the nine months ended September 30, 2012 (unaudited) and 2013 (unaudited) was $27.50, $30.00, $30.00 and $2.01 per share, respectively.

EXHIBIT E

BUSINESS

The disclosure set forth on page 85 under the heading “KHK research collaboration and license agreement” in the section titled “Business” of the Preliminary Prospectus has been updated by replacing the fourth sentence in the third paragraph under such heading in its entirety with the following.

These royalties vary depending on the total net sales and range from percentages of net sales in the high single digits to the teens.

EXHIBIT F

EXECUTIVE AND DIRECTOR COMPENSATION

The disclosure set forth under the heading “Employment Agreements” in the section titled “Executive and Director Compensation” of the Preliminary Prospectus has been updated by adding the following sentences after the first sentence in the second paragraph on page 111.

The options granted to each executive officer under his employment agreement would generally vest on a change in control of the Company or, in Dr. Fambrough’s case, an involuntary termination of his employment following a change in control. In January 2014, we entered into an agreement with Mr. Dentzer that provides for him to be reimbursed by us for any taxes imposed pursuant to Section 409A of the U.S. Internal Revenue Code of 1986, as amended, with respect to the option grant under his employment agreement.

The number of shares of common stock authorized for issuance with respect to awards granted under our 2014 Performance Incentive Plan has been increased from 1,540,000 to 1,900,000 shares under the heading “2014 Performance Incentive Plan” in the section titled “Executive and Director Compensation” and other sections of the Preliminary Prospectus, including the sections titled “The Offering,” “Capitalization” and “Dilution.”

EXHIBIT G

PRINCIPAL STOCKHOLDERS

The disclosure set forth in the section titled “Principal Stockholders” of the Preliminary Prospectus has been replaced in its entirety with the following.

The following table sets forth certain information relating to the beneficial ownership of our common stock as of December 31, 2013, by:

The number of shares beneficially owned by each entity, person, director or executive officer is determined in accordance with the rules of the Securities and Exchange Commission, and the information is not necessarily indicative of beneficial ownership for any other purpose. Under such rules, beneficial ownership includes any shares over which the individual has sole or shared voting power or dispositive power as well as any shares that the individual has the right to acquire within 60 days of December 31, 2013 through the exercise of any stock option, warrants or other rights. Except as otherwise indicated, and subject to applicable community property laws, the persons named in the table have sole voting and dispositive power with respect to all shares of common stock held by that person.

The percentage of shares beneficially owned prior to this offering is computed on the basis of 10,627,660 shares of our common stock outstanding as of December 31, 2013, which reflects the assumed conversion of all of the outstanding shares of our preferred stock into an aggregate of 10,589,434 shares of common stock immediately upon the closing of this offering, as if the conversion had occurred as of December 31, 2013. The percentage of shares beneficially owned after this offering is computed on the basis of 16,627,660 shares of common stock outstanding immediately after the closing of this offering (assuming no exercise of the underwriters’ over-allotment option to purchase additional shares of our common stock). Shares of our common stock that a person has the right to acquire within 60 days of December 31, 2013 are deemed outstanding for purposes of computing the percentage ownership of the person holding such rights, but are not deemed outstanding for purposes of computing the percentage ownership of any other person, except with respect to the percentage ownership of all directors and executive officers as a group. Unless otherwise noted below, the address of the persons listed on the table is c/o Dicerna Pharmaceuticals, Inc., 480 Arsenal Street, Building 1, Suite 120, Watertown, MA 02472.

Certain of our existing stockholders, including affiliates of our directors, have indicated an interest in purchasing up to $48.0 million of shares of our common stock in this offering at the initial public offering price. However, because indications of interest are not binding agreements or commitments to purchase, these stockholders may determine to purchase fewer shares than they indicate an interest in purchasing or not to purchase any shares in this offering. It is also possible that these stockholders could indicate an interest in purchasing more shares of our common stock. In addition, the underwriters could determine to sell fewer shares to any of these stockholders than the stockholders indicate an interest in purchasing or not to sell any shares to these stockholders. The following table does not reflect any potential purchases by these stockholders.

EXHIBIT H

RISK FACTORS

The disclosure set forth in the Preliminary Prospectus under “Risk Factors—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” has been updated by replacing, in its entirety, the second bullet point under the first paragraph on page 37 with the following.

MANAGEMENT

The disclosure set forth in the third paragraph on page 106 under the heading “Limitation of Liability and Indemnification” relating to the indemnification provisions in our bylaws has been updated by adding a third bullet point to read as follows.

DESCRIPTION OF CAPITAL STOCK

The disclosure set forth on page 126 under the heading “Removal of directors” in the section titled “Description of Capital Stock” of the Preliminary Prospectus has been updated by replacing, in its entirety, the paragraph under such heading with the following.

Our certificate of incorporation and bylaws provide that subject to any limitations imposed by law and the rights of the holders of any series of our preferred stock, the board of directors or any individual director may be removed from office at any time without cause by the affirmative vote of the holders of a majority of the voting power of all the then-outstanding shares of voting stock of the Company, entitled to vote at an election of directors.

The disclosure set forth on page 126 under the heading “Meeting of stockholders” in the section titled “Description of Capital Stock” of the Preliminary Prospectus has been updated by replacing, in its entirety, the first sentence in the paragraph under such heading with the following.

Our bylaws provide that special meetings of stockholders, which the Company is not obligated to call more than once per calendar year, may only be called by the chairman of our board of directors, our chief executive officer, our board of directors pursuant to a resolution adopted by a majority of the total number of authorized directors, or, subject to certain conditions, by our secretary at the request of the stockholders holding of record, in the aggregate, shares entitled to cast not less than ten percent of the votes at a meeting of the stockholders (assuming all shares entitled to vote at such meeting were present and voted).

The disclosure set forth on page 126 under the heading “Amendment to certificate of incorporation and bylaws” in the section titled “Description of Capital Stock” of the Preliminary Prospectus has been updated by replacing, in its entirety, the second sentence in the paragraph under such heading with the following.

The affirmative votes of the holders of at least a majority of the voting power of all of the then-outstanding shares of our voting stock will be required to amend or repeal our bylaws.

EXHIBIT I

UNDERWRITING

The disclosure set forth under the heading “Commission and Expenses” in the section titled “Underwriting” of the Preliminary Prospectus has been updated by adding the name of the investment banking firm, “Healthios Capital Markets, LLC,” to the first sentence in the third paragraph below the table on page 134 and also adding a new sentence before the last sentence such that the entire paragraph reads as follows.

Prior to our engagement of the underwriters, we engaged Healthios Capital Markets, LLC, an investment banking firm, for an offering of our securities subject to certain conditions and limitations. We terminated our arrangement with that investment banking firm in July 2013. In relation to this offering, we have agreed to pay this investment banking firm a fee of $350,000 in satisfaction of the compensatory terms of that arrangement. This investment banking firm had previously provided financial advisory services to us, but will not be participating in the underwriting or selling of securities in this offering. We have agreed to indemnify the underwriters in this offering against any liabilities arising from any claims related to that arrangement.

The disclosure set forth on page 136 under the heading “Directed Share Program” in the section titled “Underwriting” of the Preliminary Prospectus has been updated by revising the fourth, fifth and sixth sentences in paragraph under such heading to read as follows.

These shares will not be subject to any lock-up arrangement with any underwriters, except to the extent purchased by one or more of our executive officers, who have entered into lock-up agreements described above. For any such participants who have entered into lock-up agreements described above, the lock-up agreements contemplated therein shall govern with respect to their purchases of shares of common stock in the program. The representatives in their sole discretion may release any of the securities subject to these lock-up agreements at any time.

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Dates Referenced Herein   and   Documents Incorporated by Reference

This ‘FWP’ Filing		Date		Other Filings
Filed on:		1/29/14		3,  3/A,  S-1/A
		1/27/14
		1/21/14		S-1/A
		12/31/13		10-K,  S-1
		12/30/13
		12/4/13
		9/30/13
		9/24/13		4,  4/A
		8/31/13
		7/30/13
		7/25/13
		6/30/13
		12/31/12
		9/30/12
		12/31/11
				List all Filings

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Filing Submission 0001193125-14-025714   –   Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)

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