Dicerna Pharmaceuticals, Inc.
Q4 2014 Earnings Call Transcript

Published: 13 Mar 2015

[Operator:]

Good day, ladies and gentlemen, and welcome to the Dicerna Pharmaceuticals Q4 and Full Year 2014 Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to introduce your host for today's conference, Mr. Peter Vozzo. Sir, please begin.

[Peter Vozzo:]

Good afternoon. And welcome to Dicerna's conference call to discuss 2014 fourth quarter and full year financial and operational results. For anyone who has not had the chance to review our results, we issued a press release after close of market today outlining today's announcement, which is available under the Investor tab on our website at www.dicerna.com. You can also listen to this conference call via webcast on our website, and will be archived there for 30 days beginning approximately two hours after the call is completed. I'd like to remind listeners that we'll be making forward-looking statements on today's call, therefore, I'd like to remind you that today's discussion will include statements about the company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our Form 10-K filed with the SEC today. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so even if our views change. Now, I'll turn over the call over to Dr. Douglas Fambrough, Dicerna's Chief Executive Officer.

[Douglas Fambrough:]

Thank you, Peter. Good afternoon, and thanks to all of you who have dialed into the call today. Joining me to present on the call is Jim Dentzer, our Chief Financial Officer. Also in the room is Bob D. Brown, our Chief Scientific Officer to help answer questions as needed. We're pleased to be able to provide you with this fourth quarter and full year update. Dicerna continues to make positive progress in line with the guidance we've given and with the development timelines we've laid out for our development programs for two key product candidates, DCR-PH1, our program for Primary Hyperoxaluria Type 1 or PH1, which is a rare inherited liver metabolic disorder and DCR-MYC, our oncology program targeting the MYC oncogene. In addition, we made very good progress in 2014 on our extended Dicer Substrate platform, demonstrating effective gene silencing with subcutaneously administered DsiRNA-EX Conjugate molecules, which are the basis of our earlier stage liver targeted programs. Finally, in 2014, we strengthened our management team with the additions of Dr. Pankaj Bhargava as Chief Medical Officer and Dr. Ted Ashburn as Senior Vice President of Product Strategy and Operations. Both Pankaj and Ted are key to the successful clinical execution of Dicerna's most advanced programs, DCR-MYC and DCR-PH1. As a reminder, Dicerna is a RNA interference or RNAi based biopharmaceutical company focused on treating specific indications in rare inherited diseases involving the liver and genetically defined oncology targets using Dicerna's proprietary RNAi molecules known as Dicer Substrates or DsiRNAs. We are pursuing targets that have historically been difficult to inhibit using conventional pharmaceutical approaches but are accessible by RNAi and where connections between those targets and diseases are well understood and documented. We seek to retain substantial commercial rights to our key programs. To discuss our 2014 progress in more detail, I'd like to begin with our DsiRNA-EX Conjugate technology that enables subcutaneous delivery to the liver, which we unveiled during our R&D update in December 2014. These conjugates do not involve lipid nanoparticles and are built on our DsiRNA-EX technology using an extension to one end of the double-stranded DsiRNA molecule. During our R&D update, we showed greater than 90% gene knockdown after a single subcutaneous administration in mice with potency such that we can achieve 50% gene knockdown with only 2 milligrams of DsiRNA-EX Conjugate per kilogram of body weight. We are utilizing DsiRNA-EX Conjugates in our to-be-announced liver programs and have DsiRNA-EX Conjugates in optimization against four additional liver targets with more programs planned. On our DCR-PH1 program for the treatment of Primary Hyperoxaluria Type 1, we continue to expect to initiate in 2015, a Phase 1 trial of DCR-PH1 in patients with PH1 and by year end to 2015, provide initial clinical data in patients for the key critical parameters of urinary oxalate and glycolate levels. PH1 is a rare disease where an error in liver metabolism causes patients to have high levels of oxalate in the urine, resulting in progressive and severe damage to the kidneys. Existing disease management practices for PH1 may slow but they do not stop disease progression, and most patients eventually experience complete kidney failure. Aside from dual liver kidney transplant, there are no effective treatments and no FDA approved therapies for most patients with PH1. Two aspects of PH1 make it particularly attractive as a program for Dicerna. First, PH1 is a natural application of Dicerna's technology, based on the disease's clear genetic basis, and the fact that the disease metabolism seems to occur exclusively or nearly exclusively in the liver. Second, PH1 presents clear and easily assay biomarkers in the form of urinary oxalate and glycolate levels and these markers provide a direct readout of the mechanism of pathology in PH1. During our R&D update, we presented non-human primate data for the first time in which we showed that after a single dose of 0.3 milligrams of DCR-PH1 per kilogram body weight, the average reduction of target gene expression was 93% in mice and 84% in monkeys at early time points. At much later time points, 28 and 29 days respectively, the target gene expression was significantly reduced to an average of 54% in mice and 68% in monkeys. These data are supportive of our goal of achieving potent target gene knockdown in patients with potential for an infrequent dosing regimen such as once monthly dosing. As we've discussed before, we've generated highly encouraging data in the main animal model of Primary Hyperoxaluria Type 1. In this model, mice have been genetically engineered to carry the same metabolic defect found in PH1 patients. These mice have elevated levels of urinary oxalate roughly three times the normal background levels. That level of elevation is similar to the elevated levels commonly observed in patients with PH1. Using our DsiRNA technology to knockdown the targeted gene called HAO1, these mice – in these mice, we've shown reductions in urinary oxalate levels to background or near background levels. We believe that similar results, if observed in patients with PH1, would have a significant beneficial impact on disease progression. During the R&D update in December, we discussed our plans to start a natural history study of PH1 in the first quarter of 2015, enrolling approximately 50 to 75 patients with a genetically confirmed diagnosis of PH1, excluding patients on dialysis. The objectives of the study are to characterize the natural history of PH1, estimate changes in oxalate and glycolate levels and renal function over time among other objectives. We believe this information will provide an historical group for comparison to data from clinical trials and facilitate the clinical development of DCR-PH1. I'd now like to turn to our second product candidate DCR-MYC, which is our DsiRNA-based therapeutics targeting the MYC oncogene formulated in our tumor-centric on core lipid nanoparticle formulation. DCR-MYC is currently being tested in two ongoing clinical trials. DCR-MYC entered Phase 1 clinical testing in April 2014 in patients with solid tumors, multiple myeloma or lymphoma. The Phase 1 trial end points include safety and tolerability and we'll identify the maximum tolerated dose, pharmacokinetic profile, pharmacodynamic effects and anti-tumor activity of DCR-MYC. To evaluate anti-tumor activity, we are looking at conventional markers such as CT and MRI. In addition, we have incorporated FDG-PET imaging into the study as FDG uptake by tumors may serve as a useful biomarker of MYC activity. Reductions in MYC activity are predicted to cause a decrease in tumor metabolic rate which can be visualized by imaging tumor glucose uptake using the FDG-PET imaging technology. FDG-PET is also a marker for early detection of response across several tumor types. Once we have achieved the maximum tolerated dose in the study, we will be taking biopsies from patient tumors in which we will seek to identify the direct products of RNAi cleavage of the MYC transcript. We continue to expect a read out from this Phase 1 trial by the end of 2015. We are pleased with the progress of the trial so far, including our patient enrollment rate. We have escalated through several dose levels and we're continuing with the dose escalation process. We have not yet identified a maximum tolerated dose. In December 2014, we initiated a second clinical study of DCR-MYC, a Phase 1b/Phase 2 study in patients with advanced Hepatocellular Carcinoma or HCC, who have either failed sorafenib or are intolerant to sorafenib or who don't have access to other therapies for HCC. The first patient in the study was dosed in January 2015. We selected HCC as an initial focus indication for DCR-MYC, both due to the observation that the MYC gene is frequently amplified in HCC patients and due to the commercial and competitive profile of the HCC market. HCC is one of the most prevalent cancers worldwide. Patients with advanced HCC have limited treatment options and there are no approved therapies for those who do not respond or who do not tolerate standard-of-care treatment with sorafenib. We have sites for the HCC clinical trial, both in the US and in Asia due to the high prevalence of this disease in the Asian population. Dicerna selected MYC as a high priority target to silence with our DsiRNA technology, because it is frequently amplified or otherwise up regulated in a wide variety of tumor types. For decades, MYC has been a challenging target for small molecule therapy and an elusive target for drug developers, because MYC is a protein which lacks a good small molecule binding site. We believe our Dicer Substrate RNAi platform overcomes this limitation, because we don't target the protein, rather we target the RNA transcript. Our pre-clinical data for DCR-MYC demonstrates specific and significant MYC gene knockdown in multiple tumor-bearing mouse models. Now, I will turn the call over to our Chief Financial Officer, Jim Dentzer for an update on our financial progress. Jim?

[Jim Dentzer:]

Thanks, Doug. As many of you have seen, we filed our 10-K today. There is a great deal of detail contained in that document. I'd like to focus on the main financial metrics that we believe are important to use when evaluating the efficiency of our business. In the fourth quarter of 2014, Dicerna had a net loss of $14.6 million compared to a net loss of $6.7 million for the same period in 2013. For the full year 2014, net loss was $48.1 million compared to a net loss of $20.9 million for the full year 2013. Dicerna had research and development expenses of $9.9 million for the fourth quarter of 2014 compared to $4.2 million for the same period in 2013. This increase was due primarily to the initiation of clinical studies with DCR-MYC, and an increase in research activities related to DCR-PH1, including $2.5 million related to license fees paid to Tekmira for the LNP delivery of DCR-PH1. Also increased employee related expenses, including an increase in stock-based compensation of $0.8 million. For full year 2014, research and development expenses were $29.5 million compared to $11.6 million for full year 2013. This increase was due primarily to the initiation of clinical studies with DCR-MYC and an increase in research activities related to DCR-PH1, which also includes the $3 million year-to-date payment to Tekmira and increased employee-related expenses including an increase in stock-based compensation of $2.4 million. General and administrative expenses for the fourth quarter of 2014 totaled $4.7 million compared to $2.2 million for the same period in 2013. This increase was primarily due to increased cost associated with operating as a public company, and an increase in payroll-related expenses including an increase in stock-based compensation of $0.5 million. For full year 2014, general and administrative expenses were $15.6 million compared to $5.8 million for the full year 2013. This increase resulted primarily due to an increase in payroll related expenses, increased cost related with operating as a public company, including increased professional fees and an increased in stock based compensation of $1.1 million. As of December 31, 2014, the company had $98.6 million in cash and cash equivalents and held to maturity investments, as compared to $46.6 million in cash, cash equivalents and held to maturity investments as of December 31, 2013. In February 2014, the company completed its initial public offering of common stock, raising net proceeds of approximately $92.7 million. Based on our current position and operating plan, the company continues to expect it has sufficient cash to fund operations through the end of 2016. This estimate assumes no additional partnership funding and no new debt or equity financings. More detailed financial information and analysis may be found in the company's Annual Report on Form 10-K filed today with the SEC. Simultaneous with our 10-K filing today, we filed a shelf registration statement with the SEC as we have reached our one year post IPO eligibility. We do not have immediate plans to issue securities. However, this registration statement will provide us the flexibility to issue common stock in the future. And one final comment. You will note that in our earnings press release, we referenced a modification in our corporate structure. As part of that effort, we have transferred our non-US intellectual property to a non-US wholly-owned subsidiary. As a result, we expect to realize significant operational and financial efficiencies. We now expect that before the utilization of NOLs and tax credits, our effective tax rate will be 40% for profit generated by our US business and 10% for our non-US business. With that, I'll turn the call back over to the operator, so that we can take questions.

[Operator:]

[Operator Instructions] Our first question comes from the line of Stephen Willey with Stifel. Your line is now open.

[Unidentified Analyst:]

Hi. This is [indiscernible] on for Steve. Thanks for taking questions. I was just wondering if you can comment on – so you're conducting dose escalation and all-comers trial, if you'll be able to expedite the HCC trial based on what you learned from the all-comers trial. Can you comment on that?

[Douglas Fambrough:]

Sure. We were able to start dosing in the HCC trial at a higher dose level than we started in the all-comers trial, modestly higher dose level, but it did allow us to skip up some escalation steps. The Phase 1b/Phase 2 trial for HCC does have its own dose escalation. There can be differences in drug tolerability between the HCC population and other cancer patients. So that will occur in parallel. And changes to the dose escalation schedule such as changes that are programmed to occur when dose limiting toxicities are observed, for example, would be independent between the two trials. So, aside from the – starting at a higher dose level, the trials will run independently and data from one will not impact the other in a direct way.

[Unidentified Analyst:]

Okay. So when do see any data from the HCC trial, early 2016 or mid-2016?

[Douglas Fambrough:]

Well, it's a little bit hard to say, sort of early, mid 2016. Given our experience with the all-comers trial where we're still in dose escalation, it's certainly possible that will spend a fair amount of time in dose escalation for the HCC trial. So, I don't think I can give any more refined guidance that it's not going to be 2015. So, some time beyond that.

[Unidentified Analyst:]

Okay. And lastly, do you have any update on the KHK regarding the KRAS program?

[Douglas Fambrough:]

We do not have a substantial update from them. They have not provided us any timing guidance with respect to a clinical entry. They have indicated that, it's still an active program and in preclinical development.

[Unidentified Analyst:]

Okay. Thank you.

[Operator:]

Our next question comes from the line of Chris Raymond with Robert Baird. Your line is now open.

[Allison Bratzel:]

Hi. This is Allison Bratzel on for Chris today. Thanks for taking the question. I guess just generally, could you talk about how you view your positioning in the PH1 competitive landscape. And then in terms of patient enrollment, how important is it that you maintain your lead over any competing PH1 program? Just wondering therein a small patient population, how you think about enrollment if multiple players are actively involved in enrolling patients?

[Douglas Fambrough:]

Well, it's difficult for us to know any details about the program of our competitors, including timing beyond public statements that they have made. Those public statements suggest that we would be first into the clinic. This is a patient population that is in great need of therapy. So, I think when a therapy becomes available, patients who are eligible will be interested in enrolling in that kind of trial. I can tell you that we get very encouraging feedback from key opinion leaders. There is a lot of interest in providing DCR-PH1 to patients, when we're in position to start dosing patients. But I think time will tell how the competitive landscape plays out. Clearly, it will be an advantage to go into the clinic first.

[Allison Bratzel:]

Okay. Thank you…

[Douglas Fambrough:]

It's hard to say how much.

[Operator:]

[Operator Instructions] I'm showing no further questions on the phone lines. I'd like to turn the call back over to Doug Fambrough, Chief Executive Officer for closing remarks.

[Douglas Fambrough:]

I want to thank you all for joining the call today and your interest in Dicerna Pharmaceuticals. And with that, we will sign off.

[Operator:]

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program and you may now disconnect. Everyone have a great day.