Dicerna Pharmaceuticals, Inc.
Q3 2016 Earnings Call Transcript

Published: 8 Nov 2016

[Operator:]

Good day, ladies and gentlemen, and welcome to the Dicerna’s Third Quarter 2016 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 call is being recorded. I would like to introduce your host for today’s conference, Ms. Melody Carey of Rx Communications Group. Ma’am, you may begin.

[Melody Carey:]

Thank you, Operator. Good afternoon, and welcome to Dicerna’s conference call to discuss the company’s 2016 third quarter results. For anyone who has not had a chance to review our results, we issued a press release after the close of market today, which is available under the Investor media tab on our website at www.dicerna.com. You may also listen to this conference call via webcast on our website, which will also be archived for 30 days beginning approximately two hours after the call is completed. I’d like to remind listeners that management will be making forward-looking statements on today’s call, related to the company’s future expectations, plans and prospects that constitute forward-looking statements for the purposes of the Safe Harbor provision under the Private Securities 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 Factor section of Form 10-Q 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 if our views change. Now, I would like to turn the call over to Dr. Douglas Fambrough, Dicerna’s President and Chief Executive Officer.

[Douglas Fambrough:]

Thank you, Melody. Good afternoon, and thanks to all of you who have joined today’s call. Today, with me is Jack Green, our Chief Financial Officer and Bob Brown, our Chief Scientific Officer. Without a doubt, the third quarter of 2016 was a transformative one for Dicerna. Having formally rolled out our GalXC technology platform in the second quarter as a fully optimized and enabled drug discovery engine, we announced in late September, our strategic plan to focus our resources squarely on leveraging GalXC’s potential. Our goal is to advance development of innovative subcutaneously delivered RNA interference or RNAi based pharmaceutical candidates for diseases involving the liver, such as rare diseases, chronic liver diseases, cardiovascular diseases, and viral infectious diseases. Given the potential power of the GalXC platform that could provide potency on par with or better than comparable platforms, as well as key benefits, including subcutaneous injectable administration, in-frequent dosing such as monthly, quarterly, and potentially even less often than that. High therapeutic index and specificity to a single target gene each of which has been previously demonstrated with GalXC compounds and silencing more than 12 different disease targets in animal models, including now more than six demonstrations in non-human primates. Given all of these qualities of the GalXC platform, we are confident in our ability to develop a broad pipeline of GalXC product candidates with tremendous commercial prospects. So as we transition away from our legacy programs that utilized to lipid nanoparticle-based delivery system, it bears repeating, our firm belief that leveraging our proprietary GalXC platform will allow us to retain a full or substantial ownership stake, while continuing to invest internally in indications with defined patient populations, such as certain rare diseases, which we think offer the highest probabilities of both development and commercial success. With respect to our complex diseases, with multiple gene dysfunctions and larger patient populations, we remain in active discussions with various potential partners regarding GalXC programs in these broader therapeutic areas. The research data we have generated to-date has attracted a number of interested parties, and we will continue our due diligence with each, as appropriate, in order to find the right partner that can provide the enhanced scale, resources, and commercial infrastructure required to maximize these prospects. As I stated on the last call, Dicerna intends to initiate a total of three GalXC development programs this year and we are on track to achieve this goal. Moreover, at our current capacity, we can initiate three additional development programs on an annual basis going forward. As we previously reported, in addition to strong efficacy and duration profiles in animal models, GalXC has also shown a very clean safety profile, which is an important point that I want to reiterate. As you may recall, using exaggerated pharmacology, in other words very high doses, which were many multiples higher than the expected clinical dose and given more frequently than normal, we saw zero serious adverse events, including no evidence of liver, kidney, or injection site toxicity in animal studies. This is truly exciting to see and only adds to our confidence level. As a result, we believe that the path is clear for us to use GalXC to exploit the deep well of opportunity for RNAi-based therapies directed towards the liver. And this process is well underway. As many of you know, we have been actively examining potential disease associated targets across multiple therapeutic areas of interest. Our ability to rapidly generate GalXC inhibitors in rodents often in as little less 30 days has allowed us to quickly validate potential disease targets. As of today we have now qualified over 30 disease associated target genes in our stated areas of focus, where we believe an RNAi-based inhibitor may provide substantial patient benefit. Let me now take the opportunity to review our current development programs. The first of our 2016 preclinical programs, which was launched earlier this year is DCR-PHXC for the treatment of primary hyperoxaluria or PH. As you may recall, PH is a rare inborn error of metabolism in which the liver produces excessive levels of oxalate, which results in life-threatening damage to the kidneys and other key body tissues. Unfortunately, the current standard of care cannot stop disease progression, and as a result short of a combined liver, kidney, transplant, the majority of patients face complete renal failure by their early 20s. There is an urgency of therapeutic need for this patient population, and we are confident that the DCR-PHXC program will benefit from our prior experience with DCR-PH1, a lipid nanoparticle-based and IV administered program, which as you know, we have now discontinued and transitioned over to our GalXC-based compound. The final decision to transition our PH program to DCR-PHXC and to discontinue DCR-PH1 was made after taking several factors into account. First, the DCR-1 human proof-of-concept data, which showed the pharmacological activity of RNAi-based therapy in PH and normal healthy volunteers and which we presented at the International Pediatric Nephrology Association Congress in late September. Second, the utility of the subcutaneous GalXC platform, as I’ve already discussed. And finally, the totality of our encouraging DCR-PHXC preclinical data, which showed that DCR-PHXC was able to more effectively normalize oxalate production and ameliorate the disease condition of hyperoxaluria. Together, these factors convinced us that DCR-PHXC has the potential to be a better, not just as good, but a better therapeutic candidate for this underserved patient population. I want to thank all of the patients, their families, and clinical investigators involved in the DCR-PH1 trials for their invaluable contributions. We will apply all of the lessons learned from those trials to the development of DCR-PHXC as we advance the program. Let me also note that in line with our commitment to the PH community, we will continue to advance our primary HYperoxaluria Observational Study called PHYOS, which is collecting data on key biochemical parameters implicated in the pathogenesis of PH, which has now enrolled a total of 18 patients. We hope to leverage this data to better understand the baseline PH disease state, which will help guide our long-term development plans for DCR-PHXC. With all of that said, our preclinical work in this program is ongoing and on track, and we intend to file an IND or CTA for DCR-PHXC in late 2017 and commence human clinical trials shortly thereafter. Moving on to additional GalXC programs, our second 2016 GalXC program will target the PCSK9 for the treatment of hypercholesterolemia, a disease, which is characterized by abnormally high blood serum levels of low-density lipoproteins and which is one of the key known risk factors for atherosclerosis and cardiovascular disease. Our GalXC PCSK9 program is being developed for the potentially multibillion dollar statin-refractory cardiovascular disease market with a goal of improved convenience and adherence to therapy, compared to monoclonal antibodies, driven by less frequent and smaller volume dosing. PCSK9 is already a validated target for this condition and two FDA approved therapies currently in use that are based on monoclonal antibody technology. In contrast to these, based on preclinical studies, we believe that the GalXC platform has the potential to produce a PCSK9 targeted therapy with more attractive commercial properties, including comparatively smaller subcutaneous injection volumes and less frequent dosing, while providing equal or superior control of serum cholesterol. We are continuing to advance this program and are on track to nominate a candidate for preclinical development by the end of the year. As the hypercholesterolemia market encompasses a larger patient population and in keeping with our stated strategy, our end goal will be to partner out this particular program at a stage, where terms of a collaborative deal fairly reflects the assets value to Dicerna and its shareholders. We look forward to keeping you updated on our progress. For competitive reasons, we are not yet disclosing our third 2016 GalXC-based therapeutic program. Although, I can’t say that it targets a liver express gene, which is involved in another serious rare disease with high morbidity and mortality. We have selected this disease and target gene based on a strong therapeutic hypothesis, availability of a potentially predictive biomarker, high unmet medical need, favorable competitive positioning, and what we believe may be a rapid projected path to approval. The program is on track for formal launch with an optimized lead candidate also by year end. Concurrent with this activity, we are busy using our GalXC platform to proactively evaluate a series of additional target genes in multiple disease states across our core therapeutic areas and expect to formally initiate three additional preclinical programs in 2017, including one for chronic hepatitis B virus and two additional programs from our core therapeutic areas. As we stated in September, we aim to have a total of five programs in the clinic by the end of 2019. Lastly as our focus has shifted and as previously announced, we have discontinued our DCR-MYC program in oncology indications. Although, clinical response and molecular knockdown was observed in preliminary data from the DCR-MYC-101 trial, the early efficacy results unfortunately did not warrant further development. It is worth noting, however, that paired tumor biopsies pre- and post-treatment showed in all cases clear evidence of RNAi-mediated MYC messenger RNA destruction in tumors from all patients tested, indicating that successful drug delivery had occurred the likely in insufficient amounts. Data from these studies were presented at the Oligonucleotide Therapeutics Society Conference on September 28, 2016. As I hope you can tell, we are more enthusiastic than ever about the power of the GalXC platform and believe strongly, that our newly stated strategy will ultimately result in a range of highly targeted, highly effective RNAi therapies with tangible benefits that address important and urgent unmet medical needs. As I have stated before, RNAi provides the potential to develop therapies that act by a well-understood yet previously on druggable mechanisms and which require less onerous dosing regimens, which we believe can significantly improve patient compliance and health outcomes. I will now turn the call over to our Chief Financial Officer, Jack Green, for an update on our financial progress. Jack?

[Jack Green:]

Thanks, Doug. I’d like to briefly summarize the key financial results for the quarter ended September 30, 2016, and direct you to our 10-Q filing for additional details. In the third quarter of 2016, the company had a net loss of $14.2 million, or $0.68 per share, compared to a net loss of $16.9 million, or $0.82 per share for the same period of 2015. Research and development expenses were $10.1 million for the third quarter of 2016, compared to $12.1 million for the same period of 2015. The year-to-year decrease was primarily due to a reduction in manufacturing and toxicology testing activities and a decrease in discovery and early development costs, as programs advanced year-over-year into clinical testing. These decreases were partially offset by an overall increase in preclinical studies for our GalXC platform, as well as an increase in clinical trial activities. As we noted in the release, employee-related expenses, facilities, depreciation and other expenses have remained consistent year-to-year. General and administrative expenses for the third quarter of 2016 totaled $4.3 million, as compared to $4.9 million in the same period in 2015. The decrease was primarily due to a decrease in stock-based compensation expense and a reduction in other general and administrative expenses. We expect G&A expenses to increase in the future, as the company continues to expand its operating activities and incurs additional costs associated with being a public – publicly traded company. As of September 30, 2016, we had $57.5 million in cash, cash equivalents and held-to-maturity investments, as compared to $94.6 million as of December 31, 2015. In addition, we also had $1.1 million of restricted cash on the balance sheet, which reflects collaterals securing our facility lease obligations. In the third quarter of 2016, we used $11.6 million of cash in operations. Finally, based on our current cash position and operating plan, we continue to expect that we will have sufficient cash to fund planned operations for, at least, the next 12 months, excluding any additional partnership funding, debt or equity financings. More detail of the financial information and analysis may be found in the company’s quarterly report on form 10-Q filed with – filed today with the SEC. I’d like now to turn the call back over to Doug.

[Douglas Fambrough:]

Thank you, Jack. And before I turn the call over to questions, I would like to reiterate how committed we are to our focus on exploiting the full potential of our proprietary GalXC platform, which we firmly believe holds the promise of allowing us to build an exceptionally valuable pipeline over the coming years. We remain on track to finalize the launch of two more GalXC development programs this year, as well as to identify our programs for 2017 and beyond. We’ve also generated interest in our large patient population programs from potential strategic collaborators and we will continue to pursue those opportunities. I want to thank you for your continued interest in Dicerna and for your attendance on today’s call. With that, we will now open the call to your questions. Operator?

[Operator:]

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

[Stephen Willey:]

Yes. Hi, thanks for taking the questions. I was just maybe wondering, Doug, if you can comment a little bit around, I guess, how some of the, I guess, the safety concerns that have emerged with competitor programs may or may not have impacted the pace of ongoing strategic discussions?

[Douglas Fambrough:]

Sure. I was about to say, I can’t comment on other company’s data, but that’s not really your question. We’ve been very pleased to observe that this has generated very little concern on the part of the parties that we’re in discussions with. To speculate a little bit, I think, the lack of any specific safety signal associated with [death in balance] [ph] that was reported by a peer company significantly influences that. But there’s, although, there is a death in balance or sort of, there are to sink your teeth into. As you know, the dosing paradigm of that compound involved very high-level of drug large complex pollyanna [indiscernible] that is more than an order of magnitude, substantially more than an order of magnitude higher than the dosing levels that we anticipate and which are predictable from our non-human primate data both the amount of material and the frequency being substantially higher. So, in short, we have not had any impact in a negative way on our discussions with respect to pace or their trajectory.

[Stephen Willey:]

That’s helpful. Thanks for providing them. And then with respect to the ongoing PHYOS study, the Observational Study in PH1, how many of those patients that are currently enrolled in the study? Do you think will subsequently, I guess, serve as a reservoir for some of the Phase 1 development work that you’re hoping to do with PHXC?

[Douglas Fambrough:]

I don’t think it’s possible to put a number on that. We will continue to enroll PH patients in PHYOS, and as you know, there is, at least, one other program from a competitor, a company that will be enrolling in the space, it’s certainly possible for patients and PHYOS to enroll in a competitor trial. However, one of the goals of PHYOS as you’re pointing out was to serve as a reservoir for us and with the continued enrollment, PHYOS believe, it will continue to serve that role when we reenter the clinic with the DCR-PHXC program. But I don’t think I’m in a position to quantify that.

[Stephen Willey:]

Okay. Thanks for taking the questions.

[Operator:]

[Operator Instructions] Our next question comes from the line of Michael Schmidt with Leerink Partners. Your line is now open.

[Varun Kumar:]

Hi, this is Varun Kumar on behalf of Michael Schmidt. My first question is on HBV program, like the recent clinical data from other RNAi companies have been mixed in terms of viral antigen detection RNAi, can you please elaborate more on your strategy for hepatitis B program? And if you are thinking to do some preclinical work combining RNAi platform with some other agents or potential synergy?

[Douglas Fambrough:]

It’s still pretty early days for understanding the role that RNAi will have in the treatment of chronic HBV. And some of the early clinical work that’s occurred in the field has educated, I think, everyone in the field about how to target that virus. And I can tell you, we have paid acute attention to that work and incorporated the lessons from it in our program. With respect to the specific question about combination studies, we are an RNAi company. So we do not have potential combination of products that are in development here. But I anticipate that from a class level, we will look at the way combinations play out. But I think from a very simple perspective, one can look at a viral disease like HBV, and an analogy to other chronic viruses, you would expect combination therapy. In that context, you could use other molecules and face the full force of the virus or you could do it in combination with RNAi and attenuate the virus by based on our current data, at least, three logs and it – it’s pretty likely that that will work better attenuated by three logs. So, I think, independent of the exact combinations that will ultimately be determined really in clinical testing in patients, the idea that there be a role for RNAi, I think, very easily supported. So it’s really on that basis that we are working at this point primarily to optimize the activity the RNAi component itself. And we’ll have to see how things evolve. I don’t think it’s fully predictable right now.

[Varun Kumar:]

Okay. Thank you. And just the last question, so we’ve seen a recent set back in TTR space from peer companies. How are you thinking about the TTR indication, specifically the opportunity in cardiomyopathy patient? Does that – does it change your strategy for the TTR indication?

[Douglas Fambrough:]

So we have – we do not have an announced program in TTR. However, there clearly has been a change in the competitive landscape. It is certainly amongst that when I referred to a deep bowl of opportunities for RNAi in the liver TTR, is part of that. And I don’t think at this point, we’re in a position to talk about a strategy with respect to that target specifically one would have to consider both the competitive landscape. And frankly, at this point, whether the type of cardiomyopathy patients who are being treated are, in fact, amenable to RNAi treatment at all, given the apparent lack of efficacy in that population, despite dosing, which should have resulted in substantial reduction in circulating TTR, though we await full look at that data.

[Varun Kumar:]

Okay. Thank you, and thank you for taking my questions.

[Operator:]

I’m not showing any further questions on the phone lines at this time. Dr. Fambrough, please proceed with any further remarks.

[Douglas Fambrough:]

Well, I want to thank you for your attention today. The GalXC platform provides Dicerna with a stronger foundation than we’ve ever had for building a great company going forward, and with that, good night.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This does conclude the program and you may all disconnect. Everyone have a great day.