Dicerna Pharmaceuticals, Inc.
Q2 2015 Earnings Call Transcript

Published: 9 Aug 2015

[Operator:]

Good day, ladies and gentlemen, and welcome to Dicerna Pharmaceuticals Second Quarter 2015 earnings conference call. At this time, all participants are in a listen-only mode. We will have a question-and-answer session later on, and the instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded. And now let’s welcome our host for today's conference, Mr. Peter Vozzo. Dicerna’s Investor Relations, please go ahead.

[Peter Vozzo:]

Thanks Carmen. Good afternoon, and welcome to Dicerna's conference call to discuss 2015 second quarter financial and operational results. For anyone who has not had the chance to review our results, we issued a press release after the 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. It will be archived there for 30 days beginning approximately two hours after this 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-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, even if our views change. Now, I'll turn over the call to Dr. Douglas Fambrough, Dicerna's Chief Executive Officer.

[Douglas Fambrough:]

Thank you Peter, and good afternoon, and thanks to all who have dialed in to the call today. Joining me to present on the call is Ted Ashburn, our Head of Product Strategy and Operations, Pankaj Bhargava, our Chief Medical Officer and Jim Dentzer, our Chief Financial Officer. We are pleased to be able to provide you with this second quarter update. As a reminder, Dicerna is using our proprietary RNA interference or RNAi gene silencing technology to develop treatments for rare inherited diseases involving the liver and for solid tumors. We are pursuing gene targets that have historically been difficult to inhibit, using conventional pharmaceutical approaches, but are accessible by RNAi, and where the biological connection between those targets and the underlying disease state is well understood. We believe this strategy maximizes the probability of success of our programs. In addition to our key programs, we are pursuing indications where Dicerna can maintain full or significant development and commercialization rights. Dicerna continues to make progress on the clinical objectives for our development programs for our first two product candidates. First, DCR-PH1 are programmed for Primary Hyperoxaluria Type 1 or PH1, which is a rare and severe genetic liver metabolic disorder and second, DCR-MYC, our oncology program targeting the MYC oncogene. In addition, we have continued to advance our underlying technology platform making significant progress on our subcutaneously administered DsiRNA-EX Conjugate molecules, which are the basis of our earlier stage liver-targeted programs. To discuss our progress in more detail, I’ll begin by describing our progress with the DsiRNA-EX Conjugate technology and then pass to Ted and Pankaj to discuss our DCR-PH1 and DCR-MYC programs respectively. Finally, Jim will give an update on Dicerna’s financials. Dicerna’s DsiRNA-EX Conjugates are proprietary RNAi-inducing molecules that can mediate gene silencing in the liver and that can be administered by subcutaneous injection. These conjugates are targeted to the liver using a sugar molecule called GalNAc and do not involve lipid nanoparticles. The sugars are chemically conjugated to a DsiRNA-EX molecule which is an enhanced version of our RNAi Dicer Substrate technology where one of the two RNA strand has been extended. As you may recall, we had previously shown greater than 90% gene knockdown after a single subcutaneous administration in mice. During the second quarter, we provided additional data on our DsiRNA-EX Conjugate technology extending our observations to non-human primates or NHPs demonstrating effective translation of the DsiRNA-EX Conjugate technology from rodents to primates. During our NHP work, the nadir level of gene knockdown was observed to continue beyond one month after a single dose showing a very long duration of action. We are continuing to advance and refine this technology and to date we have demonstrated in-vivo gene silencing activity with DsiRNA-EX Conjugate molecules against six liver disease gene targets. These results along with the released data I just mentioned, we believe are supportive of future clinical application of the DsiRNA-EX Conjugate technology and show that we have successfully generalized our DsiRNA-EX Conjugate technology for application to any gene target. We are driving toward clinical candidate selection with the DsiRNA-EX Conjugate technology and expect to advance the program into clinical development in 2017. Now, I’d like to turn the call over to Ted Ashburn, our Head of Product Strategy and Operations for an update on our DCR-PH1 program. Ted?

[Ted Ashburn:]

Thanks Doug. I’d now like to turn your attention to our DCR-PH1 program for the treatment of Primary Hyperoxaluria Type 1 or PH1. PH1 is a severe rare genetic disease where a single gene error in liver metabolism causes patients to have high levels of oxalate in their urine resulting in progressive and severe damage to the kidneys. Existing disease management practices for PH1 may slow, but do not stop disease progression. Most patients eventually experience complete kidney failure with a mean age of kidney failure being in the early-20s. There are no FDA approved therapies aside from dual liver/kidney transplant, there are no effective treatments for most PH1 cases. Two aspects of PH1 make a particularly attractive program for Dicerna. First, PH1 is a natural application of Dicerna’s technology based on clear genetic basis of the disease and the fact that the disease metabolism seems to occur exclusively or nearly exclusively in the liver. Second, PH1 presents clear and easily assessed assayed biomarkers, specifically urine and plasma oxalate and glycolate levels. These biomarkers provide a direct read out of the mechanism of pathology in PH1 and importantly the efficacy of any targeted therapies for this disease. As we’ve discussed before, we’ve generated highly encouraging data in mice that have been genetically engineered to carry the same metabolic defect found in PH1 patients. As with PH1 patients these mice have elevated levels of urinary oxalate roughly three times the normal background levels. That elevation is similar to the elevated levels seen commonly in patients with PH1. Using our DCR-PH1 product candidate to knockdown the targeted HAO1 gene transcript that encodes for the enzyme glycolate oxidase in these mice we show 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 significantly beneficial impact on disease progression. In normal NHPs we have shown that a single dose of DCR-PH1 leads to an average of 84% gene knockdown with up to 93% knockdown observed four days after dosing. 29 days after a single dose in NHPs we see an average of 68% gene target knockdown with up to 86% knockdown observed. We have observed a DCR-PH1 administration in NHPs result in significant increases in urinary glycolate levels as expected based on the mechanism of action of DCR-PH1. While there is no PH1 disease models in NHPs, this observation of urinary glycolate elevation in normal NHPs after DCR-PH1 administration supports the notion that DCR-PH1 is inhibiting the metabolic pathway responsible for oxalate formation in PH1 patients and thereby may provide clinical benefit. DCR-PH1 is in the advanced stages of pre-clinical development and we expect to file an IND in the U.S. and CTA applications in Europe during the third quarter of 2015 in support of first-in-human dosing of DCR-PH1 in the fourth quarter. We continue to expect initial data from the Phase I trial in the first half of 2016. In addition, as previously disclosed, we are initiating an observational study of PH1 patients. This study will enroll up to 50 patients with genetically confirmed diagnosis of PH1 who have retained renal function. The primary objectives of this study are to characterize the baseline variability and factors that influenced changes in urine and blood oxalate and glycolate levels and renal function over time among others. We believe this information will provide key data to inform our upcoming clinical trials and we’ll facilitate the clinical development of DCR-PH1. Finally, during the second quarter of 2015, the U.S. Food and Drug Administration granted Orphan Drug Designation to DCR-PH1 for the treatment of PH1. And as we announced earlier today, DCR-PH1 has been granted Orphan Drug Designation by the European Medicines Agency as well. I will now turn the call over to Pankaj for update on our second product candidate, DCR-MYC. Pankaj?

[Pankaj Bhargava:]

Thanks Ted. I'd now like to turn our attention to our second product candidate, DCR-MYC, which is our DsiRNA-based therapeutic, targeting the MYC oncogene, formulated in our tumor-centric EnCore lipid nanoparticle formulation. DCR-MYC is currently being tested in two ongoing clinical trials. 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 suggesting a critical role in driving and maintaining tumor growth. The key role for MYC in tumor biology is also supported by a vast body of laboratory research and a wide variety of systems going back decades. But because MYC is an intracellular protein which lacks a good molecular binding site, it has been a challenging target for small molecule and biologic therapy and has remained an elusive target for drug developers. We believe our Dicer substrate RNAi platform overcomes this limitation by targeting the MYC mRNA transcript. Our pre-clinical data for DCR-MYC demonstrates specific and significant MYC gene knockdown in multiple tumor-bearing mouse models. DCR-MYC entered Phase I clinical testing, in April of 2014, in patients with solid tumors, multiple myeloma, or lymphoma. The endpoints for this Phase I so-called all-comers trial include safety and tolerability, and will identify the maximum tolerated dose, pharmacokinetic profile, pharmacodynamic effects and antitumor activity of DCR-MYC. We are evaluating antitumor activity by the standard resist criteria, using conventional imaging techniques such as CT scans and MRIs. In addition, we have incorporated FDG-PET imaging in the study, as FDG uptake by tumors may serve as a useful biomarker of MYC activity. Reduction in MYC activity are predicted to cause a decrease in tumor metabolic rate, which can be visualized by imaging glucose uptake using the FDG-PET imaging technology. FDG-PET is also a marker of early detection of response across several tumor types. We presented initial data from the all-comers trial during the second quarter at the ASCO conference in June. That data showed that as of May 12, 2015, 26 patients were treated with DCR-MYC with 18 patients evaluable for response. Anti-tumor activity was seen in two out of three patients with advanced treatment refractory pancreatic neuroendocrine tumors also called PNET. Specifically, evidence of a complete metabolic response based on imaging with FDG-PET was seen in one patient and a partial response based on resist 1.1 criteria in the second patient. Both patients were treated with multiple therapies for PNET prior to starting the study treatment. Based on the results observed, we announced the expansion of the all-comers Phase I study to include a cohort of patients with PNET. Once the maximum tolerated dose is established in this trial the expansion cohort will enroll up to 20 patients with low to intermediate grade PNET who have demonstrated disease progression after treatment with standard therapies. These preliminary Phase I safety and efficacy results are encouraging and we believe support further study of DCR-MYC for use as a new treatment option for patients with cancer. Once we have achieved the maximum tolerated dose in the study, we will also be taking biopsies from tumors, in which we will seek to identify the direct product of RNAi cleavage of the MYC transcript. We hope to establish proof of concept of DCR-MYC by showing resist responses in patients in conjunction with reduced FDG uptake and demonstration of RNAi activity against the MYC transcript. Since the ASCO presentation, we are continuing with dose escalation and we have not yet determined a maximum tolerated dose. We have achieved a dose level that represents our target level for clinical activity based on pre-clinical results. We continue to expect a read-out from the all-comers trial by the end of 2015. Contingent upon achieving proof of concept with DCR-MYC, we will launch our second oncology program targeting beta-catenin into IND-enabling studies. In December 2014, we initiated a second clinical trial of DCR-MYC, a Phase 1b/2 study in patients with advanced hepatocellular carcinoma or HCC, who have either failed or are intolerant to sorafenib, or who don't have access to other therapies for HCC. The first patient in this 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 that 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 fail standard of care treatment with sorafenib. We have sites for the HCC clinical trial both in the U.S. and in Asia due to the high prevalence of this disease in the Asian population. We are pleased with the progress of this study so far, and are continuing with dose escalation. We expect to discuss data from this trial at some point in 2016. Now, I will turn over the call to our Chief Financial Officer, Jim Dentzer, for an update on our financial progress. Jim?

[Jim Dentzer:]

Thank you, Pankaj. As many of you have seen, we filed our 10-Q 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 second quarter of 2015, Dicerna had a net loss of $16.2 million compared to a net loss of $11.4 million for the same period in 2014. During the second quarter, Dicerna recognized revenue of $0.2 million associated with the National Cancer Institute grant award related to cancer treatment research. No revenue was recognized in the same period in 2014. Research and development expenses were $11.9 million for the second quarter of 2015, compared to $6.8 million for the same period in 2014. The increase was due primarily to the increased clinical trial costs related to DCR-MYC, including the initiation of our Phase 1b/2 trial in patients with advanced HCC, which was initiated in the fourth quarter of 2014. An increase in pre-clinical activities related to DCR-PH1, increased expenses related to the discovery and early development of future programs and increased employee-related expenses, and including an increase in stock-based compensation of $0.4 million. General and administrative expenses for the second quarter of 2015 totaled $4.5 million, as compared to $4.4 million for the same period in 2014. The increase was primarily related to legal costs related to the Alnylam complaint. As of June 30, 2015, the company had $122 million in cash and cash equivalents and held to maturity investments as compared to $98.6 million as of December 31, 2014. In May 2015, Dicerna sold 2.75 million shares of its common stock through an underwritten offering at a price of $17.75 per share resulting in net proceeds to the company of approximately $45.9 million. We will use the net proceeds from this offering to both expand our pipeline of product candidates and extend our cash runway. Based on our current cash position and operating plan, the company expects that it has sufficient cash to fund operations for at least the next 12 months, this estimate assumes no additional partnership funding and no new debt or equity financings, more detailed financial information and analysis maybe found in the company’s annual report and its quarterly report on Form 10-Q filed today with the SEC. With that I’ll turn the call back to the operator so that we can take questions.

[Operator:]

Thank you. [Operator Instructions] And our first question comes from the line of Eun Yang from Jefferies, please go ahead.

[Eun Yang:]

Thank you. Can you hear me?

[Ted Ashburn:]

Hi, Eun. We can hear you fine.

[Eun Yang:]

Thank you. So, I just want to make sure that I heard you correctly. The natural history study for PH1 -- has it begun or you are about to start?

[Ted Ashburn:]

Sorry, Eun, can you, can you repeat the question?

[Eun Yang:]

Natural history study for PH1 - has it begun?

[Douglas Fambrough:]

PH1.

[Ted Ashburn:]

Yes, we [indiscernible] with that. Well, this is Ted Ashburn. That will be starting at end of the month or early September.

[Eun Yang:]

Okay. And then how long is the study going to be running?

[Douglas Fambrough:]

How long is the study going to run?

[Ted Ashburn:]

The study is projected to run through next year and the patients in that study will likely be rolling over into the Phase I study that we’ll be beginning later this year.

[Eun Yang:]

Okay. Great. And then also MYC, I know you guys are still doing dose escalation study to find MTD. And also in the - previously you mentioned that once you reached MTD in the Phase I dosing escalation study, you are planning to start Phase II in pancreatic neuroendocrine tumors. And I think previously it was kind of expected to begin in the fourth quarter this year. So my question is do you still expect to reach MTD with MYC by end of this year?

[Pankaj Bhargava:]

Yeah, Eun this is Pankaj Bhargava. So, thank you, that’s a good question. We are in the dose escalation phase in the MYC study. We anticipate that we will reach maximum tolerated dose in the fourth quarter this year but again as you know these studies have to go through those escalation and sometimes it’s unpredictable where you hit your maximum tolerated dose. We have been pleased with the safety profile of the drug so far and once we achieve our maximum tolerated dose, we will initiate enrollment in the pancreatic neuroendocrine tumor cohort, which is the PNET cohort at the maximum dose.

[Eun Yang:]

Thank you.

[Operator:]

Ladies and gentlemen [Operator Instructions] and our next question is from the line of Stephen Willey from Stifel, please go ahead.

[Prakhar Verma:]

Hi. This is Prakhar Verma on for Steve today. Thank you for taking my questions. So once you reach - once you identify the MTD in the trial, would you use the same MTD for the HCC trial? Would you stop it early? Would you stop the dose escalation early in the HCC trial?

[Jim Dentzer:]

Yeah, thanks for the question. So, the HCC study is a Phase 1b/2 trial and that has its own dose escalation steps which are very similar to the ongoing Phase I all-comers trial. So, and HCC population is biologically a little bit different with oftentimes compromised liver function, underlying cirrhosis etcetera. So, we may or may not have the same dose, maximum tolerated dose in both studies and we are going to evaluate the safety in both studies independently and take the maximum dose forward into the Phase II indications.

[Prakhar Verma:]

But since it's an all-comers trial, you may accrue a few HCC patients in the study, right?

[Jim Dentzer:]

We may, we may and that information will certainly be used to inform the dosing in our HCC study as well.

[Prakhar Verma:]

Okay. And I'm sorry if I missed it and you talked about it. The data from the HCC study would be available, you said this year -- later this year?

[Jim Dentzer:]

No, the HCC study will be available next year in 2016.

[Prakhar Verma:]

Okay. And one question on PH1, I - at your R&D Day in December, you talked about two PH1 registries, one in the U.S. and one in Europe. And if I remember correctly, you said that these two registries are updated annually. I don't know if you have updated numbers -- patient numbers from these two registries. Well, last time you said there were 265 patients in the Mayo Clinic database and about 500 in the French registry. I was wondering if you have any updated numbers on those two.

[Ted Ashburn:]

Yeah, I’m getting your exact numbers right now. This is Ted Ashburn. If you just give me just a few seconds here I’ll look those up for you.

[Prakhar Verma:]

Sure.

[Ted Ashburn:]

The number - okay, so the latest numbers out of the rare kidney stone consortium which is often called the Mayo Registry is 328 unique PH1 patients and Oxo [ph] Europe there are 683 PH1 patients.

[Prakhar Verma:]

Okay. Okay. Great. Alright. Great. Thank you for taking my questions.

[Ted Ashburn:]

You’re welcome.

[Operator:]

And I’m not showing any questions in the queue. I will like to turn the call back to Doug Fambrough for any final remarks.

[Douglas Fambrough:]

I want to thank people for dialing into the call and participating and asking your questions. We look forward to keeping you all up to date on our progress at future calls and at public events where we’re speaking. We’ll talk again next quarter. Have a great night.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This concludes the program and you may all disconnect, have a wonderful day everyone.