Dicerna Pharmaceuticals, Inc. (NASDAQ:DRNA)
Q2 2014 Earnings Call
August 7, 2014 4:30 PM ET
Donna LaVoie – Investor Relations, LaVoie Group
Douglas Fambrough – Chief Executive Officer
Jim Dentzer – Chief Financial Officer
Jim Weissman – Chief Business Officer
Great thank you very much. This is Donna LaVoie. Good afternoon and welcome to Dicerna’s conference call to discuss it’s 2014 second quarter financial and operational results. For anyone who has not had a chance to review our results, we issued a press release aftermarket today outlining the announcement which is available under the Investors tab on Dicerna’s website at Dicerna.com.
You can listen to this conference call via webcast on our website and it will be archived there for 30 days beginning two hours after the call is completed today. I’d like to remind listeners that we will be making forward-looking statements on today’s call, therefore, I’d like to remind you that today’s discussion would include statements about the company’s future expectations, plans, 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 day. 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. Doug Fambrough, Dicerna’s Chief Executive Officer. Doug?
Thank you, Donna. Good afternoon and thanks to all of you who have gotten into the call today, Joining me on the call today are our Chief Financial Officer, Jim Dentzer, and our Chief Business Officer Jim Weissman.
Dicerna has had an eventful year in 2014 so far with the successful IPO financing of the company, we are in a strong position to fund developments of our clinical pipeline of optimized DSI RNA molecule and to further develop our DSI RNA platform technologies.
We are carefully building a biopharmaceutical company with the purpose of treating specific indications in oncology, and rare genetic diseases with our unique approach to RNAI using Dicerna’s proprietary RNAI molecules known as Dicer Substrates or DSI RNAs.
We call them Dicer Substrates because they are processed by the Dicer enzyme. The initiation point for RNAI in the human cell cytoplasm. As we have said before, we are pursuing targets that has historically been difficult to inhibit using conventional approaches but were connections between targets and diseases are well understood and documented.
We had a long journey ahead but we are fortunate to have the financial and human resources to bring our research into development stages. Our business strategy continues to be centered around execution on two key pillars. First, we prioritized programs with high likelihood of success and second, we focused our efforts on programs in which we can maintain substantial commercial rights.
With these two strategy pillars, we hope to both maximize our likelihood of clinical success and drive maximum return to our investors and maximally benefit patients.
We will update you today on our development programs in two key areas. First, DCR-MYC which is our announced oncology candidate targeting the MYC oncogene and second, our rare disease program known as DCR-PH1, which targets the metabolic disorder, Primary Hyperoxaluria 1.
But first I’ll give a few general corporate updates for the quarter. At the beginning of the quarter in April, we initiated a Phase 1 dose-escalating trial of our first Dicer Substrate RNAI drug candidate of DCR-MYC in patients with solid tumors, and hematologic malignancies lymphoma.
In addition, this quarter included an important presentation by a key opinion leader at the International Primary Hyperoxaluria Workshop of our pre-clinical data highlighting the promise of DCR-PH1 a therapeutic candidate for this rare inherited liver disorder that often results in progressive and severe kidney damage.
The disease is known as Primary Hyperoxaluria Type 1 or you will hear us refer to the program as PH1. On a lighter note, on July 15, we celebrated our NASDAQ listing by attending the Closing Bell Ceremonies in New York City following several analyst meetings. We are fortunate to have the interest of analysts and investors in our story and we have a full agenda for the remaining of 2014 in this regard.
Watch for a listing of our investor conferences in which we will present on our website in the Investors section.
Now I’d like to provide an update on DCR-MYC which is our MYC targeted therapy that entered Phase I clinical testing in April. Normally, our Chief Medical Officer, Dr. Pankaj Bhargava would give this update, but unfortunately he is traveling on a long-planned family vacation.
Dicerna selected MYC as a high priority target to silence with our DSI RNA technology, because it is an oncogene that is frequently amplified or otherwise up regulated in a wide variety of tumor types including hepatocellular carcinoma. Because MYC is a small protein which lacks a good binding site, it has been a challenging target for small molecule therapies.
It has been an elusive target for drug developers for decades. We think our Dicer Substrate platform has overcome the limitations of small molecules. Our pre-clinical data of DCR-MYC demonstrated specific and significant MYC transcript level reduction or knockdown in multiple tumor-bearing mouse models.
As I noted, in the second quarter, we initiated a Phase I trial in patients with solid tumors, multiple myeloma, or lymphoma that will assess the safety and tolerability identify the maximum tolerated dose, the pharmacokinetic profile and the potential pharmacodynamic effects as well as anti-tumor activity of DCR-MYC.
The study protocol includes an expansion cohort treated at the maximum tolerated dose. We will be looking at preliminary efficacy to support further development in solid tumors. This is an open-label trial and we will report data when it has been meaningful and actionable.
In any event, we expect to have a top-line readout from this trial no later than the second half of 2015. We also expect to initiate by the end of this year a second Phase I study of DCR-MYC in patients with advanced Hepatocellular Carcinoma or HCC.
We selected Hepatocellular Carcinoma as an initial focus indication for DCR-MYC both due to the observation that the MYC teen 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. We will have trial sites for the HCC Phase I trial in Asia due to the high prevalence of this liver diseases in the Asian population.
Now I will turn to a discussion of our PH1 program DCR-PH1 is Dicerna’s first announced program in rare and inherited diseases and it targets Primary Hyperoxaluria Type 1 or PH1 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 therapies for PH1 may slow, but do not stop disease progression and patients eventually experience complete kidney failure. Aside from a dual liver kidney transplant, there are no FDA approved therapies for most patients with PH1. PH1 is a natural application for Dicerna’s technology based on its clear genetic basis and the fact that the disease metabolism seems to occur exclusively or nearly exclusively in the liver.
As I briefly mentioned earlier, in June, we were pleased to be the sponsor of the 11th Annual Primary Hyperoxaluria Workshop in Chicago. This event is a scientific meeting of the top key opinion leaders in the world in the field of Primary Hyperoxaluria and oxalosis.
It is hosted by the Oxalosis and Hyperoxaluria Foundation, the patient organization dedicated to improving the care and treatment and finding a cure for PH1 and related diseases and it includes patients and families along with the leading doctors.
Dr. Eduardo Salido, Ph.D., Professor of Pathology at the University of La Laguna in Santa Cruz de Tenerife in Spain, presented previously announced pre-clinical data that shows DCR-PH1 provides potent and long-term inhibition of HAO1 a gene implicated in the pathogenesis of PH1.
As a quick review, in a genetically modified mouse model of PH1, we observed a 97% reduction in the HAO1 transcript level in the mouse liver after a single-dose of DCR-PH1 and we observed a significant reduction in urinary oxalate levels a key marker of the disease.
In mice treated with DCR-PH1, urinary oxalate levels returns to near baseline levels similar to normal mice. These results are consistent to what we presented in our Investor Presentation during the IPO road show, but it was great to have validation from an outside independent expert in the field.
We expect to initiate a Phase 1 trial of DCR-PH1 in Primary Hyperoxaluria Type 1 in 2015. Now, I’ll turn the call over to our CFO, Jim Dentzer for an update on our financial progress. Jim?
Thank you, Doug. As Doug mentioned, and 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 use when evaluating the efficiency of our business.
In the second quarter of 2014, Dicerna had a net loss of $11.4 million compared to a net loss of $3.8 million for the same period in 2013. Dicerna had research and development expenses of $6.8 million for the second quarter of 2014 compared to $2.5 million for the same period in 2013. This increase was due primarily to the initiation of our DCR-MYC clinical trial and an increase in our preclinical activities related to DCR-PH1 and also increased employee-related expenses including stock-based compensation of $0.9 million.
General and administrative expenses for the second quarter 2014 totaled $4.4 million, compared to $1.1 million for the same period in 2013. The increase was primarily from the increased costs of operating as a public company and increased employee-related costs, including stock-based compensation of $1.5 million.
As of June 30, 2014, the company had $120.3 million in cash and cash equivalents and held-to-maturity investments as compared to $46.6 million 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.
On April 7, 2014, we repaid the remaining amount of a secured term loan from Hercules Technology Growth Capital of approximately $3.6 million.
In addition, for accounting purposes, we classified $1.1 million as restricted cash to reflect the collateral securing a letter of credit established in conjunction with the lease agreement for our new facility signed on July 11, 2014.
Based on our current cash position and operating plan, the Company expects it has sufficient cash to fund operations through the end of 2016. This estimate assumes no additional funding from new partnership agreements and no new debt or equity financing events.
More detailed financial information and analysis maybe found in the Company’s quarterly report on Form 10-Q filed today with the Securities and Exchange Commission. With that, I’ll turn the call back to the operator so that we can take questions.
(Operator Instructions) The first question comes from Michael Schmidt from Schmidt & Partners. Your line is now open.
Jonathan Chang– Schmidt & Partners
Hi actually this is Jonathan Chang stepping in for Michael Schmidt. Thanks for taking my questions. My first question is – so there was a recent publication in July in Kidney International based on large European cohort of PH1 patients that provide a lot of interesting information.
I am wondering what your thoughts are on the differences found between your PN study and the US registry data and whether this impacts your thoughts regarding the addressable PH1 market.
Could be a little more specific, Jonathan about what elements you are interested in?
Jonathan Chang– Schmidt & Partners
Sorry, I think this publication mentioned several points such as they found a younger age at diagnosis, a younger age and a higher percentage presenting with end-stage renal disease?
Given what I have in front of me, I can’t speak to that publication in any detail. However, it is not believed that there is any systematic difference between Primary Hyperoxaluria Type 1 patients in Europe versus patients in North America or elsewhere in the world and there is a – there are very substantial differences in things like age of diagnosis based on expertise in the geographic area where a patient is.
And actually, there are differences in outcomes based on the – essentially the rigor of compliance associated with different territory care treatment centers, Our view at this point is that this doesn’t have a significant impact on the way we would develop, PCR-PH1 or its attractiveness in different geographies.
There is a very clear expressed need from the key opinion leaders from Europe and the United States and this includes both the major and minor tertiary treatment centers that are around. So, we explore these – the topics of how to develop this product in great detail at the workshop in June. And there were participants from all over the world. So I don’t think it’s fundamentally changes any of the outlook that we have already discussed.
Jonathan Chang– Schmidt & Partners
Okay, sure, thanks. So, I am not sure if you can speak to the – in that same publication, there was a lot of data on AGXT genotypes phenotype correlation. I am just wondering given that you approach target HAO1, would you expect there to be any read through in terms of your development plans based on any kind of AGXT genotype phenotype data?
Yes, so, as you know, there is not a good genotype phenotype relationship based on AGXT. There is some documented relationship in sensitivity to vitamin B6 but it’s certainly not absolute. The consensus from physicians and this is derived from an advisory board meeting that we did where specifically addressed this topic is that regardless of the genotype or frankly the state of disease severity and the patient.
Any reduction in oxalate levels would be significant to that patient and to the patient’s future progression and that all of the genotypes would be – and any treatment would be relevant to all of the genotypes. So, we are not seeing at this point anything that would subdivide or restrict the PH1 population as to whether an HAO1 targeted drug would be appropriate for them or not.
Okay, great. And maybe just one last question. Do you have any activities ongoing in terms of increasing PH1 disease awareness and rates of patient diagnosis?
So, that is one of the main missions of the OHS the Oxalosis and Hyperoxaluria Foundation. We have not, as a company started direct efforts in that regard, but we sponsored the conference and we are going to work to support OHS in the mission and as we advance the programs as we hope to approach commercialization driving disease awareness, I think will be a key part of the commercialization strategy for the product, but that’s still ways away. Not all that far but a little ways away.
Okay, thank you.
Thank you and our next question comes from Chris Raymond from Robert W. Baird. Your line is now open.
Laura Chico – Robert W. Baird & Co
Good afternoon. This is Laura Chico in for Chris Raymond today. Thank you for taking the questions.
Laura Chico – Robert W. Baird & Co
Just wanted to – hey Doug. Just wanted to follow-up on the PH1. You mentioned the meeting with the OHF, just curious, could you update us – is there any other meetings or any chance we might get a look at more preclinical data prior to filing the IND?
Historically that meeting has been bi-annual, but they are moving it to annual. We don’t have any specific plans, but I assume we will be giving a more substantial presentation at next year’s workshop.
That we will be Tenerife, that’s being hosted by Dr. Salido. So, I think it’s going to be a great trip if you want to go. I am kind of looking forward to it. I don’t – I am not sure of the dates of – the dates have been set, but don’t have them at my fingertips. But I would expect a fairly substantial presentation at that meeting.
Laura Chico – Robert W. Baird & Co
Very good. Thank you and congrats on the progress.
That concludes the question and answer session. I would like to hand the call back over to Mr. – Dr. Fambrough for closing remarks.
Well, I want to thank everyone for calling in and paying attention. It’s an exciting time for Dicerna and we hope over the coming quarters to have substantial updates on our progress.
Thank you. This concludes the Dicerna Q2 earnings call. You may all disconnect.
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