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Dicerna Reports Second Quarter 2018 Financial and Operating Results and Provides Corporate Update

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Management to Host Conference Call Today at 4:30 p.m. ET

Dicerna
Pharmaceuticals, Inc.
(NASDAQ:DRNA), a leading developer of
investigational ribonucleic acid interference (RNAi) therapeutics, today
reported financial and operating results for the second quarter ended
June 30, 2018.

"During the second quarter and subsequent period, we took a significant
step forward in the development of our lead program, DCR-PHXC, as well
as our broad pipeline of novel GalXCTM-based therapeutics,"
said Douglas M. Fambrough, Ph.D., president and chief executive officer
of Dicerna. "Our PHYOX Phase 1 trial of DCR-PHXC for primary
hyperoxaluria is progressing efficiently, with 10 of 16 PH type 1 (PH1)
and PH type 2 (PH2) patients in the Group B portion of the trial now
dosed, and we expect to report interim results later in the third
quarter and publicly present trial results in the fourth quarter of
2018. We continue to expect that we will initiate a pivotal registration
trial of DCR-PHXC in the first quarter of 2019. In parallel, we
continued to advance our development program for DCR-HBVS for the
treatment of chronic hepatitis B virus toward clinical trials and in the
fourth quarter intend to file regulatory clearances that, if granted,
will permit us to commence human clinical trials for DCR-HBVS. Finally,
with the Alnylam litigation now behind us, we have seen a notable
increase in active discussions with potential partners and
collaborators. With these advancements, we remain on track to have three
programs in clinical trials in the first half of 2019 and expect to
achieve other development milestones in the coming months."

GalXC™ Pipeline Update

  • Primary Hyperoxaluria (PH): Dicerna continued to advance the PHYOX
    Phase 1 clinical trial of DCR-PHXC, which is in development to treat
    all forms of PH. PHYOX is a single-ascending dose study of DCR-PHXC in
    normal healthy volunteers (NHVs) and patients with PH. PH is a family
    of severe, rare, genetic liver disorders characterized by
    overproduction of oxalate that often results in kidney failure.
    • In May 2018, Dicerna dosed the first PH patient with DCR-PHXC in
      the Group B portion of the PHYOX study. Group B is an open-label,
      multi-center study enrolling up to 16 patients with PH1 and PH2.
      Group B consists of three cohorts of patients with PH1 dosed at
      1.5, 3 and 6 mg/kg, and an additional fourth cohort that consists
      of patients with PH2 dosed at flexible dosing levels. The fourth
      cohort runs in parallel to the other three cohorts. Dicerna has
      dosed 10 out of 16 patients in Group B—four PH1 patients in Cohort
      1, four PH1 patients in Cohort 2, one PH1 patient in Cohort 3, and
      one PH2 patient in Cohort 4.
    • Dicerna completed the Group A portion of the study in NHVs. Group
      A is a placebo-controlled, single-blind, single center study that
      enrolled 25 NHVs. While the study remains blinded to treatment
      assignment, topline results from Group A evidence no serious
      adverse events (SAEs). There have been two mild-to-moderate
      transient injection site reactions at doses of 6 and 12 mg/kg
      involving erythema and tenderness lasting no more than 36 hours.
    • The primary objective of PHYOX is to evaluate the safety and
      tolerability of single doses of DCR-PHXC in NHVs and patients with
      PH. The secondary objectives are to evaluate the pharmacodynamic
      effect of single doses of DCR-PHXC on urinary oxalate
      concentrations, as well as other biochemical markers, and to
      characterize the pharmacokinetics of single doses of DCR-PHXC in
      both groups.
    • Dicerna expects to report interim results from the PHYOX trial
      later in the third quarter and publicly present trial results in
      the fourth quarter of 2018. The Company intends to initiate a
      multi-dose Phase 2/3 study of DCR-PHXC in the first quarter of
      2019, pending positive proof-of-concept data and regulatory
      feedback.
    • In May 2018, the U.S. Food and Drug Administration granted Orphan
      Drug Designation to DCR-PHXC for the treatment of PH.
    • In July 2018, the European Medicines Agency's Committee for Orphan
      Medicinal Products recommended designating DCR-PHXC as an orphan
      medicinal product for the treatment of PH in the European Union
      and the recommendation was adopted by the European Commission in
      August 2018.
  • Chronic Hepatitis B Virus (HBV): Dicerna expects to file regulatory
    clearances for human clinical trials in New Zealand and Australia for
    DCR-HBVS, in development for the treatment of chronic HBV, during the
    fourth quarter of 2018. If the clearances are granted, the Company
    intends to begin clinical studies shortly thereafter.
  • Undisclosed Rare Disease Involving the Liver: Dicerna is actively
    seeking a risk-sharing collaborator for this second program focused on
    a serious rare disease, before it files regulatory clearances to
    initiate a clinical trial. For competitive reasons, the Company has
    not yet publicly disclosed the target gene or disease.
  • NASH Collaboration with Boehringer Ingelheim (BI): Dicerna continued
    to advance the program, initially focused on nonalcoholic
    steatohepatitis (NASH), in accordance with the work plan for this
    collaboration.

Conclusion of Litigation

  • On April 18, 2018, Dicerna and Alnylam Pharmaceuticals entered into a
    Confidential Settlement Agreement and General Release (the Settlement
    Agreement), resolving all ongoing litigation between the two
    companies. The terms of the Settlement Agreement include mutual
    releases and dismissals with prejudice of all claims and counterclaims
    in the litigation between Dicerna and Alnylam and neither party
    admitted wrongdoing as part of the Settlement Agreement. Pursuant to
    the terms of the Settlement Agreement, Dicerna paid to Alnylam an
    upfront payment of $2.0 million, agreed to a future payment of $13.0
    million and issued 983,208 shares of common stock to Alnylam.

    The
    Settlement Agreement does not include any licenses to any intellectual
    property from either party and does not include any royalties or
    milestones related to product development. For additional detail,
    please see Dicerna's Quarterly Report on Form 10-Q for the quarter
    ended June 30, 2018, which was filed with the Securities and Exchange
    Commission (SEC) on August 8, 2018.

Financial Condition and Operating Results

  • Cash Position – As of June 30, 2018, Dicerna had $82.3 million
    in cash and cash equivalents and held-to-maturity investments, as
    compared to $113.7 million in cash and cash equivalents and
    held-to-maturity investments as of December 31, 2017. Additionally,
    the Company had $0.7 million of restricted cash equivalents as of June
    30, 2018 and December 31, 2017, which reflects collateral securing the
    Company's operating lease obligation.
  • Revenue – Dicerna recognized $1.5 million and $3.1 million of
    revenue associated with the BI Agreement, during the three and six
    months ended June 30, 2018, respectively. The revenue primarily
    represents partial amortization of the $10.0 million non-refundable
    upfront payment from BI, as well as certain reimbursable third-party
    research expenses which are billable to BI. Dicerna expects to
    recognize the remainder of the initial transaction price on a
    straight-line basis through June 30, 2019. Dicerna does not expect to
    generate any product revenue for the foreseeable future.
  • Research and Development (R&D) Expenses – R&D expenses were
    $10.3 million and $20.2 million for the three and six months ended
    June 30, 2018, respectively, as compared to $9.1 million and $17.8
    million for the same periods in 2017. The increase was due to higher
    direct R&D expenses, partially offset by a reduction in
    platform-related expenses.

    The increase in the three months
    ended June 30, 2018 was primarily due to an increase in clinical study
    costs and an increase in R&D salaries due to an increase in R&D
    headcount compared to the same period in 2017. The increase in the six
    months ended June 30, 2018 was primarily due to an increase in
    toxicology studies and an increase in clinical studies.

    The
    decrease in platform-related expenses for the three and six months
    ended June 30, 2018 was primarily due to lab material and supply costs
    and contract research costs associated with applying the Company's
    GalXC platform against gene targets.
  • General and Administrative (G&A) Expenses – G&A expenses
    were $4.8 million and $9.1 million for the three and six months ended
    June 30, 2018, respectively, as compared to $4.1 million and $8.2
    million for the same periods in 2017. The increase is predominantly
    related to higher consulting and corporate legal expenses.
  • Litigation Expenses – Litigation expenses, all related to the
    litigation with Alnylam, were $22.2 million and $25.4 million for the
    three and six months ended June 30, 2018, respectively, as compared to
    $2.2 million and $3.6 million for the same periods in 2017. The
    increase is predominantly due to the $21.0 million of settlement
    expenses related to the litigation settlement recorded in the second
    quarter of 2018.
  • Net Loss Attributable to Common Stockholders – Net loss
    attributable to common stockholders was $35.6 million and $51.2
    million for the three and six months ended June 30, 2018,
    respectively, as compared to $24.0 million and $38.2 million for the
    same periods in 2017. The increase is attributable to higher operating
    expenses, including the $21.0 million in litigation settlement
    expenses, partially offset by higher revenues, interest income and a
    decrease in dividends as a result of the conversion of the redeemable
    convertible preferred stock in December 2017.

For more detailed information and analysis, see Dicerna's Quarterly
Report on Form 10-Q for the quarter ended June 30, 2018, which was filed
with the SEC on August 8, 2018.

Guidance

Dicerna believes that it has sufficient cash to fund the execution of
its current clinical and operating plan through 2019, which includes
advancing DCR-PHXC through proof-of-concept trials and into late-stage
clinical development and initiating proof-of-concept studies of DCR-HBVS
in patients with HBV. This estimate assumes no new funding from
additional collaboration agreements or from external financing events.

Conference Call

Management will host a conference call at 4:30 p.m. ET today to review
Dicerna's second quarter 2018 financial results and provide a general
business update. The conference call can be accessed by dialing (855)
453-3834 or (484) 756-4306 (international), and referencing conference
ID 6588739 prior to the start of the call. The call will also be webcast
via the Internet and will be available under the "Investors & Media"
section of the Dicerna website, www.dicerna.com.
A replay of the call will be available approximately two hours after the
completion of the call and will remain available for seven days. To
access the replay, please dial (855) 859-2056 or (404) 537-3406, and
refer to conference ID 6588739. The webcast will also be archived on
Dicerna's website.

About Dicerna Pharmaceuticals, Inc.

Dicerna Pharmaceuticals, Inc., is a biopharmaceutical company focused on
the discovery and development of innovative, subcutaneously delivered
RNAi-based therapeutics for the treatment of diseases involving the
liver, including rare diseases, viral infectious diseases, chronic liver
diseases, and cardiovascular diseases. Dicerna is leveraging its
proprietary GalXC™ RNAi technology platform to build a broad pipeline in
these core therapeutic areas, focusing on target genes where connections
between target gene and diseases are well understood and documented.
Dicerna intends to discover, develop and commercialize novel
therapeutics either on its own or in collaboration with pharmaceutical
partners. For more information, please visit www.dicerna.com.

About GalXCTM RNAi Technology Platform

GalXCTM is a proprietary technology platform invented by
Dicerna to discover and develop RNAi-based therapies designed to silence
disease-driving genes in the liver. Compounds produced via GalXC are
intended to be broadly applicable across multiple therapeutic areas,
including rare diseases, viral infectious diseases, chronic liver
diseases, and cardiovascular diseases. Using GalXC, Dicerna scientists
attach N-acetylgalactosamine sugars directly to the extended region of
the Company's proprietary RNAi molecules, yielding multiple proprietary
conjugate delivery configurations. Many of the conjugates produced via
GalXC incorporate a folded motif known as a tetraloop in the extended
region. The tetraloop configuration, which is unique to Dicerna's GalXC
compounds, allows flexible and efficient conjugation to the targeting
ligands, and stabilizes the RNAi duplex which the Company believes will
enable subcutaneous delivery of its RNAi therapies to hepatocytes in the
liver, where they are designed to specifically bind to receptors on
target cells, potentially leading to internalization and access to the
RNAi machinery within the cells. The technology may offer several
distinct benefits, as suggested by strong preclinical data. The benefits
seen in preclinical studies include: potency that is on par with or
better than comparable platforms; highly specific binding to gene
targets; long duration of action; and an infrequent subcutaneous dosing
regimen.

Cautionary Note on Forward-Looking Statements

This press release includes forward-looking statements, including, for
example, Dicerna's expected timeline and plans for development of
DCR-PHXC and other pipeline programs, expectations related to the
collaboration with BI, expectations for discussions and possible
opportunities with potential partners and collaborators, and guidance
related to the anticipated duration and usage of current cash and cash
equivalents. Such forward-looking statements are subject to risks and
uncertainties that could cause actual results to differ materially from
those expressed or implied in such statements. Applicable risks and
uncertainties include risks relating to Dicerna's clinical and
preclinical research and other risks identified under the heading "Risk
Factors" included in the Company's most recent Form 10-Q filing and in
other future filings with the SEC. The forward-looking statements
contained in this press release reflect Dicerna's current views with
respect to future events, and Dicerna does not undertake and
specifically disclaims any obligation to update any forward-looking
statements.

 
Dicerna Pharmaceuticals, Inc.
Condensed Consolidated Balance Sheet Information
(Unaudited, in thousands)
       
June 30, December 31,
2018 2017
Cash and cash equivalents $ 42,426 $ 68,789
Held-to-maturity investments $ 39,875 $ 44,889
Total assets $ 89,715 $ 121,002
Total liabilities $ 25,140 $ 19,916
Total stockholders' equity $ 64,575 $ 101,086
 
 
Dicerna Pharmaceuticals, Inc.
Condensed Consolidated Statements of Operations Information
(Unaudited, in thousands, except share and per share data)
           
Three Months Ended June 30, Six Months Ended June 30,
2018 2017 2018 2017
Revenue from collaborative arrangements $ 1,545   $   $ 3,090   $  
Operating expenses:

Research and development

10,339 9,068 20,232 17,811

General and administrative

4,760 4,066 9,095 8,188

Litigation expense

  22,244     2,234     25,428     3,608  

Total operating expenses

  37,343     15,368     54,755     29,607  

Loss from operations

(35,798 ) (15,368 ) (51,665 ) (29,607 )

Other income (expense):

Interest income

330 143 619 181

Interest expense

  (176 )       (176 )    

Total other income, net

  154     143     443     181  

Net loss

(35,644 ) (15,225 ) (51,222 ) (29,426 )

Dividends on redeemable convertible

preferred stock

(2,622 ) (2,622 )

Deemed dividend related to beneficial

conversion feature of redeemable

convertible preferred stock

      (6,144 )       (6,144 )

Net loss attributable to common

stockholders

$

(35,644

)

$ (23,991 ) $ (51,222 ) $ (38,192 )

Net loss per share attributable to

common stockholders— basic

and diluted

$ (0.68 ) $ (1.15 ) $ (0.98 ) $ (1.84 )

Weighted average common shares

outstanding—basic and diluted

52,555,751 20,794,193 52,141,849 20,792,925
 

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