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spk01: Ladies and gentlemen, thank you for standing by, and welcome to the Discerna Pharmaceuticals Full Year 2020 Earnings Conference Call. As a reminder, this conference is being recorded at the company's request. I will now turn the call over to your host, Ms. Laurence Devo, Senior Director of Investor Relations at Discerna. Please go ahead.
spk12: Thank you, Operator. Good afternoon, everyone. And thank you for joining us to review Dicerna's full year 2020 financial results and operational highlights. For anyone who hasn't yet had a chance to review our results, we issued a press release after the close of trading today, which is available under the Investors and Media tab on our website at dicerna.com. You may also listen to this conference call via webcast on our website, which will be archived beginning approximately two hours after the call is completed. Speaking on today's call will be Dicernes President and CEO, Doug Zambrow, who will review our 2020 progress, provide updates on our collaboration agreements, and introduce our newest internal development program. Our Chief Medical Officer, Sri Ram Muradie, will discuss upcoming clinical regulatory milestones, and our Chief Financial Officer, Doug Pagan, will review our full year 2020 financials. We also have Jim Weisman, our Chief Operating Officer, Rob Ciapponelli, our Chief Commercial Officer, and Bob Brown, our Chief Scientific Officer, available today to address questions during the Q&A session. Following our remarks, we'll open the lineup for your questions. I'd like to remind listeners that management may make forward-looking statements on today's call pertaining to the company's finances, business and operations, including the discovery, development, and commercialization of our product candidates and technology platforms, and the therapeutic potential thereof, the success of our collaborations and any potential future collaborations. 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 those relating to our preclinical research and clinical programs and other risks identified under the heading Risk Factors, including our most recent Form 10-Q and Form 10-K, which will be filed with the SEC following this call. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any allegations to do so if our views change. Now, I'd like to turn the call over to Doug Sambra, Dicerna's President and CEO. Doug?
spk06: Thank you, Lauren. Good afternoon, everyone, and thank you for joining us. 2020 was a year of success and maturation for Dicerna, a year of multiple critical and collaborative successes capped by completion of enrollments in the company's first pivotal trial, a trial that will set the stage for our first NDA submission as a company later this year. These successes were matched by strong momentum behind our pipeline building and discovery research efforts, for which we presented for the first time data supporting expansion into multiple new tissues beyond the liver, which unlock multiple potential new disease areas for future pipeline growth. Looking forward, We see 2021 as a year of accelerated pipeline growth as well as corporate maturation towards our goal to emerge as a fully integrated commercial entity in 2022. As a part of our internal pipeline growth efforts, which will be a key area of focus for us in the coming years, we announced today our fourth internal development program for alcohol use disorder, which is expected to enter the clinic in the third quarter of this year. With $568 million in cash in marketable securities as of December 31st, 2020, and a strong payment stream from our existing collaborations and the potential to access other non-diluted sources of capital, including monetization of a royalty stream we own on a non-Dicernum product and our planned ex-US commercial partnership for the Dozeram, we have the resources to fund our steady growth trajectory. including the planned launch of Nidozeran next year. And so it is that our successes in 2020 have set us up for exciting new developments in the coming years. Some of the most notable of these successes were the positive interim clinical data readouts. First, from our open label Phiox3 extension trial of Nidozeran, which carries essentially the same enrollment criteria and monthly treatment regimen as our pivotal Phiox2 clinical trial. As a reminder, we saw 100% of PH1 patients reach normal urinary oxalate measures at one or more time points in that interim analysis of BIOX3, 70% of whom had at least three consecutive normal measurements. With an overall mean urinary oxalate across all PH1 and PH2 patients at day 180 of 0.44 millimole per body surface area per day, which is in the normal range as defined by the study protocol, we are pleased with Nidozerin's overall profile to date in VIAX3, particularly within the pH type 1 population. We also observed in the study strong activity in pH type 2 patients, with two of three patients reaching normalization at one or more time points, and where Nidozerin has the potential to be the only RNA-based therapeutic option. Indeed, we believe these data exceed the bar we need to hit in order to have a highly competitive product. Of course, as well, we believe we have the potential for a best-in-class profile for treating all three types of pH. We look forward to top-line data from the Pivotal Phiox2 trial about mid-year. As it relates to pH3, we have initiated our Phiox4 single-dose study and anticipate data around mid-year. Our plan still remains to include Phiox4 data and early data from our natural history study in our NDA submission in pursuit of an accelerated approval. Both PH2 and PH3 remain unaddressed with current therapies, and we plan to seek priority review pending data as the first to address the needs of these patients. In addition to our positive Nidozerin data from the BIOX3 study, We presented exciting new phase 1B preliminary efficacy data for RG6346 in a study of patients with chronic hepatitis B infection. RG6346 is our proprietary galaxy molecule that knocks down specific genes expressed by the hepatitis B virus, most notably hepatitis B surface antigens. These data were first presented at our R&D day in August, and additional follow-up data were presented at the 2020 AASLD scientific conference in November, showing that treatment with multiple doses of RG6346 induced a deep and sustained mean reduction of hepatitis B surface antigen for up to one year after last dose. The main treatment period for our first three cohorts of the study concluded some time ago, But the study continues in its extended follow-up period for patients with at least one log or greater reduction of HVS antigen from baseline levels. We are excited by the long duration of HVS antigen suppression induced by RG6346 in nucleoside-suppressed HPV patients observed in the phase one study. And RG6346 has potential to be complementary with other existing and emerging HPV treatments. Our collaboration partner, Roche, will be including RG6346 in their Phase II adaptive design trial expected to initiate this quarter to assess multiple therapeutic combinations, including different mechanisms, with the goal to identify treatment regimens with the potential to deliver a functional cure. We are optimistic about RG6346's potential as a backbone component of future functional cure combination treatment regimens. As a reminder, Diacerna has the right to opt in to co-fund development at the initiation of Phase III with highly enhanced economics in the United States and the potential to co-promote in the U.S. as well. Also in 2020, we presented what we're calling our Galaxy Plus technology, which extends our RNAi capabilities to tissues beyond the liver, including the central nervous system, muscle tissue, and adipose tissue. And although we haven't presented data publicly yet, we're having success in other tissues beyond that, including tumor-associated immune cells. We look forward to rolling out new proprietary pipeline programs that utilize Galaxy Plus, focused on targets that we believe have a high probability of achieving clinical success and for which we believe RNAi will be the preferred treatment modality. Before I turn the call over to Sri to discuss our upcoming clinical and regulatory milestones, I would like to take a few minutes to introduce our next wholly-owned clinical candidate and development program, DCR-AUD, for the treatment of alcohol use disorder, or PUD. This program targets a broad and diverse addressable population that has been highly underserved by current pharmaceutical interventions. We believe RNAi, And the unique constellation of features RNAi potentially brings, including long duration, simple administration, high target specificity, and an excellent safety profile, has the potential to be a game changer for the treatment of alcohol use disorder. DCR-AUD is also a departure from our orphan focus to date, consistent with our belief that RNAi can be a large market technology, especially when rooted in the science of validated human genetic targets. Our AUD program is a perfect reflection of this, where the target is aldehyde dehydrogenase 2, or ALDH2. ALDH2 is a key liver enzyme involved in the metabolic breakdown pathway of alcohol. Millions of people live perfectly healthy lives worldwide and carry naturally occurring ALDH2 loss-of-function mutations. These mutations cause alcohol intolerance, and unsurprisingly, rates of alcohol use disorder amongst this population are incredibly low. When used as an adjunct to behavioral therapy, we believe that our liver-specific DCR AUD could result in substantial improvement in treatment outcomes for AUD, with a profile that may be attractive to both healthcare providers and people with AUD, and which could be highly differentiated from any current treatment options. Historically, this has been a challenging market, and we're well aware of that. But historically, there has never been a treatment option for AUD that delivers good efficacy with no side effects and with a long duration of action after simple administration, which we believe we will achieve with DCR-AUD. Like multiple other markets, it takes the right product, and we believe DCR-AUD is the right product for AUD. We are excited by the prospect of DCR-AUD as a first-line pharmacotherapy that is complementary to and to be used in conjunction with behavioral and other approaches to help people with AUD reach their treatment goals. I'll now let Sri touch on the program in more detail, and then he'll also outline our upcoming clinical and regulatory milestones for 2021. To provide an even deeper look at our DCR-AUD program, we'll be hosting a live webinar next month So look out for that announcement. Sri?
spk05: Thank you, Doug, and thank you all for joining us. Alcohol use disorder is a complex behavioral disorder with huge unmet need. It is a chronic disorder that is associated with a range of medical, psychological, social, economic, and personal problems, and it is one of the leading causes of preventable death in the United States. It is estimated that 14 million adults in the U.S. experience AUD. Unfortunately, AUD often goes undiagnosed and untreated in part due to limited treatment options and willingness to engage in treatment. In fact, it is estimated that fewer than 10% of adults in the U.S. with AUD seek help or treatment and that a similarly low percentage of those treated actually receive pharmacotherapy. Available treatments have generally shown only a modest treatment benefit in the reduction of harmful drinking levels or maintenance or abstinence with poor patient compliance being a contributing factor. The pathway to AUD recovery is a highly individual experience, and each person's journey is unique. We see a critical need and opportunity for a safe, targeted, easy-to-use pharmaceutical therapy that can be combined with behavioral interventions to help individuals to meet their treatment goals, including reduction in harmful levels of drinking and or abstinence. Empirically, ALDH2 heterozygote experience alcohol intolerance at moderate levels of alcohol intake and overall have a lower prevalence of alcohol misuse compared with unaffected individuals. Using Galaxy technology, BCR-AUD is designed to deliver liver-specific knockdown of ALDH2, resulting in intolerance of alcohol in moderate amounts. This approach differs from older small molecule therapies that result in nonspecific inhibition aldehyde dehydrogenase enzyme activity and other biological processes in the body. In preclinical mouse models, liver-specific knockdown of the ALDH2 gene induced an intermediate alcohol intolerance phenotype that appears to correlate with reduction in heavy alcohol intake. In general, we envision that BCR-AUD will provide a functional guardrail of real-time physiological feedback that may help those with AUD avoid harmful levels of alcohol intake, and give them the time and space they need to pursue their recovery. With a safety profile of our Galaxy platform shown in our other development programs to date, including monthly or even less frequent dosing and liver-specific target knockdown, we believe DCR-AUD could be a novel, convenient, and safe approach to treating AUD that may expand the reach of pharmacological therapy to many more people who could benefit from it. We plan to file an IMB for DCR-AUD mid-year and enter the clinic shortly thereafter. Our Phase 1 study plans to enroll healthy volunteers and will include an assessment of low-dose alcohol interactions to confirm pharmacodynamics, safety, and the target profile that is consistent with preclinical models of liver-specific ALDH2 lockdown and the observed alcohol interactions in humans with naturally occurring ALDH2 deficiencies. We are confident that our approach will generate important, goal-no-hope information from our Phase I program that will be directly translatable to AUD. We are very enthusiastic about this new program and plan to host an additional call with a guest therapeutic expert, Dr. Henry Kranzler, later in March to discuss VCR-AUD in more detail, including our initial study plans, the challenges of treating AUD, and its human and societal costs, and importantly, the opportunities for improvement in what is a complex treatment landscape for AUD. Dr. Cranston is a professor of psychiatry and director of the Center for Studies of Addiction at the University of Pennsylvania's Perelman School of Medicine. His research focuses on the genetics and pharmacological treatment of substance dependence with a particular emphasis on precision addiction medicine, and we are very excited that he has agreed to join us to discuss our efforts in developing DCR-AUD for alcohol use disorder. Now I'll take a moment to update you on our Alpha-1 Antitrypsin Deficiency Associated Liver Disease Program. As many of you know, Dicerla and L-Nylon entered into an agreement last April to collaborate on our Phase I clinical candidates in development. At the outset of 2021, following careful evaluation of all data to date for both programs, we announced that we had selected the Dicerla molecule Delteseram for further development in Phase II. Both molecules were well-designed and demonstrated competitive target knockdown of A1AT protein, but ultimately we chose both SRM. We plan to release initial interim phase 1 beta sometime mid-year and additional results at an appropriate medical meeting later in 2021. A1AT deficiency associated liver disease, or AATLD, is caused by the production of abnormal A1AT protein by the Z allele of the serpent A1 gene. and may lead to chronic liver disease, culminating in cirrhosis, liver failure, or cancer. No treatments exist for AATLD other than liver transplantation. It is estimated that 120,000 individuals in Europe and 63,000 individuals in the U.S. carry the ZZ genotype, but that about 10% are diagnosed with AATLD, representing a significant opportunity for increased identification, diagnosis, and treatment with individuals with this disease. We are on track to initiate our Phase II study in patients in the first half of this year. This is a multiple-dose randomized placebo-controlled double-blind study of Belcesaran to evaluate the safety tolerability PK and PB in adult patients with PIZZ-AATLD. The study will compare Belcesaran with placebo in parallel cohorts of 6 and 12 months in duration. As part of this trial, we will evaluate serum AAT, liver histology, and a variety of exploratory biomarkers to assess the effects of dalseran on AAT liver disease activity. We will be discussing with regulators the optimal endpoint for a pivotal trial based on the data collected from our phase two study. Finally, for nidoseran, as I've mentioned, we are on track to receive top-line data mid-year for our nidoseran pivotal trial, for which we will be looking to achieve our primary endpoint, demonstrating a greater percentage reduction in urinary oxalate from baseline with nidoseran versus placebo based on the reduction in 24-hour UOX from baseline using an area under the curve between day 90 and day 180. Our ongoing open-label extension study has shown promising data to date in both PH1 and PH2 patients, where we saw a 70% mean maximum reduction in urinary oxalate at day 180 for all patients in the study. As part of our overall PHIOX development program, we have also begun dosing in our PHIOX4 single-dose trial of Nidoceram to evaluate safety tolerability and PKPD in patients with PH3. Our goal is to demonstrate substantial reduction of urinary oxalate in these participants and include these data along with early data from our natural history study in PH3 in our NDA submission plan for the third quarter in support of a potential accelerated approval in PH3. As the most recently diagnosed form of PH, NETS is known to date about disease progression and long-term impacts of the disease so we expect additional work will be needed for full approval. We also plan to initiate the PHYOX-7 trial in patients with PH-1 or PH-2 and end-stage renal disease, and the PHYOX-8 trial of midoceram in ages zero to six in the first half of this year. While these data may not be available for inclusion in our initial MDA submission this year, we plan to submit supplemental filings expeditiously following the conclusion of these studies. I'd now like to turn the call back over to Dr. Ambrose to touch on progress across our various pharma collaborations.
spk06: Thanks, Sri. We continue to make excellent headway across our collaborative programs. This is another means by which we are expanding our pipeline and expanding the reach of RNAi across therapeutic areas. Our collaboration with Lilly continues to progress. In the fourth quarter of last year, they ticked off their first phase one study using Dicerna's Galaxy technology, targeting ANG-PGL3 for the treatment of dyslipidemia. This year, we anticipate an additional IND filing in the second quarter, targeting lipoprotein A, or LPA, for the treatment of cardiovascular diseases. In addition, we have received formal notification from Lilly that they plan to extend the initial research collaboration term, which is excellent news and speaks to the promise of our RNAi technology. A third clinical candidate has been declared in the collaboration and is in preclinical development, and we're optimistic for the potential of multiple additional development programs beyond these first three, including both liver-targeted and neurodegenerative disease and pain-targeted programs. Our development work for Alexion is continuing as planned, and we are pleased to disclose that the first two Galaxy candidates are targeting C3 and complement Factor B, which we disclosed at the outset of the year. We anticipate delivering IND-supporting packages to Alexion in the fourth quarter of 2021 and in the first quarter of 2022, respectively, after which Alexion will be responsible for any IND or CTA filings in accordance with our agreement. We have also made rapid progress with our partner Novo Nordisk. Although we don't anticipate initiation of a clinical trial this year for a candidate under the Novo collaboration, A tremendous amount of work has already been done in what is a highly collaborative partnership, and we look forward to additional target selections and clinical candidate selections beyond the first clinical candidate we announced at the beginning of the year. Like the Roche Agreement, this is a collaboration in which we maintain opt-in rights to co-fund development after Novo has de-risked a candidate in Phase I or Phase II development. This represents substantial economic upside potential for DICERNA. And with that, I'd like to turn this call over to our CFO, Doug Pagan, to cover financials.
spk04: Doug? Thanks, Doug. I'd like to briefly walk through the key financial results for the full year 2020 and directly to our press release outlining these financial results, which was issued today, and to our annual report on Form 10-K, which will be issued following this call. Net loss for the full year 2020 was $112.7 million for $1.52 per share compared to $120.5 million for $1.76 per share for full year 2019. Revenues for the full year 2020 totaled $164.3 million compared to $23.9 million in 2019. The year-over-year increase in revenue recognized is primarily attributable to increased activities and associated costs under the various collaboration agreements. As of December 31, 2020, we had approximately $138.5 million of current deferred revenue, which we expect to be recognized over the next 12 months, and approximately $336.2 million of non-current deferred revenue, expected to be recognized over the following several years. Full-year R&D expense totaled $205.4 million in 2020 compared to $109.3 million in 2019. The year-over-year increase was primarily driven by a $54.8 million increase in direct external research and development expenses and a $32.9 million increase in employee-related expenses, which includes salaries, benefits, and stock-based compensation, as we increase headcount to support our expanding pipeline. Full-year G&A expense totaled $72.1 million in 2020, compared to $42.8 million in 2019. The increase was primarily due to a $20.6 million increase in employee-related expense as we increase headcount to support our growing operations, as well as a $6 million increase in professional consulting services. We expect operating expense to increase in the coming quarters as we continue to grow headcount to accommodate additional R&D activity and launch readiness, as well as from higher external spend associated with increased activities in the pipeline. During Q4 2020, we received $17.5 million in milestone and reimbursement payments from our collaboration partners. We continue to project receiving over $100 million in collaborative payments received for the five-quarter period from Q4 2020 through Q4 2021, and therefore anticipate receiving over $83 million from our existing collaboration for the full year 2021 These payments represent an important source of proceeds and demonstrate the value these collaboration programs should continue to generate as they mature. As of December 31, 2020, we had $568.8 million in cash equivalents in health and maturity investments compared to $348.9 million as of December 31, 2019. Maintaining a strong balance sheet will be of paramount importance as we plan to submit our NDA for Nidosurin in the third quarter and prepare for a potential 2022 commercial launch. During 2021, we anticipate cash receipts from existing collaborations will be supplemented by other potential sources of funding, including, for example, proceeds from a planned XUF commercial partnership for Nidosurin and possibly possible royalty monetization with the objective of maintaining the balance sheet strength with which we started the current year. That concludes my review of the financials. I would now like to open the call up for questions. Operator?
spk01: Thank you. And as a reminder, if you want to ask a question, just press star and then the number one on your telephone. Again, just press star and then the number one on your telephone keypad. And to withdraw your question, just press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from the line of Jonathan Miller from Evercore ISI. Sir, your line is open.
spk03: Hi, guys. Thanks so much for taking the question, and congrats on all the progress in 2020. When you list it all out like that, it really does look very impressive. I'll start with alcohol use disorder. Obviously, a huge indication, but as you mentioned, Doug, very challenging to penetrate in the past. Are you thinking of subpopulations that are more amenable to treatment here? Do you have any views so far on the sorts of endpoints that are most relevant? How well established is the regulatory path moving forward there? If you could just give us a little more color about how development in AUD is going to look. And then secondly... Given that PH2 and 3 are sort of less well understood and no one else is developing that market, how are you thinking of commercialization in those indications as opposed to PH1 just in terms of what the ramp and amount of effort it's going to take to get there is going to be?
spk06: Thanks, Jonathan. You put a lot on the table there. We'll answer questions. some of the questions now, and I think we'll go into more detail in March at the event with Dr. Cranfler. But to start with, you asked about subpopulations in AUD, and this is a very diverse indication with millions of people who have alcohol use disorder. So indeed, we are thinking about particular populations that are most applicable But we do think that all levels of severity of AUD are potentially addressable with DCR AUD. But there will be focus. I'm not going to give much detail beyond that. You asked about endpoints. Harm reduction is really critical here. And there has been some evolution in endpoints in AUD, particularly starting in Europe. And it's certainly something that we're seeing in the FDA as well. and a move to thinking about harm reduction, which we think is the right metric and one that is particularly applicable to our mechanism of action. Is there another element there? Is there another element on AUD? So with respect to commercializing in PH2 and PH3, we really view this as a singular commercialization effort. the pH patient community has historically not been differentiated into its types. It's really only the advent of pH one specific therapy that causes there to be any cleaving of the population. So we do see it as the same effort. My colleague Rob Caffinelli, our chief commercial officer, is on the line. Rob, is there anything you'd like to add on that?
spk15: Yeah, thanks Doug. Appreciate the question, Jonathan. Doug hit it spot on. It is the overall pH market. And when you think of it, think about how nascent the overall market is, the state of the science. There's a tremendous amount of education that needs to be done here, regardless of subtype. And appropriate diagnosis and support through genetic testing are also key factors that's going to help physicians not only become aware of this disease, but also make that differential diagnosis. Because these patients have a relatively long patient journey before they're even, you know, finally diagnosed with pH. And, you know, soon hopefully we'll have an option for all pH patients through Nidosarin, but we still have to finish the BIOX program and see how that goes.
spk03: Thanks so much, guys.
spk01: Thank you. Our next question comes from the line of Yaron Werber from Colvin. Sir, your line is open.
spk02: Hi, congrats to the team on all the progress. Thanks very much for taking the question. This is Brendan on for your own. Just a couple of quick ones from us on HPV here. What can you tell us, I guess, about the potential combo treatments for this phase two that you were discussing from Roche and maybe how it's kind of reflected in the current treatment option for patients? Is the thinking really to target a specific line of therapy for commercial uptake or is more to kind of provide optionality and like a pivotal trial and a potential label. Thanks very much.
spk06: Hi, Brendan. I think the combination trials that Roche will be kicking off are really designed to identify the combination that yields the highest functional cure rate. And so I would call it exploratory is what the ideal combination is. We have some expectations, but of course the data will have to rule as it always does in clinical development. So Roche has identified that they will be initiating in near term combinations of our RG6346 alongside their nuke therapy in combination with a TLR7 agonist, also in combination with their core inhibitor, their CPAM, and also in combination with Pegasus, their PEG interferon product. So three different triple combinations. They will also be looking at extended dosing at two different dose levels of our RNAi plus the nuc. So that's five treatment cohorts that they've identified so far that we'll be initiating in the near term. And I think it's really a horse race to see which gives the highest rate of functional cure.
spk02: Okay, great. Thanks very much.
spk01: Thank you. Our next question comes from the line of Mani Foroohar from SVB Lyric. Sir, your line is open.
spk14: Hey, good afternoon. This is Rick on the line for Mani. Thanks for taking our questions. So the first one's on AUD. Given the preclinical data that have been generated to date for the asset, I was hoping you could provide some details regarding the level of ALDH2 knockdown you will be looking to reach to produce a therapeutic effect. of the duration of knockdown that you're looking for in the clinic and, you know, potentially the dosing schedule for the target product profile?
spk06: Sure. So, of course, this is a Gal-Mac. that's erected liver-specific RNAi molecule, and the class of Galmak-delivered RNAi molecules has a very consistent potency and pharmacodynamics. We are seeking maximum suppression of the ALDH2 gene in the liver, and we have seen reproducibly with different molecules targeted at different genes that we can achieve well over 90, 95 plus percent reduction, essentially silencing completely the target gene in the liver. So we will be seeking to do that. Similarly, you see an extended duration of effect for RNAi with the pharmacodynamic effect lasting multiple months. It's usually peaking on the order of four weeks or so after the initial administration and then maintaining a very high level of knockdown for several months and then slowly decaying over several months beyond that. We are not at this point targeting a particular dosing regimen, but that's something we'll be exploring more deeply, both with respect to what is most appropriate in the market as well as what we think, how we see the molecule performing. It may be quarterly, it may make more sense to go with a monthly administration because of the intuitive nature and small doses associated with that. That will have to emerge during the program. In any event, we do anticipate very high levels of knockdown and the extended duration of effect when it's come to associate with RNAi.
spk14: Got it. That's helpful. And I did have an additional question about the Alpha-1 antitrypsin study. I was hoping that maybe you could elaborate on some of the endpoints that you're planning to present in the interim readout. You know, could we expect to see the degree of the reduction of Z-AAT polymer, you know, total Z-AAT burden, or any other potential metrics for overall liver health?
spk06: Shruti, would you like to talk about the A1AT endpoints?
spk05: Yeah, sure, Doug. So as you can imagine, our goal is to look at the first beginning with reductions in serum A1AT. But the focus, of course, is on understanding the effects of delta-serine on what's happening in the liver. So we will be looking at planning to look at measuring protein in the liver. We will be looking at histology using traditional stains and ways of looking at clotting distribution, any evidence of inflammation, what's happening to fibrosis. And in addition, we will include a series of serum biomarkers to put them all together and to identify an opportunity for coming up with potentially a score that could be used to assess impact of Delta-serum on liver disease. In addition, we will include imaging biomarkers using measures of liver stiffness, if you will, like MR elastography as well as fiber scans. So the typical combinations of both histology and non-invasive imaging and serum biomarkers to assess liver disease activity. at both six months and 12 months.
spk14: Great. Thanks for taking our questions, and congrats on all the progress.
spk15: Thanks.
spk01: Thank you. Our next question comes from the line of Luca Aisi from RBC Capital. Sir, your line is open.
spk08: Oh, terrific. Thanks so much for taking my question, and congrats on all the progress. This is great. Maybe the first on PH3, I think you mentioned that you're planning to include PH3 as part of the doser and NDA package. My understanding is that the N for FiOX4 is actually fairly small. I think it's only six patients there. So I'm wondering what gives you confidence that such data can be sufficient for approval. And then maybe for the cardiometabolic, you mentioned NG3 as well as LPAA. Obviously, multiple companies in the space here, Arrowhead, IONIS, Silent Therapeutics, and a bunch of others. I think you did a great job in differentiating for primer hyperoxaluria. How are you thinking about differentiations for NH3 and LTLA? Thank you.
spk05: So, you want to start on TH3? Yeah. So, indeed, Phiox4 is a single-dose study in six subjects, up to nine, but six, that don't have a placebo control. So, Our goal there is to convincingly demonstrate that we are able to lower urinary oxalate. The endpoint, as you recall, is a 30% reduction on two consecutive visits a month apart. And that would be the first evidence that midoceram can lower urinary oxalate in PH3 as a disease. If we show meaningful reductions in urinary oxalate, knowing that mechanistically the importance of lowering oxalate as the primary source of renal injury Our arguments for an accelerated approval would be based on combining the results of yellow ox reduction with data that is available from the literature that is now emerging showing that PH3 carries risks of stone rates as well as real insufficiency that was previously unrecognized. But these are things that we still need to discuss and will really depend upon the magnitude of effect we demonstrate in Phiox4. And it will then need to serve as the basis of the potential accelerated approval with the recognition that additional work will be necessary both from our ongoing natural history study as well as any additional commitments to follow our subjects longer term to see impact on clinical outcomes. But I think the key message is that we expect this to be a discussion with the NPA around a potential assimilated platform.
spk06: So Luca, with respect to the cardiovascular targets, we obviously made the decision several years ago to seek a development partner to pursue those. And there were a number of issues on our mind when we decided not to pursue them on our own. They include the fact that there are other modalities that are more advanced in development targeting these types of targets. that there are current drugs on the market. The patients are often on polytherapy and being managed. These are, because they're large populations, very large sales forces. Differentiation, I think, is challenging and probably at the margins of the clinical data, and to generate that requires large, long, and expensive trials. And rare populations have may have special needs, but there has been a history of those markets not enjoying rare disease economics because they've been undercut by the larger population products. It may be that one can successfully navigate that complex environment, but we made the choice several years ago that a really established, strong player like Lilly would be far more capable of navigating those waters. We've really left it to Lilly. With respect to the mechanism, RNAi turns off a transcript in the liver. If you're using GalNac-targeted RNAi, it is what it is. You're going to be achieving a very strong level of silencing with the pharmacodynamics we described. In the absence of using a different target, for example, there are there really aren't good avenues for mechanistic differentiation. It's really going to be execution differentiation. And as I mentioned, that's something where I think scale is a huge benefit. And that's not – scale is not what we bring to the table as our core confidence. So our friends at Lilly, I think, are going to do a good job with this.
spk08: Dorothy, thank you so much.
spk01: Thank you. Our next question comes from the line of Steven Wiley from Stifo. Sir, your line is open.
spk11: Yeah, good afternoon. Thanks for taking the questions. Just a quick question on the AUD program. So I know we talked a little bit about the development plan, and we're going to get some more color presumably at the webinar next month, but is AUD Is this a program that you feel you can independently take across the finish line from a regulatory perspective? And I know it's a little bit of kind of a specialty niche market. Is this something for which you have commercial aspirations?
spk06: Yeah, that's a good question, Stephen. It does, you know, what's the old saying about the future? It's predictions are difficult, particularly about the future? I certainly think that we are growing to a scale where we can push this across the regulatory finish line on our own. Whether we choose to or not is a position that we'll have to face, but I think it's certainly within our capability. I think the most effective marketing of the product probably will be beyond something that we can do 100% on our own, and there are different call points that one can think about here, including a psychiatric call point, and very importantly for growth of the market, a broader call point than that with the GPU community. And I do not see us going into the GPU community. So I think it is right for commercial collaboration for us, but I don't think we'll require a development partner in the indication. So it's something that we intend to maintain a very strong economic stake in. not something that we're seeking to just generate EOC and out license. This is a core program that we're going to invest in, and we intend and hope to, you know, reap the economic rewards from it.
spk11: Got it. That's helpful. And maybe just one collaborative question. I guess, is there any kind of change of control provision that impacts the Alexion collaboration and I guess, is there a scenario by which, you know, the C3 and the CFB drug come back to you? And I guess, if so, are those targets you'd be interested in?
spk06: So, there is not a change of control trigger that means, you know, they would definitely come back to us. With respect to what might happen, I think there are a lot of possibilities for what might happen, but I'm confident that these programs are going to move forward because we do see C3 and CFB as very interesting targets to move forward. So it is conceivable that there won't be any change in the relationship. It's also conceivable that there will be some sort of rejiggering, and we'll just have to work with our friends at Alexion, and I expect After Q3, we'll be friends at AZ as well to figure out what the path forward is. And there may be a change, but I think both programs are very likely to proceed along their timelines and enter the clinic.
spk11: Okay. And then maybe just one last quick potentially stupid financial question. So the $100 million in recognized revenue that you're talking about here over this five-quarter period, is that a combination of both incremental milestones and the recognition of deferred revenue, or is that just some incremental milestone payments on top of the deferred that we should expect anyway?
spk06: I'll kick that off. I don't think that's the guy I may want to step into, but The $100 million that we quote over that five-quarter period, it's just cash in the door. It's the revenue recognition associated with the collaboration, how shall we say, Baroque. And so that number, that's just the cash going into the bank account number, and it's independent of accounting for it as revenue. And so... When Doug is quoting the deferred revenue, that's really cash that's already in the bank and about what shows up as revenue on the line. Does that clarify it for you?
spk11: Yeah, no, I just wanted to make sure that it was indeed incremental cash coming in the door. Okay.
spk04: Yeah, Steve, it does clarify. Just to further the point, there will be tables in the MD&A section that make it very clear specific cash in by partner, and it's It's in order to help understand how the deferred revenue unfolds, but it's pure cash.
spk11: Okay, great. Thanks for taking the questions.
spk01: Thank you. Our next question comes from the line of Ed Arce from H.C. Weinwright & Company. Sir, your line is open.
spk10: Great. Thanks for taking my questions, and congrats on all the progress continuing to expand both internal and collaborative programs. Just one question for me. A lot of them have already been answered, but on your A1IT program for Balsicillin, just thinking longer term as you move towards potential approval and collaboration in a few years, obviously this asset is targeted towards the liver effects. independent of the lung effects for these patients. I'm just curious how you think about the benefits to patients in the liver and how that could benefit as a complement or even synergistic clinical benefit to these patients and how that could impact your overall marketing and strategy and positioning. Thanks.
spk06: Let me try and get into that tree, step in if there's things you want to add. There are really two different diseases here. They have the same cause, but they're different diseases. There's a lung manifestation that's treated by pulmonologists, and it has a standard of care. If a new treatment is going to come along, it needs to compete with that standard of care. We have a liver disease that's treated by a different physician group. It's a different target organ. Currently, there is no standard of care for it, but there will become one. Patients with liver disease are going to want the best care for their liver. Patients with lung are going to want the best care for the lung. Obviously, there's an overlap in these patient populations. But there are patients that are lung only and there are patients that are liver only. And so I think the synergy between them is a, there's a marketing synergy for sure because the lung patients are more apparent given that people don't feel their liver decline in the same way they feel their lung decline. And so there is an enrichment for lung patients amongst the current liver patients that are there. So to the extent they are already in a system of augmentation through the three existing augmentation providers, there is potential marketing synergy there. For the liver, from a medical perspective, though, I really think you've got to ask, what is the best treatment option for the liver and what is the best treatment option for the lung? And I don't think it matters so much whether they're the same drug or not. it really is what's gonna do the best. And we think RNAi, because of its ability to give a constant and very high suppression of the misfolded protein, really has the potential to be the best liver treatment and be the standard of care in the liver.
spk09: Okay, great, that's helpful.
spk01: Thank you. Our next question comes from the line of Mayanik Mamthani from BRID Security. Sir, your line is open.
spk07: Thanks for the comprehensive pipeline update and appreciate you taking our questions, Doug. And great to see so much visibility into your partnered programs. So maybe, Doug, starting there on the Roche HPV program, obviously encouraging for them to include your program in an ongoing study with a number of different alternative combinations there I just wanted to kind of ask you, between the different options, is there any one or two you think you have more confidence in, given, obviously, it's a busy kind of landscape, but still challenging to have that off-treatment functional cure data? Any comment you could provide would be great, Doug, on that.
spk06: Yeah, I'm often happy to speculate. Of course, my opinion doesn't matter, right? It'll be in the data, but I know, of course, we all recognize that. Now, we look at the history of treating HPV, and it does vary a bit by genotype, but where there's been success, albeit at a low rate, in achieving functional cure, that's been in nukes plus interferon. It hasn't been nukes alone, actually. And I view that as, you know, the crack in the door, so to speak. And there's a real question there, can you widen it? And I think it stands to reason that if you suppress S antigen, which is the tolerizing agent, immunosuppressive activity of HPV, then you're likely to increase the activity of the new interferon combo. And so I think the most straightforward way to think about it is NUC, RNAi, and interferon or some other immunoactive agent. So that would say that amongst Roche's three triple combos, I think it's more likely that the interferon or the TLR7 arm would perform. Now, obviously, interferon has well-known downsides. And it would be great to replace it with something better. And it may be a TLR7 agonist is something better. Maybe there's something else in the pipeline. I think the optimism around core inhibitors has waned a bit as the core inhibitors in combination with NOOC haven't really shown a differentiated activity. So it is harder to see why adding RNAi to that combination, BOOC plus CPAM, is going to all of a sudden become a whole lot better. So we have a predilection to thinking that we're likely to succeed in the immunoactive combinations, but, you know, it's a clinical experiment, and we'll see what happens.
spk07: Yep. Thank you, Doug. That was very helpful. And, Sri, just to clarify, the initial label for nedosterone, Are you targeting having all PH1, 2, 3, just that PH3 is going to be more accelerated approval and the other two are going to be full approvals? Is that kind of the goal for 2022?
spk05: I think we have agreement on what the basis of approval for PH1 and PH2 is. So that is in a different place than our thinking of PH3, where for the reasons I described, we recognize that it will be an accelerated type of approval with the commitment to do additional work is what our expectation is pending data.
spk07: Okay. And last question, just a step back question, maybe for you, Doug, and also as you think about the, you know, the span trajectory going from last year to this year, are you kind of talking about a little bit of a strategy shift here that, you know, you are thinking about larger prevalence diseases in a different way, And we should kind of expect to hear from you more programs like AUD, you know, some others that might be sitting in your pipeline, you know, maybe you've not invested in it yet.
spk06: Well, I think perhaps the most important message I was fairly explicit about, which is that we're not just looking at orphan disease. biotech industry has just been flowering in ways to approach diseases. But there are, in our analysis, diseases where the qualities of RNAi, that constellation of features, looks like it's the most appropriate. And when you combine that with targets and opportunities enabled by RNAi that look like they're, you know, pretty likely to work, that you have some confidence that you have a higher than industry average probability of success, That's where we're trying to look. There's some orphan things in there, but there's some large market indications in there. We have a formalized internal process led by Bob Brown, our chief scientific officer, to evaluate various opportunities, draw us on the internal resources that are now reasonably large given the growth of our company as well as external resources. It is It's a somewhat diverse set of indications, but they're united by this confidence that, hey, this is probably really going to work. This is a great target. And, hey, RNAi really looks like the best way to go at it. As I said, there's some orphan in there, but there are also some non-orphans. So that's how we're thinking about building the portfolio. We will roll out more indications beyond AUD in the coming quarters, and I think you'll see those threads that go through the future programs. In addition, you can see how they thread through the historical program.
spk07: Got it. Thanks so much for taking my question. And it seems like middle of 2021 is going to be really exciting. So good luck.
spk15: All right.
spk01: Thank you. And our next question comes from the line of Ki Nakay from Chardon. Sir, your line is open.
spk13: Yes, thanks. Doug, for AUD, in terms of measuring knockdown of ALDH2, is something like acetylhyde a good proxy, or is there something more specific that you'd be looking to measure?
spk06: Well, I'll start, and I think Sheree can supplement the answer here. One thing we're not going to be doing is poking people in the liver, so we're not going to get an ALDH2 knockdown. But as I alluded to in another context before, RNAi has been very reproducible. So I think we can have a base level of confidence that we're going to achieve a pretty good knockdown of ALDH2. It outhides the transient biomarker. And that makes it somewhat challenging to use as a very firm basis for analysis. So we won't be hanging our hat solely on that. And ultimately, the most important thing here is response to alcohol challenge. So I think that is really going to be the most important aspect. Sheree, do you want to?
spk05: Yeah, just to flesh that out. Yeah, the PV marker will be external interaction. And we'll be looking at markers. We know from the public literature that whether it's facial flushing, whether it's heart rate, how do they feel. So we'll do a formal ethanol interaction study as the primary marker of RPD. We will have metabolic markers being measured, but our primary goal is to evaluate the onset and offset of the effect in response to a small alcohol challenge.
spk13: Okay, and then, you know, in talking about you know, perhaps a prevalence of 14 million, but, you know, with a goal to initially target some subgroups. Can you give us a sense of, you know, what the low-hanging fruit subgroup is as we're trying to model, you know, what this opportunity is worth?
spk06: Yeah, so we'll flesh this out, but at some of the 18, but obviously the key issue is the group that's currently receiving pharmaceutical intervention. That's step number one. That's about 1% of the population. That's about 140,000 individuals. There is a much larger group, 10 times that size, on the order of 1.5 million people, who are seeking some form of treatment. 90% of them aren't given pharmaceutical treatment. However, we believe that BCR-AUD has the potential to become a commonly used option amongst that group in conjunction with the behavioral therapy that they're currently getting. So that low hanging fruit there is 1.3, 1.5 million people that are already being recommended for treatment. They just don't have a good pharmaceutical option. So I think that's where we start. in thinking about the value of this product. And you can see how even a partial success there leads to a very valuable product.
spk13: Okay, thank you. That's really helpful.
spk01: Thank you. That concludes our question and answer session. I would now like to return the call over to Doug Fombro for closing remarks. Sir, please go ahead.
spk06: Thank you. With two Phase II studies of RG6346 and Belsasaran expected to start this year, and at least two INDs potentially to be filed on our highly productive collaboration activities, we're going to continue to churn out candidates. And importantly, our NDA submission on the horizon, we've got a lot ahead of us this year. It's going to be a very exciting year of execution and growth. I think it's transformative, actually, as we go through the NDA filing process. So, in addition to some conferences in March, we hope you all will join us for our webinar on March 18th on DCR AUD. We'll discuss that program in more detail with Dr. Henry Kranzler of UPenn. We've got a lot going on here at Dyserna. We look forward to keeping you all updated as we continue to build towards a fully integrated commercial stage biopharmaceutical company. Thank you again for joining us tonight, and have a wonderful evening.
spk01: Ladies and gentlemen this concludes today's conference call. Thank you for participating. You may now disconnect.
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