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Edited Transcript of DRNA earnings conference call or presentation 14-May-18 8:30pm GMT

Thomson Reuters StreetEvents

Q1 2018 Dicerna Pharmaceuticals Inc Earnings Call

Watertown May 16, 2018 (Thomson StreetEvents) -- Edited Transcript of Dicerna Pharmaceuticals Inc earnings conference call or presentation Monday, May 14, 2018 at 8:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Douglas M. Fambrough

Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director

* John B. Green

Dicerna Pharmaceuticals, Inc. - CFO

* Ralf H. Rosskamp

Dicerna Pharmaceuticals, Inc. - Chief Medical Officer

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Conference Call Participants

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* Antonio Eduardo Arce

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Jonathan Miller

Evercore ISI, Research Division - Associate

* Keay Thomas Nakae

Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Therapeutics, Devices and Diagnostics

* Madhu Sudhan Kumar

B. Riley FBR, Inc., Research Division - Analyst

* Prakhar Verma

Stifel, Nicolaus & Company, Incorporated, Research Division - Associate

* Ritu Subhalaksmi Baral

Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Dicerna Pharmaceuticals Q1 2018 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded. I would now like to introduce your host for today's conference, Mr. [Glenn Garma] of Investor Relations. Please begin.

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Unidentified Company Representative, [2]

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Thank you, operator. Good afternoon, and welcome to Dicerna's conference call to discuss the company's 2018 first quarter results. For anyone who has not 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 www.dicerna.com. You may also listen to this conference call via webcast on our website, which would be archived for 30 days beginning approximately 2 hours after the call is completed.

I'd like to remind listeners that management will be making forward-looking statements on today's call, including, for example, expected timeline and plans for development of DCR-PHXC and other pipeline programs, expectations related to the collaboration with Boehringer Ingelheim, and guidance regarding cash usage. 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 Dicerna's latest Form 10-Q, which was filed with the SEC today. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so if our views change.

Now I'd like to turn the call over to Dr. Douglas Fambrough, Dicerna's President and Chief Executive Officer. Doug?

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [3]

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Thank you, [Glenn]. Good afternoon, and thank you all for joining us today. With me are Jack Green, our Chief Financial Officer; Ralf Rosskamp, our Chief Medical Officer; and Bob Brown, our Chief Scientific Officer.

2018 is off to a strong start for Dicerna with the achievement of a number of important milestones for the company. As we highlighted on our 2017 year-end call in March, Dicerna has successfully completed the transition to a clinical-stage company with the advancement of our lead, subcutaneously delivered GalXC product candidate, DCR-PHXC, for the treatment of primary hyperoxaluria, or PH for short, into clinical trials at the end of last year. We continued to advance development activities for our GalXC preclinical programs, DCR-HBVS for chronic hepatitis B virus, and our undisclosed program for a rare disease of the liver. We've continued to advance our platform, making advancements to GalXC that we can apply going forward. And we are off to an exciting start with our GalXC research collaboration with Boehringer Ingelheim in chronic liver disease with initial focus on nonalcoholic steatohepatitis, or NASH. And finally, events have clarified the independence of our proprietary, royalty-free GalXC technology platform.

Turning now to DCR-PHXC, our lead GalXC investigational product for the -- product candidate for primary hyperoxaluria. During the first quarter, we made solid progress with DCR-PHXC, which is being developed to treat all forms of PH. PH is a family of severe, rare, genetic liver metabolic disorders characterized by the overproduction of oxalate in the liver, which often causes significant and irreparable damage to the kidneys and other organs. There are currently no approved treatments for this family of debilitating diseases. In December of last year, we dosed the first subject in the normal healthy volunteer phase of the DCR-PHXC Phase I trial called PHYOX. Currently, we have completed dosing in healthy volunteers in the Group A portion of the study, and the first PH patient in the group B portion of the study is expected to be dosed with DCR-PHXC shortly. While the PHYOX study remains blinded to treatment assignment, early results from the healthy volunteer phase are promising, with no serious adverse events and no discontinuations from the Group A portion of the study. Out of 25 patients, there were 2 mild-to-moderate transient injection site reactions lasting up to 36 hours at doses of 6 and 12 milligrams per kilogram involving erythema and tenderness. Because the LDHA gene we are targeting in the liver with DCR-PHXC represents only a minimal metabolic disruption, it does not induce changes in circulating or urinary biomarkers in healthy volunteers, unlike other approaches to PH. We are encouraged by these early safety and tolerability data. With the imminent initiation of dosing in PH patients, we expect to achieve clinical proof-of-concept results for reduction in urinary oxalate in PH patients in the second half of 2018. Assuming successful proof of concept, we plan to initiate a pivotal multi-dose Phase II/III clinical trial for DCR-PHXC in the first quarter of 2019, pending positive regulatory feedback. In that regard, recent developments in the field suggests that a small pivotal trial using urinary oxalate as the primary endpoint may be acceptable to the FDA.

As a reminder, the PHYOX Phase I study is a randomized, single ascending dose study of DCR-PHXC in normal, healthy volunteers and PH patients. The study is divided into 2 groups. Group A is a placebo-controlled single-blind, single-center study that has enrolled 25 normal healthy volunteers. Group B is an open-label, multicenter study enrolling up to 16 patients with PH type 1 and type 2. The primary objective of the study is to evaluate the safety and tolerability of single doses of DCR-PHXC in both groups. The secondary objectives are to evaluate the pharmacodynamic effect of single doses of DCR-PHXC on biochemical markers, including, but not limited to, changes in urine oxalate concentrations and to characterize the pharmacokinetics of single doses of DCR-PHXC in normal, healthy volunteers and patients with PH. The PHYOX study is being conducted at multiple clinical trial sites in Europe and in the U.S. In March, we received notification from the FDA that they accepted our DCR-PHXC investigational new drug application to conduct the U.S. portion of the Phase I study. In addition, we have received the appropriate regulatory and ethical approvals for our clinical trial applications in the United Kingdom, France and Germany. We also have submitted a clinical trial application in the Netherlands, which is pending regulatory approval.

For those of you who are newer to our story, DCR-PHXC is the only potential treatment in development for all forms of PH. We have identified a novel target, known as lactase dehydrogenase A, or LDHA, that should allow us to treat all forms of the disease. While our peers are only focused on PH type 1, we are focused on PH1 as well as PH type 2, type 3, and PH for which no mutation has been detected in the 3 genes that characterize the 3 defined types of PH, a condition sometimes referred to as idiopathic PH. Based on our preclinical research findings, DCR-PHXC achieved durable and consistent knockdown of LDHA and reduced oxalate production to normal or near-normal levels in all the available mouse models of PH. The data suggests a simple, direct and linear relationship between LDHA inhibition and oxalate production, which may translate into consistent therapeutic activity even in the event of a missed dose. As a result, we believe that LDHA is the ideal therapeutic target and opens the door for us to develop a differentiated and potentially best-in-class treatment for this devastating disease.

Data from non-GLP preclinical studies showed that DCR-PHXC was well-tolerated in animal models. Specifically, administration of multiple supra-therapeutic doses of DCR-PHXC in rodents and nonhuman primates showed no observable adverse effects in the liver and minimal metabolic disruption. External research has shown that LDHA deficiency in humans is not associated with any liver dysfunction, which gives us increased confidence in the safety profile that we observed in these animal studies for our liver-targeted treatment. Our formal long-term chronic animal toxicology studies are ongoing with all planned dosing having already been completed.

Turning now to our GalXC preclinical and early-stage research programs. We continue to advance DCR-HBVS, our GalXC product candidate for chronic hepatitis B virus, through formal, nonclinical development studies, and expect to file regulatory clearances to initiate clinical trials during the fourth quarter of 2018. We expect to begin DCR-HBVS clinical trial shortly thereafter and intend to take the product candidate into proof-of-concept studies on our own. As a reminder, HPV is a huge worldwide economic burden, with approximately 250 million people around the world currently living with the virus, according to the World Health Organization. HBV is responsible for the majority of primary liver cancers and is the 10th leading cause of death worldwide. Our focus is on utilizing our proprietary GalXC RNAi technology platform to investigate the potential for a subcutaneously delivered, experimental HBV-targeted therapy that meaningfully reduces expression of the HBV surface antigen, or HBVsAg, and HBV DNA levels in the blood of HBV patients. Our ability to achieve a reduction in these levels could potentially lead to a long-term immunological cure for this patient population, an outcome that has only -- has been only partially achieved with currently available treatments. Our early preclinical data for this program are promising and show that DCR-HBVS targets HBV messenger RNA and leads to a greater than 99% reduction; in fact, greater than 99.9% in reduction, in circulating HBsAg in mouse models of HBV infection. In particular, in preclinical studies of mice carrying the HBV genome both by transient transfection and adeno-associated viral transfection, we have observed an approximately 3 log or greater reduction in viral s antigen expression after a single subcutaneous administration of our DCR-HBVS clinical candidate. We believe that these results compare favorably to other RNAi-based approaches to HBV that have been tested in directly comparable experimental systems. It's important to understand that due to the structure of the HBV genome, 1 GalXC molecule leads to the silencing of multiple viral genes, including the core antigen and the viral polymerase. RNAi-based therapy for HBV, even with a single GalXC molecule, is, in essence, combination therapy. This makes us hopeful that RNAi-based therapy has the potential to be an important part of future HBV treatment regimens.

Our next preclinical stage GalXC product candidate targets a liver expressed gene involved in a serious rare disease. For competitive reasons, we have not publicly disclosed the target gene or disease. We continue to advance development activities in preparation for regulatory filing for this candidate. We plan to file regulatory clearances to initiate clinical trials once a risk-sharing partner is on board. We expect this to occur in the second half of the year.

In October of last year, we entered into our first GalXC platform research collaboration and license agreement with Boehringer Ingelheim to develop treatments for chronic liver disease beginning with NASH. During the first quarter, we continued to successfully execute on the program in accordance with the work plan for this collaboration. For those of you who are not familiar with the disease, NASH is caused by the buildup of fat in the liver, potentially leading to liver fibrosis and cirrhosis. It has an especially high prevalence among obese and diabetic patients, and is expected to soon become the most common cause of advanced liver disorders, often necessitating liver transplantation. There are currently no medicines approved to treat NASH, and as such, it represents an area of high unmet medical need.

I'd like to remind you, the BI agreement is for the development of product candidates against 1 target gene, with an option for BI to add the development of product candidates against a second target gene. Dicerna granted BI a worldwide license to the product candidates in connection with the agreement. Under the terms of the agreement, BI agreed to pay Dicerna a nonrefundable upfront payment of $10 million for the first target. During the term of the research program, BI will reimburse Dicerna the cost of materials and third-party expenses that have been included in the preclinical studies up to an agreed-upon limit. Dicerna is eligible to receive up to $191 million in potential development and commercial milestones, as well as royalty payments on potential global net sales, subject to certain adjustments, tiered from high single digits up to low double digits. The deal provides non-dilutive funding that we will use to advance our pipeline of rare disease therapeutic candidates. Additionally, BI has the option to add a second target gene. The triggering of that option would result in an exercise payment to Dicerna, as well as additional success-based development and commercialization milestones and royalty payments. BI are primarily responsible for development activities after formal clinical candidate selection.

The BI deal is an important validation of our GalXC RNAi technology platform and a model for the types of transactions that we hope to do more of in the future. We look forward to keeping you apprised of our progress with this collaboration. It's a valuable and important relationship for the company moving forward.

Turning to our platform. We continue to optimize our GalXC RNAi technology, enabling the development of our next-generation GalXC molecules. Improvements to GalXC include modifications to the tetraloop end of the molecule, which are independent of target gene sequence, and thus can be applied to any target gene. These modifications are unique to Dicerna's GalXC molecules and, we believe, provide us with a key competitive advantage. The improvements to our GalXC molecules have yielded a longer duration of action and higher potency of target gene silencing against multiple targets in animal models. We anticipate utilizing our next-generation GalXC molecules in our DCR-PCSK9 program for the treatment of hypercholesterolemia as well as in additional programs. We have applied our GalXC technology to multiple gene targets across our disease focus areas of rare diseases, viral infectious diseases, chronic liver diseases and cardiovascular diseases, and have developed a portfolio of early-stage research programs in these areas. In accordance with our development strategy, we are actively seeking collaborators to advance our programs in the areas of chronic liver diseases and cardiovascular diseases and select opportunities in rare diseases. Both chronic liver diseases and cardiovascular diseases represent large and diverse patient populations, requiring complex clinical development and commercialization paths that we believe can be more effectively pursued in collaboration with larger pharmaceutical partners.

I'd now like to switch gears to discuss our recent litigation settlement agreement with Alnylam Pharmaceuticals. In April, we announced that we have resolved all ongoing litigation with Alnylam Pharmaceuticals, removing a financial overhang for Dicerna. This settlement allows us to advance all of our existing and currently anticipated pipeline programs while maintaining a strong balance sheet. The terms of the agreement include mutual releases and dismissals with prejudice of all claims and counterclaims in the litigation between Dicerna and Alnylam. Dicerna denies wrongdoing and did not admit wrongdoing as part of the settlement agreement. With the litigation now behind us, we are able to focus all of our resources on progressing our clinical and discovery programs as well as our partnering initiatives in accordance with our strategy and timelines. Jack will elaborate on the financial terms of the agreement in a minute or 2.

But first, I'd like to pause and take a moment to comment on the people we have here at Dicerna. It's a great privilege I have every day to work with this team comprised of some of the most talented and highest-integrity scientists that you will find anywhere. And nothing I've seen in any way suggests otherwise. It goes without saying that, together, we have achieved significant progress towards our goal of bringing GalXC-based therapies to market, and I am truly honored to work with this group.

Finally, Bruce Peacock, a member of Dicerna's Board of Directors, notified the Board that he will be stepping down from his position at Dicerna's Annual Meeting of Stockholders in June. I'd like to thank Bruce for his contribution to the company over the past 4 years, and wish him well in his future pursuits.

And now I'd like to turn the call over to our Chief Financial Officer, Jack Green, for a review of the financials. Jack?

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John B. Green, Dicerna Pharmaceuticals, Inc. - CFO [4]

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Thank you, Doug. Before I turn to the first quarter financials, I'll review the financial terms of the settlement agreement with Alnylam Pharmaceuticals that we announced last month. Under the terms of the agreement, we've agreed to make the following payments to Alnylam: One, a $2 million upfront payment in cash. Two, an additional $13 million payable in cash over the next 4 years to be paid as 10% of any upfront or first year cash considerations that the company receives from future GalXC technology-based collaborations, excluding any amounts we receive from our existing BI collaboration, up to a total of $13 million, with any balance remaining paid at the end of the 4-year term. And finally, issuance of 983,208 shares of Dicerna common stock. The settlement agreement does not include any licenses to any intellectual property from either party, and does not include any royalties on milestones related to product development. We will have a onetime charge to the P&L in the second quarter to record the settlement. For additional detail, please see our quarterly report on Form 10-Q for the quarter ended March 31, 2018, which was filed with the SEC today.

I'll now briefly summarize the key financial results for the first quarter and direct you to our 10-Q filing for additional details.

In the first quarter of 2018, the company generated a net loss of $15.6 million as compared to a net loss of $14.2 million for the same period in 2017. This increase is attributable to higher operating expenses, partially offset by higher revenues and interest income. Basic and diluted net loss per share for the first quarter was $0.30 versus $0.68 for the comparable period in 2017, reflecting an increase in the weighted average shares outstanding in the first quarter of 2018 from the first quarter of 2017. Research and development expenses for the first quarter of 2018 were $9.9 million. That's compared to $8.7 million for the same period in 2017. The increase was predominantly due to higher direct research and development expense, including higher toxicology study cost associated with our GalXC platform product candidates; higher employee-related expenses, primarily a result of an increase in research and development headcount in 2018; and partially offset by lower platform-related expenses, primarily lower material and lab supply cost associated with discovery and early development activities. We expect our overall research and development expenses to increase in the second and third quarters of 2018 compared with the first quarter as we complete clinical manufacturing activities, advance preclinical toxicology studies and continue clinical activities associated with our lead product candidate.

General and administrative expenses for the first quarter of 2018 were $7.5 million as compared to $5.5 million for the same period of 2017. The increase was predominantly related to higher legal costs associated with the litigation with Alnylam and higher corporate legal costs, partially offset by lower consulting expense. We expect our G&A expenses to increase significantly in the second quarter of 2018 as compared to the first quarter of 20 -- as compared to the first quarter of 2018 as a result of the onetime charges associated with the settlement agreement. We expect that our quarterly G&A expenses in the second half of 2018 will be lower than the first quarter as we expect lower legal costs as a result of the Alnylam settlement.

As of March 31, 2018, we had $97.8 million in cash and cash equivalents and held-to-maturity investments as compared to $113.7 million in cash, cash equivalents and held-to-maturity investments as of December 31, 2017. Additionally, we had $700,000 of restricted cash equivalents as of March 31, 2018, which reflects collaterals securing our company's operating lease obligation.

We utilized $16.4 million of cash in operations during the first quarter of 2018 as compared to $13 million during the same period in 2017.

As of March 31, 2018, we recognized $1.5 million of revenue associated with the BI agreement. This amount represents partial amortization of the $10 million nonrefundable upfront payment from BI as well as certain reimbursable third-party research expenses, which are billable to BI. We expect to recognize the remainder of the initial transaction price on a straight-line basis through June 30, 2019. We do not expect to generate any product revenue for the foreseeable future.

We expect that our current cash balance is sufficient to fund operations through 2019, which includes advancing DCR-PHXC through proof-of-concept clinical trials and into advanced clinical development, as well as advancing DCR-HBVS into proof-of-concept studies in HBV patients. This guidance assumes no additional funding from new collaboration agreements or from additional financing events.

With that, I'd like to turn the call back to Doug for closing remarks.

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [5]

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Thank you, Jack. As you can see from our call today, 2018 is poised to be a pivotal year for Dicerna as we continued to build on our recent successes. We are proud of the steady progress we have made in advancing our clinical and preclinical stage GalXC RNAi therapeutic programs. We are well-positioned and well-resourced to execute on our stated pipeline strategy and expect to have 3 GalXC product candidates in clinical development in early 2019. As we look ahead, we are focused on achieving a number of important milestones, which include: Dosing the first PH patient with DCR-PHXC in the group B portion of the study expected shortly; announcing proof-of-concept data from our PHYOX Phase I trial of DCR-PHXC during the second half of 2018, followed by the initiation of a multidose Phase II/III trial in early 2019 with positive POC data and regulatory feedback; filing of regulatory clearances to initiate clinical trials for our hepatitis B candidate, DCR-HBVS, during the fourth quarter, followed by clinical entry shortly thereafter; and filing of regulatory clearances to initiate clinical trials for our second rare disease program after we identify a risk-sharing partner. We look forward to providing updates on quarter -- future quarterly calls.

With that, let's open the call up to questions. Operator?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from Jonathan Miller with Evercore.

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Jonathan Miller, Evercore ISI, Research Division - Associate [2]

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I just had a couple of quick ones here. First and foremost, it looks like we got some new details on the Alnylam settlement in the 10-Q. I noticed some language, about 8 targets being restricted. Could you give us a little more color on what those targets are and what restrictions you have on your further development programs there? Secondly, I noticed last quarter, you said you'd file -- you expected to file an IND on your mystery rare disease target in the 2Q, and it looks like that got pushed back to 2-half this year. Can you confirm that you are already in talks with the potential collaborator and give us a little color on what your time line is on that program?

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [3]

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Sure, John. Thanks for your questions. There was marginally more information on the restrictions in the 10-Q. We've been getting a lot of questions about the number of targets that's clearly material, and so became a required disclosure. Not able to give any more information than what was in the press release and what's in the Q, but I'll reiterate that the restrictions do not change any of our guidance related to our announced programs and do not change any of our plans with respect to programs that we are hoping to -- that we're anticipating initiating, or any of our partnering plans. And so we don't believe that those restrictions are material to any investor view of the company and will not change the -- what we would have been doing otherwise. With respect to the undisclosed rare disease program, I think that it may have been -- we have made a change in the wording that I think we may have had some confusion. The remarks indicated we were prepared to file in the second quarter, but we are waiting for the development risk-sharing partner because of decisions that need to be made relative to clinical development strategy. We are in conversations with multiple parties, say more than 2 parties. And I'm optimistic that we will conclude an agreement, file in the second half and initiate clinical development shortly thereafter.

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Operator [4]

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Our next question comes from Stephen Willey with Stifel.

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Prakhar Verma, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [5]

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This is Prakhar Verma on for Steve. So Doug, with respect to PH, so Alnylam just announced their trial design for lumasiran. So just wondering how you think those details might mirror, if at all, how you're thinking about the Phase II/III trial that you will be initiating early next year with respect to trial design and point selection, duration of exposure? And secondly, related to that, do you believe you'll be able to reach a similar level of agreement with the agency on pivotal trial design with the SAD data only? How much patient exposure data would you need for that?

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [6]

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I have with me today our Chief Medical Officer, Ralf Rosskamp. I'm going to pass the answer to those questions over to him.

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Ralf H. Rosskamp, Dicerna Pharmaceuticals, Inc. - Chief Medical Officer [7]

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Yes. Thank you very much, Steve, for all the questions. So first of all, I think that it's very good news what we heard from Alnylam. The FDA has accepted urinary oxalate as a surrogate marker, something which came not unexpected, but it's nice to know that the FDA has actually agreed on this. So this takes some risk out of the program. Yes, you're right. The Alnylam, most likely -- we don't know exact what the FDA had seen. Most likely had seen their multiple-dose data, and based on this, given Alnylam the okay to use urinary oxalate as a surrogate marker. But I think also from their data, I think it's clear that most of the oxalate reduction is coming from first dose. So if you're able to show a reduction after 1 dose of an RNAi drug, so I think that this will well be enough for them to also give us the surrogate marker urinary oxalate. In terms of the other details of the study, I think that sometimes, the nice thing to be a fast follower. So we'll watch what Alnylam will do, and then we'll have a look at what we are going to do. But it's sometimes nice to have somebody a little ahead of yourself because you can learn from what they're actually doing.

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Prakhar Verma, Stifel, Nicolaus & Company, Incorporated, Research Division - Associate [8]

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Is there a level of reduction you're targeting up for a single dose in urinary oxalate?

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Ralf H. Rosskamp, Dicerna Pharmaceuticals, Inc. - Chief Medical Officer [9]

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Well, right now, yes, we have a target product profile, and there's a certain reduction which we would like to see. But we'll see when the data come out what the data will look like. And it's comparable to we believe what we've seen in our animal models.

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [10]

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We have stated before that 30% reduction in urinary oxalate is the threshold for clinical significance, and we certainly want to exceed that with a single dose. It is important to recognize that multiple doses of RNAi lead to an additive effect and for the complete silencing of the gene that generally requires multiple doses. If you're achieving complete silencing with a single dose, you're probably overdosing in a multiple-dose context. So when we present data, it will be important that people compare apples to apples and compare single dose to single dose if one is trying to make a relative comparison of activity between compounds. So we focus on that style of comparison, but reiterate that we're looking for 30% or greater for clinical significance, and that the data that we've seen preclinically, which is consistent across models and consistent with our understanding of the pathway, is that if we fully silence LDHA, we should remove all or nearly all of the excess oxalate in a PH patient and return oxalate levels to at or about the upper level of normal.

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Operator [11]

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And our next question comes from Ritu Baral with Cowen.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [12]

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Just as a follow-on to the last one, what is your plan for releasing data from part B? What's the duration of follow-up? And is there any option to retreat as part of the protocol going to what you said, Doug?

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [13]

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We're currently trying to figure out what the best medical meeting to release the data will be. And for the other parts, I'm going to pass to Ralf.

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Ralf H. Rosskamp, Dicerna Pharmaceuticals, Inc. - Chief Medical Officer [14]

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Yes. The protocol is a single dose, but the protocol also has language in it that those patients who complete the single-dose study will be eligible to go into follow-up studies. The follow-up in these patients is until they reach 80% of their baseline oxalate, so we'll follow them through 6 weeks. And if after 6 weeks, they haven't reached 80% of their baseline values, then we will continue to follow them up until this happens. And it can be -- we don't know. It can be 2 months, it can be 3 months. But anybody of these patients, if they meet certain criteria, are eligible to go in our follow-on studies.

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [15]

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So Ritu, some of the context of your question may be thinking about patient availability, particularly with 2 companies conducting registration trials in parallel. So the ability to re-treat does mitigate against that dynamic, but we were pleasantly surprised to see the size of the Alnylam study. I think I would've predicted a larger number of patients. And as we pencil this out, particularly given that we'll be treating type 2 in addition to type 1 as part of our trial program, we don't see delays in enrolling due to competition as likely playing much of a role in time lines.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [16]

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So I'm sorry. I'm not sure I understood the follow-up period to 80% of the baseline level. But is there an option to re-treat after that level is achieved?

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Ralf H. Rosskamp, Dicerna Pharmaceuticals, Inc. - Chief Medical Officer [17]

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Not within this protocol. But the protocol has language in it that patients who participate in this study, and this is also part of the informed consent already, that they have the ability to participate in further studies. Sometimes, you exclude certain patients after they've been dosed and there is a gap, but we definitely want these patients to continue in a Dicerna program.

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Ritu Subhalaksmi Baral, Cowen and Company, LLC, Research Division - MD and Senior Biotechnology Analyst [18]

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Got it. And then to what Doug said about the broader population that your drug, PHXC, can address, what does mean for your potential pivotal makeup? Is there a certain mix of PH1, PH2, PH3 or idiopathic that you need in order to secure either PH1 in your label, a broad label? Have you had any discussions with regulators about that or even KOLs at this point?

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Ralf H. Rosskamp, Dicerna Pharmaceuticals, Inc. - Chief Medical Officer [19]

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No, we haven't had discussions with regulators on this specific topic. Right now, we include PH1 and PH2 patients. And I would assume going forward that we will include at least PH1 and PH2 patients in our Phase II/III study, and we'll have a certain stratification according to the PH type. PH3, we definitely will study as well. But whether this will be part of the registrational study or whether this will be an additional smaller study, we will have to see, and we'll -- we have some ideas, but we want to discuss this with the regulators first before we can make any statements around this.

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [20]

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The overall intention is, at the end of the trial program, to go to the FDA and seek a label for all PH regardless of type.

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Operator [21]

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Our next question comes from Ed Arce with H.C. Wainwright & Company.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [22]

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Most of my questions have been asked, but I did want to go back to, just quickly, the couple adverse events so far in the group A that you saw, mild-to-moderate injection site reactions. I know you said that these didn't induce any sort of changes in circulating biomarkers, but just wondering if you could specify which ones you measured. And then I have a couple of follow-ups.

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [23]

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Okay. I want to separate the circulating biomarkers from the injection site reactions, which are redness and a little bit of tenderness. So very mild as ISRs go and not -- really not surprising. I want to add as well that we have not unblinded this study, so we don't know if those patients were placebo or drug. The circulating biomarkers really is a reference to the fact that we don't get pharmacodynamic information by inhibiting LDHA in a healthy volunteer. It doesn't really speak to the injection site question. As much as it would have been nice to get pharmacodynamic information from healthy volunteers, the fact is that when you knock down LDHA in the liver, you just -- you don't change the circulating markers, and so we can't see anything. But with respect to what those are, Ralf, do you have those at your fingertips?

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Ralf H. Rosskamp, Dicerna Pharmaceuticals, Inc. - Chief Medical Officer [24]

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Yes. I -- they were typical injection site reactions. And in one case, it was only tenderness without any erythema starting 2 to 3 hours after the injection and going up to 36 hours. And the one with erythema also started a couple of hours after the injection and lasted for 24 hours. So both were really clinically unremarkable. And that's the only 2 which we have seen out of a total of 25 subjects. And as Doug says, we are still blinded to the results. So we don't know, in the case of tenderness, it could just be injection site volume and nothing else.

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [25]

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Circulating markers.

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Ralf H. Rosskamp, Dicerna Pharmaceuticals, Inc. - Chief Medical Officer [26]

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Well, in terms of -- yes, for this specific case, we haven't seen any -- in general throughout the study, any changes in cytokines at all, which we measured as part of a potential immunological course, so we haven't seen any changes there.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [27]

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Okay, great. And just following up on this, on a couple of questions earlier, with now having this precedent set for the pivotal from Alnylam and your own Phase II/III that you expect to start early next year, I guess, the multidose study, is that -- just to clarify, that is intended to be the single pivotal registrational study?

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Ralf H. Rosskamp, Dicerna Pharmaceuticals, Inc. - Chief Medical Officer [28]

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Yes, it will be the main registrational study. Whether it's the single study, we will have to see. It could be as dependent. For instance, if we don't include PH3 III, so if we do a smaller PH3 study separately or in normal (inaudible) patients separately, there could be some smaller studies going with it, but this would be the main registrational study. That's correct.

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Antonio Eduardo Arce, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [29]

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Okay. And so just to further clarify there, the ultimate package to the agency could, depending on what they say, include perhaps data from that follow-up study that some of these patients out of PHYOX may be eligible to after they complete that study?

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Ralf H. Rosskamp, Dicerna Pharmaceuticals, Inc. - Chief Medical Officer [30]

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That's true. This could be part of the package as well that these patients going into a long-term safety extension in an open-label fashion. And in addition, the new data, that could well be that -- this could be the complete package. But again, we will have to wait for the discussion with both the FDA and also in Europe.

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Operator [31]

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Our next question comes from Keay Nakae with Chardan.

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Keay Thomas Nakae, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Therapeutics, Devices and Diagnostics [32]

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Two quick questions. First, on the accounting side. How much of a settlement are you expecting to recognize in G&A in Q2?

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John B. Green, Dicerna Pharmaceuticals, Inc. - CFO [33]

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Let me go -- just go through the pieces. The $2 million cash -- the first piece is a $2 million cash upfront that we paid them in Q2 that will be expensed. We have a $13 million liability to pay the additional $13 million over the next 4 years. So that liability will be set up in Q2. And then the 983,000 shares of stock that we gave them were issued also in Q2, and so those will be recorded at their market value for the stock. So it will be to sum of those 3 items.

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Keay Thomas Nakae, Chardan Capital Markets, LLC, Research Division - Senior Research Analyst of Therapeutics, Devices and Diagnostics [34]

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Okay. And then for the Phase II/III study that you hope to commence in early 2019, is the expectation that, that will only be U.S. sites? Or what's the geographic spread of that?

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [35]

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Keay, we are -- that will be a multicenter study that we'll conduct in multiple countries. I would expect that we would expect to use all the countries we're in for Phase I, which would be the U.K., France, Netherlands, Germany, as well as the United States. And I expect we will be in additional geographies as well.

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Operator [36]

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(Operator Instructions) Our next question comes from Madhu Kumar with B. Riley.

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Madhu Sudhan Kumar, B. Riley FBR, Inc., Research Division - Analyst [37]

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So first, on the PHYOX study in PH patients, is there an (inaudible) representation of PH1 versus PH2? Or is it just the first 16 PH patients to come independent of type? And then secondly, when thinking about kind of circulating biomarkers, there was no circulating biomarkers in the normal, healthy volunteer arm. Is it that -- to be clear, you measured for circulating biomarkers and you saw no changes to them to date, right?

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Ralf H. Rosskamp, Dicerna Pharmaceuticals, Inc. - Chief Medical Officer [38]

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Yes. For the PHYOX study, we haven't started the patient part yet, so I don't know the breakdown of PH1 and PH2 patients. Protocol specifies that the first patient dose always has to be a PH1 patient. And then the next patients can be a PH2 patient. So we're not specifying the mix. And what I can tell you, what I see right now, we have several patients in screening. This is mostly PH1 patients right now getting into the study.

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [39]

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So with respect to the circulating biomarkers, the -- we have not unblinded the results yet. But based on the pooled data, we're not seeing biomarkers move, and we don't expect them to move in the study.

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Operator [40]

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At the time, I'm showing no further questions in queue. I'd like to turn the call back over to Doug Fambrough for any closing remarks.

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Douglas M. Fambrough, Dicerna Pharmaceuticals, Inc. - Co-Founder, CEO, President and Director [41]

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Thanks again, everybody, for joining us today. And we look forward to speaking again next quarter.

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Operator [42]

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