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Dicerna Pharmaceuticals Deep Dive: October 2021

For the first time ever, we are releasing an active recommendation to the general public as three-time recommendation Dicerna Pharmaceuticals was acquired by Novo Nordisk in a $3.3 billion deal.

December 28, 2021

The following is a transcript of the 7investing advisor team’s conversation about Dicerna Pharmaceuticals. This conversation originally took place on September 17, 2021. Dicerna Pharmaceuticals was later published as an official 7investing recommendation on October 1, 2021.

Introduction to Public Deep Dive

(December 28, 2021) 7investing doesn’t publicly reveal recommendations. Our members subscribe to our service for our research, after all. But a unique opportunity has presented itself for the team to publicly share our research for the first time. On December 28, 2021, Novo Nordisk announced that it had successfully acquired RNAi pioneer Dicerna Pharmaceuticals, which was recommended in November 2020, April 2021, and October 2021. In fact, it was the first three-time recommendation of 7investing.

We’ve decided to make the October 2021 recommendation report and Deep Dive video pitch (with team Q&A) publicly available to showcase our research. As this now-public research demonstrates, each team member wields a deep understanding of their respective domains — we’re not just handing members a list of tickers. We thoroughly and objectively evaluate opportunities and challenges to encourage members to adopt a long-term mindset. The team at 7investing comprises experts in biotechnology, health care, synthetic biology, artificial intelligence, fintech, disruptive innovation, space technologies, and more. If you’re interested in gaining access to seven of these recommendations each month, then subscribe today!

The real October 2021 Deep Dive transcript follows and the video pitch is displayed above. You can download a PDF copy of the slides used during the Deep Dive using the button above. References to other 7investing recommendations have been removed from the video, slides, and transcript.


Note (October 1, 2021): The slides available for download are cleaned up from those in the video. References to slide numbers in the transcript below match the updated slides, not those in the video.

Maxx Chatsko  00:00

(Slide 1 & 2) All right, my recommendation for October 2021 is Dicerna Pharmaceuticals — again. I think this is the first time we’ve recommended the same company three times not including a Best Buy, which we no longer do. This is still a biotechnology company, I still consider it a “very high-risk,” “growth” investment. It is still a small cap. I still own shares.

Maxx Chatsko  00:24

(Slide 3) Dicerna Pharmaceuticals is a genetic medicine company utilizing RNA interference, or RNAi. At the end of June 2021, it had $710 million in cash, which is enough to fund operations into 2025. It’s likely to earn its first FDA approval in 2022, becoming the first RNAi company other than Alnylam Pharmaceuticals to earn an FDA approval. It expects one clinical entry per quarter for at least the next eight quarters, and it still has partnerships with Roche, Eli Lilly, Novo Nordisk, Alexian Pharmaceuticals )which is now part of AstraZeneca), Boehringer Ingelheim, and Alnylam.

Maxx Chatsko  01:03

(Slide 4) I knew I had to go hard in the paint here for the triple down buy alert, so we’re going to talk about a few different things. First, nedosiran. We’re going to go through that and why it wasn’t the best-case scenario for the recent clinical trial. We’re gonna talk about pipeline expansion and the new technology for getting outside of the liver. We’re gonna talk about an exciting program in alcohol use disorder. And then talk about the relative valuation compared to peers and some of the trendiest stocks out there on the market.

Maxx Chatsko  01:30

(Slide 5 & 6) First, we’ll talk about nedosiran. This is the lead drug candidate, and it was an ambitious approach to treating a rare disease called primary hyperoxaluria. There are three subtypes of this disease each caused by unique genetic mutation. We could treat these diseases by coming up with a unique treatment for each, or if you look at the genetic pathways downstream, they all share this common pathway in the LDHA gene. Dicerna Pharmaceuticals designed nedosiran to selectively inhibit the LDHA gene and potentially treat all three subtypes of this rare disease.

Maxx Chatsko  02:07

(Slide 7 & 8) In the recently-announced results from the phase 3 clinical program, it was successful. This program looked at PH1 and PH2 patients to receive either nedosiran or placebo. Patients were overwhelmingly more likely to respond to treatment if they received nedosiran compared to placebo. However, look at this distinction. Obviously, patients with PH1 saw clear benefit and this is where it’s likely to earn FDA approval. Patients that had the PH2 subtype though, saw no benefit. They only had one patient in the placebo group and [that individual] actually saw a pretty large reduction in the primary endpoint. Individuals who received nedosiran were all over the place. Some had a big benefit, some didn’t.

Maxx Chatsko  02:56

(Slide 9) So, quite the opposite actually of earlier results in this subtype. A previous study that had almost the exact same trial design as the phase 3 study showed the opposite results. It showed that nedosiran did help patients reach normal or near normalization of urinary oxalate excretion at 180 days, even patients with PH2. Then in the recent phase 3 clinical trial, we did not see that. The crucial lesson here is that, look, both of these trials only had a small number of patients, the “n.” There’s only three in this earlier trial, only six in the phase 3 trial [specifically referring to the number of PH2 patients]. That’s not enough to capture the genetic diversity of this disease. Although the LDHA gene is shared among all of these subtypes, there’s clearly something else going on, at least in the PH2 subtype. Maybe there are different genetic variants. Maybe there’s something to do with genetic compensation. But for whatever reason, nedosiran helps some but not all patients with PH2.

Maxx Chatsko  03:57

(Slide 10) This is more for at-home reading. I actually made a net present value calculation and I wrote an article and then I didn’t publish it because the company later came out and said it was no longer looking to commercialize this on its own. So, all of this is mostly invalid, but it does show there’s different things to consider across these three subtypes. Different amounts of patients have each [subtype], there’s also different numbers of patients who are actually diagnosed. Only one has an existing treatment on the market that’s Oxlumo in PH1 for primary hyperoxaluria. And this affects things like the peak sales estimates, right? Now, there is an ongoing study in PH3. They’re supposed to have results in October 2021. That won’t be enough to file for approval or anything, it’ll need to run a much larger trial later, but there’s still upside potential to add some of these, maybe even some patients with PH2 to the label in the coming years. Interestingly, the asset is actually worth more now after the mixed results from the phase 3 trial than it was worth before just due to how the math works out. Bottom line, nedosiran still has a lot of commercial potential.

Maxx Chatsko  05:04

(Slide 11) FDA approval is likely in PH1 in 2022. If we look at historical probability of success rates it’s around 90%. However, without the PH2 subtype on the label for approval, the economic opportunity is obviously more limited. Dicerna Pharmaceuticals does not have commercial infrastructure today. With a more limited label, it has made the strategic decision to not build out this commercial infrastructure for the first time around nedosiran. It doesn’t think the return on investment would actually be the best move for shareholders. It is now looking to license rights to this drug in both the U.S. and international markets. Previously, it was looking to hold all of the rights in the U.S. and then outlicense it internationally. So now the US is also up for grabs for a license. This strategic decision will actually preserve cash. Again, you don’t have to go out and build commercial infrastructure, and actually boost the cash position.

Maxx Chatsko  05:55

This is a late-stage asset, it’s very likely to earn approval, and it’s still going to generate hundreds of millions of dollars in peak annual sales, maybe more if we can add other subtypes later. The company is likely to earn an upfront cash payment for this license of at least $100 million and then collect a pretty healthy amount of royalties on sales. It also doesn’t need cash right now — it had $710 million in cash at the midway point of 2021 — so maybe it takes a lower upfront payment and decides to take more royalties. It has some optionality here as well. And again, there’s another study separately in the PH3 subtype that should come out shortly after this recommendation goes live.

Maxx Chatsko  06:35

(Slide 12 & 13) Next, we can look at the pipeline expansion. Now, when nedosiran had mixed phase 3 results, the stock fell in half, right? Fifty percent — wooo, big drop! And the post nedosiran narrative is a little too bearish. Part of what analysts are saying is, “Well, you know, after this, the company doesn’t have the rights to many other drugs. All these other ones are in the earliest stages.” If you look at the pipeline it’s easy to take that away, right? Look at over here on the far column. A lot of the assets that are in the pipeline are partnered off with Roche, Eli Lilly, Alexion, Novo Nordisk, and so forth. A lot of these are still in the earlier stages. A lot of them haven’t entered clinical trials yet. But this is the wrong way to look at how this pipeline is going to emerge.

Maxx Chatsko  07:20

(Slide 14) First of all, there’s opt-in rights for this Roche program, which is the next leading, next most-advanced program in the pipeline. The company also has opt-in rights for two Novo Nordisk programs. That actually isn’t necessarily the two that show up in the pipeline here. There’s over 30 genetic targets in this collaboration with Novo Nordisk. Dicerna has the ability to opt-in after phase 1, phase 2, or phase 3 results are in, so it actually gets to look at the data and then shoot its shot. It gets to have Novo Nordisk de-risk assets and then choose to help fund and co-commercialize. Obviously, depending on when they opt-in, that does affect some of the economic opportunity. Nonetheless, it’s going to have two additional assets in its pipeline that it gets to share in some of the economic opportunity.

Maxx Chatsko  08:08

(Slide 15) There’s also an emerging wholly owned pipeline. If you look at the right programs. In A1AT liver disease, this is technically partnered with Alnylam, but this is a Dicerna-developed asset. They have 100% rights in the U.S. I’ve written before, I don’t think this has the best commercial potential, namely because their number one competitor, which is another RNAi company, Arrowhead pharmaceuticals, is pretty far ahead both in terms of time of development and the results they’ve gotten are just really amazing. But this is one of the largest opportunities for genetic medicines right now, so the market can still support two drugs, for sure.

Maxx Chatsko  08:45

Additionally, there’s this exciting we’re going to talk about next in alcohol use disorder. This is expected to enter phase 1 clinical trials in September before this report comes out. And then recently it added these two programs here, these are GalXC Plus programs, which means outside of the liver. It’s the first time, one of the first times, the company is moving outside of the liver. One of the first times RNAi is moving outside of the liver. We don’t know what these are yet, but they will move into clinical trials maybe before the end of 2022.

Maxx Chatsko  09:15

(Slide 16 — added after presentation, it was accidentally deleted) It’s important to keep in mind that Dicerna is… I think I missed a slide.

Maxx Chatsko  09:26

(Slide 17 & 18) Oh anyway, important to remember that Dicerna is differentiated and ambitious. If we look here, I’ve included this in the last report. I’ll talk about it again, but these are the different chemical structures of the therapeutic payloads among the main three RNAi companies. You can see immediately there’s a pretty big difference between all of them. Dicerna at the bottom has this unique structure on one end it’s called a tetraloop. This provides a lot of advantages for getting into different tissues and for the potential to conjugate this, which can help with delivery to other tissues. I don’t know if they had that in mind when they design in the mid 2000s, everyone was still focused on getting to the liver, but this is actually going to serve it very well as the whole field is trying to answer that question of, “Hey, how do we deliver these payloads outside of the liver?”

Maxx Chatsko  10:15

This is important to consider. Right now, all genetic medicines, — CRISPR, whatever,  gene editing, RNAi — everything’s really kind of stuck in the liver because that’s what we know how to deliver to. You need to change up your payloads if you want to get to other tissues, like the central nervous system, muscle, adipose tissue. Maybe you want to edit or engineer tumor cells or immune cells within the body in vivo and additional tissue types.

Maxx Chatsko  10:40

(Slide 19) The first class of conjugates that the company is looking at are called oligo-lipids. If we look here, this is the therapeutic payload, we see the tetra loop at the end. There’s a linker, which is this line, and then this blue triangle would be the [ligand]. To date, to get to the liver we would conjugate to GalNAc, it’s a sugar, it is easily metabolized in the liver. If you attach that to the end, your payload is gonna end up in the liver. It’s a very simple way to target your payload to the liver. But if we want to get outside liver, we need to use other ligands. Here, the first thing the company is using are lipids, and it can change the chemical makeup or the length of the lipids and get in a different tissue types with different efficiencies.

Maxx Chatsko  11:25

(Slide 20 & 21) One of the most exciting opportunities, and this is something that only Dicerna Pharmaceuticals can do, is in next-gen cardiometabolic diseases. If we look here, the company made a GalNAc RNAi payload and then it made one with this oligo-lipid tool. It tried to silence this gene, Dgat2, as a model gene. Here, we see that GalNAc in the liver — “hepatic” means liver — 95% gene silencing. That’s what we expect, right? GalNAc gets to the liver. The oligo-lipid also had a 95% gene silencing rate in the liver, so that’s good.

Maxx Chatsko  12:04

But now look. Iif they want to also silence the genes in white adipose tissue — this is a different kind of fat [tissue] — GalNAc is not going to help you. It’s all over the place and this is what we’d expect. It’s super selective for the liver, it’s not going to help you get to adipose tissue. But this oligo-lipid actually did get to white adipose tissue to the same effect as it did in liver. The meaning of this is that we can design oligo-lipids to simultaneously silence genes in multiple tissues.

Maxx Chatsko  12:30

(Slide 22) That could come in handy for certain cardiometabolic diseases. There’s a gene expression for like, say, NASH, or obesity, or maybe even type 1 diabetes, where gene expression in the liver and in some of these adipose tissues plays a role. This would be the first time we’d be able to do that at the same time.

Maxx Chatsko  12:52

The company has partnerships, exclusive partnerships, in RNAi with the two leading cardiometabolic drug developers globally. This provides opportunities to maybe expand these partnerships. Dicerna Pharmaceuticals owns 100% of the rights to targeting adipose tissues, but it’s still too small to really pursue some of these opportunities on its own. A clinical trial for obesity, or type 2 diabetes, or NASH, or some broad cardiovascular risk would require a hundreds of patients, maybe even over 1,000 patients. Dicerna is not going to do that on its own. But it’s already partnered with the two leading companies in this space.

Maxx Chatsko  13:29

In fact, the value of these existing partnerships, which don’t include adipose tissue, is $14.2 billion — if you added up all the programs and targets — and royalties. Obviously not all that’s going to be captured, not every target is going to work out, not every drug is going to be developed. But plenty of upside potential from those partnerships just in cardiometabolic disease. Plenty more upside potential if Dicerna wants to dangle out adipose tissue as well to maybe expand one or both of these.

Maxx Chatsko  13:56

(Slide 23 & 24) Oligo-lipids are also great for getting to different tissues within the central nervous system. There’s some different data here in a non-human primate study. And you can just see different gene silencing rates in different tissues, different regions of the brain. This is interesting for getting to central nervous system and neuroscience applications. Again, the company can tune or change the lipid composition for the conjugate and that would affect what types of cells in the central nervous system it ends up up. And so again, if you wanted to get maybe into astrocytes, but you didn’t want to get into neurons, maybe you would use this here, GalXC and the Conjugate A to tune that. Maybe if you wanted to get into neurons, but not into astrocytes, you’d use this here, Conjugate D. The company’s building these libraries, understanding how it changes the chemistry, or the length of some of these lipids, and what cell types the payload actually ends up in. It has a ton of optionality. A lot of potential to tune these for specific cell types or tissue types.

Maxx Chatsko  15:06

(Slide 25) The company has an exclusive partnership with Eli Lilly to get to neuro or central nervous system indications. Eli Lilly is actually partnered in cardiometabolic, neuroscience, and pain applications with Dicerna Pharmaceuticals. They’re looking to explore over 10 genetic targets across those three therapeutic areas. The total value of this partnership right now is $3.5 billion plus royalties. Interesting to note Eli Lilly actually played an instrumental role in developing this GalXC Plus, getting outside of the liver, the tools for that, with Dicerna Pharmaceuticals. This was a very important partnership so far.

Maxx Chatsko  15:43

(Slide 26 & 27) Next, we’ll look at an important and exciting program in alcohol use disorder. This is a busy slide — this is for at-home reading, you can check it out later.

Maxx Chatsko  15:55

Alcohol use disorder is commonly referred to as alcoholism. If you just focus on that graphic on the left here at first, over 14 million individuals in the United States are affected by alcohol use disorder. Only 10% of those actually ever receive treatment. Most of that’s behavioral treatment, therapy and so forth. Only 10% of that 10% are ever actually offered pharmaceutical interventions.

Maxx Chatsko  16:17

Now if we look at the right, I’ve put an arrow on something that’s important that I want to focus on here. And that’s just how this RNAi therapeutic is designed to work. Dicerna Pharmaceuticals designed DCR- AUD to selectively silence ALDH2 in the liver. ALDH2 is an enzyme that plays a key role in alcohol metabolism. If we drink alcohol, this enzyme comes into action and it processes and metabolizes alcohol into other things you can then excrete through your urine and so forth. Now, there’s actually naturally occurring mutations among the human population in the ALDH2 gene that makes it inactive, one or both copies. In those individuals, they are protected against developing alcohol use disorder and they’re protected against drinking too much. So in a way, Dicerna Pharmaceuticals is trying to kind of recreate this interesting genotype with this drug candidate.

Maxx Chatsko  17:12

(Slide 28 & 29) I’ve shown diagrams like this in previous presentations and I’ll keep doing it. This is really one of the most important things to keep in mind for generic medicines: And that is that gene expression is tissue specific. If we look here, the ALDH2 gene is expressed from head to toe, everywhere! Brain, head, shoulders, knees, and toes.  However, only about 50% of ALDH2 gene expression occurs in the liver. All the other tissues add up to the other 50%.

Maxx Chatsko  17:41

Dicerna Pharmaceuticals found, granted in an animal model, that if we silenced ALDH2, but only in the liver, you would prevent heavy drinking but not moderate drinking. This is pretty interesting, right? It’s because of this strange correlation, just that half of it is from the liver, if we can selectively silence that we can basically recreate these protective heterozygous genotypes. That’s the hypothesis anyway.

Maxx Chatsko  18:08

(Slide 30) Again, if we look at individuals that have a naturally occurring, inactive form of this gene, they are much less likely to develop alcoholism. We’re trying to recreate that here with liver-directed RNAi, basically recreating the same amount of activity for this gene. And this is good too, because, it’s 2021. We don’t need to take a Puritan approach for people to stop drinking entirely. But if we could help them maybe moderate their drinking, that could be a benefit for patients and maybe even make them more compliant with treatment.

Maxx Chatsko  18:39

(Slide 31) This therapy also has some potential advantages over existing treatments. We do have approved treatments for alcohol use disorder, as you can see here. The first was approved in 1949. The most recent was in 2006. None of these actually work all that well. Only one of them is actually designed to inhibit the ALDH2 gene. The other three work for reducing cravings in the brain.

Maxx Chatsko  19:06

All of them, as you’ll notice in the second-to-last column, require abstinence prior to treatment. Patients cannot be drinking alcohol before starting treatment. Quite obviously, if you have an addiction to alcohol, that’s going to be a pretty big challenge to treatment.

Maxx Chatsko  19:22

The final column shows one of the most important considerations as well. A lot of these require daily dosing. Not only do they not work very well, but daily dosing provides a compliance burden. Imagine in a one-month period, if you need daily dosing of a treatment, you need to make that decision to comply with treatment 30 times in a 30-day period. But if we can space out dosing maybe once a month or once a quarter, now we’re shifting that compliance period. And you only need to make that decision to treatment once in a 30-day period and maybe once in a 90-day period. This might have some really interesting advantages over what’s out there now and maybe allow more of that 14 million population in the United States that has alcohol use disorder to maybe be eligible for pharmaceutical interventions.

Maxx Chatsko  20:10

Another interesting part of this perspective, is to think about how Dicerna is approaching it’s wholly-owned pipeline. I had a quote from the CEO — I guess I deleted that slide, that’s why I kind of froze earlier. But on the second-quarter 2021 conference call, he said, “Hey, you know what? I want Dicerna to be in whitespace opportunities. We’re gonna be taking some more ambitious swings. We have the financial flexibility to do that because we spent recent years trying to sign up all these partnerships.” So he said, “I think as we start to roll out our wholly-owned pipeline for the first time, you’re going to start to see what our strategy is, we’re going to be in these whitespace opportunities.”

Maxx Chatsko  20:45

(Slide 32, 33, & 34) This is important to consider. Look here, genetic medicines began in rare diseases. This is the number of individuals affected by some of the diseases in the United States. And look how crowded this is. These are all the companies that we know across gene editing, RNAi, gene therapy, and so forth. Among these rare diseases, A1AT liver disease is the largest and it’s only 130,000 patients total in the United States.

Maxx Chatsko  21:12

But now look what happens. We’re starting to move genetic medicines into some more common diseases, right? We’re moving beyond rare diseases. This is hypercholesterolemia, this is a rare genetic mutation that affects how individuals metabolize certain lipids. There’s an approved drug from Alnylam and The Medicines Company, which was just acquired by someone — I forgot. And there’s other companies going after it — Verve Therapeutics with base editing, Precision BioSciences with gene editing. This is a 1.1 million patient population in the United States. Look what happens to these other bars from these rare diseases that everyone else is going after. You can barely see some of them.

Maxx Chatsko  21:50

Well now look what happens when you add alcohol use disorder. This is a genetic medicine, which is going after something that’s very common. I mean, probably all of us know somebody that has alcoholism. And you can’t even see the bar for primary hyperoxaluria. Again, it’s just a reminder that Dicerna is taking some ambitious approaches. I mean, it did that with nedosiran and it just didn’t work out. But this provides some pretty asymmetrical risk / reward opportunities for investors.

Maxx Chatsko  22:15

(Slide 35) Last, we’ll look at relative valuation for Dicerna compared to some of its peers, or some of the trendier names that investors might hear in the market. You know, every month we’re asked by Simon, “What’s your best stock market opportunity?” And I think you’ll see it’s kind of hard for me, it’s like, “Well, it’s obviously Dicerna,” and we’re going to talk about that in a second.

Maxx Chatsko  22:36

(Slide 36 & 37) If we look at all the drug developers on the 7investing scorecard, there’s nine of them. Dicerna Pharmaceuticals has six collaborations originating from its technology platform or pipeline. All the other eight combined only have eight. Eight collaborations originating from their technology platform or pipeline. Dicerna has six! Six!

Maxx Chatsko  23:11

If we look at that, compared to the trendier names that are– What was that, Simon? I know it’s probably the most important stat in this presentation: six. Six collaborations originating from its technology platform or pipeline. All the other drug developers on the scorecard only have eight.

Maxx Chatsko  23:11

If we look here, trendier names are with a lot more and they have a lot less. Look at this. I mean, Dicerna Pharmaceuticals, $1.6… What was that, Dana? Six! I know! Six! It has six collaborations originating from his technology platform or pipeline. Very important. I’m glad you guys are on board. But look, I have to get to the end of this presentation.

Maxx Chatsko  23:46

So look, Dicerna Pharmaceuticals $710 million in cash at the end of June 2021, it only has a $1.6 billion dollar market valuation. Look at all these peers. It’s first in collaborations. It’s first in preclinical programs. It’s first in discovery programs– What was that? What was that, Anirban? Six! I know! This is the most important stat, maybe, it’s very interesting, right? This might not stand out to most other people, but six collaborations originating from his pipeline, all the other picks on our scorecard only–

Anirban Mahanti  24:17

I’m disappointed it’s not seven.

Maxx Chatsko  24:20

That’s enough, don’t make this about you.

Maxx Chatsko  24:22

Alright, so look, Dicerna Pharmaceuticals is second in cash, third in clinical programs among this list of 10 and it actually has the chance to be first maybe by 2023. Again, it’s expecting one clinical entry per quarter in each of the next eight quarters at least. So we’re gonna see these discovery programs advance into preclinical, preclinical jump up to clinical, and so forth. Despite having this this comparison, Dicerna Pharmaceuticals is ninth in market valuation out of this list of 10. What was that, Steve? Oh, no, he was just talking about Virgin Galactic, so we can move on.

Maxx Chatsko  24:58

(Slide 38) Look, why is Dicerna Pharmaceuticals a buy? Dicerna Pharmaceuticals is one of the most undervalued drug developers on the entire market. Again, due to its unique financial flexibility and its development strategy, the company is financially de-risked. Six! collaborations originating from its technology platform provides a nice steady stream of milestone payments, especially as some of those programs mature, milestone payments get quite a bit bigger. And it has a wholly-owned list of programs. And that list is growing.

Maxx Chatsko  25:27

It’s working in a lot of whitespace programs, that’s kind of its focus for its wholly-owned pipeline. When it comes to cardiometabolic diseases, Dicerna is not large enough to go and develop those programs. It can’t run multi-hundred-patient clinical trials and it’s never gonna be able to compete with the Amgens, Novo Nordisks, and Eli Lillys of the world. So it said, “Hey, you guys go figure this out. Use our tools, just give us a cut later.” And instead, it’s choosing to be a little bit more ambitious with the programs that it’s pursuing by itself. It has oligo-lipid conjugates. It’s working on the things that aren’t lipids for conjugates to get maybe more specific tissue delivery. And additionally, as the alcohol use program shows, the company has a pretty asymmetrical risk / reward profile I think.

Maxx Chatsko  26:12

And again, stupidly undervalued, in my opinion — six! It has cash through at least 2025. That might actually bump up to 2026, after the nedosiran license is announced. Whitespace programs. Compared to anything else you can buy on the market, I just, I don’t really understand why it’s still only valued at $1.6 billion. And that is my presentation.

Maxx Chatsko  26:37


Simon Erickson  26:40

Maxx, we are 7investing here. Would you bring this back when they have one more collaboration so you can say that number more often?

Maxx Chatsko  26:46

Yeah, I’m sorry. My apologies.

Simon Erickson  26:49

In all honesty, though, this is you basically pounding the table for Dicerna. Now you recommended it in November last year [2020]. You recommended in April this year [2021]. This is you coming back for a third stake. That’s pretty impressive. Seems like the market is not responding to what you are seeing and it’s giving us an opportunity. Fair statement.

Maxx Chatsko  27:09

Yeah. And I mean, it did rise to like a maybe a little over $3 billion market valuation heading into the phase 3 data readout. So there was some acknowledgement, finally. And then those were mixed results and everybody said, “We don’t want to wait around. We have to wait another six months, Maxx?! I mean, come on. This is Wall Street! We got things to do. Day trades to make.” I think there’s a bit of an overreaction there. Obviously, it wasn’t the best-case scenario for nedosiran. It would have been way better if it worked across the board. You have to acknowledge that. But for sure, it still doesn’t make sense.

Maxx Chatsko  27:45

That’s one of the beautiful things about having a technology platform is, again, it has over 20 discovery-stage programs, a ton of preclinical programs, clinical programs. One failure is not going to make or break the investment thesis. If we started to see five or 10 failures in a row, then I would have some questions to answer, right? But it’s kind of the same thing with alcohol use disorder. There’s a lot of reasons that might not work. And we’re going to get data and the first half of 2022.

Maxx Chatsko  28:12

That’s actually one of the interesting things about that program. You know, you can give patients that and then we do something, it’s a clinical term called the “alcohol challenge.” It’s not like in cancer or some rare disease, you generate data very quickly [in alcohol use disorder]. The phase 1 trial hasn’t started as of this recording, it’s going to start later this month in September 2021. We’re going to get phase 1 results by the first half of 2022. So we’re gonna know pretty quick, like, what are the possibilities here? There’s a lot of reasons that might not work. If it doesn’t work, it’s like, “Eh, we got 20 other programs.” If it does work, then it’s like, “Well, this is a potentially blockbuster product. So let’s start to factor into the valuation.”

Simon Erickson  28:53

Why does nedosiran not have a commercialization partner yet? Or they’re waiting for there to be more data that they can say, “Yes, we have something that we can run with,” somebody like Alnylam jumping on this?

Maxx Chatsko  29:04

I actually thought it might have been Alnylam before the failure — or failure in PH2. I think, honestly, their strategic pivot to now also open up the license in the U.S., maybe allow them to go back to the list of potential partners. On the second-quarter 2021 conference call, they did say they have a lot of interest. But what else are they going to say, right? But they might choose a different partner in the U.S. and a different partner in international markets. They might just choose the same partner across the board.

Maxx Chatsko  29:38

Interestingly, they also made some comments about, “Hey, look, we have — six! six! — we have six collaborations. That’s kind of tapping our bandwidth, right? We have way more potential to generate programs and we can ever pursue.” But there’s also a trade off. There’s only so many partnerships you can service as a tiny little company. So to me, that was an answer to a question for a different program, but maybe they might just tap one of their existing collaborations since they already have that relationship. Maybe not. But like Alexion Pharmaceuticals makes a lot of sense in PH1, again, because you have to compete with Alnylam, which has already been running for almost a year now. So you do need to choose the right partner to maximize the commercial success.

Simon Erickson  30:31

The the other question I had was about GalXC versus the lipid nanoparticle approach that Intellia is taking, because Intellia, like you said, is 10 times the valuation of what Dicerna is right now. And of course, that’s in vivo gene editing, as opposed to Dicerna’s RNAi, but it is still for the liver, right? I mean, the the amyloidosis that you’re showing it’s a rare liver disease. It seems like it’s just a different approach. But they’ve got 10x the valuation. Is this just the market is too excited about CRISPR and gene editing? They’re not paying enough attention to RNAi? Or, why do you think there’s such a disconnect between Intellia and Dicerna?

Maxx Chatsko  31:08

Well, there’s a lot of excitement for gene editing. And I think, and this is probably correct, maybe not to the extent that it has been with like an $11 billion or $12 billion market valuation. But I think you can read through the very early results from Intellia’s lead drug candidate and say, “Well, if there’s any other disease in the liver, they can just change a little part of that payload, and then affect a different gene and probably get very similar results. Very effective. Very safe.” So I think it makes sense to read through some of that, in terms of, the lipid nanoparticles versus conjugates.

Maxx Chatsko  31:43

The lipid nanoprobe is just to encapsulate the gene editing payload because it’s a multi-component system. There’s multiple things in that payload and you have to make sure they all get to the same place at the same time. I do believe that the lipid nanoparticles still have to be conjugated to something. For example, Verve Therapeutics is using CRISPR base editing. They also use lipid nanoparticles, but they actually also use GalNAc as the ligand to get to the liver. When you have oligonucleotides, like RNAi or maybe a peptide nucleic acid, you don’t have to encapsulate that. You can just conjugate it directly, so it simplifies the payload a little bit.

Maxx Chatsko  32:25

So, yeah, I don’t know, in terms of like the disconnect. I mean, RNAi is not that exciting. And also RNAi is not, or Dicerna is not the leading RNAi company. Alnylam’s valuation, if you’ve seen that lately, it’s like $25 billion or $20 billion. They’ve been rewarded for being the leader in RNAi. I think investors still have to figure out, and the market is still kind of asking this question maybe, but with technology platforms in genetic medicines, kind of anyone can do it, right? A lot of companies are using CRISPR. It’s just a tool. A lot of companies are gonna be using RNAi, it’s just a tool. A lot of companies will be using mRNA. There should be premiums attached to leaders, but maybe not such a huge gap between like the first and third companies or something like that. The difference between Arrowhead and Dicerna in terms of valuations is pretty significant as well and I’m not sure that’s correct. Five years from now, I think they might actually trade places.

Simon Erickson  33:28

Last question for me, and then I’ll open up to Dana, I know she’s got some questions, too. But do you think that Dicerna needs to beef up its investor relations team to let people know about this stuff? I mean, like, honestly, it seems like gene editing is getting all the attention and quietly Dicerna has got all these partnerships and all this progress that the world doesn’t really know enough about yet.

Maxx Chatsko  33:47

Yeah, they could probably do a better job communicating the whole whitespace approach. Maybe they’re just waiting to have some results, like maybe in this program in the first half of next year for alcohol use disorder. But I mean, imagine that. Imagine you have the only treatment that’s in the industry pipeline, and maybe it shows some really impressive results. We can help people to stop heavy drinking.

Maxx Chatsko  34:10

Also interesting, too. I mean, there was there was another company that was working on that, Silence Therapeutics, another RNAi company, and they kind of quietly just stopped working on it. They just gave a one-sentence reasoning that was like, “We think the market opportunity is limited.” That’s all they said. I could ever find anything else about it. In so many years since that statement, though, the FDA and even the World Health Organization are becoming a little more progressive in how they treat addiction. We used to do an abstinence-only approach that was the clinical [endpoint], right? Does this help people stop drinking 100%? And now they’re using these endpoints of harm reduction. So that’s only recently changed and so Dicerna started taking advantage of that. That’s why it’s kind of the first one to use genetic medicines in alcohol use disorder. If they can get the FDA to sign off on harm reduction instead of total abstinence as a clinical endpoint, then and the thing works. I mean, this could be not just a blockbuster, this could be like an over $10 billion per year drug. It has that much potential. But again, we have no in human data yet, so we can’t get too excited.

Dana Abramovitz  35:24

Alright, I’m just gonna ask one question. So drug delivery is one of my favorite things. I actually did a whole study on GNRA tetraloops. So, I’m really curious about their oligo-ligand delivery system or I’m sorry, oligo-lipid delivery system. My question is, could it be an oligo-ligand, so that it can target more receptor-based molecules and not just necessarily adipose tissue or more fatty tissues that you might see in the CNS?

Maxx Chatsko  36:08

Yeah, so they have multiple ligands in the works. They’ve only released data on the lipid platform. Is that your question?

Dana Abramovitz  36:21


Maxx Chatsko  36:21

Okay. So, they are working with peptides. That’s interesting, too. I’ll put this in my report. I don’t want to keep blabbering here. But Alnylam Pharmaceuticals and Arrowhead Pharmaceuticals, their first ligands for their oligo conjugates are peptides. For a peptide you can — it’s just like, think of it like a short fragment of a protein, basically like a piece of a protein. You can have one peptide and get to a very specific cell type somewhere in the body. If you’re trying to treat muscle or tumors or something, you can optimize a peptide very well to be very selective for a very specific cell type, tissue type.

Maxx Chatsko  37:00

As you know, Dana, Dicerna Pharmaceuticals is not going first with peptides, it’s choosing lipids. And lipids are not that selective at all. They have data that it gets to both the liver and white adipose tissue, but it also ends up in like the kidney and the heart and the lungs and the muscles and all this other stuff. Now, that would not be a very good platform for every disease, obviously, right? You don’t want to just broadly silence gene expression, there could be some safety risks there. But for certain cardiometabolic diseases, if your drug accumulates in the kidneys, but gene expression is not really important in the kidneys, then it kind of doesn’t matter, it’s going to be inert. So I think they’re being pretty selective about how they’re deploying their oligo-lipid technology and tools and it’s not going to be for everything. They’re gonna have to come up with other ligands for sure, but interesting that they’re starting with this. And again, they’ll have more whitespace. They won’t be competing head-to-head with Alnylam or Arrowhead because they don’t have the tools to get to adipose tissues right now.

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