The Silent Killer: Who has the killer apps? With Dimerix and PYC Therapeutics

We speak to Dimerix CEO Dr Nina Webster about why investors are thrilled with her company, as it nears the midway point for its Phase III clinical trial for the rare disease focal segmental glomerulosclerosis (FSGS).

And we talk to PYC Therapeutics CEO Dr Rohan Hockings about how his company's tech actually works to treat polycystic kidney disease.  

Chapters

• 2:00 PYC Therapeutics CEO Dr Rohan Hockings
• 13:57 Dimerix CEO Dr Nina Webster

Transcript

Rachel Williamson: 0:00

Who has the killer app for kidney disease, the incurable illness that affects a 10th of all Australians? These CEOs would have you know they are the Apple of the kidney world. 

I'm Rachel Williamson, and this is Phase III. 

There are four main companies working on kidney diseases in Australia: these are Dimerix, PYC Therapeutics, Certa Therapeutics, and diagnostic tool developer Proteomics. But it's the first two, Dimerix and PYC that we've invited to showcase their wares. 

Dimerix CEO Dr Nina Webster is here to explain why everyone is so excited to invest in her company. And PYC CEO Rohan Hockings is here to describe their exciting science. 

PYC's story is deeply embedded in science. Science that didn't work until it did. PYC was spun out of the not-for-profit medical research organisation Telethon Kids Institute in Perth in 2005, with a very nice piece of technology: cell-penetrating peptides or phylomers, which can deliver drugs directly into cells. 

But for 15 years, it couldn't find anything that this worked for. Until 2019, when it hit on a rare and nasty genetic eye disease. Since then it hasn't looked back. 

Now it's making an attempt on polycystic kidney disease, another genetic condition, which it's bumped up the queue to be its third drug candidate for human clinical trials. 

CEO Rohan Hockings is the person who led the company out of the desert. 

Hi Rohan, thanks for being here.

Rohan Hockings: 2:03

Thanks very much for having me, Rachel.

Rachel Williamson: 2:04

We're here to talk about the kidney disease application of PYC's tech. So let's start at the start. Why polycystic kidney disease and what do you expect the drug should do?

Rohan Hockings: 2:16

Yeah, I think in the first instance the simple answer to why polycystic kidney disease is the extent of the unmet patient need. So this is a disease that has got very serious implications for people who suffer from it. And there are no drugs that address the underlying cause of the disease available for patients today. So there is one drug that is approved for patients, but only about 5% of the polycystic kidney disease patient population can tolerate it. And because it doesn't address the underlying cause of the disease, it only defers the need for a renal transplant, it doesn't prevent it. And so thinking through where our drugs can have the most impact in patient lives, it was a very attractive indication for us to pursue for that reason.

Rachel Williamson: 3:01

Rohan, I tried writing a question that explained PYC is technology, but gave up. How does it work?

Rohan Hockings: 3:08

Put simply, you and I are made up of 3. 6 billion letters. That is our DNA. And I think most people are familiar with that. It's the A's, the T's, the C's and the G's that make you, you and me, me. And we're now in the era of precision medicines where we can go inside of cells where there's a problem with that genetic code or a spelling error in that sequence of letters and correct it. 

And that's exactly what these RNA drugs do. They are called antisense oligonucleotides because they are the direct complement or the opposite letter sequence to what you've got in your DNA. So they go in and they bind to a very precisely defined target or a gene inside the cell, and they correct the spelling mistake that's occurred in that individual with the hope that that in turn rescues the disease that is caused by that spelling error.

Rachel Williamson: 4:01

RNA therapeutics have stymied researchers for many years because they're quite difficult to get into cells. They're big, they're negatively charged, they tend to decay before they get to the target. How does the platform, the delivery platform, change the situation, actually get your therapy into the cell?

Rohan Hockings: 4:22

Yeah, look, it's a really good point, and I think it was beautifully illustrated by the COVID pandemic. Uh, the technology there really leveraged this RNA technology that's been around for decades and decades and decades, but has never really got a foothold for the reason that you just articulated. It's hard to deliver to where it needs to go, and so the way that problem was solved in the context of the COVID vaccination was to wrap the RNA in a little ball of fat, what we call a lipid nanoparticle. 

And it was really the delivery technology that enabled the step change in the utility of the MRNA technology. The MRNA vaccines, they are thousands of those letters that we just spoke about in a row. These are big pieces of genetic information. 

We are delivering a much smaller sequence of letters, so only about 25 letters in a row. So we don't need a delivery technology that is as complicated as that fatty lipid nanoparticle that we've spoken about. So we just link up our RNA drug to a small delivery peptide. It's a bit like the difference if you're delivering a bale of hay, you need a tractor, if you're delivering a pizza, you may get away with a scooter or a bicycle. And so the peptide is the scooter or the bicycle that delivers this much smaller piece of RNA, firstly to the target cell within the target organ. So in this case, the kidney, and then across that target cell membrane which is the, again, a fatty layer that exists on the outside of cells that stops foreign particles from entering into the cell.

Rachel Williamson: 5:52

As yet there are no approved drugs on the market that are using this cell penetrating peptide and oligonucleotide technology. 

You've got other biotechs, Sarepta, PepGen and, Entrada Therapeutics, which are using it for other indications. Mostly Duchenne muscular dystrophy, and all overseas. And they are further forward in human trials than you are. But this adds risk for PYC based technology surely in that it's so far unvalidated. 

Is it daunting not to have a playbook to follow when your tech is so new and, to my knowledge, you're the only one using it for this particular indication?

Rohan Hockings: 6:33

I think the answer there is yes and no. Uh, the bit that is not yet validated is the delivery technology. The RNA drugs themselves are an approved class of drug. And I think everybody in the field has recognized these are beautifully precise, beautifully potent molecules, but they have an Achilles heel. 

The delivery side of things is what has limited their much broader application. So the first generation of the RNA therapies is what we call the naked RNA drug, or just the sequence of letters. The current generation, and where the whole field has moved, not just PYC therapeutics, is trying to get more of the RNA drug inside the cell.

Rachel Williamson: 7:08

But what is making you and others so confident that the specific delivery tech works?

Rohan Hockings: 7:15

I think the piece of information that came out earlier this year from Sarepta, as you mentioned, in the context of their Duchenne muscular dystrophy program, they have run a human clinical trial where they have compared the data that they have generated for the naked RNA drug with the peptide conjugated version. And it shows that the peptide conjugated version is about 12 times as potent as the naked RNA drug, uh, with a very similar safety tolerability profile. And that enables an extension of the dosing interval. 

So it's actually more convenient for patients as well. 

So whilst that drug has not yet made it through to market because it hasn't passed the Phase 3 study it has actually generated what we call the clinical validation or the human validation that the technology is capable of, is in fact the step change that it was hoped to be over the current generation of RNA drugs.

Rachel Williamson: 8:01

And from what I can see, you are also on track to getting that sort of data too, now, aren't you. Just to read out what PYC has achieved over the last year and what is coming up, PYC's mouse and primate results for polycystic kidney disease are done, your toxicology results are due soon, and you're expecting to start clinical trials next year. 

But this condition, polycystic kidney disease, that wasn't supposed to be next in line for clinical trial. So what is the current data telling you? To push it up the queue?

Rohan Hockings: 8:34

At the minute we are joining the dots and very excited about joining dots between what we've seen in the non human primates or the monkey studies. 

So the information that we've got from those studies already is that we know what the safe and well tolerated doses of the drugs are. We know if we dose at three milligrams per kilogram, or 10 milligrams per kilogram, or even 30 milligrams per kilogram, that the monkeys tolerate the drug and it is safe and what we call the NOEAL or no observable adverse event limit. 

That's terrific because we can dose the drug at very high concentrations and not see any adverse, uh, tolerability or safety concerns. We know that when we dose the drug at the lower end of that range, three milligrams per kilogram, we're getting a very high concentration of drug in the, in the target organ, in the monkey kidney. That's great, because the concentration at which we can achieve an in vivo delivery profile in the monkey then is able to be correlated with the outcomes that we were able to generate in a human kidney. 

We were able to get a tissue sample from patients who are undergoing a nephrectomy or a kidney transplant because they had in stage disease. So as the kidney came out of the human, We were able to treat it with a dose of the drug and observe reversal of the phenotype or the manifestations of the disease, which is a really exciting observation to make, because there's nothing quite like human data in the context of a human genetic disease. So if you link those three dots together, that's why we are just bubbling with excitement in relation to the path forward.

Rachel Williamson: 10:12

Listeners, Rohan has been grinning throughout this whole conversation. So bubbling is clearly an apt description. Rohan, what are the next steps from here?

Rohan Hockings: 10:23

We've got a pretty high degree of resolution as to what the pathway looks like from here, because we're moving into the advanced preclinical stage, what we call about transition to an investigational new drug enabling phase, so formal toxicology studies. 

And then, as you mentioned, we're actually hoping to submit the regulatory submission to enable those first in human studies this year, but we won't actually dose a patient until the first quarter of next year. So we've got some good colour there. 

The nice thing is if you just zoom out for a moment and you look at the overall path to market, we know that the FDA, the U.S Food and Drug Administration, have recognised the extent of the unmet patient need in this indication and have suggested that we don't need to do three clinical trials before an approval. We only need to do two. 

So the FDA has committed to what we call a surrogate end point. An anatomical endpoint that does not show a functional improvement in the kidney, but shows that the structure of the kidney itself is getting better. We don't need to show that the function of the kidney is getting better until after the drug has been approved for launch commercially in the US so that's very nice. 

That's the overarching path to market. 

We're looking at a, uh, submission of a new drug application in 2028 on the back of that accelerated pathway. And so if you wind back from 2028 to 2025, when those human studies start, we've got 36 months to get through that Phase 1 and Phase 2 study.

Rachel Williamson: 12:32

It's 2024. And today Dimerix is once again one of the Australian stock exchanges, biotech darlings. 

In Australia Dimerix is the farthest ahead in terms of getting a kidney drug through the gruelling clinical trials process. It's got DXB-200 into the final round of clinical trials. The trial is for a drug to treat a focal segmental glomerulosclerosis or FSGS. It's a rare kidney disease for which there are no drugs on the market right now. 

Globally, the company is on par with some big hitters. Novartis, Canadian company Vera Therapeutics and Boston-based Vertex Pharma have drugs for different rare kidney diseases in Phase 3 as well. But there's also risk. An example of what can happen is CSL Vifor. It said in May its FSGS kidney drug candidate failed to meet the primary outcomes in a Phase 3 trial. 

This also means Dimerix's FSGS candidate is now one of the few options left on the table for a US$5 billion market. And with the end in sight, the valuation of this company has again, started making people very rich. If the drug does what investors hope the gravy train might continue. 

Dr. Nina Webster. It is lovely to talk to you again.

Nina Webster: 14:01

Hi Rachel, how are you?

Rachel Williamson: 14:03

The last time I interviewed you was in mid 2020 and just before your share price was about to hit that all time high. Today investors are interested again because the last three years of hard work are really starting to bear fruit. But it has seemed like it's taken a while, for your share price to start inching up. And that doesn't seem to square with a company that has the kind of positive interim results from a phase three trial that you guys do, as well as licensing deals already signed. So what is going on here?

Nina Webster: 14:40

Yeah, no, thank you, Rachel. I think a huge amount has changed since we last spoke in 2020. We've got two licensing deals put behind us with at least 70% of the value still to come. So a huge amount of potential upside for the business to come as well. Um, you mentioned before about share price also put into perspective market cap. You know, our all time high prior to, the share price high, it was only about A$120 million. We're currently set about A$240 million. So it's an all time high for the, uh, market cap at this time.

Rachel Williamson: 15:10

Could the depressed market for listed biotechs, be having an impact there as well?

Nina Webster: 15:15

The whole sector, the healthcare sector has gone through a couple of tough years. It's been hit particularly heavily post-COVID, uh, in terms of everybody's market cap and share price. That's something that, particularly in Australia, we've all felt pretty heavily. It's always a challenge getting a lot of traction with investors when you're sub-A$100 million market cap. Um, I think that that reaching a hundred mil market cap really does change a lot of the dynamics and the discussions you have with a variety of different types of investors.

Rachel Williamson: 15:45

I know that your latest Euroz market report compared Dimerix to Neuren, which had a similar market cap uh, while it was doing its Phase 3 trial. And it's now at, I think, a two and a half billion dollar company. But is that a fair comparison? Both of these companies have orphan drug status, which encourages treatments for rare diseases through tax breaks and so on. But Neuren's blockbuster drug targets a rare genetic neurological disease in children with Rett syndrome, and Dimerix's main therapy targets a rare kidney disease in FSGS. These, these are very different markets.

Nina Webster: 16:22

Actually, I think it is and the reason I say that is, you know, Neuron was a great example of what can happen in a rare disease Phase 3 going through to market approval. When you think about the synergies between the two companies, first of all, we're both targeting an orphan indication. Both companies did an early regional deal. Neuren did theirs in the US and we did ours in Europe, and both companies initiated that Phase 3 clinical trial. You look at the trajectory of Neuren, even in those early days with. following exactly the same trajectory in that early stage as well.

Rachel Williamson: 16:54

There is always the risk that Dimerix's Phase 3 trial doesn't work. CSL Vifor in May showed that failing to meet a primary endpoint in Phase 3 happens with its FSGS drug sparsenten. I'm not suggesting that your drug and their trial are in any way similar, just making the observation that it happens. So aside from this possible clinical risk, what are the commercial risks you're aware of?

Nina Webster: 17:24

The key thing for us is any rare disease is recruitment. So one of the things that we're very much focused on, we're opening clinical sites in additional countries and including in we're already in. So we'll be in 16 countries, opening another 100 clinical sites, and that is to really make sure that we mitigate that risk in recruiting those patients.

Rachel Williamson: 17:43

Will you need to raise again, um, before commercialization activities start?

Nina Webster: 17:48

No. So we've got no plans for any capital raise now, we are, uh, we completed the capital raise in March of this year for A$20 million, and at the end of that March quarter we had A$35 million in cash. So those funds will not only support that Phase 3 program right the way through, but puts us in a great negotiating position with potential partners.

Rachel Williamson: 18:08

Let's talk about those two licensing deals that Dimerix has done for its FSGS drug. For our listeners, these are the cliff notes: one licensing deal is with the UK's Advanced Pharma and it covers most of Europe, Canada, Australia, and New Zealand. It's worth A$230 million, plus royalties. The other is with Middle East pharmaceuticals distributor Taiba, and it's worth A$120 million, plus royalties. But I understand Nina, you have other deals waiting, particularly for the important us market. What are they waiting for?

Nina Webster: 18:50

Of the key things for us is that because we're the only candidate in Phase 3, we really have a lot of interest and potential partners around the world in all those other territories. We have made it public we do have term sheets on the table. We're in negotiation with other parties The key priority for us is going to be US and China, given that those are the largest markets and collectively they could be worth 70% of the global opportunity. So a lot of potential upside to come.

Rachel Williamson: 19:15

What data are they waiting on in order to sign. Are they waiting on data or is it purely just negotiations that you have to undergo to get these across the line?

Nina Webster: 19:26

No, so not waiting for any data. We deliberately have not pushed the US deal component, given that we felt that was the largest opportunity until after we got that interim analysis, which happened in March. That was something that we felt having that data put us in the best negotiating position, because not only do we have a magnitude larger cohort, but to confirm what we saw in the Phase 2 is what we expect in the Phase 3, but also that funding position that we put ourselves into in March as well meant that we're in a very strong negotiating position. So that was a strategic decision.

Rachel Williamson: 19:57

The US is nearly every biotech's target market because of the sheer size of the health market there. But also in your case, FSGS is much more common amongst people with African ancestry, so it's easy to see why you're aiming for the US. But in China, FSGS rates are much lower. What is it about that country that's appealing for licensing and commercialisation? Is it just the size of the market or is it something else as well?

Nina Webster: 20:29

Yeah so I think two things there is the incident rates for FSGS around the world are actually pretty uniform across territory to territory. Um, so it's actually a global issue affects children down to two years old as well as adults. You're right, there is a marginal increase in the black men population, but overall country by country is actually the same incidence rate. 

So in China, they have the largest kidney disease issue in the world, and a large component of that is the glomerular nephritis, which of which FSGS falls into. So it's a very interesting target market, particularly given citizens in China do get free access to healthcare and then the treatments that come with that as well. And typically in orphan disease, which you can get exclusivity periods for in China of up to six years as well, uh, they typically follow European pricing. So it could be a very attractive opportunity.

Rachel Williamson: 21:19

Just how attractive?

Nina Webster: 21:22

This comes back to, again, traditionally, companies would develop a product for US and for Europe, for example, and then at the end of that would turn attention to the Asian markets and look at what do you do for registration in those territories. 

And one of the challenges has been is across, uh, particularly China and Japan is that often products would be six to eight years behind getting an approval in US and Europe simply because they just had not factored that into the clinical trial design. 

One of the key advantages we've had is we've gone to speak with the regulatory agencies in China, for example, the NMPA, early, we've got alignment that the study design that we're running is appropriate in China as well as US and Europe. 

So we could well be looking at an approval on the same clinical trial as other territories. Hence, we're recruiting in those territories as well. That is a key component for us because you know, patients with FSGS have little option at the moment. They typically get end stage renal failure or kidney failure within five years, end up on dialysis or transplant, 60% get reoccurring FSGS in the transplanted kidney. And so really that's not an answer either. They end up back on treatment with kidney failure all over again.

Rachel Williamson: 22:31

I asked you about risks earlier. What are the key milestones that we should be looking ahead for? For example, provided the Phase 3 trial goes as expected, when do you expect the commercial launch for the, the current licensing deals that you've signed?

Nina Webster: 22:49

Because we have what's called orphan drug designation, because it is a rare disease, we have a number of different incentives. Pricing is one of those incentives, but one of the other incentives is that we do have two interim analysis built into the study. 

The first of which we already announced, that was an interim analysis, Phase 3 interim analysis, that we are on track. We are seeing the drug performing better than placebo. 

The second analysis, is when we reach 144 patients at week 35, we take another snapshot at that point. If that data is compelling, we may have an opportunity to submit for a regulatory approval at that time. So it's a way of incentivising again, to get these products to patients who really have no other treatment options early. 

So that is expected at the moment on current timelines to mid 2025. The key thing to look out for for that is when we announce the 144th patient has been randomised and dosed because that officially starts the clock for the interim outcome that could, if, if, uh, compelling lead to an early approval.

Rachel Williamson: 23:56

Do either of these companies have a killer app for the type of kidney disease they're fighting to fix? 

Part of why they're so excited now is as Rohan said, regulators and governments are really starting to get behind the kidney. Partly it's because the winds of change are pushing policy makers into taking kidneys seriously. 

Join us in the next episode for a deep dive into what is driving the policy and regulatory landscape, that biotechs like PYC are benefiting from.