Introduction

Dicerna Pharmaceuticals (DRNA) is a small-cap ($980M) developing RNA interference (RNAi) based therapeutics for rare and/or chronic diseases affecting the kidney and liver.

The mechanism of RNAi was first described in the late 1990s by Drs. Andrew Fire and Craig Mello. In 2006, the Nobel Prize community acknowledged the paradigm-changing seminal concept by jointly awarding both scientists the 2006 Nobel Prize for Physiology or Medicine. Their mechanism of degrading mRNA from a specific gene proposed that:

RNA interference is activated when RNA molecules occur as double-stranded pairs in the cell. Double-stranded RNA activates biochemical machinery which degrades those mRNA molecules that carry a genetic code identical to that of the double-stranded RNA. When such mRNA molecules disappear, the corresponding gene is silenced and no protein of the encoded type is made.

Two decades following the seminal mechanistic discovery, the first RNAi based therapeutics, Onpattro (patisiran) by Alnylam Pharmaceuticals (ALNY) was approved by the FDA in 2018. To understand how competitive this technology could become, look no further than the 2017 legal tussle over RNAi trade secrets between Alnylam and Dicerna. Apparently, this issue has now been resolved with both sides claiming the usual "no wrongdoing".

Dicerna has created a proprietary RNAi technology platform, GalXC, "a next-generation RNAi-based therapies designed to silence disease-driving genes in the liver. GalXC-based therapies are processed by the Dicer enzyme, which is the natural initiation point for RNAi within the human cell. By using the Dicer enzyme as the entry point into the RNAi, we seek to optimize the activity of the RNAi pathway so that it operates in the most specific and potent fashion. Compounds produced via GalXC are intended to be broadly applicable across multiple therapeutic areas, including rare diseases, viral infectious diseases, chronic liver diseases, and cardiovascular diseases."

It has a diverse pipeline with drug candidates in preclinical studies and at different phases of clinical development. The most advanced pipeline, DCR-PHXC, a breakthrough drug designate, is in Phase 3 study for the Primary Hyperoxaluria, a potential rare end-stage kidney disease, which is characterized by the recurrent kidney and bladder stones. Other drug candidates are DCR-HBVS and DCR-A1AT for chronic hepatitis B infection and alpha-1 antitrypsin deficiency-associated (A1AT) liver disease, respectively.

Alpha-1 antitrypsin deficiency (A1AT) is a genetic disorder that affects the liver and lungs. A1AT is caused by a mutation in the SERPINA1 gene. Alpha-1 antitrypsin protein regulates the effects of neutrophil elastase, an enzyme released from white blood cells to fight infection. Neutrophil elastase can induce chronic uninhibited tissue breakdown in the lung alveoli if not tightly controlled by alpha-1 antitrypsin.

Abnormal alpha-1 antitrypsin can also accumulate in the liver causing damage. A1AT can present from birth to old age and is the most frequent cause of metabolic liver disease in pediatric patients and the second most common indication for liver transplantation after biliary atresia. Suggesting that Alpha-1 antitrypsin induces protective effects in the lungs and liver against damage. Exposure to tobacco smoke, chemicals, and dust has been proposed to impact the severity of A1AT.

NIH notes that:

10% of infants with A1AT develop liver disease, which often causes yellowing of the skin and whites of the eyes (jaundice). Approximately 15% of adults with A1AT develop liver damage (cirrhosis) due to the formation of scar tissue in the liver.

The disorder affects about 120,000 European individuals or 1 in 1,500 to 3,500 individuals with European ancestry with many more being undiagnosed, particularly people with a lung condition called chronic obstructive pulmonary disease.

Therapeutics: Four alpha-1 antitrypsin products derived from a human plasma Prolastin, Zemaira, Glassia, and Aralast are approved by the FDA as intravenous augmentation A1AT therapy, costing up to $100,000 annually per patient. Alternative strategies currently being investigated, includes new delivery strategies, the use of gene therapy or Induced pluripotent stem cells (iPSCs), and silencing RNA strategies.

In Q3/2019, DRNA announced:

Initiation of a multi-center Phase 1/2 trial of DCR-A1AT is expected in the third quarter of 2019. The proposed parallel-group, placebo-controlled study will evaluate the safety, tolerability, pharmacokinetics, and pharmacodynamics of DCR-A1AT in adult healthy volunteers (HVs) and patients with A1AT deficiency-associated liver disease.

At the end of Q2/2019, DRNA reported that cash and cash equivalents were $345.3M. DRNA perceives it has sufficient funds to execute current clinical trials and other operating expenses beyond 2020. DRNA has ongoing collaborative license agreements with Eli Lilly (LLY), Alexion (ALXN) and Boehringer Ingelheim International.

With 3 clinical-stage programs, several catalytic events are expected in 2020 and beyond.

RNAi-based therapeutics are high risk due to potential safety and tolerability signals. In 2016, ALNY halted further clinical development of Phase 3 drug candidate, revusiran, for treating a rare and fatal disorder called ATTR amyloidosis with cardiomyopathy, due to safety signals.

It has been proposed that the GalXC-Dicer enzyme RNAi platform invented by DRNA is designed to use the lowest possible dose whilst providing therapeutic efficacy and improved safety profile. Additional risks that could negatively impact the share price are negative data readout from clinical trials.

Institutional ownership currently stands at 82.35%, with 116 institutional holders accounting for 56,295,099 total shares. Analysts recommend a strong buy with a 12-month consensus price target of $22.25.

CEO & President Doug Fambrough on executing DRNA clinical and financial strategy:

The first aspect of the strategy is to go deep on select opportunities addressing a high unmet medical need with what we believe is a high probability of clinical and commercial success.

Our internal clinical pipeline reflects these choices including two rare diseases, primary hyperoxaluria and alpha-1 antitrypsin deficiency-associated liver disease, where we plan to drive development and commercialization either wholly or largely on our own and one prevalent disease, chronic hepatitis B virus infection, where we are seeking a development and commercialization partner, concomitant with Phase 1 proof-of-concept data.

The second aspect of the strategy is to realize the potential of our technology against all remaining targets through collaboration and discovery stage licensing with therapeutic area leaders. Our collaborations with Eli Lilly, Alexion and Boehringer Ingelheim reflect this aspect of our strategy. It is our expectation and plan that we will expand on both aspects of the strategy in coming quarters, both expanding our internal pipeline and expanding our circle of corporate collaborators, funding for much will help us drive the internal pipeline.

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Dicerna And DCR-A1AT In Alpha-1 Antitrypsin Deficiency-Associated Liver Disease - Seeking Alpha