During the pandemic, Dimerix (DXB: $0.17) was very pleased to have been able to complete two Phase II kidney disease studies. The company has now moved to a Phase III program in FSGS (kidney disease) involving 75 sites spread across 12 countries, including in the US where the company recently gained FDA approval (IND) to commence its study there as well. The first patient was treated in this study this week.

Dimerix CEO Nina Webster said that sclerotic kidney disease is a progressive three mechanism cycle that results in an acceleration of the disease as it progresses to end stage kidney failure. The drugs currently on the market all focus on the first mechanism of this disease by reducing hypertension across the bloodstream.

Dimerix's compound, DMX200, works on the second mechanism of disease, reducing inflammation in the kidneys. However only blocking one of these mechanisms allows upregulation via the other mechanism that is not blocked. In this way, blocking both pathways of disease provides more benefit than just the of sum of the parts according to Webster.

Webster said that the drugs that work on the first mechanism have been on the market since the early 1990s, which was the last real pharmaceutical innovation in this field, other than in the last two years.

Webster provided a summary of all the licensing delas completed during the pandemic in the kidney drug therapeutics field (see presentation on the Bioshares or ASX websites), highlighting that there is considerable commercial activity in this field now (10 major commercial deals since November 2020). One transaction of particular relevance was the deal between Travere Therapeutics and Vifor Pharma (being acquired by CSL) for US$845 million for European rights alone to its drug Sparsentan. This is of relevance because Sparsentan is also being developed for the treatment of FSGS and is at the Phase III stage of development.

There have also been six major M&A deals in the last two years in the kidney disease therapeutic space, the most significant being the bid by CSL for Vifor Pharma for US$11.2 billion.

So why is there suddenly so much activity in the kidney disease space now? Webster said that historically incentive programs in this field were lacking as well as a deficiency in public policy for this disease space. In 2018 the EMA and the FDA held workshops to determine how these barriers could be addressed.

In the US, the level of disease is remarkably high, with 40 million adults with kidney disease. "This is a huge number," said Webster. The annual cost to the US healthcare system is US$88 billion, of which US$55 billion is for assisting people with end stage renal failure. Webster said the dilemma then is how to prevent patients moving to end stage care (renal dialysis).

In 2019 a White House executive order was released to encourage more companies to develop therapies to prevent or slow the progression of this disease.

The 2018 regulatory workshops investigated the potential introduction of surrogate endpoints to accelerate drug development in the field. In 2019 the FDA published that it would accept surrogate endpoints, such as proteinurea and GFR (glomerular filtration rate) in clinical studies for certain conditions.

This was supported the following year by a number of publications that confirmed the direct link between proteinurea and kidney survival in FSGS (as the kidney fails an increasing amount of protein is leaked out through the kidney into the urine).

And in 2021 the FDA confirmed this change through the approval of the first kidney drug based on proteinurea levels in a rare kidney disease. If the endpoint is kidney failure then studies would have taken five to 10 years to complete according to Webster. But now these trials can be conducted in one to two years.

Webster said the timing was perfect for Dimerix which has moved into its Phase III program in FSGS this year.

FSGS is a severe condition that causes end stage kidney diseases on average five years after diagnosis. Even in patients who receive a transplant, FSGS reoccurs in around 40% of patients. There are currently no approved drugs for this disease said Webster.

The reason that Dimerix has moved into a major Phase III study is that in its Phase II study, 86% of patients experienced a benefit from DMX200 compared to placebo.

Novel Capital Raise Structure
To fund its Phase III program, Dimerix conduced a novel capital raise last year. The first step was a placement and SPP, which raised $24 million (at $0.20 per share). However, the structure included options (one for two) at a 100% share price premium to the raise ($0.40 per share). Those options will be activated by an accelerated trigger event. That trigger is the release of interim results, that if positive, will allow for funding of the second part of the study, de-risking the second half of the raise. Webster said that this 'accelerated trigger event (not date)' has never been seen before in biotech, with Webster having seen the concept previously in raises conducted by banks.

The Phase III design structure has three analysis endpoints, the first of which is the trigger event for activation of the options. This is an analysis of the first 72 patients treated (for 35 weeks) to confirm the same benefit seen in the Phase II study, which the company expects to see, measuring proteinurea.

Part two recruits a further 72 patients treated also for 35 weeks. It will then use the results from those 144 patients and submit for accelerated approval with the FDA (with the surrogate marker of proteinurea) and bring the drug to market. Whilst on market, the study will continue until 286 patients are enrolled and all have been treated for a minimum 35 weeks. That is expected to take two years (104 weeks). The final analysis will use filtration rate through the kidneys (eGFR) as the final endpoint.

Path to Market
At this point Dimerix does not intend to bring DMX200 to market on its own but will seek a partner. However, it needs to be the right deal stressed Webster with the company currently funded to progress its Phase III FSGS program.

In response to questions, Webster said that one of the benefits at the moment is that Sparsentan has finished its Phase III FSGS trial with no other Phase III global programs underway in FSGS. Sparsentan is an angiotensin receptor blocker (ARB), similar to other drugs on the market. Given FSGS is a progressive disease, improved therapies are always needed with DMX200 delivering the same benefit with Sparsentan or any other ARB therapies. Current ARB drugs only slow down disease progression by around two years.

Bioshares recommendation: Speculative Buy Class A

 

Disclaimer:
Information contained in this newsletter is not a complete analysis of every material fact respecting any company, industry or security. The opinions and estimates herein expressed represent the current judgement of the publisher and are subject to change. Blake Industry and Market Analysis Pty Ltd (BIMA) and any of their associates, officers or staff may have interests in securities referred to herein (Corporations Law s.849). Details contained herein have been prepared for general circulation and do not have regard to any person’s or company’s investment objectives, financial situation and particular needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without consulting their investment adviser (Corporations Law s.851). The persons involved in or responsible for the preparation and publication of this report believe the information herein is accurate but no warranty of accuracy is given and persons seeking to rely on information provided herein should make their own independent enquiries. Details contained herein have been issued on the basis they are only for the particular person or company to whom they have been provided by Blake Industry and Market Analysis Pty Ltd. The Directors and/or associates declare interests in the following ASX Healthcare and Biotechnology sector securities: Analyst MP: ACR,CGS, CYC, IMM, OPT,CUV,MX1,PAB, PXS,RNO,SOM. These interests can change at any time and are not additional recommendations. Holdings in stocks valued at less than $100 are not disclosed.