Dyne Therapeutics, Inc. (DYN) Earnings Call Transcript & Summary

All right. Good morning, everyone, and thanks for joining us at the Morgan Stanley Global Healthcare Conference. I'm Mike Ulz, one of the biotech analysts here. It's my pleasure to introduce the team from Dyne Therapeutics, including John Cox to my immediate left, President and CEO; as well as Erick Lucera, CFO on the far left. Just before we get started, I need to read a quick disclaimer. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representatives. And with that, maybe I can just hand it over to John to make a couple of sort of introductory comments for people that might not be familiar with the story.

Yes. Thank you, Mike, and we'll be making some forward-looking comments as well. Good to see you. So maybe I just mentioned about the company where we are today because it's really, it's an important moment in time for us as the company. We've been waiting to get to this moment, frankly, and a number of us joined the company because we wanted to build a pure-play neuromuscular company. And we're like right on the cusp of doing that. And I say on the cusp of doing that because we have 2 major programs right now, which I'm sure we'll talk about, DMD and DM1 that are in registrational cohorts, now the implication of that since they're an accelerated approval pathways, both of them is that we could be commercializing these products in 2027. In fact, DMD, we're planning for early 2027 and the commercial efficiencies across both programs is meaningful. And that means we could be really generating revenue soon. The other thing that's come together here recently is that we have been building intentionally a management team that would be able to not only raise capital, which Erick Lucera recently did, but could manage that capital, allocate the capital and also a management team that could generate revenue in the near term. That takes a particular phenotype of a leadership team. And I feel like we have built that and put that into place. And then the final point is that we've got this platform that is playing out exactly the way we had hoped it would play out. And I'd love to talk more about that, but it's led into not just 2 late-stage programs, but now we have programs in preclinical or first or IND-enabling studies that allow us to kind of build out a platform and a pipeline as we go forward. So now you've got this kind of full pure-play neuromuscular company that's completely integrated. So we're in a really, really good place. And we're kind of -- we're more than a little excited about the next 1.5 years.

So a lot to look forward to and maybe we could just start with the platform because that's sort of the base and what's driving all your discoveries here. So maybe talk a little bit about FORCE platform and why it's well set?

Yes, I'm happy to. So the FORCE platform is really the secret sauce of the company. And I would put it this way first that in this industry, there are these points in time where people overcome some major biotechnical hurdle. And then there's an explosion of therapeutics. Countless examples -- not countless, a few examples of that in our history. One of the big technical hurdles over the last 10 years has been how to deliver genetic medicines to tissue. People knew what the genetics were. Many of us worked on ASOs years ago for things like DM1, you could not get enough genetic medicine to the tissue and particularly to the tissues that matter. So in this case, you've got to get to the billions of muscle cells that matter and you need to get to the CNS. First-generation delivery technologies tended to focus on monoclonal antibodies targeting the transparent one receptor. And so mother nature, God has provided us with a perfect receptor for transferring payloads in that case, iron into cells. And scientists had figured out how to use a monoclonal to occupy that receptor and transfer a payload into a cell. Sometimes they design to the CNS, typically not getting to the CNS, but sometimes. The challenge has always been with that is that when you occupy that receptor, you block the iron transport and you see anemia, and that limits your ability to dose. What the scientists at Dyne had done was just really interesting. I mean what they had done is said, what if we designed a Fab, just an antibody fragment targeted a particular epitope of the transparent receptor. Don't occupy for any period of time to avoid that issue of anemia and allow you to transfer payload into cells efficiently. Would you be able to dose at a high level? And would you not only get to muscle cells but would you be able to get to the CNS. And our data not only in animals, but now in humans is suggesting that we're getting to muscle cells, quite definitely but also potentially even to the CNS. So it's kind of a step change with a next-generation platform and it's playing out in our clinical work.

Maybe we can switch into sort of your -- one of your programs DNY 101 (sic) [ DYNE-101 ] for DM1. And maybe to start there, just talk a little bit about why target DM1, what sort of makes it an attractive market opportunity?

First of all, DM1 is a -- it's a horrible disease affecting about 40,000 patients in the United States, maybe another 55,000 in Europe. So it's large for a rare disease. There is nothing for these patients. It's remarkable in many ways because the way that the disease works, it's -- we can get into it, but it comes down to a core spliceopathy in the nucleus that results in mis-splicing across many different genes. So you can end up with all kinds of different effects for different patients. Those effects can be something simple like expression of myotonia in the hand, not so clinically significant, but the ability to release your hand to things much more clinically meaningful, such as the ability -- such as your strength, the ability to walk, GI issues to CNS issues that affect a significant portion of those patients. So I characterize that because our platform, the fourth platform allows us to deliver a payload in ASO, which gets to the nucleus to address the core pathobiology of the splicing and at the same time, is using a Fab that allows you to get to the muscle and get to the CNS. So DM1 in some ways, our platform is just made for addressing the heterogeneity and the core biology of DM1.

Got you. That's a nice sort of segue into sort of what you're seeing in the clinic now from the ACHIEVE study. You've given us a couple of updates. So maybe just what are the key takeaways or what have you learned so far from that study?

Yes. So the ACHIEVE study has been a multi-ascending dose study in which we were really guided by taking biopsies and evaluating splicing correction to determine the dose. And ultimately, we determined that at 6.8 mg per kg, we started seeing the kind of broad effect that I just described on many features of the disease. And it was very exciting to see that. So some of those effects were a very simple measure called Video Hand Opening Time or vHOT, which is the ability to open your hand and middle finger to touch a table at a certain amount of time. We saw a 40% improvement on that particular feature. It's an early indicator of clinical effect of those things that are more meaningful. And so the things that are more meaningful are, for example, quantitative muscle testing, where you're testing upper limb, lower limb according to a standard set of measures. And we saw remarkably a 10% improvement at 6 months on strength. At 12 months, we saw a 20% improvement. That is a really meaningful improvement in muscle strength. And then we also looked at time function tests. So now you're trying to look at kind of how the muscles are all working together, things like 5 times sit to stand, 10-meter walk run, those improved significantly as well. And then the final feature that really got our attention was when you looked at patient-reported outcomes with a measure called MDHI, there are multiple scales. Six of the scales touch on CNS-related features. Those scales moved significantly. We saw roughly 40% improvement across multiple CNS-related scales. So that told us we're getting to muscle suggests that we may be getting to CNS and as I mentioned to you, the CNS effects in this disease affect a significant number of the patients and that becomes often the most debilitating aspect of life for them. So the data from the ACHIEVE multi-ascending dose trial really impressive set of data, and that's given us the confidence to kind of move forward into a registrational cohort 6.8 mg per kg.

Yes. Maybe talk about sort of the registrational cohort and you've made some fine-tuning on the strategy there. So maybe walk us through that a little bit.

Yes, we did. So when we started the registrational cohort, we started with using. Well, first of all, treating it as an accelerated approval pathway. And in that pathway, you can use either a molecular surrogate end point as a predictor or you can use what's called an intermediate clinical endpoint, which may not be clinically meaningful, but is an early indicator of some response. We chose splicing correction as our molecular surrogate endpoint and we started moving with that because it's the best indicator of getting to the core pathobiology and that you're addressing the heterogeneity of the disease. So we have moved forward with that. When we talk to the FDA most recently in a Type C meeting, their reply to us on that was that using a splicing index was a novel new endpoint. It was going to take more time to validate. The alternative that we proposed was and I'm glad the team was able to take the data from the MAD study and say, well, let's look at an alternative. That alternative was using vHOT, which I just described as an intermediate clinical endpoint. And so we switched to that intermediate clinical endpoint. We do not have to go back in time. It was amendment to our protocol. It was certainly a meaningful shift for us. It was a shift for our investors because we were all in on the splicing. So we recognize that. The positive is that we were able to pragmatically adjust and move to vHOT and that's what we're doing as we go forward. And so we have a registrational cohort now that has increased the number to 60 patients in that registrational cohort for the purpose of having stat sig on vHOT. We'll have stat sig on splicing correction. And with that number, we think we will have very good trends on a number of other clinically meaningful measures.

Makes sense. And you spoke to the FDA and then you filed the protocol amendment? Have you gotten feedback or acceptance from the FDA there? Are there any next steps around that at all? Or is that all done?

We filed the amendment -- or we filed the protocol with the FDA. There's no requirement for the FDA to respond on that type of protocol. So we don't have additional updates from kind of a regulatory play by play. I will tell you that it is all systems go. It is execution. That's what we're doing. And that registrational cohort remember is just one part of our overall regulatory plan because the second piece of that is moving into a confirmatory trial, which we have been telling people will be Q1 of next year, so very soon.

And maybe just back to the registrational cohort. You have data mid mid-next year and for approval? Is it just hitting the primary endpoint on vHOT? Or are these other endpoints important to you to sort of build the story or how do you think about that?

So for accelerated approval, stat sig on vHOT will be needed. We're confident about the stat sig also on splicing. And I think that will be certainly complementary and important to the FDA. And then beyond that for accelerated approval, what you need are reasonable trends that you can see. And so you've seen our multi-ascending dose data. We have trends that are -- you don't have to squint to see them. They're very strong trends. So we anticipate with 60 patients, we would see that. And I'll just throw in just one other piece that I have not mentioned is that after we met with the FDA in the Type C meeting, they gave us breakthrough designation.

Got you. And I guess one question we get sometimes from investors is your competitors using vHOT as a primary endpoint as well. They have more patients than you do in your sort of registrational cohort. And so is there any risk around that or not, I guess?

So listen, this market is, one, it's a new market. Nobody has had a drug approved. We're taking one approach to the regulatory pathway. Others are taking another approach. So we're taking our particular approach. I think it's tough to compare the 2, but I'll try a bit. First of all, we have -- keep in mind, when we talk about numbers of patients, we have 60 patients in the registrational cohort. It's 3:1 drug to placebo, so it's a significant number of subjects on drug. It's not a 75 on drug, 75 on placebo. Then we have the multi-ascending dose portion of that study, which had 56 patients. Those patients had all been dose escalated or the vast, vast majority, up to the 6.8 million per kg, and they had been continuing in the trial. And that becomes an entire substantive set of data. So you put all of that together, 50-plus patients, the number of patients we have in the registration cohort. This isn't a small trial. This is a 100-patient rare disease trial for accelerated approval. And I think it puts us in a position to put -- to provide data that is differentiated at that point. And it will be differentiated for sure on splicing because nobody's got the splicing data that we're going to be showing as well as all of the other pieces that I just described.

Maybe talk a little bit about how enrollment is going in the expansion cohort versus your expectations?

Yes. I just -- so I would point back to I believe it was end of Q2 was when we provided our last guidance or not very long ago. We're not providing kind of intra-quarter kind of progress updates or commentary. We are moving with it. And as I mentioned, Q1 is our chance to be moving into a Phase III as well. So all of this is moving forward.

You just mentioned the confirmatory study to start in the first quarter of next year. Maybe just talk a little bit about sort of your thoughts on the study design and kind of what that could look like in terms of endpoints, et cetera.

Well, we're excited about it for a number of reasons. I'll highlight one, and that is that. So as I mentioned with the accelerated approval trial, I think we're going to have a fairly robust set of data that's going to show that when you get splicing correction at the levels we were getting at 6.8 mg per kg that you start seeing not just myotonia improvement, you start seeing clinically meaningful improvement across the board. That will help us differentiate with the accelerated approval product, label, et cetera. That's what we believe. The chance to further differentiate as a Phase III. And in the Phase III, we are not planning to make this a myotonia vHOT trial. We want it to be about what is really clinically meaningful and important to patients. So if you -- when you look at the data that we presented so far, I think our CMO, Doug Kerr and his team have multiple options. That can be 5x sit to stand like meaningful time function test. The FDA cares about those things. 10-meter walk run. These are the types of endpoints that we can evaluate and include in our phase III. And then I think we have a chance to further evaluate things like MDHI and CNS subscales and to do even more exploratory work on the CNS side. So I think it's going to be a really defining kind of Phase III for the field.

In terms of timing of the endpoints, is 12 months a reasonable expectation? Or is it -- could it be 6 months?

We haven't stated that yet. We're still -- so with the breakthrough designation, we're having the conversations with regulators, U.S., global, but we will let people know when that time comes, what that trial design before we start the trial design, what that will look like.

Makes sense. And maybe a couple of questions just on the competitor front. Obviously, there's one competitor out there, they're in Phase III and points of differentiation. You've mentioned some already like splicing, anything else come in mind?

Yes. So I guess from a differentiation standpoint, I tried to put it into a couple of categories. I think splicing is certainly important feature. I also think that the CNS is incredibly important. And I don't believe others are getting to the CNS. In fact, I think they argue that they don't get to CNS. And if you talk to any clinician, the CNS piece is really massive and important. And then the other piece is around safety. So our Fab is designed to allow us to get to doses that are important for payload delivery, high dose is 6.8 mg per kg without seeing the kind of persistent anemia that people see. And I'll just point out that for these patients, one of the CNS aspects and the physical aspects is fatigue. You add anemia on top of fatigue that's a problem. So I think in those kind of 3 areas and the splicing ultimately will result in, I believe, it will result in differential kind of functional benefit as well. So we have an opportunity to be really differentiated as the data develops.

Makes sense. And another question we get is just implications of having sort of an accelerated approval when a competitor may have sort of a full approval at the same time and how you think about that?

We have -- we brought in a commercial leader and team. They've been obviously talking to payers. We've talked to clinicians. Having an accelerated approval label is not a deficit. If you've got meaningful data associated with that, and I think I hope I've made the case that we ought to, then you can have a label that is describing that benefit, and we're going to be presenting that data and making that public. Clinicians aren't concerned about whether you call it what pathway you call it. They want to know what does it do and what the data is. And the same thing with payers that we present to the payers that we've got an approved drug, and we should be in -- we should not be in some sort of disadvantage.

Makes sense.

It comes down to the data.

I guess just for the last question on DM1 program as you progress to sort of starting the Phase III 1Q of next year and data 2Q? Or are there any other sort of updates we should be paying attention to from now until mid next year.

For DM1?

Yes.

Well, so what we've been describing, I'll describe this across maybe both programs. I mean we've got what we call kind of our 221 program, our approach and milestones. And we have 2 programs that we will have top line data. So top line data for DMD end of this year, and then we have top line data midyear next year for DM1. Beyond that, we're going to have 2 BLAs. And then by early '27, we should be launching DMD. So that's kind of the 221. And we've been highlighting that because based upon the work of Erick, capital raised recently and really providing kind of the overall discipline around capital management, looking at our budgets and so on. We feel getting out to that time frame takes us out to -- well, actually, it takes us up to Q3 of [ 2027 ] from the cash runway. So now you're generating potentially revenue in early '27. So there's -- that's a pretty good set of updates for people.

You guys will be busy for sure.

Yes.

Maybe we can dig into just sort of the DMD program and 251 and maybe just start, let's talk about sort of unmet need and sort of market opportunity there.

Yes. So DMD, I'm glad you're raising on that one. I know DMD has been -- is in the news a lot lately, mostly over gene therapy and a lot over safety. I would just comment that even if you set that kind of stuff aside, efficacy is what's missing in this field. I mean for those that don't really watch the progression of this disease, it is devastating. I mean, by the time the boys are 8, 9 years old, they are declining rapidly. They've been kind of improving physically slowly, and then it is a steep decline to the point that they can't get off the floor. By the time, they're 11, 12 years old in a wheelchair and by the time of 24, 25 years old, they are dying. It's just inevitable and is terrible. And nothing on the market is significantly changing that, nothing. So the unmet need is very, very meaningful. Now we're focused on the most prevalent version of that mutation, Exon 51, which represents about 13% of the population and roughly 1,600 boys in the United States. Now of those, to describe the market a little in more detail, that submarket is the only, I guess, you could call a standard of care is eteplirsen, which is a naked PMO. We're obviously targeting our PMO. And those patients drop off. There's maybe 400 or 500 on drug. There's probably several hundred more that quit and there's another 400 or 500 more that have at best, maybe they take some steroids. So they're underserved. If they're taking etep, they're getting dosed every week with an IV ports, infections, all of that, very difficult. And we should talk about what's different about ours because if you see that early data at 20 mg per kg and 10 mg per kg. We recently showed that at 6 months, 12 months, even out to 18 months, you're seeing sustained improvement, not slowing of decline, sustained improvement off of baseline. Now it's a small number of patients and patient numbers, which is why we're conducting a registration cohort but I don't think anybody has presented data that is improvement of baseline. Everybody is showing data about how they slow the decline, a little better than somebody else. We're about functional improvement and it looks like our product is enabling us to do that, and we hope we can demonstrate that in the next number of months.

Yes. So maybe just talk a little bit about you expect to provide the sort of registrational cohort data by the end of this year and kind of what's the focus there? And what's your level of confidence?

So that is also a program where we're pursuing accelerated approval, and that's well trodden is precedent for it. So we feel quite confident about that path. The bar for accelerated approval is well established as improvement in dystrophin. That's the biomarker. That's what's been done. We're -- we feel -- we don't be overconfident, but we feel quite confident on that because what we saw in our data is that we got up to about 8.7% dystrophin adjusted for muscle content at just 6 months. Dystrophin has a 4-month half-life. So that should keep improving. And keep in mind, Exon 51 is the toughest to skip. And these patients typically have at best 0.5% dystrophin naturally. So it's a really meaningful improvement. A small improvement should get it approved and where we are today feels well above the bar. Beyond that, we want to take it further, and we want to see some clinical effect. So we had seen 10-meter walk run time to rise stride velocity, 95th centile. All these different measures had actually improved, as I just described over time. So hopefully, we'll see very strong trends with that. And that would be incredibly meaningful for the community.

You mentioned sort of continued confidence in the accelerated path. Just curious if you've had any interactions with the FDA just given sort of the new leadership and just any issues there?

We do have confidence in the path. So I'll remind you that we also recently received breakthrough designation for DMD. So I think it's a good signal for sure from the FDA. We had talked to the FDA some time ago, and they were clear that the accelerated path was open to us with dystrophin as the biomarker. I did attend one of these sessions with Dr. Makary and Dr. Tidmarsh, where they were kind of CEO talking, listening conversations. I specifically raised the question about accelerated approval. And they were very, very clear that they were supportive of accelerated approval. Dr. Tidmarsh had actually sponsored an accelerated approval drug at one point in his career that he touted in a positive way. But they were also clear that they wanted to see a surrogate endpoint that showed some improvement, and they also want to see some trends and function, and they want to know you're going to do a confirmatory trial. We're doing all those. We're going to -- we will check off all those boxes as we plan anyway.

Makes sense. Since you could be in a position to maybe launch this maybe end of next year, maybe talk a little bit about sort of plans there, where you're at and sort of preparing ahead of that?

So we hired a commercial leader, Johanna Friedl-Naderer, who had launched SPINRAZA globally, launched many drugs and rare disease drugs very, very successfully in preparation for this kind of moment. So we have been prepared. I will say that -- I think people are starting to realize that commercial opportunity is real and could be relatively rapid switching over from the existing therapies of this therapy. This community is looking and clinicians are looking for a next-generation therapy. Gene therapy, the enthusiasm is clearly waned. And the time is really right for us, and we are the one company really positioned well in Exon 51 to capture some commercial opportunities.

Are there other Exon 51 skippers in development you are aware?

There may be 1 or 2. I am not seeing anything that has the kind of data that we presented or an approach or an MOA or a targeting mechanism that compares to where we are. So I think we're really uniquely positioned in this way.

And just given the platform and your -- the data you're seeing in Exon 51. How are you thinking about other potential Exon skippers and thoughts about moving those forward in time lines maybe?

Listen, building a franchise is one exciting. In fact, maybe there's an opportunity to give Erick a chance to pipe in here because he -- when he came into the company, this is what he started talking to me about.

Yes. Thanks, John. I would say, as I was doing my due diligence, I sort of looked at the investment thesis that was out there, and I really felt that the DMD part of the story was just not getting the attention that it deserved. When you think about the Exon 51 being only 13% of the total patients, there's another 4 Exons, which we already have the DCs for which are small changes, but everything else is basically the same, which can get us up to 40-odd percent of the total DMD market. So my thought as a former investor, is this is really a pipeline and a product or we can have multiple product launches. And with the basket trial type designation that the FDA is talking about, there really is an opportunity for us in the coming years to build these out.

Maybe just talk a little bit about just the commercial opportunity there, but also sort of leveraging that for DM1. Are there synergies there that could sort of be helpful?

Yes. I mean one of the reasons that I had come to the company was I feel that we have the potential for 2 or 3 if you include FSHD, 3 muscle products all targeting the same centers, doctors or maybe some differences here and there, but you can really have that prototypical specialty pharma, rare disease, capital-efficient sales force that I think gives us a differentiated opportunity to be a sustainable organization.

Makes sense. And we got 2 minutes left. So maybe just last question, just FSHD and just remind us where you are with that program and next steps.

So FSHD, we've been an IND-enabling efforts right now. As I've said before, we are -- I think in FSHD is just a perfect market for our technology similar in the size to DM1. We are using an siRNA in that case. I think it's appropriate. I will just say we haven't given some guidance on dates yet, but we will. We're very serious about it. We've been spending time really optimizing that molecule for the unique aspects of that disease. And one of the unique aspects of that disease is that DUX4 suppression is variable. It fluctuates. It's not a constant. And so that lends itself to getting the dose right. And I think we have an opportunity to really optimize with our technology, the amount of payload and the time it is there and in the cell to keep that volatility addressed. So we're focused on that. We're focused on particular safety and off-target aspects that you could have with that. Our technology is just, I think, perfect for it. So we're pursuing it. We're very serious about it. And as Erick said, it fits right into our neuromuscular kind of commercial structure.

Okay. Great. We're just about out of time. So a lot to look forward to. Appreciate your time, John and Erick, and thanks so much.

Thank you, Mike.

Thank you, Mike, and thanks for the support.