Dimerix is looking to raise $12 million to continue its phase 3 Focal Segmental Glomerulosclerosis (FSGS) clinical trial past first interim data.

Clinical stage biopharmaceutical company Dimerix (ASX:DXB) has announced a $12 million capital raise.

DXB said it is seeking to raise the funding through a combination of an entitlement offer and convertible notes, with an option for up to a further $8.5 million in convertible notes.

The entitlement offer is looking to raise up to ~$8.56 million through a partially underwritten non-renounceable entitlement offer to shareholders.

One new share will be issued for every three held by eligible shareholders on the record date of May 9 at an issue price of 8 cents/new share.

DXB said ~$4.06 million of the entitlement offer will be underwritten.

Furthermore, every two shares under the entitlement offer will be accompanied by two free-attaching options in total, including one short term new option and one long term new option.

The rights issue is partially underwritten by the lead manager and underwriter Bell Potter Securities.

DXB said there is commitment for full entitlement uptake and sub-underwriting of a portion of shortfall from substantial shareholder Peter Meurs along with CEO and managing director Dr Nina Webster (held by an associated entity) and non-executive director Dr Sonia Poli.

There have also been firm sub-underwriting commitments from international institutional and sophisticated investors.

Fund to continue Phase 3 FSGS trial

Funds raised will continue the company’s Phase 3 Focal Segmental Glomerulosclerosis (FSGS) clinical trial past first interim data, including clinical, manufacturing, and partnering activities.

DXB has entered into a convertible securities agreement with US-based investment fund Mercer Street Global Opportunity Fund for an initial tranche of $3.5 million, $1.9 million of which is subject to shareholder approval, and a further optional tranche of up to $8.5 million by mutual agreement.

Now the only FSGS asset in Phase 3 development

This week, US drug developer Travere announced that its candidate sparsentan had failed to meet its Phase 3 primary endpoint.

“We are deeply disappointed for FSGS patients who so desperately need treatment options, and for Travere in this outcome. However, this also means that DMX-200 now has the potential to be the first drug approved for FSGS,” said Webster.

She said DXB is targeting a very different mechanism of action to sparsentan, and that the DXB study design is quite different too.

“Travere ran what is called a comparator arm study, and this may have confounded their outcome,” she said.

“Instead, Dimerix is running a placebo controlled study.

“What this means is that Dimerix now has a very clear market as the only asset in Phase 3 for FSGS with no approved treatments.”

Webster said this may also increase the number of potential patients, not just in the event the product gets to market, but also in recruitment for the clinical study.

“All in all, this could be very favourable for the company,” she said.

Path to commercialisation

Making it to Phase 3 means the company has already shown the safety and efficacy of the drug, but it also means the probability of getting to market is much higher.

FSGS is an orphan indication (a rare disease or condition, and in the US is defined as affecting fewer than 200,000 people) for which the company already has orphan drug designation in US, Europe, and UK.

In 2021, kidney disease cost the US healthcare system $88 billion, with $55 billion of that in kidney failure and dialysis, which was the turning point to incentivise kidney disease treatments.

Previously trials in the space had to run to a hard renal end point, which was kidney failure. There was no incentive for pharmaceutical companies to develop products that could take decades to progress through clinical trials and require thousands of patients.

However, a change in the regulatory environment means instead of the hard end point of kidney failure, companies can use surrogate end points or biomarkers shortening the duration of studies.

DXB is expecting first data from its Phase 3 trial at the start  of next year.

Strong capital raise support to advance trial

Non-executive director Hugh Alsop said the number of international institutions sub-underwriting this raise reflects the quality and stage of the Dimerix assets.

Webster said the raise will help advance the Phase 3 FSGS clinical trial, currently being recruited globally, following global regulatory agencies feedback and proposed changes incorporated into the trial design.

“This raise puts us in a great position to continue to deliver on the strategic goal, including on the late-stage partnering negotiations,” she said.

“We look forward to reporting on our progress in due course.”

New experienced board director

DXB has also appointed a new board member Clinton Snow, who has nearly 20 years’ experience as a tech leader across engineering management, project delivery, risk management, and assurance.

Snow is currently a non-executive director of iCetana Limited (ASX:ICE) and provides advisory services to a family office with multiple Australian biotech investments.

He holds a Bachelor of Chemical Engineering (honours) and Bachelor of Commerce degree from The University of Melbourne.

This article was developed in collaboration with Dimerix, a Stockhead advertiser at the time of publishing.

 This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.