In a tough market environment Dimerix has announced it has raised close to $9 million as it moves to advance its Phase 3 Focal Segmental Glomerulosclerosis (FSGS) clinical trial past first interim data.

Clinical stage biopharmaceutical company Dimerix (ASX:DXB) has announced it has raised  ~$8.7  million,  through  a  combination  of  an entitlement  offer  and convertible notes, which is a great outcome particularly given the current capital market environment.

DXB said it has received subscriptions for $5,205,960 under the rights issue with 65,074,494 new shares together with 65,074,746 free-attaching new options to be issued shortly.

The rights issue closed at 5pm (AEST) on May 29 with the company receiving subscriptions for $3,142,260 (39,278,252 new shares together with 39,278,496 free-attaching new options) from eligible shareholders, inclusive of shortfall subscriptions.

DXB said the maximum number of new shares and new options offered under the rights issue was 106,957,889 and accordingly the shortfall was 67,679,637 new shares and new options. The expiry date of both the short term and long term options are aligned with the first and second interim analysis endpoints, which could provide the company with funding right though to the final clinical endpoint.

Underwriter takes up some shortfall

Of the shortfall, the underwriter, including via sub-underwriters, subscribed for an aggregate of $2,063,699 (25,796,242 new shares together with 25,796,250 free-attaching new options) in accordance with the terms of the underwriting agreement.

DXB expects to issue 5,877,692 long term new options to sub-underwriters of the rights issue in the coming days.

The issue of long-term new options to related party sub-underwriters is subject to shareholder approval which will be sought at the general meeting on June 20.

As part of the rights issue capital raising initiative, DXB reserved the right to offer and issue the remaining 41,883,395 new shares and new options from the shortfall at its discretion on or before the date that is three months after the closing date (August 29).

Convertible securities agreement

On May 25, DXB issued 1,760,000 notes and 1,875,000 new shares to Mercer Street Global Opportunity Fund, LLC, a US-based investment fund managed by Mercer Street Capital Partners, for a subscription sum of $1.6 million under a convertible securities agreement (CSA).

A further 2,090,000 notes ($1.9 million subscription sum) and 11,363,636 long term new options will be issued to Mercer under the CSA subject to shareholder approval sought at the June 20 general meeting.

Fund to continue Phase 3 FSGS trial

Funds from the capital raise will be used to continue DXB’s Phase 3 Focal Segmental Glomerulosclerosis (FSGS) clinical trial past first interim data, including clinical, manufacturing, and partnering activities.

Recently US drug developer Travere announced that its FSGS candidate sparsentan had failed to meet its Phase 3 primary endpoint.

DXB CEO and managing director Dr Nina Webster said while she was deeply disappointed for FSGS patients who so desperately need treatment options, and for Travere in this outcome, it meant that DMX-200 now has the potential to be the first drug approved for the condition.

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.”

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 expects first data from its Phase 3 trial at the start of next calendar year.

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.