Dimerix’s choice: do they partner or go it alone?

Special Report: With results from the first of three clinical trials set to come in this year, shareholders are asking: is it smart for Dimerix to licence its drug candidates for the final stages, or go it alone?

As biotech Dimerix (ASX:DXB) reaches the first of three key clinical trial result deadlines, shareholder gossip is turning to a key topic: will it find a partner to help it over the final hurdle, or will it finish the race alone and retain all of the winnings for itself?

The key here, says chief Nina Webster, is that the infrastructure and experience already existing within the company to run large scale clinical trials means they are in the privileged position of having a choice.

With the company recently announcing the last patient having completed its dosing of DMX-200 and all critical data to determine the efficacy of the drug now collected, results from a Phase 2a study of Dimerix’s drug candidate DMX-200 in Focal Segmental Glomerulosclerosis (FSGS) are due by the end of July.

Dimerix raised $5.8m in June after DMX-200 was chosen to be part of a global World Health Organisation (WHO) funded study for COVID19 treatments, leaving it with $7.8m in the bank at the end of the month.

“Dimerix has all of the key infrastructure capability, core competencies and resources to run and successfully deliver on a Phase 3 program for FSGS,” Webster says.

“Furthermore, we confirmed with the US federal Drug Administration (FDA) in a meeting at the end of 2019 that the Phase 3 will be a single study eligible for an accelerated endpoint approval based on proteinuria reduction, which is well within the company’s capabilities.”

Accelerated endpoint approval is typically available for drugs with orphan status, meaning they are for conditions that are very rare and hard to treat. It means that halfway through the study, if results around improved proteinuria are positive, Dimerix will be able to start marketing the drug to patients while simultaneously completing the trial.

Patients in the FSGS trial and for a diabetic kidney disease study also using DMX-200 have already been allowed by the Australia drug regulator to stay on the treatment through the Special Access Scheme, demonstrating some physician confidence in its benefit to patients.

The right time, the right terms

Being able to choose whether to partner or not is a privileged position to be in and means Dimerix doesn’t need to jump at just any offer on the table, Webster says.

“We will do what’s right and in the best interest of the shareholder. There are pros and cons to both pathways and it will depend on whether we can achieve the right terms and the right timing,” she said.

She cautions that if they do choose to couple up, shareholders need to remember that licence deals typically take between six and 18 months to finish.

As a result, Dimerix will still need to be planning and potentially putting its Phase 3 FSGS trial in motion in parallel with such licensing negotiations.

“Deals don’t just happen the day after results are announced. If we want to remain a frontrunner in FSGS, it means moving ahead with the Phase 3 regardless so the product isn’t devalued by a delay,” she said.

“Then there is the ethical side. There is no currently approved therapy for FSGS, so if we delay the program while concluding a transaction with a partner we delay a potential treatment for people desperately in need.”

Pros and cons

There are advantages and disadvantages to finding a partner to help fund and move a drug towards commercialisation, or conversely for a company to do it by itself.

“An ideal partner is one that has capabilities that you don’t have,” Webster said.

“But if you can go it alone successfully, the rewards are exponential for companies which are capable of running a large-scale study and have the infrastructure and the resources to take a drug right through to marketing approval.”

“You have to be confident you have the ability to deliver, which Dimerix does.”

Webster also agrees that partnering is a sound prospect under the right conditions, though.

Partnering early can be a big advantage, as a partner can provide ongoing advice as to what is possible to sell, as well as reducing the risk to the biotech. For example, a drug that needs to be taken three times a day is a harder sell than once or twice a day, so an early reformulation to fit that mould early is easier and cheaper than doing it later.

Small pre-commercial biotechs are often lacking sales and marketing infrastructure for approved drugs; partnering can open physicians’ doors in countries that biotech would never have been able to reach, and ideally they’d have a portfolio of complementary drugs with nothing that will compete directly.

Webster says, as a general comment for the sector, an additional consideration here is whether to go with a multinational pharmaceutical company which can open the doors to the world but where your drug is likely to “just be another number on a spreadsheet”, or whether to go with one or more territory-limited companies which have smaller geographical reach or portfolios but where your product will be prioritised. There are pros and cons to both approaches.

For biotechs without the cash or capabilities to carry a drug candidate through to marketing approval, a partner will need take on the funding and remaining development risk, which usually comes at a cost, meaning the value of the transaction can be significantly discounted to account for this risk the partner takes on. Partnering later essentially de-risks the development program for the partner, therefore drives up the value.

Importantly, a good partner will have proven capabilities around development and successfully shepherding submissions through the final regulatory process as well as full sales and marketing capabilities.

Webster says there are significant pros and cons for Dimerix when it comes to either partnering, or going it alone, but having the choice is key.

Luckily, the company is in a sweet spot of being able to choose.

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.