DICE Therapeutics: Moving Things Along Nicely (NASDAQ:DICE)

DICE Therapeutics (NASDAQ:DICE) is a small molecule therapeutic developer I covered briefly last year when it IPO-ed. The stock went up 70% recently after posting positive phase 1 data from its lead candidate DC-806 in psoriasis.

In this phase 1 trial, DC-806, an IL-17 agonist, was given at 800mg BID to a high dose group of 8 patients and 200mg BID to a low dose group of 13 patients and was tested against a placebo group of 11 patients. 43.7% of the high dose group versus 13.3% in the placebo group saw a mean percentage reduction in Psoriasis Area and Severity Index from baseline. This had an exploratory p-value of 0.0008. The drug was also well-tolerated, with an excellent safety profile. There were no serious adverse events, dose-limiting toxicities, discontinuations, or liver enzymes increases harmful to patients.

DC-806 is expected to advance into a Phase 2b clinical trial in the first half of 2023. Other programs are early stage, with a proof of concept readout coming for next candidate DC-853 next year. All programs are self owned.

“We are extremely excited by the overall clinical profile of DC-806 and clear proof-of-concept in psoriasis in this Phase 1 clinical trial, which we believe is the first ever clinical demonstration of direct inhibition of a cytokine with a small molecule,” said Kevin Judice, Ph.D., CEO of DICE Therapeutics. “We believe these data not only support further development of DC-806 as a potential best-in-class oral therapy for psoriasis, but also may unlock additional IL-17-mediated disease indications given DC-806’s excellent safety profile, strong PK data, and robust, dose-dependent target engagement. More broadly, we believe these data validate our DELSCAPE platform as we work to advance more oral small molecule therapeutics to address other validated protein-protein interaction targets in immunology and other therapeutic areas.”

DELSCAPE is the company’s platform for developing therapeutics. DEL stands for DNA encoded libraries. According to the company, DELSCAPE “is designed to discover selective oral small molecules with the potential to modulate protein-protein interactions (PPIs) as effectively as systemic biologics.”

Psoriasis is a differentiated market. There are many approved therapies available for the last almost 5 decades. There are two approved antibody therapeutics, COSENTYX (secukinumab), marketed by Novartis, and TALTZ (ixekizumab), marketed by Eli Lilly. Both are approved for the treatment of psoriasis, and together generated approximately $6.9 billion in worldwide sales in 2021. However, none of these is an oral small molecule. For a chronic ailment like psoriasis, biologic is not the most suitable therapeutic.

The company provides an interesting example of the success of an efficacy-wise inferior oral treatment:

In psoriasis, results from pivotal trials for COSENTYX and TALTZ show therapeutic benefits that are approximately double those shown in the pivotal trials for apremilast, an oral phosphodiesterase 4 (PDE4) inhibitor marketed as OTEZLA by Amgen. Despite its inferior therapeutic benefit, OTEZLA generated sales of $2.2 billion in 2021, primarily due to the convenience of its oral administration for patients and clinicians.

If therapeutically inferior oral therapies are able to produce revenues, Dice’s goal is to produce oral therapies that are at least equal to the approved biologics. According to the company, preclinical studies have shown “DC-806 matches Cosentyx inhibition of human IL-17 bioactivity in vitro.” If it is successful in a larger trial in humans, Dice will have opened up a very attractive market for it.

Financials

DICE has a market cap of $1.66bn and a cash balance of $303mn. The company just made a $300mn offering after the positive data. Research and development expenses were $13.4 million for the first quarter of 2022, while General and administrative expenses were $5.5 million. At that rate, and even accounting for higher expenses due to later stage trials, the company has adequate cash to last it many quarters.

The company has patents covering DC-806 that have a coverage up to 2040.

Bottomline

DICE is an interesting discovery in the pharma world. While data is too early stage to merit a solid position, this stock warrants a close consideration over the next couple of years in order to plan a position. However, right now, the time may not be right because the stock has soared extremely high in the last few weeks.

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