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Dicerna Snags $60M as RNAi Heats Up Again

Xconomy Boston — 

Alnylam Pharmaceuticals (NASDAQ: ALNY) has spent the last couple of years amassing clinical trial evidence it needs to show that RNA interference just might work against diseases that can’t be treated by conventional pills or protein drugs. And Alnylam’s rising tide is apparently helping lift at least one more RNAi boat.

Watertown, MA-based Dicerna Pharmaceuticals, which has its own proprietary approach to silencing disease-related genes through RNAi, is announcing today it has raised $60 million in a Series C round of venture financing.

The round was led by RA Capital, one of several new names to join Dicerna’s investor group along with Brookside Capital, Deerfield, and Omega Funds—firms better known for their investments in public companies. All five of Dicerna’s previous shareholders contributed to the round as well: Abingworth Management, Domain Associates, Oxford Bioscience Partners, Skyline Ventures, and SR One (the VC arm of GlaxoSmithKline). RA Capital partner Peter Kolchinsky has joined Dicerna’s board of directors as part of the investment.

The cash, which now gives Dicerna $110 million in raised venture funds to date, should give the company enough money to wrap up its preclinical work and bring the first of its RNAi drugs into clinical trials. CEO Doug Fambrough expects Dicerna to file its first investigational drug application around the end of the year, and begin dosing human patients in its first trial in the first quarter of 2014. Dicerna expects to bring “multiple” programs into the clinic with the cash, which Fambrough says will take the company all the way into the second half of 2016.

“It’s a long runway,” he says. “It shows that we have demonstrated, on a preclinical basis, that we have things that are likely to work in people, and that we have been able to address the challenges—particularly the challenges of delivery for RNAi—effectively.”

Like other companies in the RNAi space, Dicerna is creating drugs that are designed to hit a disease at its roots by engineering RNA molecules that shut down the production of specific disease-causing proteins. Dicerna, however, does this in its own differentiated way. Rather than engineering small RNAi molecules in the way that, say, Alnylam does, Dicerna makes them a little bit longer, which enables them to act a step earlier in the gene-silencing process, and thus potentially be more potent and last longer in the body. This, in turn, could mean that Dicerna could give its drugs in lower doses, produce them for less money, and administer them with fewer shots.

Even so, Dicerna has yet to make the big step from promising research-based company to a true clinical-stage biotech. Today’s news represents the first time Dicerna has spoken publicly about its progress in close to three years. As Fambrough says, that wasn’t by design. In 2010, the RNAi field was floundering, bedeviled by longstanding problems in effectively delivering those drugs to the targets they’re intended to hit. Skepticism in the RNAi field was at an all-time high when Roche—which had previously placed a huge bet on Alnylam’s RNAi work— walked away from the field in November 2010.

“We just went quiet for a couple of years while everyone hated RNAi,” Fambrough says. “We had money in the bank, we knew what we were doing, and we had reasons to think we were on the right track.”

So what does Dicerna have to show for it? Since then, Fambrough says the company has fine-tuned its method of delivering its RNA-based drugs, and identified the types of targets it will go after. It now has two focuses as a company: oncology, and orphan diseases caused by genetically-defined targets in the liver (Fambrough declined to specify which ones they are, but says that there are no effective treatments for them). And it has been perfecting a lipid nanoparticle that it will use to shepherd its drugs to solid tumors.

“[We’ve been] really optimizing delivery both to the liver and to tumors in a way that [makes for] a true pharmaceutical product,” he says. “It’s consistently manufacturable at scale. It has an excellent toxicity profile. It has great activity.”

Along the way, it didn’t hurt that Alnylam’s recent success has refueled RNAi discovery. Alnylam has shown signs in early clinical trials that it might not only be able to use an RNA-based drug to help combat a rare disease known as transthyretin amyloidosis, but do it with an injection just under the skin. Its stock has skyrocketed in the process.

“I think indirectly it had to have helped [with the financing],” Fambrough says of Alnylam’s turnaround. “The visibility of Alnylam, and the quality of their data has helped set the stage for our financing. This is part of a broader recognition that RNAi can be made to work, and it can be made to work in humans.”

In oncology, Dicerna has been developing one drug designed to hit the Myc gene, which, while well-known and mutated in many forms of cancer, is currently undruggable—it can’t be hit by either small molecules or antibodies. Through a partnership with Japan-based Kyowa Hakko Kirin, Dicerna has its sights set on a similarly familiar, yet untouchable target, the KRAS gene. Though KHK got the rights to the drug as part of the deal, Dicerna could exercise an option to retain 50 percent of the U.S. rights, according to Fambrough.

Dicerna is inclined to find partners to help share the cost of developing cancer drugs, but it intends to keep at least half of the U.S. commercial rights, Fambrough says. Dicerna’s plan is to retain full ownership of its RNAi drugs “deep” into clinical trials for rare diseases, and possibly all the way to the market, Fambrough says.

Meanwhile, with a mix of private and crossover investors and months away from its first clinical trial, Dicerna is signaling pretty loudly that it is building towards an IPO.

“From a financing point of view, it’s a very logical next step for us after this round,” Fambrough says. “It’s a good option on the table for us.”