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By Team Ace Investors

Company Overview

Dimerix (ASX: DXB) is a clinical-stage biopharmaceutical company working to improve the lives of patients with inflammatory diseases, including kidney and respiratory diseases. Dimerix is currently focused on developing its proprietary Phase 3 product candidate DMX-200 (QYTOVRA® in some territories), for Focal Segmental Glomerulosclerosis (FSGS) kidney disease, and is also developing DMX-700 for Chronic Obstructive Pulmonary Disease (COPD). DMX-200 and DMX-700 were both identified using Dimerix's proprietary assay, Receptor Heteromer Investigation Technology (Receptor-HIT), which is a scalable and globally applicable technology platform enabling the understanding of receptor interactions to rapidly screen and identify new drug opportunities. In 2020, Dimerix completed two Phase 2 studies: one in FSGS and one in diabetic kidney disease, following a successful Phase 2a trial in patients with a range of chronic kidney diseases in 2017. No significant adverse safety events were reported in any trial, and all studies resulted in encouraging data that could provide meaningful clinical outcomes for patients with kidney disease. The company is now undergoing a Phase 3 clinical trial titled ACTION3 on 72 patients with FSGS across multiple study sites in 11 countries.

Investment Rationale

Addressing a billion-dollar-plus market opportunity in FSGS

Dimerix’s goal is to develop patient-friendly products that treat unmet medical needs in important therapeutic areas. The Dimerix assets are all based on compelling scientific rationale and/or existing clinical data and are all in commercially attractive, growing markets, with little or no current competition. During the half year (1H24), the Group’s focus was on the development of its lead drug candidate DMX-200 in Focal Segmental Glomerulosclerosis (FSGS). FSGS is a rare disease that attacks the kidney's filtering units, where blood is cleaned (called the 'glomeruli'), causing irreversible scarring. This leads to permanent kidney damage and eventual end-stage failure of the organ, requiring dialysis or transplantation. FSGS is a billion-dollar-plus market: the number of people with FSGS in the US alone is just over 80,000, and worldwide about 220,000. The illness has a global compound annual growth rate of 8%, with over 5,400 new cases diagnosed in the US alone each year. DMX-200 has the potential to increase the life of the kidney, reducing the burden for both the patient and the healthcare system. As there is no available effective treatment for FSGS, Dimerix has received an Orphan Drug Designation for DMX-200 in both the US and Europe for FSGS. Orphan Drug Designation is granted to support the development of products for rare diseases and qualifies Dimerix for various development incentives including seven years (FDA) and ten years (EMA) of market exclusivity if regulatory approval is received, exemption from certain application fees, and a fast-tracked regulatory pathway to approval.

Dimerix successfully passed efficacy interim analysis in a Phase 3 study (ACTION 3) for FSGS kidney disease.

On 11 May 2024, the company announced that its Phase 3 trial (ACTION3) of DMX-200 in patients with focal segmental glomerulosclerosis (FSGS) successfully passed the first interim analysis using proteinuria efficacy endpoint. Proteinuria (the measure of how much protein is in the urine), is used along with the estimated glomerular filtration rate (eGFR) in both the classification of kidney diseases and the effectiveness of therapies. Proteinuria can serve as an indicator of renal disease, and the degree of proteinuria correlates with disease progression. The interim analysis indicated that DMX-200 performed better than placebo in reducing proteinuria (using a statistical measure) in patients with FSGS in a significantly larger cohort than its prior Phase 2 study which was conducted on only 8 patients. The interim analysis included a futility assessment (where certain data are assessed early to determine whether or not the drug is having a desired effect) to ensure the continuity of the trial, suggesting that DMX-200 may achieve a statistically significant and clinically meaningful result at the end of the study. The ongoing Phase 3 is a double-blind, randomized (1:1) trial and is currently being conducted across multiple study sites in 11 countries and will now formally expand into Part 2 of the study. The Phase 3 study titled ACTION3 is a pivotal (Phase 3), multi-centre, randomized, double-blind, placebo-controlled study of the efficacy and safety of DMX200 in patients with FSGS who are receiving a stable dose of an angiotensin II receptor blocker (ARB). Once the ARB dose is stable, patients will be randomized to receive either DMX200 (120 mg capsule twice daily) or placebo. The second interim analysis is designed to capture evidence of proteinuria and kidney function (eGFR slope) during the trial, aimed at generating sufficient evidence to support marketing approval. Following the successful first interim analysis, Dimerix’s focus will be on the execution of potential licensing deals in the US and China. Key highlights-

The ACTION 3 Phase 3 trial successfully passed the first interim analysis using proteinuria efficacy endpoint.
DMX-200 is currently performing better than placebo in reducing proteinuria (using a statistical measure) in patients with FSGS in a significantly larger cohort than its prior Phase 2 study
The Independent Data Monitoring Committee (IDMC) has again noted no safety concerns to date, which is entirely consistent with the existing and growing strong safety profile of DMX-200.
ACTION3 clinical trial will now formally expand into Part 2 of the study
New clinical sites will now be opened in additional countries, including China, to further enhance recruitment.
Dimerix will now focus on the execution of potential licensing deals in available jurisdictions including the US and China.

Dimerix and Taiba entered into an exclusive license agreement to commercialize DMX-200 in the Middle East.

On 27 May 2024, Dimerix and Taiba Middle East announced that they have entered into an exclusive license agreement for the commercialization of Dimerix's Phase 3 drug candidate DMX-200 for the treatment of focal segmental glomerulosclerosis (FSGS) kidney disease in the United Arab Emirates (UAE), Saudi Arabia, Oman, Kuwait, Qatar, Bahrain and Iraq. Taiba Middle East FZ LLC is a privately owned company with extensive experience in bringing innovative medicines to patients in the Middle East. Under the agreement, Dimerix will fund and execute the global ACTION 3 Phase 3 study for DMX-200 in FSGS patients, and Taiba will be responsible for the submission and maintenance of the regulatory dossier in its licensed territories, as well as all sales and costs of marketing activities. Under the exclusive license, Dimerix will receive an upfront payment of US$350,000 (~ AU$ 0.51 million) within 30 days. Furthermore, Dimerix is eligible to receive potential payments of up to US$80.4 million (~AU$120 million) on certain development and commercialization milestones being achieved and tiered percentage royalties starting at 30% and decreasing by 5% every 5 years down to 20% on net sales of DMX-200 in the region, if successfully commercialized (all contracted financial terms are denominated in US$). Taiba also has a right to negotiate a license to develop and commercialize DMX-200 in any additional indications in the licensed territories that Dimerix may achieve for DMX-200. Taiba is the second license deal executed for DMX-200 following the license deal with Advanz Pharma (announced 5 Oct’2023) and collectively the license deals provide almost AU$11.5 million in upfront payments and up to approximately AU$340 million in potential milestone payments.

Dimerix is well capitalized to pursue its ACTION 3 Phase 3 clinical trial in FSGS.

During the Sep’2024 quarter, Dimerix continued to make significant progress with its lead program, ACTION3 Phase 3 clinical trial in focal segmental glomerulosclerosis (FSGS), and opened several additional clinical sites globally. This has been another key quarter for the program, as clinical site initiation is fundamental to the overall operational success of a clinical trial. The ACTION3 clinical trial is currently recruiting across 17 of the 19 planned countries. The full study recruitment target is 286 patients, with 129 currently randomized/dosed in the ACTION3 Phase 3 clinical trial and 16 patients in stabilization, titration, or screening ahead of potential randomization (subject to meeting inclusion criteria), collectively leading to the 144 patients required for Part 2 analysis of the trial. An interim analysis is planned after the first 144 patients reach 35 weeks of treatment, with results expected around mid-2025. On 20 Nov’ the company completed the planned IDMC review of ACTION 3 PHASE 3 FSGS KIDNEY trial with no safety concerns. During the quarter, Dimerix also received AU$ 0.53 million upfront payment from Taiba for the commercialization of its Phase 3 drug candidate DMX-200 for the treatment of FSGS in UAE. Under the agreement with Taiba, Dimerix may be eligible to receive up to AU$120.5 million in upfront and milestone payments in addition to royalties. Dimerix is well capitalized to pursue its ACTION3 Phase 3 clinical trial in FSGS with the receipt of an R&D Tax Incentive rebate of $ 7.9 million for FY24 on 15 Nov 2024 and is on track to release Part 2 of the interim analysis around mid-CY25.

ACE’s Recommendation

Dimerix (ASX: DXB) is a clinical-stage biopharmaceutical company working to improve the lives of patients with inflammatory diseases, including both kidney and respiratory diseases. The company is now undergoing a Phase 3 clinical trial titled ACTION3 on 72 patients with FSGS across multiple study sites in 11 countries. On 11 May 2024, the company announced that its Phase 3 trial (ACTION3) of DMX-200 in patients with focal segmental glomerulosclerosis (FSGS) successfully passed the first interim analysis using proteinuria efficacy endpoint. The interim analysis indicated that DMX-200 performed better than placebo in reducing proteinuria (using a statistical measure) in patients with FSGS in a significantly larger cohort than its prior Phase 2 study which was conducted on only 8 patients. The interim analysis included a futility assessment (where certain data are assessed early to determine whether or not the drug is having a desired effect) to ensure the continuity of the trial, suggesting that DMX-200 may achieve a statistically significant and clinically meaningful result at the end of the study. On 27 May 2024, Dimerix and Taiba Middle East entered into an exclusive license agreement for the commercialization of Dimerix's Phase 3 drug candidate DMX-200 for the treatment of focal segmental glomerulosclerosis (FSGS) kidney disease in the Middle East. Under the agreement, Taiba will be responsible for the submission and maintenance of the regulatory dossier in its licensed territories, as well as sales and marketing expenses. Dimerix will receive an upfront payment of US$350,000 (~ AU$ 0.51 million) within 30 days. Furthermore, Dimerix is eligible to receive potential payments of up to US$80.4 million (~AU$120 million) on certain development and commercialization milestones being achieved. The company is currently recruiting for the ACTION3 clinical trial in FSGS and recently completed the planned IDMC review of the ACTION3 PHASE 3 FSGS KIDNEY trial with no safety concerns. Dimerix is on track to announce Part 2 of its interim analysis around mid-CY25 and is a key near-term catalyst for growth. The stock closed the day at A$ 0.330/share and presents an investment proposition from a long-term view. So, we would like to recommend a BUY rating on the stock.

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