DICE - DICE Therapeutics: Oral Drug Of Proven IL-17 Target

Summary

• DC-806 is the lead drug for the company, which is being developed as an oral IL-17 drug for psoriasis and other immunological disorders.
• Proof of concept established with use of DC-806 for patients with psoriasis in a phase 1 study compared to a placebo; Phase 2b study expected to start 1st half 2023.
• There are two other oral IL-17 inhibitors being developed targeting immunological disorders. One is DC-853 which may have improved potency/stability and a non-named one with an improved scaffold.
• It is expected that the global psoriasis market could reach $47.24 billion by 2029. However, the ability to go after other multi-billion dollar immunological disorders is what makes this an attractive investment opportunity.

DICE Therapeutics ( DICE ) is a great speculative biotech play to look into. The reason why I state that is because it is developing several oral IL-17 drugs. What's particularly interesting about this biotech is that it has potential to target large market opportunities. The reason being is that biologics already approved in the market like COSENTYX from Novartis ( NVS ) and TALTZ from Eli Lilly ( LLY ) have proven to work for multiple immunological targets. Well, if this biotech can successfully develop an oral version of an IL-17 treatment, then it might be able to compete against these major pharmaceutical companies. DC-806 is the lead drug being developed for psoriasis and other chronic immunology indications. This isn't going to be the only shot on goal for the biotech in terms of developing an IL-17 oral drug. Matter of fact, it has two follow-on candidates. One of them is already named DC-853 which is similar to DC-806 but has improved potency and metabolic stability. A third oral drug targeting IL-17 in the pipeline is not yet named, but is similar to the other two, but has a novel scaffold. The goal with this last one is to slightly alter the structure of this compound, to see if such a method yields superior potency. It has other discovery programs in place, such as developing an oral PD-L1 drug, but many such as this are likely years away from reaching the clinic. DC-806 has already done well in a phase 1 study establishing proof of concept. A phase 2b study is expected to begin in the 1st half of 2023 and that should move this program forward.

An Oral IL-17 Drug To Potentially Disrupt The Market

As I stated above, DICE Therapeutics is developing DC-806 for the treatment of patients with psoriasis and other immunological disorders. The first target being looked at with this oral IL-17 drug is psoriasis. Psoriasis is a disease whereby patches of thick red skin and silvery scales form. Such patches are found all over the skin, but specifically they are found on: elbows, knees, scalp, lower back, face, palms, soles of feet and some other places. The most common type of psoriasis is called plaque psoriasis. The symptoms of this disorder can be separated into key areas, which are:

• Pain in specific parts of the body
• Skin problems such as rashes, flaking, redness etc.
• Itching or inflamed skin

It is believed that psoriasis is a result of the immune system going out of control. There are sometimes specific events which could trigger this disease and they are:

• Stress levels
• Weather being cold
• Infections occurring

The treatments, which exist today, are developed to attempt to remove scaly skin and stop skin cells from continuing to grow aggressively. It is a large market opportunity for sure. It is expected that the global psoriasis market could reach $47.24 billion by 2029 . In the U.S. alone, there is a huge psoriasis population which exists. There are said to be more than 3 million cases of this disease in the U.S. alone.

The thing is that this biotech is already ahead of the game in the immunological space. The reason why I state that is because it has already established proof of concept in using DC-806 for the treatment of patients with Psoriasis. It is also ahead of the game in this space for another reason as well, because it did something that not many biotechs typically do in a phase 1 study. It already explored reduction in PASI score of high-dose DC-806 compared to a placebo. This was a bold move for only a phase 1 study, but it paid off. It was shown that patients who took high-doses of DC-806 achieved a reduction in PASI from baseline at 4 weeks of 43.7%. This, compared to placebo treated patients who only achieved a reduction in PASI from baseline of 13.3%. This means that patients treated with DICE's drugs achieved a statistically significant reduction in PASI from baseline at 4 weeks compared to placebo, with a p-vale of p=0.0008. I believe that the goal was to see if DC-806 acted in a similar fashion to other IL-17 drugs, like the already approved biologics I noted above. Not only was efficacy established with the use of this drug from DICE, but there were no major safety issues to make note of. In other words, there were no serious adverse events (SAEs) found. There were some treatment emergent adverse events (TEAEs) but they were considered to be mild/moderate. The key item to note is that this biotech has already established some great proof of concept in using this drug to treat patients with psoriasis. However, with safety established, there is potential to advance an oral IL-17 drug such as this towards other immunological disorders. With respect to some catalysts, there might be two on deck in this first part of the year. That is, DICE is expected to submit an investigational new drug ((IND)) application with the FDA in the 1st half of 2023 for DC-806. If all goes well, then it will get the green light to begin a phase 2b study for this particular program during the same period.

Financials

According to the 10-Q SEC Filing , DICE Therapeutics had cash, cash equivalents and marketable securities of $266.6 million as of September 30, 2022. This was an okay amount of cash. However, it likely won't be enough to push its phase 2b study of DC-806 for psoriasis forward along with other pipeline programs. As such, it chose to raise cash through an upsized public offering . It raised gross proceeds of approximately $345 million through this type of offering. It sold a total of 9,452,054 shares of its common stock, plus the full exercise of the underwriter's option to purchase 1,232,876 additional shares at a public offering price of $36.50 per share. With this newly added cash from the upsized public offering, it is able to fund its operations into 2026. This is a long time, and it likely won't need to raise cash for quite some time. I believe that it should be able to deliver results from the phase 2b study well before it needs to raise cash again.

Risks To Business

There are several risks that traders/investors should be aware of before investing in this biotech. The first risk to consider would be with respect with the use of DC-806 for the treatment of patients with psoriasis in the phase 2b study, which is expected to begin in the 1st half of 2023. Even though the company established proof of concept in the phase 1 study, there is no guarantee that the same will be achieved with a larger pool of patients. I believe there is a good shot at success considering the first proof of concept established for DC-806 was done comparing it to a placebo. A second risk to consider would be with the fact that most of its pipeline is in the early-stages of clinical development. In addition, it is attempting at redefining the IL-17 space by developing oral candidates. Sanofi ( SNY ) is attempting to get its hat in the ring as well in co-developing an oral IL-17A inhibitor with C4X Discovery Holdings , but it is only in the lead optimization of testing. This means it has to get to IND enabling studies, and then finally reach phase 1 clinical testing thereafter. This will be another oral IL-17 inhibitor to watch for, but DICE is far ahead of the game considering it is initiating a phase 2b study in the 1st half of 2023.

Conclusion

The final conclusion is that DICE Therapeutics is a great speculative biotech play to look into. I think it has a lot of risk, because it is attempting to get into the IL-17 market, which has behemoths in place like Novartis with COSENTYX and Eli Lilly with TALTZ. The good news is that DICE is already in a good spot, considering that it already established proof of concept that DC-806 is active in psoriasis and other immunological indications. Again, it has already done a bold move in adding a placebo in a phase 1 study. The phase 2b study should, in essence, confirm what was established in the prior study. While risk is still in play with the phase 2b study, which is expected to begin in the 1st half of 2023, it will have additional shots on goal at developing an oral IL-17 inhibitor. As I stated above, it will have DC-853 with the potential to have increased potency and metabolic stability. Then, it has the not yet named candidate, which will have an improved scaffold (structure). Based on proof of concept being established with DC-806 for the treatment of patients with psoriasis, plus two additional follow-on compounds also being developed as oral IL-17 drugs, these are the reasons why I believe that DICE Therapeutics is a great speculative biotech play to look into. The market opportunity for psoriasis alone is huge for the biotech, but with the potential to go after other immunological targets as well, that's what makes it even more special. If it can get an oral IL-17 inhibitor to marketing approval, then it has a great shot at competing against other biological IL-17 drugs like COSENTYX and TALTZ. I believe an oral option would be far more suitable compared to the need of getting a subcutaneous injection.

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