Investment Overview — Dyne’s Long Bull Run Comes To Shuddering Halt
Dyne Therapeutics, Inc. (NASDAQ:DYN) stock had a sensational bull run, from a value of $6.5 per share in November 2023 to an all-time high of $46 per share at the beginning of August. This was a gain of >600%. However, Dyne stock was in free-fall yesterday, as shares plummeted by ~45% intraday, sinking to a low of ~$24.
The stock since has shown some resilience, rising to ~$34 per share at the time of writing. Let’s unpack the events that have led to the sell-off, and consider whether there is a “buy the dip” scenario in play, or whether Dyne’s bull run may be at an end. First, let’s begin with a brief company overview.
Background To Yesterday’s Sell-Off — Dyne Shares Get Hot On Promising Muscle Disease Data — Management Raises >$600m
Dyne completed its IPO in September 2020, raising an impressive $268m via the issuance of ~14m shares priced at $19. In its IPO press release, Dyne described its business as follows:
Dyne is developing a broad portfolio of therapeutics for muscle diseases, including lead programs in myotonic dystrophy type 1 (DM1), Duchenne muscular dystrophy (DMD) and facioscapulohumeral muscular dystrophy (FSHD).
In its Q2 2024 quarterly report / 10Q submission, the company describes the mechanism of action (“MoA”) of its FORCE technology platform as follows:
Our proprietary FORCE platform therapeutics consist of an oligonucleotide payload that we rationally design to target the genetic basis of the disease we are seeking to treat, a clinically validated linker and an antigen-binding fragment, or Fab, that we attach to the payload using the linker.
With our FORCE platform, we have the flexibility to deploy different types of oligonucleotide payloads with specific mechanisms of action that modify target functions.
The company has three main pipeline candidates. These are
- Dyne-101, being evaluated in ACHIEVE, an ongoing Phase 1/2 global clinical trial in patients with DM1,
- Dyne-251, being evaluated in DELIVER, an ongoing Phase 1/2 global clinical trial in patients with DMD who have mutations amenable to exon 51 skipping, and
- DYNE-302, indicated for facioscapulohumeral muscular dystrophy (FSHD).
Post IPO, Dyne stock generally trended downward as Dyne had little data of note to report. It reached a low of ~$7 per share in November last year, before surging at the beginning of this year, as the company provided updates from its studies of Dyne-101 and Dyne 251.
Specifically:
- In Phase 1/2 ACHIEVE Trial, DYNE-101 Demonstrated Dose-Dependent Splicing Correction, Muscle Delivery and DMPK Knockdown
- All Evaluable Patients in the 3.4 mg/kg Cohort Treated with DYNE-101 Q4W Demonstrated Consistent Splicing Correction with a 19% Mean Improvement Across 22-Gene Panel at 3 Months
- Improvement in Myotonia (vHOT) as well as Fatigue (MDHI) Observed in Lowest Dose ACHIEVE Cohort at 6 Months.
- In Phase 1/2 DELIVER Trial, DYNE-251 Showed 0.88% Mean Dystrophin Expression at 6 Months in 5 mg/kg Cohort Administered Monthly; Greater Than 2.5 Times Higher Dystrophin Than Reported for Weekly Administered Current Standard of Care.
Finally, Dyne shares found some momentum, and the company was able to complete a $300m fundraising at $17.5 per share. At the end of January, rumors that management were speaking to advisors about a potential sale of the company sent the share price even higher. In late March, the company appointed a new CEO, John Cox, replacing Joshua Brumm, who left “to pursue a career in healthcare investing.”
In May, Dyne reported further data from the ACHIEVE and DELIVER studies, as follows:
– In Phase 1/2 ACHIEVE Trial, DYNE-101 Demonstrated Dose Dependent 27% Mean Splicing Correction Across All Patients in the 5.4 mg/kg Cohort at 3 Months –
– DYNE-101 Showed Improvement in Myotonia, Muscle Strength, and Timed Function Tests and in DM1-ACTIVc and MDHI Patient Reported Outcomes –
– In Phase 1/2 DELIVER Trial, DYNE-251 Showed 3.2% Mean Unadjusted (7.6% Mean Muscle Adjusted) Dystrophin Expression at 6 Months in 10 mg/kg Cohort Administered Monthly; 10 Times Higher Level of Dystrophin Than Reported for Weekly Administered Standard of Care1–
– DYNE-251 Demonstrated Trends in Functional Improvement in NSAA, Time to Rise from Floor, 10-Meter Walk/Run Time, and Stride Velocity 95th Centile at 6 Months in 10 mg/kg Cohort –
In response, Dyne stock rose higher again, and Dyne completed a second fundraising of the year, raising $325.5m at $31 per share.
Yesterday’s Market Sell-Off Explained — Managerial Merry-Go-Round, Underwhelming Data
On September 3rd, Dyne issued two press releases. The first discussed the latest data for Dyne-251.
Apparently, the drug demonstrated “unprecedented” dystrophin increases in DMD patients (who are effectively unable to generate dystrophin themselves, making them more sensitive to damage and causing chronic loss of muscle strength) of 3.71%, which is “more than 10-fold higher than the 0.3% reported in a clinical trial of the weekly standard of care, eteplirsen,” otherwise known as Exondys 51, marketed and sold by Sarepta Therapeutics (SRPT), earning $120m of revenues in Q124.
Further efficacy updates were shared as follows:
Meaningful improvements in multiple functional endpoints were observed in both the 20 mg/kg and 10 mg/kg DYNE-251 Q4W groups, including North Star Ambulatory Assessment (NSAA), Stride Velocity 95th Centile (SV95C), 10-Meter Walk/Run Time (10-MWR), Time to Rise from Floor. The 10 mg/kg cohort showed continued improvement in all reported measures from 6 months to 12 months.
Safety data was shared as follows:
Safety and tolerability data are based on 54 participants enrolled in the DELIVER trial. DYNE-251 demonstrated a favorable safety profile and the majority of treatment emergent adverse events were mild or moderate.
No related serious treatment emergent adverse events have been identified other than in two participants at the 40 mg/kg dose level with events potentially related to study drug and both participants have recovered. Approximately 675 doses have been administered to date in the DELIVER trial, representing over 50 patient-years of follow-up.
Both sets of data — safety and efficacy — seemingly account for the market sell-off that occurred yesterday. They also likely triggered the necessity for a second press release issued yesterday, announcing the resignations of Wildon Farwell, M.D., MPH, chief medical officer (“CMO”), chief business officer, Jonathan McNeill, M.D., and the chief operating officer, Susanna High.
The executives will be replaced by Doug Kerr, M.D., Ph.D., MBA, formerly of biotech VC Atlas Ventures, Johanna Friedl-Naderer, formerly vice president and chief operating officer of Vir Biotechnology, and Lucia Celona, formerly vice president of HR for pharmaceutical operations & technology for Biogen (BIIB), who becomes chief human resources officer.
Analysis — No Statistical Significance, Three Adverse Safety Events Rattles Wall Street
In January 2022, the FDA had placed a clinical hold on Dyne’s Investigational New Drug (“IND”) application for Dyne-251, but after Dyne supplied additional safety data, lifted it in July of that year.
The three serious, deemed treatment related, adverse events (“TRAE”) experienced by two patients at the highest 40mg/kg dose hint at a potential safety issue that could derail management’s aggressive plans to push for registrational studies of Dyne-251, however. One TRAE was an acute kidney injury, the second a case of thrombocytopenia, and the third a case of pancytopenia.
Management says it plans to update the market “on the path to registration by the end of 2024,” but with an entirely new CMO on board, and patients experiencing TRAE’s, this could potentially be interpreted as, at best, an unwise move, and at worst, an irresponsible one.
Equally, from a safety perspective, Dyne management noted “improvements across multiple functional endpoints,” and “clinically meaningful improvements in stride velocity,” but stopped short of describing any statistically significant improvements, which would likely be required to support a push for approval.
While improvements in dystrophin and EXON-51 skipping may be indicative of the therapy having a positive effect, my understanding would be these would be considered surrogate endpoints only. In other words, a sign that the therapy may work, not that it is working in terms of helping patients battle a devastating disease.
Another point that may be worth noting is that most of the improvements in, e.g., stride velocity, NSAA score noted occurred in an open label extension part of the study, after day 169. Open label means there is no placebo arm to compare the data to, and to secure approval, Dyne would very likely have to produce data showing outperformance versus placebo.
Conclusion — Some Potentially Worrying News For Shareholders — I’m Firmly On The Sideline
One more thing to note is that Sarepta Therapeutics (SRPT), which is the dominant player in DMD, recently secured full approval for its gene therapy Elevidys. It reported net product revenues from the drug of $121.7m, out of a total of $360.5m from its other DMD drugs, including Exondys 51, in Q2 of this year.
Sarepta’s partner in Europe, the Swiss Pharma giant Roche (OTCQX:RHHBY) is busy preparing a marketing authorization application (“MAA”) in Europe and is responsible for marketing and selling Elevidys in all territories ex-US.
Doubtless, Dyne would love to attract a Big Parma partner like Roche, but it could be that the field of DMD treatment is moving away from Exon 51 skipping therapies and towards gene therapies. According to the Muscular Dystrophy Association (“MDA”):
ELEVIDYS is a different type of technology known as gene replacement therapy that requires one-time administration to be effective. ELEVIDYS uses an adeno-associated virus (AAVrh74) to introduce a shortened version of the dystrophin gene (mini-dystrophin) into muscle tissue of boys with DMD, partially compensating for their lack of a functional dystrophin gene and addressing the underlying genetic defect that causes DMD.
A one-time therapy is clearly preferential for patients versus regular infusions of an Exon skipping therapy. Thus, there may be a question mark over what Dyne-251 could achieve commercially even if it were approved, which is at least three years away, or potentially not achievable, based on data shares to date.
With that said, Exondys 51 was approved based on its ability to increase dystrophin levels — the drug is not yet fully approved, having been granted accelerated approval only. Elevidys itself failed to meet its key endpoint in its confirmatory study (used to convert an accelerated approval into a full approval), but the FDA approved the drug anyway, based on Elevidys being favored over placebo on most efficacy endpoints, and having a satisfactory safety profile.
It seems the jury is still out on whether Dyne-251 is either effective or safe, and only a registrational study that includes a placebo arm would be able to prove it one way or the other. Meanwhile, Dyne-101’s study saw 6 instances of serious TRAEs, although these were deemed unrelated to the study drug. Dyne-101 has also shown “improvements” on various efficacy measures, but is yet to be fully tested in a placebo controlled study.
Frankly, it may be the case that higher dose Dyne-251 does not possess a safety profile to get excited about. With patients at risk, it may be a bad idea would be to rush the drug into a registrational study under the guidance of an entirely new CMO, which is the plan that Dyne seems to want to pursue.
One thing management has proven adept at is completing substantial fundraisings after reporting promising early-stage study data, but potentially, the real tests are yet to come.
Clearly, the market has seen data it likes from Dyne, and there do appear to be some encouraging signs — most notably, perhaps, the increases in dystrophin levels and improvements in some efficacy measures (albeit with no placebo arm to compare to).
Dyne’s share float was held 8.5% short as of August 15th, so there are some skeptics out there too. I would count myself as one, despite the incredible share price gains, some data presented to date, and the $600m raised from dilutive share offerings.
It will be interesting to hear management’s plans for both lead programs, which have been promised for this year, to see if they address any of the market’s concerns, highlighted by yesterday’s sell-off.
