Dicerna Pharmaceuticals Inc (DRNA) Q1 2021 Earnings Call Transcript

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Dicerna Pharmaceuticals Inc (DRNA)
Q1 2021 Earnings Call
May 6, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, ladies and gentlemen, and welcome to the Dicerna Pharmaceuticals First Quarter 2021 Earnings Conference Call. As a reminder, this conference call is being recorded at the company's request.

I will now turn the call over to your host, Will Grammig of Stern IR. Please go ahead.

Lauren Stival -- Investor Relations

Thank you, operator. Good afternoon, everyone, and thank you for joining us to review Dicerna's first quarter 2021 financial results and operational highlights. For anyone who hasn't yet had a chance to review our results we issued a press release after the close of trading today, which is available under the investors and media tab on our website at dicerna.com.

You may also listen to this conference call via webcast on our website, which will be archived beginning approximately two hours after this call is completed. Speaking on today's call will be Dicerna's President and Chief Executive Officer, Doug Fambrough, who will review our program portfolio and strategy; our Chief Medical Officer, Sheeram Aradhye, who will discuss progress in our key programs; and Chief Financial Officer, Doug Pagan, who will review our first quarter financials. We also have Jim Weissman, our Chief Operating Officer; Rob Ciappenelli, our Chief Commercial Officer; and Bob Brown, our Chief Scientific Officer, available today to address your questions during the Q&A session.

During our remarks, we will open the line for your questions. I'd like to remind listeners that management may make forward-looking statements on today's call pertaining to the company's finances, business and operations, including the discovery, development and commercialization of our product candidates and technology platform and the therapeutic potential thereof and the success of our collaborations and to any potential future collaborations. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such statements.

Applicable risks and uncertainties include those relating to our preclinical research, and clinical progress and other risks identified under the heading Risk Factors included in our most recent Form 10-Q and Form 10-K. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so if our views change. Now I'd like to turn the call over to Doug Fambrough, Dicerna's President and CEO. Doug?

Douglas W. Pagan -- Chief Financial Officer

Thank you. Good afternoon, everyone, and thank you for joining us. Dicerna entered 2021 with momentum and the financial strength to continue to build on that momentum. There are currently four Dicerna GalXC molecules in clinical development, nedosiran for all known types of primary hyperoxaluria, or PH, --for alpha one antitrypsin deficiency associated liver disease, RG6346 for chronic HBV with Roche, and an anG PTL three targeted program under our livid collaboration. The clinical programs will grow to six in the coming months, with our DCR-AUD alcohol use disorder program and another Lilly cardiometabolic program targeting LPA that we anticipate to enter the clinic shortly. Beyond those 6, there are currently five more galaxy molecules with declared clinical candidates in preclinical development, which includes a new development program in 2021 under our Novo collaboration.

And behind this 11 strong development portfolio or more than 20 research stage programs, many utilizing our Galaxy plus technology that extends delivery to tissues beyond the liver. Some of these discovery programs will advance to formal development later this year, including Dicerna proprietary programs utilizing Galaxy Plus. We have the resources to drive this pipeline forward. We started the year with approximately $570 million in cash, cash equivalents and marketable securities. And since then, we've received more than $230 million in collaboration milestones and payments including the milestone payment from Roche for the Phase II start of RG6346 in chronic HBV as well as from the sale of our royalty interest in a peer company marketed program. We anticipate receiving additional cash this year and are hoping to achieve net 0 cash burn in 2021, while fully funding our development programs and preparing for a commercial potential commercial launch in 2022 of AR nedosiran program to treat all known types of primary hyperoxaluria, a candidate that is currently in pivotal clinical development. Regarding nedosiran, we are on track to read out top line results of the PHYOX2 pivotal trial midyear.

As a reminder, PHYOX2 is enrolling subjects with PH type one and PH type two and the data, if positive, as expected, should support full approval for both those PH types. We are also currently enrolling a trial for subjects with PH type three called PHYOX4. COVID-19 spikes impacted the enrollment time line, but we believe it will be fully enrolled in the very near future. As we intend to include PH type three data and our planned NDA, that will push that NDA submission into the fourth quarter. In any event, we fully expect nedosiran to be our first marketed product, and thus mark our transition to a fully integrated biopharmaceutical company as we intend to market the -- in the United States. PH is an ultra-orphan indication so it's ideally suited for the initial build-out of our U.S. commercial organization, which is already well under way, including with the recent hire of our Vice President of Sales. We expect to build further from there.

Next for the -- AAT liver disease market and with larger specialty call points in non orphan indications beyond that. Thus, this development portfolio supports a logical step-wise increase in U.S. commercial capabilities with nedosiran at the point of the sphere. Our maturing and growing development portfolio is, we believe, more likely to enjoy clinical success than the average success rates for our industry. Some of that comes from the unique constellation of properties shared by our GalXC molecules, and we also think likely shared by our GalXC plus molecules.

These include high tolerability, lack of off-target effects, long duration of effect, simple administration regimens and relevant to some programs, tissue specificity. For our own portfolio, we focused on diseases with clearer disease mechanisms that we can directly impact with RNAi, such as with the primary hyperoxaluria, alpha-1 antitrypsin and chronic HDV programs. In other cases, we followed genetic association that imply likely success for our treatment mechanism, such as with the alcohol use disorder program and several of the collaboration program. In certain cases where development risk is higher, such as in achieving functional cure in chronic HBV and with more novel cardiometabolic targets, we've entered into collaboration structures with a cost and clinical proof-of-concept risk is taken by our collaborators with Dicerna having the right to opt back in to co-fund development and co-commercialize after clinical proof-of-concept has been achieved. I'm referring there to our Roche and Novo collaboration.

There's a well from which we can draw new programs is deep. As we presented during the first quarter and last year, our Galaxy plus technology is achieving strong and specific gene knockdown in multiple non liver tissues, including various CNS cell types, muscle, adipose tissue and tumor-associated immune cells and as yet undisclosed work from our research labs extends further than that. We may become a little more adventurous in our target selection going forward, pursuing entreat mechanisms and major opportunities enabled by Galaxy Plus and particularly suited to RNAi.

And in contrast to traditional modalities and to other genetically based mechanisms such as gene therapy or gene and base editing. I look forward to talking about those programs and future updates. As building our proprietary pipeline is a high priority. In addition, we anticipate additional discovery collaboration, although that is not a focus for 2021. So as you should see from our portfolio of current programs, our deep opportunity set for new programs, our risk reducing and revenue-generating collaborations, current financial resources, and our planned move to commercialization of nedosiran next year. We are confident that we have paid the way for strong value growth that can continue for many years at an attractive risk profile. With that general overview of our strategy and the means to execute it,

I'm now going to turn the call over to our EVP and Chief Medical Officer, Shreeram Aradhye, who will give an update on our core development programs. Sri?

Shreeram Aradhye -- Executive Vice President and Chief Medical Officer

Thank you very much, Doug, and good afternoon, everyone. As Doug mentioned, we continue to make great progress across our clinical development programs and as of now, we have 10 clinical trials under way or expected to begin in the near term, evaluating our four pipeline candidates. Nedosiran for primary hyperoxaluria, -- for alpha-1 antitrypsin associated liver disease, RG6346 for chronic hepatitis B viral infection with Roche and DCR-AUD for alcohol use disorder. Let me begin with an update on nedosiran, our most advanced program, which is in development for the treatment of primary hyperoxaluria. Primary hyperoxaluria or PH is a family of ultra-rare genetic disorders causing hepatic oxalate overproduction that can result in life-threatening kidney damage as well as damage to other organs.

The burden and impact of disease continue to become clearer in PH2 and PH3 as newer data emerge demonstrating the need for a treatment that can address all known PH subtypes. We are developing our Galaxy RNAi product candidate, nedosiran for the treatment of all of the known subtypes, PH1, PH2 and PH3. There are currently no therapeutic options available that treat all three known forms of PH. Having completed enrollment, despite the ongoing pandemic surge late last year, I am pleased to say that PHYOX2 to our six month double-blind, randomized, placebo-controlled pivotal trial in patients with PH1 or PH2 who are older than six years of age is nearing completion with the last patient last visit expected to take place this quarter.

As a reminder, the primary endpoint of this six month study is the percent change from baseline in urinary oxalate based on the area under the curve of 24-hour urinary oxalate excretion between days 90 and 180. We anticipate announcing top line data midyear as we also prepare for an NDA submission based on this study. In addition to PHYOX2, we continue to enroll our PHYOX4 single dose trial of nedosiran in patients with PH3, although enrollment has been slower-than-expected due to the current COVID environment. This study is designed to evaluate safety, tolerability and PK/PD of nedosiran in patients with PH3 with the additional objective to evaluate reduction in urinary oxalate as a secondary endpoint for efficacy. Our plan is to include data from this trial in our NDA submission to support a potential approval in PH3. Our expectation is to have top line data from PHYOX4 in the third quarter setting us up for a submission of the nedosiran NDA in the fourth quarter of this year.

Moving on to additional nedosiran trials. Early in the second quarter, we initiated patient dosing in PHYOX7, our open-label study of nedosiran in patients with PH1 or PH2 who have severe renal impairment, including those on dialysis. Our PHYOX8 open-label trial in patients from infancy up to six years of age with PH1 or PH2 is also expected to initiate this quarter. Both of these studies are expected to complete after we have submitted the first NDA, and we, therefore, plan to submit these data as supplemental filings subject to the nedosiran approval to support label expansion for treatment of these patient populations. Next is our investigational Galaxy candidate, RG6346 for the treatment of chronic hepatitis B virus infection, which is in development in collaboration with Roche.

The disease affecting an estimated 300 million people worldwide and contributing to the depth of more than 880,000 people each year there is a tremendous need for a treatment that could result in a functional cure for this disease. During the first quarter, we were very pleased to announce that Roche had initiated RG6346 in a Phase II platform trial that will evaluate the efficacy and safety of RG6346 in combination with multiple additional agents with different mechanisms of action. This platform trial design allows comparison of multiple NME combination therapies against a common control arm as well as the introduction of additional treatment arms at later time points. Roche added RG6346 to the trial in March as part of new treatment arms in combination with standard of care nucleotide therapy and in triple combinations with pegylated interferon alpha 2a, Roche's core protein allosteric modulator CPAM inhibitor or Roche's novel investigational TLR7 agonist.

This trial is being conducted entirely by Roche and will evaluate the percentage of participants with hepatitis B surface antigen loss at 24 weeks after the end of the 48-week treatment period as the primary endpoint. The Phase I trial of RG6346 that we initiated and for which we are responsible, continues in parallel with dosing cohorts that include follow-up durations of up to 48 and 72 weeks. The positive interim Phase I results that we presented last year showing that four monthly doses of RG6346 treatment resulted in substantial and durable reductions in hepatitis B surface antigen levels lasting up to one year following the last dose were indeed very encouraging, and we are optimistic about RG6346's potential as part of a functional cure combination treatment regimen for chronic HBV. Turning to disulfiram.

We continue to advance our clinical development program for the treatment of alpha-1 antitrypsin deficiency associated liver disease, or AATLD. Other than liver transplantation, no treatments exist for AATLD, a disease caused by the production of abnormal A1AT protein by the -- of the Serpin A1 gene that can result in chronic global disease leading to fibrosis, cirrhosis, liver failure or cancer. Individuals with two copies of the ZOE are believed to be at increased risk of developing AATLD. A rare disease, recent epidemiology research indicates that approximately 120,000 individuals in Europe and 63,000 individuals in the U.S. carry this ZZ genotype. It is estimated that 10% or more of these individuals may have a TLD and recent research suggests that al TLD is both underrecognized and underdiagnosed.

Our Phase I multi-cohort single ascending dose trial to evaluate the safety, tolerability and PK/PD of disulfiram in healthy volunteers continues. We recently completed dosing in our fourth dose cohort and a fifth those cohort is now under way. We anticipate reporting top line interim data from the first four dosing cohorts at midyear and are targeting presentation of more complete data from the Phase I trial at a scientific conference later this year. I'm also pleased to report that we have initiated patient screening for our multiple dose randomized, placebo controlled, double-blind Phase II trial named Astrella, which will evaluate the safety, tolerability and PK/PD of disulfiram ran in adult patients with AATLD who have the PIZZ genotype. Our teams continue to work hard to track the impact of the COVID-19 pandemic of our trial rollout and based on present projections, we anticipate dosing the first eligible patient in the coming months when the majority of worldwide sites are expected to be active.

Turning to the latest addition to our core pipeline on our last quarterly call, we revealed our next Galaxy clinical development candidate, DCR-AUD for the treatment of alcohol use disorder. Alcohol use disorder, or AUD is a chronic disorder that is associated with a range of medical, psychological, personal, social and economic problems resulting in approximately $250 billion in annual medical, economic and social costs and representing an area of substantial unmet need. About 14 million adults in the U.S. experienced a and fewer than 10% see treatment. Fewer still, roughly 140,000 people in the United States actually received pharmacotherapy for this disorder. While there are a variety of factors contributing to the low adoption of pharmacological therapies for AUD, we think there is significant opportunity for a safe, targeted, easy to use therapy that can be combined with behavioral interventions to help individuals with AUD meet their treatment goals. DCR-AUD is our investigational RNAi therapeutic designed to deliver liver-specific knockdown of dehydrogenase two or ALDH2. ALDH2 is a key liver enzyme involved in the metabolic breakdown pathway of alcohol.

In March, we provided an in-depth discussion of our DCR-AUD program that included a deep dive into the ALDH2 target rationale and detail on the limitations within the existing treatment landscape shared by a therapeutic expert, Dr. Henry Kranzler from the University of Pennsylvania's -- School of Medicine. A replay of the webinar remains available on our website for anyone who missed it, so I won't delve into great detail today. But stated briefly, VCR AOD's mechanism is designed to result in intolerance of alcohol in moderate amounts providing real-time physiological feedback that can assist individuals to avoid harmful levels of alcohol intake.

We believe that DCR-AUD is expected long duration of action with easy subcutaneous dosing and high target specificity with minimal to no side effects, similar to what we have observed with our other galaxy molecules together present a compelling potential profile. We are very enthusiastic about DCR-AUD's prospects as a potentially game-changing therapy for people with AUD, and are looking forward to taking it into the clinic. We are on track to file our IND for DCR-AUD midyear and plan to initiate the Phase I trial in healthy volunteers soon after in the third quarter.

The Phase I trial will include an assessment of low dose alcohol interactions to confirm the pharmacodynamics safety and the target profile consistent with preclinical models of liver-specific ALDH2 knockdown. As we approach midyear, I'm pleased to say that from a clinical development standpoint, we are making steady progress toward multiple study starts and data readout milestones over the remainder of 2021. In addition to the significant deliverable of preparing to submit our first NDA, an important and exciting milestone for the company. We look forward to an eventful balance of the year.

I'd now like to turn the call to Doug Pagan to review our financial results. Doug?

Douglas W. Pagan -- Chief Financial Officer

Thank you, Shri. I'd like to briefly walk through the key financial results for the first quarter 2021 and direct you to our press release outlining these results and our Form 10-Q, both issued after close today. Net loss for the first quarter 2021 was $30 million or $0.39 per share compared to $22.5 million or $0.31 per share for the same period last year. Revenue for the first quarter 2021 totaled $47.6 million compared to $34 million in the same period last year. The year-over-year increase in revenue was primarily attributable to an increase in services performed under the Roche, Alexion and Novo collaboration agreement.

As of March 31, 2021, we had approximately $138 million of current deferred revenue, which we expect to be recognized over the next 12 months. And approximately $318.3 million of noncurrent deferred revenue expected to be recognized over the following several years. R&D expense for the first quarter totaled $56 million compared to $43.2 million in the same period last year. The year-over-year increase was primarily driven by an increase in employee-related expenses as a result of higher R&D head count necessary to support our expanding pipeline and collaboration agreements as well as development costs associated with the nedosiran clinical development program. G&A expense for the first quarter 2021 totaled $20.7 million compared to $16 million in the same period last year.

The year-over-year increase was primarily driven by employee-related expense as we increased head count to support our growing operations as well as increased professional services. We expect our operating expenses to increase in the coming quarters as we continue to grow head count to accommodate additional R&D activity and launch readiness as well as from higher external spend associated with increased activities in our pipeline. During the first quarter of 2021, we received $32.9 million in milestone and reimbursement payments from our collaboration partners and continue to guide to receiving over $83 million for the full year 2021. These payments represent an important source of proceeds and demonstrate the value these collaboration programs should continue to generate as they mature.

As of March 31, 2021, we had $544.9 million in cash, cash equivalents and held-to-maturity investments compared to 56 -- sorry, $568.8 million as of December 31, 2020. In early April, we announced the sale of our -- royalty interest to royalty pharma for an upfront amount of $180 million, with the potential to receive up to an additional $60 million, contingent on sales based milestones. This non-dilutive transaction extends our cash runway into 2024. This transaction will begin to be recognized in our financial statements during Q2. We also anticipate signing an OUS commercialization partnership for nedosiran this year. Our goal has been to maintain a strong balance sheet through the planned NDA submission for nedosiran in the fourth quarter and potential 2022 commercial launch. That concludes my review of the financials.

I would now like to open the call for questions. Operator?

Questions and Answers:

Operator

First question comes from the line of Jonathan Miller from Evercore.

Jonathan Miller -- Evercore -- Analyst

Congrats on all the progress. It seems like you've done a lot of work this year, and there's a lot of stuff coming to the clinic. I'd like to start on PH since that's the most near-term stuff. I guess, can you talk a little bit more about your choice to delay filing to wait for the PH type three data versus going forward with PH type one and two and then moving on with an sNDA when PH type three is ready. And secondly, now that you've had some time enrolling PH three patients. Can you give any more color on that market, how readily identifiable those patients are, how many are seeking treatment as we start to think about PH type three becoming a commercial opportunity? Secondly, what could we expect from the initial data from A1AT releases? I know it's healthy volunteers, and I assume we'll see silencing data but is there any other meaningful information we can get from safety or details of loan surveillance that is going to be important in evaluating those initial releases.

Douglas M. Fambrough -- Chief Executive Officer, President and Director

I do put a lot on the plate there, but we'll bang through it. Sheri will talk about our filing strategy, and then Rob Ciappenelli will chime in on the PH three market, then we'll turn to a A1AT. Shri?

Shreeram Aradhye -- Executive Vice President and Chief Medical Officer

So John, as you know, I mean, the primary value proposition for nedosiran that we see is the fact that we have the potential to treat all three types of PH. That's been our incoming strategy. We've had agreement on PH1 and two with the FDA with there's still some conversations going on. But we believe that the delay that we are seeing in enrollment is not of a degree that warrants are wanting to split the fire. We think that we expect the enrollment to complete imminently. And with that, we are able to stay on track for our plan, which is an integrated file that includes data on all three types of patients with the goal to get approval for PH1 and 2. And pending the data for PH3. But -- so at this point, we're staying on track with our original plan.

Lauren Stival -- Investor Relations

And John, I appreciate the question. In terms of the PH2 market, I want to start with -- we're starting to see some additional data being published through offer around the --. So this is where we're starting to get into what could be the market here. And we're seeing that PH3 patients are suffering from current kidney stones and impaired renal function. We're starting to quantify that. And what we've heard from our scientific advisors is that there are a group of these patients that are demonstrating symptoms. How many? I think we're still being very conservative in our estimates. And in terms of what we're looking at right now, we're thinking that based on what we know today. But frankly, even over the last two quarters, it keeps changing, about 20% of those patients may be demonstrating symptoms. We certainly will need to have them diagnosed. They will need to have a genetic test to confirm. They have and we're continuing to size up the market that way.

Douglas M. Fambrough -- Chief Executive Officer, President and Director

All right. Shri, do you want to talk about the the A1T1 data?

Shreeram Aradhye -- Executive Vice President and Chief Medical Officer

Yes. John, John went so fast, I missed the question.

Douglas M. Fambrough -- Chief Executive Officer, President and Director

He was asking about what to expect in the initial release obviously, we'll talk top line on the suppression of the protein in this healthy volunteer trial. Do you think we'll learn anything from safety?

Shreeram Aradhye -- Executive Vice President and Chief Medical Officer

We will provide information, John, on the overall safety profile of we have been monitoring safety, and we will report the safety and tolerability of the data up to that point. And I think we -- what you'll see is the data we have that gave us the confidence to proceed with our plans for Phase II having selected a dose and a dosing regimen to move forward. And at top line data, you will see some parts of it and then later in the year, the more complete information. Does that answer your question?

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Certainly, we would not expect to see declines in lung function in a healthy volunteer population.

Operator

Next one on the queue is Mani Foroohar from SVB Leerink.

Rick Bienkowski -- SVB Leerink -- Analyst

This is Rick on the call for Mani. Congrats on all the progress. And just two questions from us. So first, looking at the upcoming initiation to the PHYOX7 and PHYOX28 trials. I was just hoping to get a sense of how large of a proportion of the total PH market opportunity is made up by patients with end-stage renal disease and also chiding ending six years old based on any market research that the company may have performed. And second, I was just hoping to get a little bit more color on when we may expect to see some of the initial clinical data from the leading partner programs? And in what sort of a time frame we could expect to see the first data from ANGPTL3 or Lpa programs?

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Rick, I'm not sure we've got a lot for you on these questions. I mean with respect to the patients under six and patients in ESRD. Most PH patients do live quite a long line, if not a full healthy human life span. And we do see a lot of patients expected across the age spectrum. So this is not a young pediatric dominated indication. And once on ESRD you obviously have some patients who are closer to the end of their lines, and some patients who then proceed to liver transplant. At which point, they would no longer frankly no longer have meaningful pH because it's deliver the source of the oxalate. I'm not sure we have any specific numbers to quantify those --

Lauren Stival -- Investor Relations

Jon, let me take a little bit of a crack at it. And Rick, what we're trying to do is segment out the market. I think we've talked on previous calls about how thin the data is across the registries for PH1, two and 3. And Doug spot on. We're seeing PH patients demonstrate and demonstrate their disease and be symptomatic. Across all the tranches. Frankly, the easiest ones to find are the infants. But what we frankly is seeing in the PHYOX studies in -- patients we have, as you would expect, in any ultra-rare disease, a number of silent sufferers out there. And we're still really trying to pinpoint down the different segmentations with each of the three new subtypes at this time.

Douglas M. Fambrough -- Chief Executive Officer, President and Director

With respect to your second question on timing of clinical trial data from partners and specifically the Lilly -- and LTA. We currently don't know the timing or the data release and clearly, we will share that when we do understand it.

Operator

The question next question comes from the line of Madhu Kumar from Goldman Sachs.

Rob Williams -- Goldman Sachs. -- Analyst

Rob on here for Madhu. Congrats on all the progress. I just have two quick questions. First, what do you think are the key metrics by which nedosiran can differentiate from approved RNAi drugs in PH1? And then additionally, what have you learned from peer alpha on any trips and RNAi drugs about clinical endpoints to examine for Dicerna and in the now initiated Phase II trial.

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Well, I'll take a crack at your first one, and then Sri can address the -- endpoints question. Clearly, key differentiation for nedosiran from the lumasiran molecule is our ability to dose, we hope, all the PH types, PH type 1, type two and type 3. As you're well aware, PH type two and type three are not addressed by --. With NPH1, where there is patient overlap. We are optimistic based on the study PHYOX3 open-label study, which has the same dosing regimen for PHYOX2 pivotal trial. Based on that PHYOX3 data, we're optimistic that we may report a higher level of normalization of oxalate levels, which we view as the most important metric in looking at the disease. It is important to note that if oxalate is in the normal zone, then you have effectively normalized the disease state fourth patient. And even disease management activities, you have the potential to stop doing those with elevated levels of oxalate, don't think that's something that's going to occur. So the larger the fraction of patients who achieve a stable normalization level, I think, is going to be viewed as a differentiating factor, and we're optimistic that we may achieve that. We'll have to see what the PHYOX2 data is. Related to that is the average -- play level achieved by patients, similarly, more reduction, the, better, right? So the absolute level achieved in the percent normalization, we think, is very important. Beyond that, we are -- have received a lot of positive feedback about the regimen of our product and its presentation as a prefilled syringe for self administration. This is a lifetime chronic disorder. And that sets up an extremely convenient, no healthcare practitioner acquired, easy to remember dosing regimen with a small volume small needle self-administration subcutaneous injection. That, we believe, may emerge as a preferred format for in this disease for dosing and RNAi therapy. So there are a number of differentiation channels that are possible. And in the case of the dosing format, that is we're confident we're on track to launch with those three folks origins.

Lauren Stival -- Investor Relations

So the therapeutic hypothesis for disulfiram, as you know, is that by reducing -- by knocking down the expression of the gene in the liver, you reduce the abnormal protein in the liver that allows the liver to regenerate. So our Phase II study is designed one, to confirm that we are able to knock down the liver protein, which we fully expect to do based on the mechanism of action. We then expect to see that, that has resulted even a decrease in the abnormal in the level of abnormal ad in the liver. We have histological endpoints based on biopsies, so serial biopsies done with a cohort, both a six month and a 12-month duration in our Phase II study. That will evaluate improvements in histology, where we will be looking for reductions in globules as well as disease activity as well as looking at fibrosis. We have complemented that with the use of imaging studies that will allow us to assess home liver, if you will, behavior for the lack of a better word, in terms of stiffness using -- or --, and combine that with soluble biomarkers.

To that end, the recent press release from Arrowhead based on five patients worth of data, demonstrating some improvements in fibrosis and consistent changes in many of these markers is actually a very encouraging sign. Yes, it's small numbers of patients, it's own data, but at 12 months seeing some changes in the app -- although in the absence of the placebo control, gives us encouragement that our plans are well thought through, and we are planning on collecting all of that information in the Phase II study to then inform us for our regulatory interactions to decide what will be the basis of approval in a Phase III study in an indication where the disease is rare enough where traditional liver outcomes in the long-term are going to be difficult to follow. So that -- so I think I'm very encouraged by the recent data. They're quite compatible with the plans we have made. We are excited that we have designed a study that has two cohorts looking at six and 12 months of treatment. We've included a population that covers F2 through F4. So now the focus is on getting it going.

Operator

Next question comes from the line of Stephen Willey from Stifel.

Stephen Willey -- Stifel -- Analyst

This is -- on for Steve. For PH3, is there any color that you can provide on how you plan to find these PH3 patients, especially since they're -- as you describe them as silent sufferers. And also, is there any overlap between the PH3 diagnosing physicians and the ones that also diagnose or PH1 to patients?

Robert D. Ciappenelli -- Chief Commercial Officer

Yes, Bonnie, it's Rob. Thanks for the question. And related to the PH3 marketing, where are these patients. So one of the key aspects, both from a healthcare professional side and from a patient standpoint, that would be education. And you can start to see some of that already on our website and working with the patient as we see the split as. So awareness of the disease and the symptomatology, key aspects that we have to get out into the marketplace around. If you have frequent stone, you really need to talk to your doctor about what may be going on. Those types of context needs to really continue to get embedded into the marketplace in terms of education. Also, in terms of appropriate and differential diagnosis, the typical PH station three to five year patient journey of speaking a differential diagnosis. And we've got two really good tools right at our fingertip, urinary oxalate testing and genetic testing. Dicerna will have a program to help care professionals differentially diagnose patients. And I think having access to the company's sponsor genetic test is yet another way to take a barrier off the table, so that physician can be informed. And the panel that we're designing will be a panel that not just looks at PH, but gives the physician information that goes beyond PH because, frankly, every patient that these positions are seeing it isn't necessarily a PH basin in part of what we're trying to do is help these patients get to a differential diagnose.

Douglas M. Fambrough -- Chief Executive Officer, President and Director

In the the physician population, the physician group is the same one.

Robert D. Ciappenelli -- Chief Commercial Officer

Yes.

Douglas M. Fambrough -- Chief Executive Officer, President and Director

So the same groups of urologists and the projects we would --

Stephen Willey -- Stifel -- Analyst

And my last question is, I was wondering what are your thoughts regarding Alnylam's recent -- data? And what do you believe this means for lumasiran?

Douglas M. Fambrough -- Chief Executive Officer, President and Director

I think you're referring to the nephrocalcinosis data, Bonnie. And so we were encouraged to see the data. Another example of what the potential impact of durable reductions in -- over time can achieve. Now for cosmesis is measured on -- We are looking at it, too. Our program is initially focused on demonstrating the durable and meaningful normalization of urinary oxalate in a large proportion of subjects. But we see the -- calcinosis information as, again, emerging everyone in our case, we are measuring it in our PHYOX2 program as well as our for the studies. It will take time to have that data. But for me, it's, again, for the validation that is even hyperoxaluria lowering action rate loads and reducing urinary oxalate is a good start.

Operator

Next question comes from the line of Yaron Werber from Cowen.

Brendan Mychal Smith -- Cowen -- Analyst

Congrats team. This is Brendan on for your Cowen. First, I know you touched on milestone payments, but can you just confirm one more time what you expect maybe in terms of cadence, which milestones you think going to hit maybe the rest of this year and even next year, if you can? And then just really quickly, as you're looking ahead to new programs percent of CNS, maybe kind of give us a sense how you're prioritizing different targets that you think are especially amenable to RNAi versus maybe other modalities? And if you think you'd look to partner that program for development?

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Doug Pagan, is going to take them off the question.

Douglas W. Pagan -- Chief Financial Officer

Thanks for the question, Brendan. Yes. So the milestones, what we've laid out is starting last year at the end of the quarter, we laid out a five quarter $100 million paid. We recognized 17 in Q4 and now not recognized but received and now 32.9% this quarter. So the remaining amount there, remaining $50 million or so will come in unevenly milestone payments range from small reimbursements, two large milestones and $10 million, but they will come in over the next two quarters relatively evenly. We haven't forecast or given guidance on next year because some of these milestones are dependent on the ones preceding them. So we'll look to give more guidance as we get toward the end of this year.

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Thanks, Doug. With respect to the target prioritization question, it's such an interesting area. I mean, specifically for the CNS, as you know, we have a collaboration with Lilly, and it has been a close collaboration in the neurodegeneration and pain space, there is potential, which I think you alluded to, for us to do certain orphan indications on our own. There is a dialogue with Lilly with respect to some orphan indications. I would note the s is pretty crowded space where there's been a number of companies focusing with a number of different modalities. And as we evaluate more broadly indications to go after with the Galaxy plus technology, we're not just thinking about CNS. I think among the set, we're pretty deep in the CNS is a minority. We expect to be advancing multiple programs proprietary programs, not necessarily orphan out of GalXC plus internally.

And there may be a neuro program among them, that there will be non-euro as well. Each indication is its own little universe of detail and fact. So it's hard to make general statements about what makes an RNAi indication what makes RNAi preferable in general, relative to others, but other modalities. But in some cases, it has to do with the fact that the target is not very druggable. And other cases, it has to do with the long duration of effect in area under the curve or the difficulty of multiple administration, which we avoid with a long effect with RNAi. So there are a series of reasons why RNAi would be preferable. And there are different, if you're thinking about, which you use CRISPR against this target compared to which use a small molecule against the target. So I'm not sure there's a general answer there.

However, we do think about that set of potential competitors for different technologies as part of our review of an indication. And there are a bunch of other things that go in there, the strength of the therapeutic hypothesis, the predictability, have the animal models, the difficulty and length of the clinical trial program including endpoint selection and things like that. So it's really -- it's a three dimensional chest cane choosing these indications, and we're trying to be very careful about it, but it's hard to describe general rules.

Operator

Next question comes from the line of Luca Issi from RBC Capital.

Luca Issi -- RBC Capital. -- Analyst

Maybe the first one on I think we've seen lumasiran actually, it's off a pretty good commercial start here, particularly ex U.S. So wondering if that impacts in any sort of form of shape our ongoing dialogue with our potential partner here and maybe dig your picture, how should we think about time lines for potential partnerships ex U.S. for nedosiran? And then on PH3, if I recall it correctly, PHYOX4 is enrolling just six patients, I think, total, including placebo. So can you just remind us what gives you confidence that such a small data set would be sufficient to get a label that actually includes PH3 as well?

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Rob, do you want to address the lumasiran launch?

Robert D. Ciappenelli -- Chief Commercial Officer

Sure. Thanks, Doug. Thanks, Luca, for the question. In terms of lumiere and any inquiries from our partners. And the bottom line has been our OUS conversations has proceeded quite nicely with our expectations. And there are -- from from our discussions with partners, it's been really interesting. They're looking at the whole market, not just the PH1 market. And what they see is high unmet need, some promising results as we talk from the -- data.

But back to what I was talking earlier that you've got a high burden of disease in PH patients in emerging further than disease in PH three patients and the partners that we're talking about, understand that. And they see the potential with the nedosiran and PHYOX package and being able to bring that package forward, not only in the EU, Asia and other markets. And they just see a lot of potential upside here for the program. And we're really optimistic in wrapping up those conversations and getting a deal done.

Shreeram Aradhye -- Executive Vice President and Chief Medical Officer

Luca, this is Sri. As far as the use of the PHYOX4 data toward a potential PH3 submission and approval, I think behind your question is the indication. Of course, we are more confident. We have agreement on PH1 and P H2. The way we think about PH3 is as follows: Please treat the disease that is also characterized by excess oxalate production. It is a disease for which increasing implications of that disease state are becoming apparent. It's the most recently described form of PAH. So that information was a little bit less than what was available for PH1 and 2. So we now are going to have that information available to us. PHYOX4 is going to be a single-dose study that is double-blind, placebo-controlled and in which we're going to assess safety, tolerability, PK/PD but also our responder analysis where a 30% reduction in the oily oxalate on two consecutive visits, which is known to be a threshold that is clinically meaningful. It's used by nephrologists and clinical practice.

And if we convincingly show that, then we expect to make the argument that we are lowering -- oxalate in this disease. We know what the importance of the -- oxalate is. And given the disease burden, do we have an opportunity in the context of the overall PH1, PH2 data set and the PH3 findings to seek an approval for all types of PH. I should say that, of course, the PH 3-part of this is less agreed to with the FDA than our PH3 plans, but our confidence is all going to be primarily dependent on the data as it comes in. But that's going to be our strategy.

Operator

Next one on the queue is Yigal Nochomovitz from Citigroup.

Yigal Nochomovitz -- Citigroup -- Analyst

First, on PHYOX7, am I correct that you're going to be measuring EGFR? And would you expect the doser to have an impact on EGFR slope in these patients given the reduction in oxalate and perhaps even potential to delay dialysis? And then the second question, a follow-up on the previous one. Just wondering, what are you hoping to see in the Phase II data for alpha-1 antitrypsin deficiency that will meet your objectives for the target product profile for Velcera? And then finally, Doug, I think you mentioned at one point in your prepared remarks that you becoming a you'd be becoming a bit more adventurous with respect to future indications for the GalXC program platform. So just wondering if you could provide any preview of where you may go beyond the latest new program in alcohol use disorder.

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Sure. So Sari will start off on the PHYOX7.

Shreeram Aradhye -- Executive Vice President and Chief Medical Officer

Yes. So PHYOX7 is actually the study in which we will evaluate the ability of nedosiran to reduce hepatic oxalate production, in people who have a degree of insufficiency, including being on dialysis that prevents urinary oxalate from being the right marker, so we will use plasma oxalate reductions as evidence of efficacy. So PHYOX7 is about demonstrating the efficacy of nedosiran in a population that we have not yet studied. So it's not a population in which we will then be evaluating whether progression of GFR reductions in onset of new dialysis or things like that, it's actually evaluating effects on oxalate. So that was one. Your second question was about and what we expect to see in Phase II. And I will repeat my prior answer, which is that the goals of the Phase II study are to demonstrate the ability of the selected dosing regimen to reduce abnormal A1AT levels in the liver. The primary endpoint is actually around the serum because that's an asset that's available. We want to measure a A1AT deliver and show that we can reduce it. We're going to do the serial biopsies that will evaluate histology to see what we are doing to the abnormal globules that accumulate and deliver and other markers of injury. We will be evaluating fibrosis. We will combine that with imaging measures of the stickiness, which are an indicator of fibrosis, i.e., fibroscan and MR elastography. And we will add some soluble biomarkers that are also indicative of progressive liver injury in addition. But it's a combination of a number of those things all moving in the right direction. That will be the basis of the data. That will be the data that we'll collect in Phase II and then convert that into a proposal for a meaningful endpoint in our Phase III study as the basis of approval in discussions with the regulators.

Douglas M. Fambrough -- Chief Executive Officer, President and Director

We have the expectation of observing improvement across all of those parameters. But we're not going to get quantitative about what we're looking for. Yes. And can you repeat the third question?

Yigal Nochomovitz -- Citigroup -- Analyst

Sure, Doug. I think you'd mentioned at one point that you were going to become a

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Yes. Of course. There are GalXC Plus goes a lot of late. And that raises a lot of possibilities for what we could do. RNAi is not inherently an orphan disease or metabolic disease technology, ultimately perhaps will impact every therapeutic area with possible exception of antibacterials because doesn't -- it doesn't work in bacteria. And there are certain cases where there's famous undruggable targets that are really intriguing. That sort of wouldn't meet the criteria of strong genetic association and the traditional association study sense? And obviously, you have I talking about genetic diseases in that case. I didn't really mean something that I could go into a lot more detail on. There's going to be diversity in our indications. We're not going for commercial synergy. We're going for products that, in each case, would support doing a commercial launch, even if you didn't have a commercial operation in that area. And I really, I think, was just trying to express that sense of diversity that's likely to come out.

Operator

So, next question comes from the line of Mayank Mamtani from B. Riley Securities.

Mayank Mamtani -- B. Riley Securities -- Analyst

Congrats on so much going on and still having. So maybe just three for me. Just quickly on PHYOX8, the open-label pediatric. Any color on the timing there? I know now it's starting next quarter, but are you thinking of this could also sneak into the NDA initial

Douglas M. Fambrough -- Chief Executive Officer, President and Director

No. So I don't expect PHYOX data sneaking to the NDA. That will have to be a supplemental.

Mayank Mamtani -- B. Riley Securities -- Analyst

Okay. Got it. And then, yes, most of my questions are just follow-up clarification. And then on the AAT side, again, I appreciate the extensive color you've already provided. But I was just curious that on the dose levels, if you could comment that you've tested, and you've obviously looked at it against the Alnylam molecule. Just trying to understand how much knockdown and how much headroom do that knockdown you need to have now that you know, at least from the arrowhead data that the liver healing process is happening pretty quickly. So just curious, are you -- do you feel comfortable with the doses that you've looked at in your Phase I and sort of have a good answer there?

Douglas M. Fambrough -- Chief Executive Officer, President and Director

We've done doses in our Phase I healthy volunteer study. They're very similar to doses that we explore to identical, right? And HBV and then the dose around before that we're talking about another indication here where you're going to have long-term chronic dosing. And you have dose additivity in RNAi. So there's -- I know that the buy side tends to focus a lot on, OK, when this group got 85%, this group got 90%, maybe that one's better. Inside the company, it doesn't matter. You're going to be doing multiple doses, it's going to go down to its max rapidly after two doses. So I think it's there's maybe a little too much focus on that. When we were evaluating the Dicerna molecule versus the Alnylam molecule, we are also considering the ease of manufacture of the molecules. We're considering the type of preclinical toxicology studies that were done and its implication for sequencing of later studies of course, the outcome, the detailed outcome of those studies. So there are a number of things that played into it. The ability to generate sufficient knockdown, frankly, is very easy in a multi-dose context. And so that wasn't even the primary. As I've said in the past, both companies are very good at making these molecules. And I think either one could have been selected and successfully developed, it only makes sense to do one based on the totality of the data, we chose our on.

Mayank Mamtani -- B. Riley Securities -- Analyst

Got it. And Doug, on the -- programs, you said majority are non CNS. I guess my question on this, to be more specific on this carport. Like when you look at indications, do you think of who might be ahead from an antisense, less inferior -- kind of more inferior platform standpoint? Or are you looking to sort of tread new waters like you did with AUD? Is that like how are you determining what cell types? And what indications you're going to go for?

Douglas M. Fambrough -- Chief Executive Officer, President and Director

I would like to have some things that are first-in-class in what we're doing. There are context where an antisense ahead may be really problematic in there a context where we think it may not be problematic. But the competitive environment around an indication is an important element. And it matters a lot if you're competitive in a large market versus competitive in an ultra-orphan market. We would you want to be straight up head-to-head and an ultra-orphan that's already being addressed fairly well with a similar modality, it's probably not a good place to be.

Operator

Next question comes from the line of Ed Arce from H.C. Wainwright.

Thomas Yip -- Wainwright & Co -- Analyst

This is Thomas Yip asking a couple of questions for Ed. Congratulations on a lot of progress with multiple programs. -- partner. Perhaps this question for the Phase II Roche collaboration with 6346 in HBV. As we understand the comm end point of service engine reduction, what would be threshold that we can look at as to be considered as a success for the for 6346?

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Well, in the Phase II study, the question being asked is really, does it look like you can achieve a functional cure with these combinations. And that means the s antigen would go to undetectable and remain so. Until 24 weeks, which would be the final assessment point. So you're really looking for 0.

Thomas Yip -- Wainwright & Co -- Analyst

Okay. And that perhaps back to -- and as you outlined, we are approaching closer to NDA filing and perhaps approval within the next 12 months. And you specifically mentioning targeting neurologies and nephrologists. Any thoughts on what U.S. market launch would look like?

Robert D. Ciappenelli -- Chief Commercial Officer

Yes. It's Rob. I appreciate the question. In terms of our commercial activities, you're responding, we're pacing them to the NDA filing and targeting and the FDA approval, a couple of key components. The launch planning is clearly under way at this point. I'm really pleased, and Doug mentioned it, we've hired the Vice President of Sales, which is the last member of my leadership team. So we have the full complement assumptions represented across commercial at this point in time. And as you can imagine, all the key areas that you'd be expecting at this point in time are under development, such as branding, message testing, pricing and contracting, establishing patient services, acumen and skills. And last but not least, now starting to design inside the sales force. Our expectation is still go-to-market with a full and comprehensive promotional plan package and we'll have all the functions in place to do that in the United States.

Thomas Yip -- Wainwright & Co -- Analyst

Okay. Got it. Insight. Perhaps one final short one for Lilly's, it's anticipated in the for 469 in second quarter. Are there any milestones associated with that filing?

Robert D. Ciappenelli -- Chief Commercial Officer

Yes.

Operator

Next question comes from the line of Robyn Karnauskas from Truist.

Robyn Karnauskas -- Truist -- Analyst

So one quick one. When you thought about designing your Phase II trial for A1AT, just a couple of questions I had for you. I know there's some questions around biopsies having different levels of fibrosis improvement, depending on where you biopsy in the liver. So how -- what kind of things did you take away from the arrowhead data as far as like any potential modulations of how you're going to be running the Phase II trial? And what other additional parameters, what do you think are the most important parameters or additional parameters that maybe you haven't spoken about yet, that will be important to determining how doctors view the A1AT data from the clinician side? I was just worried about the biopsies having variable results.

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Well, we designed the study, keeping -- firstly, a placebo-controlled Phase II study. So that's the first thing. So we haven't included the control that allows us to make meaningful interpretations of the information that we will find. That's number one. Number two, knowing that the duration of effect in which you may see improvements in fibrosis until the iron data became available and knowing that, that's early small numbers, but still at 12 months, we have designed a cohort at six months and 12 months, right? So we are getting a good sense for when are we seeing -- what is the trajectory of the histological improvements that we expect to see. Traditionally, biopsies do carry the risk that you described, which is given that you -- a very small portion of the liver, around 70,000 of the entire liver volume, things do get difficult to interpret. But I think that the goal was to make sure that we have had a control arm, we are making sure that we are thinking carefully about standardizing the way we're going to look at the biopsy so central pathologists, having predefined criteria for how the tissue will be evaluated. So there's a series of steps that are taken in this context that there are a lot of learnings from the national nature on how you need to do this to get it right. And we'll certainly be thinking about it. But in order to overall interpret the information, we are complementing it with the imaging approaches of fibroscan and MR elastography, to create a holistic picture, for lack of a better word of how we are impacting the disease. The foundation of it all is essentially finessing the gene to reduce that normal protein and allowing the liver to start healing. And we are encouraged to see from the early -- data that Mike was previously described in --. There seems to be a possibility that this happens in a liver disease.

Operator

Next one on the line is Keay Nakae from Chardan.

Keay Nakae -- Chardan -- Analyst

Just a couple of quick accounting questions. Doug, the upfront $180 million for the royalty. How are you recognizing that?

Douglas M. Fambrough -- Chief Executive Officer, President and Director

So we'll put that on the balance sheet, albeit a deferred item in the liability section, and then we will recognize it proportionate for the current period royalties earned. Over the proportion -- over the denominator of the lifetime royalties. So it will be sort of a pro rata recognition over time for the life of the patent.

Keay Nakae -- Chardan -- Analyst

And the sales milestones, will you recognize those in whole once reached?

Douglas M. Fambrough -- Chief Executive Officer, President and Director

The contingent sales milestones for the royalty, they would be treated similarly to our others in that they would be added into the total transaction price, and there would be sort of a catch-up for the proportion recognized over time. So they wouldn't be a single onetime recognition.

Operator

Next one on the line is Jonathan Miller from Evercore.

Jonathan Miller -- Evercore -- Analyst

One more thing that I wanted to follow-up on from another analyst's question. When you think about ex U.S. PH partners, what are you looking for and the ideal partner there? And is there anything in particular on a deal structure that you're most attracted to? How would you like to -- what sort of a partnership would you like to Form Act?

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Yes. I can speak generally about this. We're very deep in the process at this point in time. We are looking for a partner that we think brings excellent rare disease capabilities and a strong history with the call point as a desirable point as well. In terms of structure, this is not a transaction where we're trying to optimize an upfront payment. This is more something where we're looking for a risk-sharing partner where we're also going to share the upside of successful commercialization in Europe.

We're fortunate to be reasonably well funded from a balance sheet perspective and have a pretty good visibility on continued cash inflows through collaboration. And so it was not a case where we were it's not a case where we're trying to optimize that. What is the biggest number that we can get upfront here. But rather, what we think is our strong risk share in the collaboration. I think that's probably all I can say on structure at this point.

All right. We'll take someone back or a second place. And I think that's our last question. So I want to thank everybody, and thank you, operator. As we head into the summer months, we're really excited to have a lot of potential announcements, including by PHYOX2 readouts, PHYOX4 readouts [Indecipherable] Phase I data in A1AT, patient dosing and the Phase II initiation on that. And in A1AT NDA filing our IND filing for DCR-AUD initiating that Phase I study. And of course, we are [Indecipherable] IND this year. There maybe some more things that we end up announcing. Over the coming months as well. So we'll be participating in a number of investor conferences in the coming months. So we can keep you updated there. And also, of course, on our next call. Thanks for joining us. Have a great evening.

Duration: 70 minutes

Call participants:

Lauren Stival -- Investor Relations

Douglas W. Pagan -- Chief Financial Officer

Shreeram Aradhye -- Executive Vice President and Chief Medical Officer

Douglas M. Fambrough -- Chief Executive Officer, President and Director

Robert D. Ciappenelli -- Chief Commercial Officer

Jonathan Miller -- Evercore -- Analyst

Rick Bienkowski -- SVB Leerink -- Analyst

Rob Williams -- Goldman Sachs. -- Analyst

Stephen Willey -- Stifel -- Analyst

Brendan Mychal Smith -- Cowen -- Analyst

Luca Issi -- RBC Capital. -- Analyst

Yigal Nochomovitz -- Citigroup -- Analyst

Mayank Mamtani -- B. Riley Securities -- Analyst

Thomas Yip -- Wainwright & Co -- Analyst

Robyn Karnauskas -- Truist -- Analyst

Keay Nakae -- Chardan -- Analyst

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