Regulus Therapeutics Inc (RGLS) 2014 Q1 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Regulus Therapeutics first-quarter 2014 conference call. My name is Latoya and I will be your coordinator for today.

I would now like to turn the conference over to Amy Conrad, Director, Investor Relations and Corporate Communications. Please proceed.

Good afternoon and thank you for joining us. On behalf of Regulus Therapeutics, I would like to welcome everyone to our conference call for the quarter ended March 31, 2014.

I hope you've all had a chance to review today's press release. If you have not and you need a copy, you can visit our website at www.regulusrx.com.

Joining me on today's call are Kleanthis Xanthopoulos, PhD, President and Chief Executive Officer; Neil Gibson, PhD, Chief Scientific Officer; and Dan Chevallard, Vice President Finance and Accounting. During today's call Kleanthis will provide introductory remarks, Neil will provide an update on our microRNA therapeutic programs and Dan will summarize our first-quarter 2014 financial results. Following your questions Kleanthis will wrap up the call.

Before we begin, I would like to remind you that this call will contain forward-looking statements considering Regulus's future expectations, plans, prospects, corporate strategy and performance which constitute forward-looking statements for the purposes of the Safe Harbor Provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in our filings with the SEC.

In addition, any forward-looking statements represent our views only as of the date of this webcast and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements.

At this time I would like to turn the call over to Kleanthis.

Welcome everyone and thank you for joining us this afternoon.

We had a great start to 2014. Our achievements over the last quarter and recent period continued to solidify our leadership position in the field of microRNA therapeutics. We successfully advanced our microRNA therapeutic pipeline by initiating the Phase 1 study for RG-101, reporting positive data from our oncology programs and moving our discovery efforts forward.

We also expanded our microRNA biomarkers markets platform with the creation of the Regulus microMarkers R&D Division.

In addition, we bolstered our intellectual property portfolio, strengthened our strategic partnerships and maintained a solid financial position. And finally, the goals under our Clinical Map Initiative remain on track. Most notably in the last quarter we were pleased to have dosed our first human subjects in our Phase 1 clinical study of RG-101, a GalNAc-conjugated anti-miRtargeting microRNA-122 for the treatment of chronic hepatitis C virus infection, or hep-C.

This is an important milestone for the Company. We expect to achieve another significant milestone in this program by the end of this year in order to demonstrate our first human proof of concept results from part four of the Phase 1 study of RG-101.

If favorably inclined, this data will serve as validation of our microRNA technology platform and will further enhance in advance the field of RNA therapeutics.

In addition to commencing our first clinical study, we also are very pleased to have renewed our strategical alliance with Sanofi to focus on oncology and orphan disease targets specifically microRNA-21 for kidney fibrosis and hepatocellular carcinoma in microRNA-221/222 also for hepatocellular carcinoma. We expect to drive each of these programs to human proof of concept at which time Sanofi has an option to take over development and commercialization.

If Sanofi exercises the option we will receive significant option prepayments and we will be reimbursed for the majority of the development cost for each one of these programs.

Regulus is also eligible to receive milestone payments of up to $101.8 million for proof of concept exercises, $15 million for clinical milestones and up to $300 million for regulatory and commercial milestones.

Finally, we also have an option to co-promote in the United States or receive royalty payments in the mid 10% to 20% range.

In other business highlighting the quarter was the relationship formed with the Alport Syndrome Foundation, a nonprofit corporation focused on raising awareness and finding a cure for Alport Syndrome, a life-threatening orphan kidney disease with no approved therapy. Recently we nominated our second clinical candidate, RG-012, an anti-miR targeting microRNA-21 for the treatment of Alport Syndrome. Relationships like this are critical to helping us enhance our scientific research to explore novel treatments for orphan diseases. We look forward to raising awareness of this life-threatening disease while we rapidly advance our microRNA-21 inhibitor into clinical development.

In addition to RG-101 and RG-012, we intend to nominate a third microRNA candidate for clinical development by the end of this year which is a key goal under our Clinical Mapping Initiative. This candidate may come from our proprietary efforts or from any of our partner programs. If we succeed, we may have three clinical programs in 2015.

We set such aggressive goals because we've never been more bullish on the science and the potential that targeted microRNAs have to treat diseases. In the last several years, the biological knowledge of microRNAs has increased exponentially. In 2015, there were over 7000 peer-reviewed publications on microRNAs and this year the predictive number of publications is estimated to increase to over 9000 thus providing us with valuable biological knowledge.

Inherently the biology of microRNAs are well-suited to treat complex multiple bacterial diseases and we will focus internally and with our partners on several attractive therapeutic opportunities in oncology fibrotic conditions such as Alport Syndrome, metabolic and inflammatory diseases, and finally HCV.

In addition to our deep understanding of the microRNA biology in these disease areas, we also take into consideration areas of high unmet medical need and positive preclinical evidence in validated animal models of each disease. In short, our opportunities are significant. We continue to believe that microRNAs will transform the traditional drug development model and become a new and major class of drugs with broad therapeutic applications.

With these introductory remarks, I would like to turn the call over to Neil to summarize our recent scientific progress and provide some insights into the existing programs. Neil?

Thank you, Kleanthis, and good afternoon, everyone. We are very pleased with the scientific progress we've made in the first quarter. Under our Clinical Map Initiative, we continue to evaluate RG-101 in human subjects, advance RG-012 towards clinical development and are on track to selecting a third clinical program by the end of the year.

In March we dosed our first human subject with a microRNA therapeutic in our Phase 1 clinical study of RG-101, a GalNAc-conjugated anti-miR targeting miR-122 for the treatment of HCV. In preclinical studies, we have shown that RG-101 is potent and safe with the mechanism of targeting miR-122 being pan-genotypic. Inhibition of miR-122 has not yet been associated with viral resistance.

The phase 1 clinical map for RG-101 has four parts. First, a single ascending dose study in healthy volunteers. Second, a multiple ascending dose study in healthy volunteer subjects. Third, a single dose drug-drug interaction study of RG-101 in combination with an approved PAA in healthy volunteers subjects. And fourth, a single dose study in HCV patients to assess the safety and viral load reduction which is designed to demonstrate human proof of concept.

The primary objective of the Phase 1 program is to evaluate safety and tolerability and the secondary objectives are to evaluate pharmacokinetics, viral load reduction and any impacts an [RODAA] may have on the pharmacokinetics of RG-101.

Up to 100 healthy volunteers subjects and HCV patients are planned to be enrolled in this study. By the end of the year we expect to demonstrate human proof of concept from part four of this study, which is a key corporate goal under our Clinical Map Initiative.

Our second development program is RG-012, an anti-miR targeting microRNA-21, or miR-21, for the treatment of Alport Syndrome, a life-threatening kidney disease driven by genetic mutations in the type 4 collagen and family of proteins, 4A3, 4A4, or 4A5. The impact of the mutation in the collagen gene results in a disruption of the structure of the glomerular basement membrane, increased expression of miR-21, increased fibrosis and loss of renal function leading to end-stage renal disease, dialysis or transplantation.

In preclinical studies, RG-012 has demonstrated potent inhibition of miR-21 in vitro and in vivo, a decrease in the rate of renal fibrosis and effective percent increase in lifespan of mice harboring a collagen 4A3 mutation, similar to the collagen 4A3 mutations inherent in human patients with Alport Syndrome. And finally, a favorable pharmacokinetic profile that supports the potential for a once a week dosing regimen.

As Kleanthis mentioned earlier in the call, we are pleased to be working closely with the Alport Syndrome Foundation. We are hopeful that our relationship with the Foundation will advance our understanding of the disease as we advance RG-012 into the clinic.

During the first quarter, we prepared for upcoming clinical studies with RG-012 by initiating IND enabling activities and continuing to build the clinical map for RG-012. We will conduct a pre-IND meeting with the US Federal Drug Administration in the second quarter to help clarify the regulatory path forward. During this meeting, we expect to discuss the current clinical development strategy for RG-012 in order to help us establish appropriate clinical endpoints for any future clinical studies.

In the third quarter of this year, we expect to initiate a natural history of disease study to learn more about the actual progression of Alport Syndrome by documenting the decline in certain renal biomarkers such as glomerular filtration rate, or GFR. In the first half of 2015, we expect to initiate a Phase 1 clinical study to assess the safety and pharmacokinetics of RG-012 after both single and repeat dosing in healthy volunteers.

If the Phase 1 results are favorable, we anticipate that we may conduct a Phase 2 study of RG-012 in Alport Syndrome patients which may be designed to determine proof of concept. Additionally in the fourth quarter this year, we expect to report our first combination data of RG-012 within angiotensin converting enzyme, or ACE inhibitor. ACE inhibitors are emerging as standard of care in patients with Alport Syndrome and are used to treat the proteinuria associated with disease.

The combination data will be important to show the utility of adding a microRNA therapy to this emerging standard of care. We look forward to reporting continued progress on this exciting program.

As part of our Clinical Map Initiative, we intend to nominate a third candidate for clinical development before the end of the year which may come from our proprietary efforts or from a partner target program. To that end, we continue to pursue several undisclosed microRNA targets namely for oncology and orphan diseases and to expand our therapeutic pipeline. Specifically, we continue to advance our oncology portfolio and presented positive preclinical data on miR-21 and miR-221-222 for the treatment of hepatocellular carcinoma, or HCC, the most common form of liver cancer. This work was presented at the American Association for Cancer Research annual meeting, or AACR, last month.

We also presented data from biomarker discovery studies evaluating the pharmacodynamic signature for assessing miR-21 inhibition in the microRNA expression in tumor tissues in mouse models of HCC. These data provide further evidence that miR-21 and miR-221-222 are validated preclinical targets for the treatment of HCC.

As Kleanthis mentioned, Regulus is responsible for driving these programs to proof of concept at which point Sanofi has an option to take over further development and commercialization. If Sanofi chooses to exercise its option on these programs, this will trigger significant payments to Regulus. In addition, we are eligible to receive clinical, regulatory and commercial milestones as described earlier by Kleanthis. Currently we are optimizing anti-miRs in each program for potential clinical development.

In addition to the miR-21 and miR-221-222 programs, we also advanced our miR-19 program for lymphoma with AstraZeneca. We remain excited about the opportunity that microRNAs having cancer and we look forward to reporting further progress from our oncology portfolio later in the year.

To round out our portfolio review, we also continue to advance our biomarkers technology platform with our Regulus microMarkers R&D division. This division is aimed at identifying microRNAs as biomarkers for disease and supports our growing therapeutic pipeline, our strategic alliance partners and our collaborators. We plan to present additional biomarker data at the upcoming Tides Research meeting on May 12 through in a Rhode Island in an oral presentation on May 14 titled, the Prognostic and Predictive Utility of Measuring Biomarkers in Serum and Other Bodily Fluids. Regulus will demonstrate that distinct microRNA signatures can distinguish patients with multiple sclerosis, or MS, from normal volunteers and identify colorectal cancer patients with high risk of liver metastasis.

As a reminder, we have an ongoing research collaboration with Biogen Idec to identify microRNAs as biomarkers for MS. In addition to the MS work, we are also working to identify a microRNA signature that may be both prognostic and predictive for patients with rheumatoid arthritis.

To summarize, the first quarter of 2014 has been very productive on the scientific front. The clinical maps for RG-101 and RG-012 are on track and we look forward to building a meaningful clinical portfolio.

With that I will turn the call over to Dan to summarize our first-quarter 2014 financial results.

Thank you, Neil, and good afternoon. In the first quarter of 2014, we maintained our strong financial position and finished the quarter with $114.6 million in cash, cash equivalents and short-term investments. Our cash position as of the end of the first quarter was strengthened by the $10 million equity investment from Sanofi in connection with the renewed strategic alliance, which was completed in February.

Turning now to our financial results, we recognized revenue of $1.6 million in the first quarter of 2014 compared to revenue of $3.2 million for the same period in 2013. Revenue during these periods consisted primarily of amortization of upfront payments received from our strategic alliances and collaborations, which we recognize over our estimated period of performance.

Total operating expenses were $12.3 million in the first quarter of 2014 compared to $8.8 million for the same period in 2013. Our research and development expenses were $9.6 million in the first quarter of 2014 compared to $6.9 million for the same period in 2013. This increase was primarily driven by the initiation of a Phase 1 clinical study for RG-101 and the continued advancement of other development programs including RG-012. We expect our research and development expenses to increase as we initiate additional clinical studies and regulatory filing activities in the future.

Our General and administrative expenses were $2.7 million in the first quarter of 2014 compared to $1.9 million for the same period in 2013. This increase was primarily driven by an increase in salaries and related employee costs including non-cash stock-based compensation expense and other operating costs.

Our net loss for the first quarter of 2014 was $12.7 million or $0.30 per share compared to a net loss of $7.2 million or $0.20 per share for the same period in 2013. As previously guided, we expect to finish 2014 with at least $75 in cash, cash equivalents and short-term investments.

With that, I will turn it back over to Kleanthis to wrap up the call.

Thank you, Dan. In closing, we had a very busy and satisfying start to 2014 on both the business and scientific front and remain bullish on our leadership position in the field of microRNA therapeutics.

We have several important catalysts coming up under our Clinical Map Initiative. By the end of the year we will have the unique opportunity to demonstrate our first human proof of concept results with RG-101, which if favorable, may validate our microRNA technology and advance the overall RNA therapeutic space.

Additionally, we are on track to initiate a natural history of disease study for RG-012 for the treatment of Alport Syndrome in the third quarter of this year and we continue to plan for a Phase 1 clinical study in the first half of 2015. We also expect to nominate a third microRNA candidate for clinical development by the end of this year potentially giving us three clinical stage programs in 2015.

Thus it has been a very productive quarter and recent period and we hope to carry this positive momentum throughout the remainder of the year. We look for to advancing the programs and continue to build a meaningful clinical portfolio based on microRNAs.

Thank you again and with that I would like to turn it over to the operator to take some questions.

Thank you. (Operator Instructions). Alan Carr, Needham.

Hi, thanks for taking my questions. I wonder if you could comment on your selection process for the third target and what sort of bandwidth you have beyond three programs at a time. And then also your thoughts on oncology versus rare disease -- I know you are working in both of them and I am wondering if you have bias towards one or the other? Thanks.

Alan, I will be a two-part answer and I will cover the first one and then turn it over to Neil for a little more specificity on the science front.

As you know, part of our strategic financial planning exercises that we conduct very regularly, we have disclosed that at any given point, we will have anywhere between six and eight programs. This is a combination of preclinical and clinical programs that are satisfied fully and critically having sufficient resources behind them to have a critical impact on the portfolio. So it is a very good point that you are raising that we actually do have the bandwidth should we be successful with additional clinical programs to move into the clinic, and again, we have been communicating that the third clinical candidate, which we will later do a third clinical program by next year, is the best case scenario. We have at least a handful of programs competing for attention and we believe that at least one will nominate a candidate but there is room for additional ones if the science continues to be successful.

Neil, any comments particularly on the cancer versus orphan?

Only add, Alan, that obviously we have an internal strategic focus on oncology, which by default the majority of oncology programs are orphan diseases and the orphan disease approach is a mix of the partner programs with some of our own exploratory work. And from the projects where we have three or four projects that are moving in parallel, a number of them obviously have already shown preclinical proof of concept, both our own internal work as well as published literature that helps support the validation around those programs.

All right, thanks very much.

Christopher James, Brinson Patrick Securities.

Good afternoon and thanks for taking my questions and congratulations on the progress you have made this quarter.

My first question is related to your pre-IND meeting with the FDA, just given that there is so much data in kidney disease and around specific endpoints and that there is nothing really for Alport Syndrome other than ACE and ARBs, do you think you will get an opportunity to discuss maybe accelerated approval under subpart-H during this meeting, or is that too forward-looking?

The focus of the meeting is to have the discussion with the Agency around our early clinical development plan and also the regulatory path forward, which would include a discussion around what type of approval best suits the program.

Okay, good.

Just to provide a little more specificity here, we disclosed yesterday at an investor conference meeting that the date for this pre-IND meeting is June 2, so it's literally around corner. We have submitted all of the appropriate materials and we are looking at both an orphan designation and potentially lay out the development path that could lead to accelerated approval.

Oh, great. Thank you. That's helpful. And Neil, you mentioned in the past a number of biomarkers outside of GFR, or [submitting] GFR. Could you briefly touch upon those again and maybe help us understand why they may be relevant in Alport Syndrome?

Yes, so obviously in addition to GFR, we will be looking at markers such as beta-2 microglobulin, creatinine both serum and urinary creatinine, as well as a number of exploratory biomarkers including microRNAs in the serum or urine. Obviously the GFR in creatinine, are the low-hanging fruit and the focus will be really to document the rate of change of those markers in patients with Alport Syndrome who are predominantly -- or who have stage 3 chronic kidney disease, so that we can really monitor the rates of decline of renal function and use that information as we plan our Phase 2 study.

Okay, great. Thanks for taking my questions.

Jim Birchenough, BMO Capital.

Yes, hi, guys. Congrats on all the progress over the quarter. A few questions. Just on the Alport Syndrome program and the preclinical data, is there any way to benchmark what we have seen with anti-miR-21 and what we see with ACE inhibitors pre-clinically, when you look at your results versus what's been shown pre-clinically for the ACEs and ARBs?

Yes, so for the ACE inhibitors, the published work in those rodent models which have the collagen or mutations in the collagen gene, was showing 25% improvement in survival and in our studies with the miR-21 anti-miRs, we've been able depending upon the background strain of the mouse to show survival ranges that go from 20% increase in survival to 50% increase in survival. And then when we get to the combination work we will be able to show when we show this data later this year, the opportunity for those two drugs to be potentially synergistic.

And, Neil, on the natural history study, could you maybe go through what the timeframe is for getting meaningful data from that study that could inform a proof of concept study? I'm just trying to get a sense of the timing of that natural history study and does that become gating on doing a proof of concept study?

So ultimately if we start the natural history study in the second half of this year and start the Phase I SAD/MAD program in the first half of 2015, we will be already six months into the natural history study before we start the SAD/MAD part and thus, it's likely that the SAD/MAD would take anywhere between three and six months, so we're anticipating having a minimum of six months, maybe longer, data on the natural rates of decline of renal biomarkers in patients with Alport Syndrome and use that information as we design this Phase 2 study.

Got it. And then maybe, Kleanthis, just a broader question. When you think about the 9000 or so publications that will come this year and what we saw in prior years, what is your approach to consolidating your leadership position in microRNA therapeutics and how active are you in identifying orphan opportunities and oncology opportunities within these publications and collaborating with academic centers? I'm just trying to get a sense of how you leverage all this data that is being generated.

Yes, Jim, it's a very good question. I think from day one of Regulus' existence we had a network of what we called the Greater Regulus and at any given time with up to 30 academic collaborations and multiple different microRNAs and that interest has continued to increase. We have selected to be essentially in a steady-state in terms of our external collaborations to (inaudible) out there that we collaborate. But we do have, I think, a very sophisticated system by which we A verify the data that are being published and there is really an avalanche of biological knowledge that is thrown at us. And then we relate that to our strategic interests to a lot of the pharmacological approaches, to competitive landscapes and then down to how quickly can we develop a potential drug for that indication. So we have a very stringent set of filters that address a variety of different factors before we prioritize the number of programs that we are going to run.

And I continue to say that our biggest problem is what not to do. So you will hear in the future specifically as additional programs come up and percolate to the surface that we begin to invest significant amounts of money of additional programs that satisfy the strategic focus and all the other criteria that I mentioned before.

So this is the work -- very active focus of our R&D and business groups that continue to prioritize the opportunities that we have.

Is there anything that jumps out at you, Kleanthis or Neil, from the literature we've seen recently as an area of particularly I guess exciting data that might be worth pursuing? Is there one area in particular that is most exciting from your perspective?

The vast majority of the publications in microRNAs continue to be in oncology and that is to be expected as the role of microRNAs is so evident in multifactorial diseases where a single gene approach can not necessarily satisfy the correction of the disease genotype. So on the last count, more than 40% of the 9000 were dealing with oncology. So that's a natural affinity that we have including of course the vast expertise that Neil has in the area.

But we continue to be very interested in unique orphan diseases such as the kidney fibrosis and other indications that may give us the opportunity to A, designate an orphan program and look for accelerated approval.

One more comment that I would say, Jim, all this biological knowledge and partially because we have executed exactly on track [from our own] programs that we've been discussing with you guys over the past year and a half, we have accelerated the development of our D part of the organization, the clinical development part, in building a clinical organization that will be able to continue to support that progress into the clinic.

And finally, of course, we continue to very aggressively expand our IP position being on the forefront of microRNA therapeutics. We collectively have more than 1000 patents and very aggressively looking either through in-licensing or through our own efforts to continue to expand that intellectual property.

Great. Thanks, Kleanthis.

(Operator Instructions). Bill Tanner, FBR Capital Markets.

Thanks for taking the question. Congrats on the progress. Kleanthis, just had a question on 101 and some companies tend not to do it, so I will respect if you don't want to do it, but would be curious if there's any comment on the enrollment pace relative to expectations?

We are actually on track with our enrollment. The way we set up the development plan in the Phase I program is going exactly according to schedule.

Okay, okay. So still POC by the end of the year, hopefully?

Yes.

You will see collective data of over -- or close to 100 subjects in terms of safety and tolerability and the proof of concept in HCV patients of both genotype-1 and genotype-3 this year.

And just based on historical clinical testing in HCV, it would seem that with a decent sized sample of patients and maybe a decent response that those could be reasonably viewed as the risking, or viewed as reasonably be risking -- is that kind of a fair way to look at it just in terms of proof of concept but having pretty meaningful proof of concept, I guess? Or really increasing the confidence, I guess?

Yes, that's exactly what we are anticipating, Bill, that we will be able to see a significant viral load reduction based upon everything we know from the published literature and our own internal preclinical studies.

Okay. And then, as you think about 21 for Alport and 21 potentially for HCC, how do you think about bifurcating the commercial opportunity because I am assuming that for Alport that would be chronic disease -- or excuse me -- chronic therapy, and for HCC, not. So do you see there being a way to take advantage, I guess, of an orphan versus maybe an oncology situation with respect to maximizing commercial opportunity?

One of the things we have been focused on is really making sure that we have an optimized compound for our oncology efforts and specifically not only the compound but also the formulation, so ultimately one could look at these as two separate entities where the miR-21 and Alport Syndrome therapy is a saline formulated subcutaneous injection and the modality or the therapeutic for oncology is likely to be a different chemical entity formulated in a different way.

Okay, so that would be a different sequence even, potentially, or --?

It would be the same sequence but a different pattern of modification potentially with a different formulation.

Got it.

Potentially a different length too.

Right. Okay. All right, thanks very much.

Thank you, there are no further questions in queue at this time. I will turn the call back over for closing remarks.

Well, thank you all for participating in the call. I know it's been a very busy season for you guys with all the calls. We appreciate your interest in Regulus and look forward to communicating our progress with you very shortly. Thank you.

Ladies and gentlemen, that concludes today's conference call. Thank you for your participation. You may now disconnect. Goodbye.