Regulus Therapeutics Inc (RGLS) 2016 Q1 法說會逐字稿

Welcome to the Regulus Therapeutics first-quarter 2016 financial results conference call. My name is Brian, and I will be your coordinator for today.

I would now like to turn the call over to the Company. Please proceed.

Thank you, Brian. Good afternoon, everyone. I would like to welcome you to Regulus's financial results call for the quarter ended March 31, 2016.

Joining me on today's call are Paul Grint, MD, Chief Executive Officer; Jay Hagan, Chief Operating Officer; and Mike Huang, MD, Vice President Clinical Development. During our call today, Paul will make introductory remarks, Mike will provide an overview on our microRNA therapeutics pipeline, and Jay will review our financials and business highlights for the quarter, and then Paul will wrap up the call.

Before we begin, I would like to remind you that this call will contain forward-looking statements concerning Regulus's future expectations, plans, prospects, corporate strategy and performance, which constitute forward-looking statements for the purposes of the Safe Harbor provision 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.

With that, I will turn the call over to Paul. Paul?

Thank you, Amy.

Welcome, and thank you for joining us this afternoon. We are off to a great start in 2016, and the year is shaping up to be one of pivotal growth for the Company. We have demonstrated our ability to advance multiple clinical programs and execute well on our goals.

In particular, we were pleased with the rapid progression of RG-101, our potent antagonist of microRNA-122 for the treatment of chronic hepatitis C virus infection, currently being developed in a broad Phase II program, designed to investigate its ability to eradicate HCV in four weeks or less, a significant advantage over currently available HCV therapies, which generally require 8 to 12 weeks of therapy. A few weeks ago, we presented additional interim data from an ongoing Phase II combination study during a plenary session at the International Liver Congress, or EASL, meeting in Barcelona, Spain.

These data followed our prior interim analysis conducted in early February. We reported follow-up data on HCV viral load productions for all evaluable patients, some of whom had completed 24 weeks of follow-up.

Overall, RG-101, used in combination with four weeks of either Harvoni, Olysio or Daklinza, continues to demonstrate significant viral response. Based on the consistency of the response rates and the favorable safety profile to date, we have accelerated development of the clinical program and CMC readiness, and are actively designing additional combination studies to help us further understand the potential for the product and to find the optimal path to regulatory approval.

From a global perspective, it is estimated that there are approximately 185 million people chronically infected with hepatitis C. While we have seen significant advancements in the standard of care, the currently approved agents have been difficult for patients to access. Investments by the pharmaceutical industry to date have been aimed at developing more potent, pan-genotypic, shortened treatment regimens.

While these goals for incremental improvements to standard of care have clear market merit, RG-101 stands alone as the only agent to date to demonstrate significant viral load reductions in the majority of patients treated with just a four-week treatment course, in combination with available DAAs. Based on the results we have seen thus far, we believe that RG-101 is uniquely positioned to help address this global healthcare problem.

In addition to all the progress with RG-101, our second program, RG-012, targeting microRNA-21, in development to treat an orphan kidney disease called Alport syndrome, is progressing well towards the next phase of development, which we aim to initiate around mid-year. Our third program, RG-125, targeting microRNA-103/107 to treat type 2 diabetes and NASH, currently in Phase I development, is being led by our alliance partner, AstraZeneca. In February, we received a $10 million milestone triggered by the initiation of this Phase I study from AstraZeneca, which has contributed to our strong cash position, ending the first quarter with $106 million.

So, to close my introductory remarks, I would like to summarize our goals for the current year. RG-101 remains our main focus. We have accelerated development with the initiation of key clinical trials in both Europe and the United States. We expect to report additional combination data from multiple trials, and we expect to obtain clarity on a potential path for approval.

With RG-012, we will presenting pre-clinical data and longitudinal data from our ATHENA natural history study at ERA-EDTA later this month, and around mid-year, start the key Phase II study in Alport syndrome patients. We are also working hard on the pre-clinical portfolio, and we expect to nominate an additional candidate for clinical development before the end of the year, which will be our fourth microRNA drug candidate.

With that, I will turn it over to Mike.

Thank you, Paul. And good afternoon, everyone.

As Paul mentioned, we are extremely pleased with our progress so far this year, most notably with the demonstration of favorable interim combination results with RG-101 and the overall progression of our clinical portfolio. Our broad Phase II clinical development plan for RG-101 is advancing well. This plan includes evaluating RG-101 in combination with multiple different oral agents to achieve shorter treatment regimens, but also in combination to enable a single-visit therapy through our clinical trial collaboration with GSK, and in certain underserved patient populations, such as HCV patients with chronic kidney disease, where treatment options are limited.

We are very encouraged with the results of RG-101 thus far. Our clinical experience to date has demonstrated potent antiviral activity, both as monotherapy, as well as in combination with oral DAAs in a shortened, four-week regimen across different oral mechanisms. To date, RG-101 has been well tolerated, with nearly all adverse events considered mild or moderate, and with no adverse events leading to discontinuations in any study.

Additionally, the pharmacodynamic markers have consistently shown that we have achieved effective target engagement with RG-101. Later this quarter, we expect to have another readout from this combination study, which will be the primary endpoint analysis for 12 weeks of follow-up for all 79 patients enrolled in this study.

Now let's turn to the second facet of our broad Phase II program, our clinical trial collaboration with GSK. The goal of this collaboration is to evaluate the potential for a single-visit therapy to treat HCV, which, if successful, could dramatically change the HCV treatment landscape.

During the first quarter, we initiated Phase II combination study evaluating RG-101 and an oral tablet formulation of GSK175, an investigational non-nucleoside NS5B polymerase inhibitor for the treatment of HCV. In previous clinical studies, GSK175 has demonstrated substantial reduction in HCV RNA across all genotypes as monotherapy, and has displayed a PK profile consistent with once-a-day dosing.

The primary endpoint of this Phase II combination study is to evaluate the potential to achieve virologic responses post-treatment with a single dose of RG-101, in combination with daily oral dosing of GSK175 for up to 12 weeks in treatment-naive patients chronically infected with HCV genotypes 1 or 3. We anticipate reporting interim safety and efficacy data from this study by the end of the year.

We believe GSK175 has the right physicochemical properties amenable to formulation into a long-acting parenteral, or LAP, injection. GSK is working to advance this LAP formulation of GSK175 as a single injection that would deliver the equivalent of up to 12 weeks of oral drug. GSK's LAP technology enables injectable formulations of a drug [solubility of] limited release results in the ability to have very long apparent half-lives, potentially weeks to months.

LAPs have been developed in other settings, such as the treatment of HIV and schizophrenia, where sustained release is beneficial. Developing a long-acting HCV therapy that can be administered in a single visit could potentially transform the current treatment landscape by improving patient compliance and extending opportunities for therapeutic intervention.

We also continue to make significant progress in our development of RG-101 in patients with chronic kidney disease. We are on track to report safety and efficacy data from this study towards the end of the year. And as we talked about on our last call, we are actively designing additional clinical studies to optimize RG-101-containing treatment regimens. We expect to initiate additional studies in the second half of this year.

Now let's turn to our second clinical program, RG-012, targeting microRNA-21 for the treatment of Alport syndrome, a life-threatening genetic kidney disease with no approved therapy. We have made significant progress with the RG-012 program. In March, we had a productive meeting with the FDA to discuss a potential path for regulatory approval of RG-012. We are on track to initiate the next phase of development mid-year.

As well, we will be presenting longitudinal data from the ATHENA natural history study, together with some pre-clinical data, at the ERA-EDTA meeting later this month. As you can see, we have had a very busy quarter on the clinical front, and we look forward to updating you on our continued progress throughout the year.

With that, I will turn the call over to Jay.

Thanks, Mike.

The first quarter of the year has been very productive executing on our key goals. Our financial footing remains solid. We ended the first quarter of 2016 with $106 million in cash, cash equivalents and short-term investments, which included a $10 million milestone payment from AstraZeneca received in February of 2016.

We recognized revenue of approximately $500,000 in the first quarter of 2016, compared to $4.2 million for the same period in 2015. Revenue in the first quarter of 2016 was attributable to the amortization of upfront payments received from our strategic alliances and collaborations established earlier.

Our R&D expenses were $16.8 million in the first quarter of 2016, compared to $13.4 million for the same period in 2015. This increase was primarily driven by Phase II clinical trial costs for RG-101, costs associated with our global ATHENA natural history study, and manufacturing costs for RG-012.

Our general and administrative expenses were $5.1 million in the first quarter of 2016, compared to $3.6 million for the same period in 2015. This change was primarily driven by an increase in non-cash stock-based compensation.

Our net loss for Q1 2016 was $21.2 million, or $0.40 per share, versus a net loss for Q1 2015 of $14.5 million, or $0.29 per share. Overall, our results of operations and related cash burn for the first quarter were in line with our operating plan.

We're pleased with our progress during the quarter, and look forward to providing further updates throughout the year. We will be presenting at the B of A healthcare conference in Las Vegas next week, and the UBS and Jefferies healthcare conferences in May and June in New York.

With that, I will turn the call back over to Paul for closing remarks.

Thanks, Jay.

As you've heard today, we're off to a great start this year. We are focused on advancing RG-101 and RG-012, advancing our research pipeline, and nominating our fourth clinical candidate for development.

With that, operator, we are ready to take questions. Thank you.

(Operator Instructions)

First question comes from Jim Birchenough with Wells Fargo,

Hi, guys, congrats on all the progress. I'm just wondering if you have any updates in terms of Phase II data for RG-101 from the data that was recently presented, particularly on any baseline characteristics that might have included different mutations, resistant mutations, different genotypes, trying to get a sense for the patients that did not have a durable response, and obviously, there were few of them. Were there any baseline characteristics that you have identified so far that might help predict the future development?

Jim, good afternoon. This is Paul.

Right now, currently, we are still sequencing samples from the study, so we don't have a clear-cut answer, but hopefully we'll do in the relatively near future, you know, from a sequencing standpoint. Otherwise, if you look at overall, and if you correct me if I'm wrong, if you look at baseline characteristics, there's nothing obvious that you could relate to those two patients who subsequently relapsed. Obviously, bear in mind, we're talking about two patients of the 79 here, so the numbers are very small from a relapse standpoint.

Is there any further detail you can provide on studies that you're going to initiate in the second half? Are you considering a two-week regimen? Are you considering a open-faced sandwich with the DAAs? Just wondering if you can give any more detail on what you're thinking about in the second half of these new studies.

Hi, this is Jay here. We are actively considering adding a four-week course without that second injection, as we've talked about in the past.

Jim, as you know, that is an open question that we'd want to understand from a commercial perspective on whether that is required, and clearly, seeing the results we have seen thus far with 100% response rates in the Harvoni arm begs the question -- do we need that full treatment course? Whether we do that on our own or in clinical trial collaboration is analogous to what we have with GSK remains an open point of discussion, and we're working through those, and we will have more color on the specifics of these additional studies as we iron them out.

Great. Thanks for taking the questions.

Thank you, Jim.

Next question, Bill Tanner with Guggenheim Securities

Thank you for taking the question. I cannot remember, Paul, if it was you are Mike, that mentioned on the 12-week RG-101 data. This quarter, this is in the second quarter, calendar quarter, you will release the data, is that correct?

That is correct, Bill. Our plan as we've said all along is late second quarter to release what we're calling the primary endpoint data, this was the data point that was laid out in the start analysis plan, once we had everybody through 12 weeks of follow-up. So, yes.

And then is it contemplated that, that is going to be PR-ed, or how do you anticipate disclosing that?

Yes, I think we would plan to PR it and host a call. There are a number of, as Paul alluded to, a number of secondary analysis based on the statistical analysis plan that will have more data than just viral load reductions.

That is correct, yes.

And then maybe just the last question, what other tranches of data might we anticipate over the balance of the year beyond that for this study?

For the four-week study we'll obviously have more patients through longer periods of follow-up, and so we would expect to report those out at appropriate times, and using medical conferences where appropriate to disseminate that information. So, you can imagine, given the study is 48 weeks in duration that we will have data in the second half of the year reading out more from that study. We also, though, as we mentioned, will have data from both GSK collaboration towards the end of the year in from analysis from that study, as well as from the study in patients with chronic kidney disease and hepatitis C virus.

So, where appropriate, we will use a mix of medical meetings or press release to release the information. Clearly, [wherever it's fits] from a timing standpoint we obviously do like to release the medical meetings that we can.

Sure. So, I guess, without just putting words in your mouth, already it seems like you would be in a decent position to have a pretty good set of presentations at AASLD, I guess, in the fall.

Absolutely, our goal is to get as much data as we can at AASLD. You are correct.

Okay, all right, thanks very much.

Thank you.

Next question Alan Carr with Needham

Hi, this is Esther in for Alan, thanks for taking my question. So, what can we expect to learn from the ATHENA study and what will a Phase II program with RG-012 look like? Will you be enrolling patients straight from the ATHENA trial, or will you be expanding that, and what kind of endpoints will you be using?

This is Mike. So, with the ATHENA natural history study we have learned a lot from the study in terms of how patients progress over time with this condition, with Alport syndrome. Keep in mind that there has really never been a prospectively designed natural history study in this indication to characterize appropriate biomarkers, endpoints, and rate of decline with this disease. I think all of those items are now being answered, and we have now a good set of longitudinal data to help inform the next study. It is really our intent that the ATHENA study would be able to help feed patients into the next trial as well, so not only is the ATHENA study giving us important longitudinal data, but is also helping us to identify those patients that are most appropriate for inclusion in the next trial.

This is Paul, just to add. Thanks, Mike. As we said, we needed data from the ATHENA study to help us to find the endpoint, so to this point we have not talked about, publicly, about data from the ATHENA study. As we said in our script, we will be releasing data for the first time later this month at the European Renal Association. And then I think once that is out there, then we will talk more about how we use that data to design our Phase II program, and we will in the future talk more about the endpoints and the nature of the types of patients that we will be enrolling into that study.

Okay, and earlier you mentioned a few other pre-clinical candidates, what can you tell us about them? Anything about timing or indication?

Yes, we continue, obviously, we have a very powerful research engine here, so we continue to look for great target opportunities. We have a focus, really, on liver and kidney diseases, as you know, because so far we have demonstrated we can effectively deliver oligonucleotides to those organs. We will talk later in the year more about the science and what we're -- with (inaudible) types of targets we're looking at.

But, the goal that we set ourselves for this year is for a fourth clinical candidate in 2016, and we are on track for that. So, stay tuned, you will hear more later in the year about our clinical candidate and the progress on the research pipeline.

Okay. Thank you.

Next question Matthew Luchini with BMO Capital Markets.

Hi, this is Nate Smith on the line for Matthew. Thanks for taking our questions.

So, first, could you comment on the development plans that you mentioned for RG-101 after the Phase II trial? Are you planning to expand into additional patient populations in these trials, other genotypes, or out of [ex-treatment experience] patients?

This is Jay here. So, we have designed a Phase II program, and as we said, we are contemplating and actively designing additional studies now to really round out the Phase II program to inform what the right optimal strategy is then to take forward for pivotal study for approval. We have not really said much more than that.

A number of these things we are designing on our own, a number of things are in discussions with others, where we have stated we have an interest in doing additional clinical trial collaborations along the lines of what we have done with GSK. The totality of that will help inform then what the path forward is from the approval standpoint, which we would expect to initiate next year.

Great. Could you also speak to any plans to accelerate the long-acting GSK175 formulation?

That is being done in parallel right now. So, while we are enrolling patients in the study, the, what we call open-faced sandwich study, combining one injection of RG-101 with either 6, 8, or 12 weeks of oral DAAs, they are in parallel, developing the long-acting parenteral formulation of either 6, 9, or 12 weeks of therapy, so that will be a position then to test in a true proof of concept to injection single-visit cure, and the potential for that.

This program is already moving very quickly. So, we are very pleased with the rate of progress.

Great. Thanks for taking the questions.

Next question, Joe [Tome], Cowen and Company

Thank you and congratulations on a productive quarter. I am on the line for Eric. I know that we're going to expect that additional post-12-week data coming up in the next quarter, but I was curious if you are going to continue to put out the 16-, 20-, and 24-week data along with that, and maybe what you view is the importance of that extended data going forward in future trials.

Absolutely. The primary endpoint goal is to have all patients through 12 weeks, so, yes, clearly, we will have quite a lot of patients through 16 and 24 weeks.

And as we reported, at the usual meeting we will show whatever data set we have. Clearly, it is important that we continue to watch these patients over time and monitor their response. So basically we will be doing a data cut, we will have everyone through 12 weeks, a number of patients at additional long-term time points and we will have all of that data.

Great. Thank you.

Next question, Madhu Kumar with Chardan Capital.

Hi, guys. My question is about the patient who had a serious adverse event related to elevated bilirubin, will there be -- do you have any additional color on that now, or will additional color on that come out with the next data release?

That was nicely summarized during the usual presentation. What the information we had and basically what was reported was that the patient was recovering, the total bilirubin was decreasing over time. But yes, obviously we continue to get follow-up information from this patient, and we will report further information on this individual when we have the overall 12-week primary endpoint data.

Great. Also, how much have you thought about pricing and pair structures and that kind of thing, and when would you release any work you might have done on that front?

Good question, I will ask Jay to answer that.

We have completed a first round of physician and pair work, very promising feedback. As you know, this is a constant process, that you get feedback. It adds additional questions, and you continue to do market research. We will have color on that physician-and-pair research as we make progress with further articulating the additional phase to work that we are undertaking as well, so at an appropriate event we will find time to share that with you all.

Great. On the RG-012 front, (inaudible) are those patients taking angiotensin blockers now?

We do have a number of patients that are on angiotensin blockers, as well as ARBs, and other standard-of-care medications that are used in an attempt to treat the condition. So, what we're finding is that in this disease [paper] there aren't any approved therapies that treating physicians are going to use what they think is, perhaps is possibly effective. So, a good proportion of those patients are on those ACE inhibitors, and we expect to enroll patients, both with and without ACE inhibitors in the next trial.

Thanks very much, guys.

Next question, Jim Birchenough with Wells Fargo.

Hi, guys? Thanks for taking the followup. Just a question on the CKD patient population and whether you think that might provide a path to more accelerated approval? And, if maybe you could quantify the percentage of patients that have compromised renal function in HCV, and what other patient populations might you consider difficult to treat that you could also pursue?

Yes, Jim, that is a great question. So, this is a patient population, up until recently, really with the approval of the [benazepril tier], which has the specific patient group in the indication claim, has been difficult to treat historically. There are a number of DAAs that you cannot effectively use in these patients, because they are primarily renally excreted and, therefore are obviously, their metabolism is affected by renal function.

So, many of these patients in the treatment paradigm is being to the long-term interfere on the low-dose ribavirin, which has been difficult to manage. And so, generally, many of them have not been treated. So, I think, we, in talking to some of the big renal dialysis groups, we are hearing estimates of approaching 40%, four zero percent, of dialysis patients being hepatitis C positive.

And so, I think if you start doing approximate back-of-the-envelope calculations, you may be talking about a patient population size that could be around 100,000 patients in the US. And we think there's a definite opportunity here, if we can get a treatment cost that's well-tolerated and relatively short in duration, then I think there's definitely an opportunity here to treat a lot more of these patients than have been treated historically. The other patient population that we have talked about that we believe offers a real opportunity are those folks who are currently failing the approved oral agents.

If you fail Harvoni, what do you do for these patients? There isn't a formal, so, second-line indication yet in hepatitis C, but obviously, given what RG-101's double mechanism, it offers the potential to be part of a combination regimen yet to be defined that could be used in a second-line setting. So, that is definitely something else that we are very interested in, and we've have had some dialogue with the FDA on that.

Great. Thanks again for the followup.

Next question, Katherine Xu with William Blair.

Good afternoon, thank you for taking my questions. I'm just wondering for the Phase II study, when you had the two relapses -- you might have talked about it, and I apologize, what were the characterizations on those two relapses?

What exactly do you mean by characterization?

What kind of mutations have you seen from those?

We have not yet completed all the sequencing data to look at the mutations, but we have that ongoing. So, obviously, we are interested in seeing that information as well.

Great. And then for the GSK175, you said it was pangenotypic, can you comment on the pangenotypic activity against various genotypes, but also on the barriers (inaudible)?

There is, a year back, I can't remember which meeting, there's quite a lot of information on the public domain, both about the biology and with regard to the antiviral activity with a two-day dosing course on the molecule. So, we can actually point you in that direction.

Okay, then lastly, I am just wondering about your view on the market. Suppose that you launch RG-101 with a combo regimen, let's say in a 2020, 2021 timeframe, what would you envision how this product fits into the market at that time in US, Europe, Japan; the high-value markets, as well as in the global market outside of those territories?

This is Jay here. We think that the two distinct profiles that we're actively disclosing right now, we alluded to some variations in between, but just for simplicity, either a four-week course or a single-visit course represent real attractive product profiles for physicians, patients, and payers to choose from in making their determination of what to use. That has been borne out in the market research that we have done to date.

And so, as we think then about how those product profiles would work in the marketplace, I think they would achieve their natural preference share based on those constituents' desire for a shortened course. It is the same reason why other competitors in this space have tried four-week treatment courses and have failed in the past, because shorter is better.

Do you think the injection nature of the therapy would be unfavorable in the global market outside of the high-value market?

I think it would actually be more favorable because of insurance compliance and control over the administration of a regimen.

All right. Thank you.

Next question, Christopher James with FBR Company

Hi, good afternoon. Thanks for taking the question. Sorry, I jumped on a little bit late.

Maybe regarding your discussions with FDA in March maybe can you give a little bit more clarity around your discussions, around specifically with Alport syndrome proteinuria, and is that sort of in an approvable endpoint?

Chris, this is Paul, good afternoon. So, as you are well aware, in the ATHENA study we're measuring multiple, multiple different parameters aside from just GFR in terms of biomarkers and other clinical chemistry markers. So, clearly, that is the data set that we have discussed with the FDA.

So, as I remarked earlier, it's once we have made the ATHENA, at least the analysis, current interim analysis we have on ATHENA publicly available at the European Renal Association, I think following that, we'll be able to talk more about the nature of the endpoints that we will be including in the Phase II design. I mean, to talk about it now without people having seen that data set and understanding why we are selecting the things that we have agreed with the FDA, sort of makes it a little difficult for people to understand. But, from (inaudible), there was something in there that we were measuring frequently in these patients.

Great. Thanks, Paul, I appreciate the color.

Thank you. Congrats.

Ladies and gentlemen, this concludes our question-and-answer session for today. I am now handing the call back Paul Grint, Chief Executive Officer, for closing comments.

Thank you again for joining us on the call this afternoon. We are very excited about the future, and look forward to reporting more progress to you soon. Thank you.

Ladies and gentlemen, this does conclude today's program. You may now disconnect. Everybody have a wonderful day. [Event concluded]