Regulus Therapeutics Inc (RGLS) 2016 Q3 法說會逐字稿

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Regulus Therapeutics Third Quarter 2016 Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

Now I would like to welcome and turn the call to Ms. Allison Wey. Please go ahead.

Thank you, Carmen. Good afternoon, everyone, and thank you for joining us to discuss Regulus' third quarter financial results and recent events. We are joined today by Dr. Paul Grint, Chief Executive Officer; Jay Hagan, Chief Financial Officer; and Dr. Tim Wright, our new Chief R&D Officer. Paul and Tim will provide remarks on our clinical programs, and Jay will review the financial results before we open the line for questions.

Before we begin, I would like to remind you that this call will contain forward-looking statements concerning Regulus' 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.

I'd like to turn the call over to Paul now.

Thank you, Allison. Welcome, everyone, and thanks for joining us this afternoon. We've had a very productive quarter. The third quarter of Regulus was dominated by three key activities, addressing the hold for RG-101; advancing the pipeline, including 012; and building out the senior management team. Today, you will get an update on the first two activities from Tim and I; and then I will spend a few minutes updating you on the progress for RG-012 and RG-125; and then Tim will discuss the progress on the RG-101 program.

Before we provide the program update, I'm delighted to welcome Tim to the Regulus team. For those of you who don't know Tim, he brings extensive experience in global leadership roles across clinical development and translational research at both Pfizer and, more recently, at Novartis and Calibr here in San Diego.

Let's start with RG-012 for Alport syndrome. After supportive and positive feedback from the FDA, we initiated the Phase 2 HERA study in the U.S. in September. HERA is an international, randomized, double-blind, placebo-controlled multicenter study designed to evaluate the safety, pharmacodynamics, pharmacokinetics, dose selection and preliminary efficacy of weekly RG-012 injections in patients with Alport syndrome.

Recently, while in the process of expanding the study to our European sites, we received feedback from European regulators on the HERA study design. Based on this feedback, we've decided to implement a four-week multiple-ascending dose, or MAD, study in healthy volunteers to provide additional PK and safety data over a range of RG-012 doses. During the conduct of this MAD or MAD study, enrollment in the HERA study will be paused. We anticipate results from the MAD study in the first half of 2017, at which time we plan to resume enrollment in HERA. Based on the anticipated enrollment rates, we now expect interim results from HERA in the first half of 2018.

Given the importance of expeditiously researching a treatment of Alport disease as an orphan indication and conducting an international development program, it is important to be aligned from a global regulatory perspective to advance this program to Phase III, with the goal of ultimately bringing an improved therapy to address the unmet needs for Alport patients around the world.

I would like to add a brief update on the progress of RG-125, our third clinical program which is partnered with AstraZeneca. RG-125 is a GalNAc-conjugated anti-miR targeting microRNA-103/107 for the treatment of NASH patients with type 2 diabetes or pre-diabetes. Recall that RG-125 was selected as a clinical candidate a year and a half ago in May of 2015 and then dosed in healthy volunteers starting in December 2015 and has now rapidly progressed to a Phase 2a study in type 2 diabetic patients with nonalcoholic fatty liver disease. We believe RG-125 has the potential to have a positive impact in these patients given the breadth of biological activities seen with this molecule in our preclinical work.

Now I'd like to turn the call over to Tim.

Thanks, Paul. Before I go into an RG-101 update, I'd like to share with you my first impressions of Regulus and why I believe it's a great time to be part of this company.

What excites me about joining Regulus at this time is the unique opportunity to capitalize on three key strengths. First, to work with a highly talented and experienced research and development organization with deep knowledge in the oligonucleotide therapeutic space; second, to leverage the explosion in the understanding of basic biology of microRNAs and their role in disease; and third, with a highly refined approach to target validation and screening, Regulus is poised to translate the growing body of knowledge of microRNAs rapidly into clinical candidates. This has the potential to take years off the time for clinical testing compared to traditional drug development for small molecules or biologics for cell therapies. This is exemplified by the generation of three clinical candidates in less than nine years since the founding of the company. With my background in R&D and, in particular, my experience in translational research, I plan to rapidly prioritize and advance the clinical and preclinical pipeline.

Moving on to the current status of RG-101. The work to address the clinical hold was well underway when I joined the company. Since joining, I assumed leadership for the team responsible for the response to the FDA. As I'm sure you're aware, in late July, Regulus received a formal clinical hold letter from the FDA requesting additional information, which included five items. First, a detailed safety analysis from preclinical and clinical studies; second, exploration of potential mechanisms of hepatotoxicity in nonclinical models; third, review and input from independent hepatotoxicity experts; fourth, additional pharmacokinetic data from the U.S. Phase 1 study; and fifth, a risk-benefit assessment for the proposed therapeutic regimens containing RG-101.

Since the receipt of the letter detailing the request for additional data and analysis, we had initiated additional mechanistic work, the data of which we now believe will enhance the package we plan to submit. Furthermore, we've been formulating a plan that may provide a path forward. Based on the timing of the results of these additional studies, which we intend to include in our response, we've pushed out our resubmission time line several weeks and, thus, would now expect a response from the agency in the first quarter of 2017. Our goal is to get off clinical hold and initiate additional planned studies, including the single-visit cure regimen in collaboration with GSK and, ultimately, to partner the program.

While we are in the midst of the clinical hold, we have decided to focus our resources on addressing the issues outlined by the agency, completing the additional studies I mentioned and assembling this comprehensive package for the FDA response. We are not planning any further interim data cuts on our ongoing RG-101 studies. We do, however, continue to collect safety data on all active clinical trials, and we'll update our safety database accordingly. We do not plan further evaluation of the efficacy data until the hold is resolved.

Now stepping back and reiterating why I decided to join Regulus at this time. It's clear that Regulus is at the forefront of developing truly novel therapeutics that can broadly address disease pathways. We look forward to sharing more with you at the upcoming R&D Day on December 6, when we plan to announce our next clinical candidate.

Now I would like to turn to Jay for the financial review.

Thanks, Tim. We ended the third quarter with $91.7 million in cash, cash equivalents and short-term investments. We expect to end 2016 with approximately $75 million to $80 million in cash, which we believe provides runway into 2018.

We are currently in the midst of our 2017 planning cycle, and we're evaluating a range of investment opportunities to advance our development programs, including our next clinical candidates and the potential timing in resolution of the clinical hold. We are pleased with the significant recent progress made by our research team and, as Tim mentioned, our focus on positioning ourselves to rapidly advance our clinical and preclinical pipeline. We look forward to providing further guidance on our future cash burn projections early next year.

We recorded revenue, which consisted of amortization of upfront payments from our strategic alliances and collaborations, for the third quarter and nine months ended September 30 of $0.2 million and $1.2 million, respectively. This compared with $1.9 million and $9.9 million for the same period in 2015, of which $0.03 million (sic - see press release "$0.3 million") and $3.2 million, respectively, were preclinical milestones.

R&D expenses were $14.6 million and $49.3 million for the three and nine months ended September 30, 2016, respectively, compared with $11.0 million and $43.6 million for the same period in 2015. The increases were driven by RG-012 and RG-101 expenses as well as increased investment in our preclinical pipeline.

G&A expenses were $4.8 million and $13.6 million for third quarter and nine months ended September 30, 2016, respectively, a slight increase from the same period in 2015.

Net loss for the third quarter was $19.5 million or $0.37 per share and $61.8 million or $1.17 per share for the first nine months of 2016. This compared with a net loss of $13 million or $0.25 a share and $48.5 million or $0.95 a share for the same period in 2015.

And now I'll turn the call back to Paul for closing remarks before we get to your questions. Paul?

Thank you, Jay. I hope you found this update on our clinical portfolio helpful. Our time lines on providing the RG-101 response to the FDA has moved out a couple of months due to our decision to generate and include additional results. We feel more confident now, based on what we've learned over the last several months, that this comprehensive submission could provide a path forward for the program and look forward to the FDA feedback in the first quarter next year.

And finally, while the RG-012 time line to interim Phase 2 data has been pushed out a couple of quarters, we believe aligning for global regulatory requirements is the right step to take here, and gathering the additional data requested by the EU regulators will ultimately give us and our partner, Sanofi, a more robust data package to guide later-stage developments.

With that, we're ready for your questions. Operator, could you please open the lines? Thank you.

(Operator Instructions) And our first question is from the line of Matthew Luchini with BMO Capital Markets. Please go ahead.

So I was hoping you could maybe talk a little bit more about the drivers of the change in clinical hold time lines. Specifically, was it that you needed to do more or longer or more complicated mechanistic trials than what was expected? Was it something that the FDA came back to you requesting more information about? Just really, what were the specifics that you were trying to answer here?

This is Paul. Good questions. So let me just say, first off, that the FDA has not come back to us with any specific additional questions or proposed mechanistic studies. Perhaps I'll ask Tim to talk a little bit more about the work we have ongoing and why we're delaying the submission a few weeks.

Right. Well, as I mentioned, when I started, there were already studies underway. Some of these were studies requiring some additional dosing preclinical models, and those take a while to read out. And in the course of reviewing the clinical entry, clinical data and putting our heads together, we also identified a few other preclinical studies that we wanted to do to wrap up the package. So I think it's fair to say that this is actually not a very long period to address the hold. I've been part of holds before that took 6 to 12 months. So this is actually, I think, a fairly reasonable time line given the five points I mentioned to you already that the FDA asked us to address.

Yes. So Matthew, clearly, as we've said, our goal and our priority is getting off clinical hold. And we believe that what is important is to put the strongest data package into the FDA, and that's what we plan to do and, hence, the few weeks delay there.

Okay. And on the 012 trial, I guess, can you provide a little bit more color on the multiple-ascending dose portion of the study? Specifically, so for example, will the sites that you need to -- that participate in that aspect of the trial, will you be able to activate them for the active portion of the study? Was EMA looking for -- was there anything specific from EMA that they were looking for or concerned about that led to the request for the MAD study? Just any more details on that would be great.

Yes, we'd be happy to. I think as you're aware and as we've spoken to you before, we've had ongoing dialogue with the FDA since the pre-IND discussion now, which goes back almost -- goes back two years, actually. At that time, we had contemplated doing both single- and multiple-ascending dose in healthy volunteers. And we're guided by the FDA that, really, single dose in the U.S. in volunteers will be sufficient and for us to move to patients as rapidly as possible.

I would like to sort of recognize Dr. Stockbridge and the team at the FDA with regard to the sort of collaborative nature of working with them that has allows us to design this Phase 2 study. As we move forward, as we've said, to bring on board our European sites, clearly, there are additional questions that the EU regulators have raised here. And I'm going to hand it back over to Tim because I think what is -- what's important is he's sat in Novartis in Basel for a number of years and has been closer to the European regulators over the last few years as compared to I have, and I think he can bring a really good historical perspective to some of their questions right now.

Sure. Thanks, Paul. Well, I think it's fair to say that moving from a single dose to a 24-week multiple dose is a bit of a leap. It can be managed with very careful follow-up. And I think that the challenge that was seen by some of the European regulators was this basic expansion into a larger population of subjects and the duration. So it's not uncommon and, in fact, it's pretty traditional in drug development to go from a single- to multiple-ascending dose, to establish the pharmacokinetic profile. In particular, Europe has been very sensitized, as you can imagine, based on some really unfortunate events in the Phase 1 studies that were done -- carried out in Europe over the last year, one in particular comes to mind, where they had a situation during a multiple-dose phase where they had a patient die. And some of this relates to whether adequate pharmacokinetic modeling and estimates of pharmacokinetic exposure were done, including measurements in real time, during the study.

So for our purposes, consider this as something that just required additional more data -- additional data to make them feel more comfortable. FDA felt comfortable based on the class of therapeutics and the data we have for them in a single-ascending dose study to allow us to go forward. But I think there's a little less experience in the part of some European regulators with this class of molecule as well as the sensitivity that they have.

And last thing from me before I get back in the queue. So if the Phase 2 study is third -- I think it's going to be about 30 patients. How big are the single-ascending and multi-ascending dose arms actually are going to be?

Just to clarify, so this multiple-ascending dose will be in healthy volunteers, and it'll be at a Phase 1 site, so it won't be competing for any of the other sites, nor for any of the patients that are planned to enroll in the HERA study. That's one of the reasons why, when it was suggested by the European regulators to move into healthy volunteers to perform this now, had been the intent initially, as Paul mentioned. This is the fastest way to get this done, and it's the fastest way to get into resuming the HERA trial.

So in terms of the overall size, the anticipated size is roughly 24 subjects, somewhere in that range. We're still working out the final protocol design, but this can be done fairly efficiently in a Phase 1 unit.

And Matthew, I think one of your questions was around continued progress to get sites up for HERA. So yes, so wherever possible, we're going to have -- we've paused enrollment now, but we're going to have the sites for the HERA study and the patients, some of whom, obviously, are currently in our ATHENA Natural History Study, on standby, ready to potentially be enrolled as soon as we have the data that's required to answer the questions raised by the European regulators.

And our next question comes from the line of Alan Carr with Needham & Company. Please go ahead, Alan.

A follow-up on both of the previous ones, actually. Can you elaborate a bit on what sort of mechanistic studies you're working on there? And then also, with respect to the Phase 2 trial in 30 patients, the planned 30 patients, can you tell us a bit more about the interim analysis, how many patients are involved in that and what we'll learn at that point? Thanks.

So I'll -- we're not, at this point, going to talk a lot of detail from a mechanistic standpoint with regard to RG-101 and where we are. But clearly, the signal that we saw was significantly increased bilirubin. So suffice it to say, we've been looking at transporters of mechanisms associated with bile acids and bilirubin. And we're conducting some additional studies to look at that. And as we get more information in the future, we'll obviously provide more update.

With regard to RG-012 and the Phase 2 study, the study design is -- was -- or currently is 30 patients, two different doses and one placebo arm, the six months of treatment, and it's a randomized and blinded study, and that's the design we have now. So the interim look was planned to be data once every one through six months. And we've talked about, and I think it's very possible, that what we will do, which we believe is important, is to offer these patients an extension study, in essence, to continue on therapy for some period of time after participating in the HERA study.

Thanks. And then with -- you said it's a delay for a few weeks for 101. Is it -- what's your confidence level that you'll be able to submit something to the FDA by the end of the year?

So Tim, do you want to?

Yes. I mean, I think we said several weeks, I think if you can read our Q, we were saying that we expect a response in Q1. And it's several weeks delay, and you can tell it, it's on the cusp of year-end. Right now, we're just at that range.

Yes, I mean, the practicalities here, Alan, we got some additional studies being run out of the house. So not everything is in our direct control. We have time lines from the contract groups we work with. Obviously, there is data that's coming in pretty much last minute. We have to include that in reports, electronically format everything for submission. So we have time lines, but things can move back and forwards by a few days, which is why we don't want to guide to an exact date right now. But clearly, our goal is to get the most comprehensive package we can, submit it in the fastest possible time frame.

And our next question comes from the line of Eric Schmidt with Cowen and Company. Please go ahead, Eric.

On 012, Paul, I think you mentioned that dosing in the U.S. was suspended. Did you actually dose an Alport patient? And so what's going to happen there?

So yes. So I'll get Tim to address that. But you are correct, we had.

Yes. Just after the first subject was entered into the trial, went through screening and was dosed is when we found out that the -- there was significant concern in the terms of wanting an additional study before moving forward in Alport disease patients from a European regulator. And so we didn't continue with dosing in that subject, so they did not get a second dose. They are being monitored in the study for continued monitoring for safety. But since we've paused dosing and paused recruitment in that study, that subject will not be part of the analysis.

Okay. And then on RG-101, what's the rationale for not providing updates until the clinical hold is finished, I mean, specifically in combination study with the GSK oral NS5B?

Well, I -- let's -- suffice it to say that while our program is on hold, it's really very difficult for us to share any efficacy data without also addressing the safety concerns from the agency. So it's a situation where we could be seen in conflict with some of the things that they would want us to include in any disclosure, so it becomes very, very difficult for us to share any efficacy results, so we've decided to put those on hold.

Yes. I mean, just to remind you, Eric, with the -- the FDA has asked us -- we've talked about this in some detail when we received the clinical hold letter. The FDA has asked us for detailed summaries of safety across all studies that we're doing. So part of the difficulty we have is we've got significant safety database there, and that's what we're providing as part of the clinical response to the FDA. As one thinks about presenting efficacy and safety data just from a given single study, I think as Tim has just outlined, perhaps that doesn't give the full picture exactly of what is going on. And so I think perfectly reasonable -- and Tim, correct me if I'm wrong -- but not unusual, actually, for companies, when they're on clinical hold on a program, not to provide sort of ongoing updates with regard to either safety or efficacy until we've met our priority, which is providing the relevant information to the regulators and we hear back from them with regard to the path forward.

Yes, this is a very sensitive phase of the program, and we don't want to -- we want to maintain full engagement with the agency and basically abide and build confidence with them that we're going to do the right thing up through the resolution of the hold.

And can you say whether you've had any additional reports of liver tox in the ongoing studies?

Well, I can just say that we haven't had any additional serious adverse events; only the two that we've previously reported.

Okay. And I guess, Paul, looking forward, let's say you're able to get off the hold on RG-101 in the first quarter next year, how long do you think it would take or what do you think you would need in order to drive an appropriate partnership for that molecule?

Good question. So it depends on -- we're talking about different designs of studies that we might do when -- if we're to propose the FDA to get off hold, I think that maturing data that we have from the current studies is going to be helpful. But together with, I think, data from whatever, the continued clinical work that we do next year. I think at this point, it's difficult to be specific. However, our goal that got us excited with this molecule potentially moving to a one-visit type of cure, it's still within our sights. I mean, that's why we want to get off hold. We believe that such a therapeutic option, in particular, for -- as one thinks about hep C as a global health problem is important.

And our next question is from the line of Madhu Kumar with Chardon and Company. Please go ahead.

So really two questions. My first question is, is there any [recent] discussion of the one-visit combination with GSK? Is there -- I mean, has there been any interaction with the GSK? Do they have information on your response with the clinical hold? And then for RG-012, what proportion of the patients in the HERA studies would have come -- who are likely to come from the natural history study?

Let me take the first part, and I'll hand the RG-012 part to Tim in a minute.

So with regard to GSK, absolutely, we've kept them completely apprised as a partner as we've gone through this process. To be honest with you, they've been an excellent partner. I mean, as a company, they have resources and experience that we don't have here at Regulus that we've been able to tap into as we've gone through reviewing data that -- from our clinical safety database together with reviewing preclinical data and proposing designs for additional preclinical studies.

So absolutely, we've been sort of in lockstep with them as we've reviewed -- reviewed the information and propose new studies, and some of that data is what we're waiting for. So yes, we continue to be very aligned. Perhaps, I'll ask Tim to address the question on RG-012.

Sure. Well, as you know, the ongoing ATHENA study is a live study in terms enrolling subjects and also attracting subjects in terms of their eGFRs over time. And basically, and as we have set up our enrollment criteria, we expect -- and I'm not going to give you the exact number, but let's just say double-digit eligible subjects at the current time out of the 30. So that gives you some sense of where we are right now. And with the additional time between now and when we restart the enrollment, we expect that number to continue to increase. We are open to other subjects not being part of the ATHENA study to be able to enroll. And we're also looking carefully at the ATHENA study to inform us on criteria that could allow us to enroll subjects even faster into the HERA study.

And our next question comes from the line of Liana Moussatos with Wedbush Securities. Please go ahead.

Just following up, to be clear, what is left that you need to do in order to submit the package to the FDA to get RG-101 off clinical hold? And how long do each of these items take? Is there only eight weeks left?

I'm sorry, we missed the end of your --

If there's only eight weeks left.

Are there only eight weeks left? Well, what I can tell you is that many of these studies started before I joined, which was four weeks ago. And so there are some studies that we'll take a few more weeks to complete. And then as Paul mentioned, we have the report writing and the compiling and then the overarching work that needs to be feeding back in each of these five items.

Suffice it to say that the -- some of the items were relatively easy to address and compile the data, such as the existing safety database, although we're updating that in real time, and we'll do so after the submission. But other items, in particular, some of the in vivo work that had to be done, that we felt was important to do, will take a few more weeks for the in live portion, and then we have the analysis.

So that's -- that gives you as much detail as we're willing to share at this time, but we anticipate, like I said, having this done in several weeks and expect the response in Q1.

Can you repeat the five items again?

I think -- yes, I mean, Liana, so -- well, Tim has them [here].

Okay. So the first one is a detailed safety analysis from preclinical and clinical studies. The second is exploration of potential mechanisms of hepatotoxicity in nonclinical models. The third is review and input from independent hepatotoxicity experts. And the fourth is additional pharmacokinetic data from the U.S. Phase 1 study. And the fifth is a risk-benefit assessment for the proposed therapeutic regimens containing RG-101.

And our last question for today is coming from the line of James Birchenough with Wells Fargo. Please go ahead.

This is actually Yanan Zhu in for Jim. Most of my questions have been asked, but I have a couple of questions on the 012 program. Specifically on -- because the HERA study enrolls patients with a decline in eGFR during the screening period, so I was trying -- I'm trying to understand the variability of the decline. I think from the ATHENA interim results, 55% of the patients had a decline after 24 weeks. So is the decline -- is this -- the dynamic of the eGFR change, is it highly variable? And also for patients who had a decline, is it possible for the figure to -- and for the number to go up? So just trying to understand the dynamics of the eGFR change over time.

So I've been reviewing the data with the team. As recently as yesterday, we looked some -- at some additional analysis. What I can tell you is that for a given patient, the rate of decline is somewhat stable over a period of months, at least five to six months. And the rate of decline, though, over years, obviously, is not going to be stable. There's going to be some variability. But in order to see a difference -- a statistical difference in the rate of decline or a clinically meaningful difference in the rate of decline, we need to establish what that individual's rate of decline is and whether it's in the range that we could easily see a difference. So if someone had a 0.5% drop in eGFR in a year, reducing that by 50% is not going to be detectable.

So we are looking carefully at the patients. What I can tell you, when you map this out, the statisticians have used a curve [fitting]. Almost -- most of these are lines going through the data. They are not curves that are steep or bending. And so it is -- it gives us a fair degree of confidence that we're going to be able to map the rate of decline, both before treatment and then follow it after enrollment in the study.

So just to make sure I get -- I understand this correctly, so on an individual patient basis, if the patient has a decline, that decline is likely to continue.

Yes.

So on the individual patient basis, it's pretty predictable of a future trend?

It is consistent. And obviously, Alport as well as a lot of chronic kidney diseases, you don't see the eGFRs early on in the disease. It tends to occur after the disease has progressed to a stage where enough nephrons are being destroyed over time, that you actually see a reduction in eGFR. It's something that -- at the upper end of the range, eGFR is fairly insensitive to change. And as the disease progresses, you start to see an acceleration of a lot. So we're looking for subjects that are in that middle zone and not that have end-stage renal disease, but ones that we believe that the RG-012 will have an impact on the disease progression.

Got it. And lastly, I'm wondering if you would mind commenting on the endpoints for HERA that you are going to analyze besides the safety endpoints, any pharmacodynamic or efficacy endpoint that you're following.

Well, we've got -- I mean, we've talked about this before. We have a lot of different endpoints built into the study. I mean, clearly, eGFR is very important, but it's not the only endpoint. There are other markers of -- biomarkers, looking at it from a renal function standpoint or decline in renal function. We'll be looking at those both in blood and in urine. So the study collects a lot of different samples, and clearly, we'll be watching what happens to those over time.

Ladies and gentlemen, thank you for participating on today's program. This concludes the conference, and you may all disconnect.