Regulus Therapeutics Inc (RGLS) 2016 Q4 法說會逐字稿

Good day ladies and gentlemen, welcome to the Regulus Therapeutics, Inc. fourth quarter 2016 conference call. At this time all participants are in a listen-only mode. Following management's prepared remarks we will host a question-and-answer session, and our instructions will follow at that time. (Operator Instructions). As a reminder to our audience, this conference is being recorded for replay purposes. It is now my pleasure to hand the call over to Ms. Allison Wey, Vice President of Investor Relations and Corporate Communications. Ma'am, you may begin.

Thank you Brian. Good afternoon everyone, and thank you for joining us today to discuss Regulus' fourth quarter and full year 2016 financial results, and recent pipeline events. We are joined today by Dr. Paul Grint, Chief Executive Officer, Jay Hagan, our Chief Operating Officer, and Dr. Tim Wright, our Chief R&D Officer. Paul will share some 2016 highlights, Tim will provide remarks on our development 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 Provisions under the Private Securities Litigation Reform Act of 1995. Actual result may differ materially from those indicated by these forward-looking statements, as a result of very 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 will now turn the call over to Paul.

Thank you Allison. Good afternoon everyone. As we look back on 2016 it was a mixed year for us at Regulus, characterized by important accomplishments and unexpected setbacks. Targeting microRNAs is a therapeutic approach to address complex diseases is still a relatively young and evolving field. Importantly, over the last couple of years, we have gained many insights and key learnings in the areas of pharmaceutical developments, delivery technologies, and pharmacokinetics pharmacodynamic relationships, these are being quickly applied to our clinical and pre-clinical programs. This has facilitated a more focused and efficient research and transitional effort.

In fact, based on these learnings I'm more convinced that targeting microRNAs offers a significant advancement in therapeutic potential, for many diseases for which there are currently no or limited treatment options. Although the RG-101 clinical hold cast a cloud on us in the latter half of 2016, as we review overall Company progress, we did achieve several successes from the corporate and R&D perspectives. On the corporate side, we strengthened our Management Team with the addition of Jay Hagan, Chief Operating Officer, a year ago in January, and Dr. Tim Wright, our first Chief Research and Development Officer, who joined in October. Tim introduced himself, and talked about his considerable experience, at both Pfizer and Novartis on our previous call, and he is already using that experience to strengthen our Research & Development teams.

We secured a $30 million credit facility with very attractive terms, extending our cash runway. From the R&D perspective, we presented encouraging data on many of the key scientific Congresses, and published them in top-tier journals. Now let's turn our attention to 2017 and beyond. We have a number of significant milestones and events over the next six quarters, and our current cash runway supports achieving these goals, which Jay will provide more details in his remarks.

As we look forward towards advancing our programs targeting significant unmet medical needs to late stage developments and potential commercialization, the product attributes of relatively low and infrequent dosing, drug stability, potential for flat dosing, and cost of goods, all support the profile of a highly competitive therapeutic. Now I will turn the call to Tim, who will provide an update on our programs. Tim.

Thanks Paul. As Paul pointed out, over the last year we have made substantial progress with our pipeline, and gained valuable insights into the unique properties of microRNAs and our modified oligo therapeutics. For example, we have advanced our ability to preferentially target the liver and kidney, with novel chemistry and conjugation technologies. Having now been at Regulus for five months, I would like to share a few perspectives as someone who is relatively new to microRNA therapeutics. As a field, microRNA biology is still in its early stages, having been first described in mammals less than 20 years ago. As a therapeutic class, we believe that microRNA therapeutics has the potential to offer major therapeutic advantages over conventional approaches. We have barely scratched the surface in terms of microRNA targets that have been associated with diseases, and we look toward forward to continuing to build our portfolio over the coming years. As a Company we have learned a lot about the process of going from microRNA targets to clinical stage compounds.

Keep in mind that this process is still in its early stages, and we are gaining important insights that should enable us to do so more efficiently and effectively with every compound we bring to the clinic. Speaking of clinical phase programs, let's begin with our lead program, RG-012. As you know last fall we initiated a Phase 1 multiple-ascending dose study in healthy subjects, based on feedback from European regulators, and paused recruitment of the Phase 2 HERA study. During this time, we took an opportunity to take a closer look at the overall program design and regulatory path. We have modified the RG-012 clinical development program to accelerate patient recruitment, and potentially achieve proof of mechanism this year. The revised Phase 2 program will include the HERA study, a randomized double-blind placebo-controlled in 30 Alport syndrome patients, with rapid renal function decline. We plan to formally extend this study to 48 week duration, with an interim assessment at 24 weeks. The objective of the HERA study remains the same, to evaluate the safety and efficacy of RG-102.

We have removed the biopsies from the HERA study, and have designed a separate renal biopsy study, that we expect to initiate in Q2, and will evaluate RG-012 renal pharmacokinetics, target engagement, and its effects on downstream genomic markers of disease. Both studies will begin enrollment following the completion of the Phase 1 multiple ascending dose study in Q2. Based on the projected enrollment rates, data from the renal biopsy studies expected in Q4 2017, and interim data from the HERA study is expected in mid-2018. Our ATHENA Natural History Study for Alport syndrome continues, and has yielded important data for the revised design of the HERA study. The ATHENA study has also been important in setting up our planned biopsy study, as well as pre-qualifying many Alport syndrome patients for participation in the HERA trial.

Now on to RG-101. We were disappointed with the FDA's decision to continue the clinical hold. We felt that our response to the FDA's questions were comprehensive, that we had identified potential mechanisms for the hyper bilirubin anemia, and had proposed a reasonable path forward. That said, we are pleased to share with you the summary of the top-line results from our recently completed Phase 2 RG-101 direct acting anti-viral combination study, or DAA combo study. To refresh you on the design, this was a Phase 2 study of RG-101 in combination with four weeks of once-daily approved antiviral agents, Harvoni, Olysio, or Daklinza. The study enrolled 79 treatment naive genotype 1 and 4 HCV patients.

The result from the final analysis demonstrated sustained biologic response through 48 weeks of follow-up SVR 48 as follows. RG-101 plus Harvoni demonstrated 100% SVR-48. RG-101 plus Olysio demonstrated 77% SVR-48, and RG-101 plus Daklinza demonstrated 84% SVR-48. RG-101 in combination with four weeks of oral DAA therapy was generally well tolerated, with the majority of adverse events considered mild or moderate with no AE related discontinuations. Commonly reported adverse events included fatigue, headache, and injection site reactions.

Over the course of the one year study, five subjects experienced SAEs. As previously reporting there was a single SAE of jaundice in a patient at seven weeks in the Daklinza combination arm of the study. There were four patient across all arms that experienced some adverse events of asymptomatic transient hyperbilirubin anemia greater than or equal to 2 times the upper limit of normal. No cases met the criteria for Hy's Law. Since the interim analysis in June 2016 that we reported on last year, there were two additional SAEs. One was a trauma related knee injury, and the other was an upper respiratory infection.

As we disclosed in January, written communication from the FDA indicated our program remains on clinical hold. The Agency requested additional safety and follow-up efficacy data from ongoing RG-101 clinical and pre-clinical studies, and additional expert opinion before reconsidering the clinical hold. We expect that the additional pre-clinical and clinical data will be available in Q4, at which time we plan to submit a complete response to the FDA.

As for the clinical candidates we introduced to you in December, RGLS5040 for cholestatic diseases, and RGLS4326 for Autosomal Dominant Polycystic Kidney Disease, or ADPKD, IND enabling activities are ongoing for both, and we are on track for IND filings in the second half of this year. We are particularly excited about these two new programs, since both offer us an opportunity to generate early proof-of-concept using patient subsets and clinically relevant biomarkers.

Also at the R&D Day in December, we discussed some of our other early stage programs, including NASH and acute kidney injury. Based on the biology of microRNAs that we have investigated in NASH, we believe there are multiple therapeutic opportunities in the modulation of this complex disease. As a consequence, we have significantly increased our resources, and now have two teams focused specifically on advancing targets validated last year, as well as identifying novel microRNA targets for NASH. The HAI program is also progressing nicely, and if all goes well, should advance to a clinical candidate nomination by year-end. Jay will now take you through the financials and upcoming milestones.

Thank you Tim. We ended the year with $76.1 million of cash and cash equivalents, compared with $115.3 million at the end of 2015. R&D expenses were $15 million for the quarter, and $64.3 million for the full year 2016, compared to $12.8 million, and $56.4 million for the same periods in 2015. The increases in R&D expenses were primarily driven the advancement of our clinical programs and an increased investment in our pre-clinical pipeline. G&A expenses were $4.8 million for the quarter and $18.4 million for 2016, compared to $5.4 million and $19.1 million for the same periods in 2015.

The decreases were driven by a decrease in personnel costs, including noncash stock based comp. Revenue was less than $100,000 for the quarter, and $1.2 million for the full year 2016. This compared to $10.9 million and $20.8 million for the same periods in 2015, during which clinical milestones payments from our partnerships were achieved. With RG-101 still on hold this year, we took a very close look at all of our programs, reallocated resources, and prioritized our most promising programs for 2017. We have also stopped other programs in order to extend our cash runway through major milestones we expect over the next six quarters. Year-over-year we lowered our cash burn by approximately 25%, which provides runway into mid-2018.

Now turning to business development. As we have discussed over the last couple of quarters, our strategy with regards to partnering takes into consideration what we want to keep and eventually commercialize on our own, and what makes sense for partnering. Given the breadth of our pipeline, and productivity of our research group, there are a number of different areas under discussion for partnering. Obviously, there is a lot of interest in the NASH space currently. Additionally, the novel approach of targeting microRNAs to treat complex disease in areas of high unmet medical need where early proof-of-concept can be established, also presents an attractive proposition for interested potential partners. We will advance these various discussions, and consider different deal constructs, to capture the value of our emerging pipeline.

Before we take questions, I want to briefly summarize a list of key events expected over the next six quarters. With respect to RG-012 we will have multiple ascending dose data in the second quarter, upon completion we will begin enrolling patients in both the renal biopsy study, as well as resume enrollment in the HERA study mid-year, which we anticipate will begin mid-year. We anticipate filing two INDs or equivalents in the second half of 2017, and nominate at least one new clinical candidate by year-end. We expect to submit our complete response to the FDA, addressing the clinical hold for RG-101 around year-end, and we intend to continue to present new data from current programs at the relevant scientific meetings, as well as publish in top tier journals. Now I will turn the call back to Paul before we open the lines for questions.

Thank you Jay. So in closing, 2017 is a year focused on operations, and delivering on the portfolio. We need to deliver on key milestones that Jay outlined. We remain confident in the promise of microRNA therapeutics, and that Regulus maintains its leadership position with our impressive pipeline and R&D engine. So with that, we will be happy to take questions.

Thank you sir. (Operator Instructions). Our first question will come from the line of Matthew Luchini with BMO. Please proceed.

Hi. good afternoon. Thanks for taking my questions. So a couple, first maybe on RG-012. I was hoping you might be able to provide a little bit more color around or details around the biopsy trial, in terms of maybe the size of it, where it will be conducted, and what markers you will be typically focused on? And relatedly, maybe you could provide a little bit of color on how you're thinking about the potential hurdle rate that you would need to see for target engagement, or one of the other measures, that can give you comfort in a potential proof of principle, ahead of the HERA data that is expected in the middle of 2018?

So, Matthew, thank you for the question. I'll ask Tim to address that.

Sure. Hi Matthew. Just a couple of comments. We're not disclosing all of the details in the study yet. We haven't posted it in clinicaltrial.gov yet, so at the high level I can tell you this is a relatively small study. It's a study that will enable us to very rapidly assess whether we got target engagement and appropriate PK. This is a study that's actually mirrored on our pre-clinical studies that have shown similar data in our animal models. So we expect to have the ability to very rapidly address whether we're seeing target engagement and downstream marker modulation, with a very small, relatively small and short-term study. So what I can tell you is that the ATHENA study has enabled us to very rapidly and effectively design this study, and the study itself was designed in collaboration with our partner Sanofi.

Okay. Thank you. And just on RG-101, it seems like obviously there's been a couple more assays, and maybe you can just remind us or talk us through not only what was seen, but also with the cases of the elevated bilirubin, which specific combo arms these different events were seen?

So as I mentioned, there was only one SAE for hyperbilirubin anemia and jaundice in this study, and that was on the Daklinza arm.

Yes.

The others were distributed, the other adverse events which were at the level of asymptomatic laboratory abnormalities, were seen across all of the arms. So the additional four subjects who had bilirubin changes, were across the other arms. So that is all of the detail we are providing at this stage. They were asymptomatic and laboratory abnormalities that were transient.

Okay. So I should interpret that to mean that every arm had at least one asymptomatic elevation?

Yes.

Okay. Thank you.

Thank you. Our next question will come from the line of Alan Carr with Needham & Company. Please proceed.

Hi. Thanks for taking my questions. Looking at some your earlier stage programs, I am wondering if you can give us a sense of when we might learn about more about 5040 and 4326, with respect to pre-clinical data, and that kind of thing? And then Jay, you mentioned that some programs were stopped in this reallocation. I wonder if you could elaborate on that? Thanks.

Alan, good afternoon. Thanks for the questions. This is Paul. I'll hand it over to Tim to talk a little bit more about the pre-clinical data, but just to remind you of two things. One is there's quite a lot that we put out there at our R&D Day, and importantly for the Polycystic kidney disease if you just look back recently, there was an important publication, and Tim can speak to more of that perhaps.

Yes. So our strategy here is actually to publish this work as soon as we have achieved a reasonable package that warrants sharing this publicly. And regarding 5040 we're at this stage not disclosing any additional information, other than what we presented at the R&D Day, but for the ADKPD there is actually a fairly extensive publication that just came out with our collaborator, Vishal Patel from UT Southwestern, and we can get you the reference on that if that would be helpful, but what I would recommend is that you look at that paper. It has a lot of information on the target, the validation, and the effects seen in this model.

Yes. Alan, regarding the work that we de-prioritized, yes, we have gone through the budget very carefully, with an eye towards extending our cash runway, so that we can get through a lot of the key events that we have outlined, including the additional small renal biopsy study, that will get us data towards the end of this year, in Alport patients, showing target engagement, and downstream markers of disease modification. What we have de-prioritized have been the earlier stage things that we haven't really talked about.

To give an example, we have worked pretty extensively historically going back to the days when we were pursuing more aggressively oncology opportunities, looking at specific types of conjugation technologies, to get to additional tissues in those sorts of activities where we don't have pre-clinical validation to warrant investment today, we de-prioritized or stalled effectively at this point, including things like lipid nanoparticles, and so forth. So that is what we have done with respect to making adjustments to our plan.

Okay. Great. Thanks very much.

Thank you. Our next question will come from the line of Joseph [Domei] with Cowen and Company. Please proceed.

Hi, guys. Thank you for taking my questions. I guess first on 012, are you expecting to sort of press release the multiple ascending dose data in Q2 from this trial? And I guess what are the next steps? Do you have to have any sort of communication with European agencies before reinitiating the phase? Or going into the next trial, or what are the possible outcomes then?

Yes. Thanks for the question. Yes. It's will be our intention obviously, to make that data public from the multiple-ascending dose study, and Tim, perhaps you could address answering the questions from the European regulator?

Yes. So since these came up as questions, our plan is to submit the additional data as an amendment to the existing protocol, and so we will have to engage and share with them our revised plans, and the data that goes with this, but based on that we would expect a relatively rapid turnaround on the review. I can't give you specifics on that. That's up to the regulatory agencies.

Okay. Great. And then I appreciate the 101 trial, you are engaging with the FDA, but do you anticipate releasing any additional data over the next year on those trials, maybe any of the collaborations that you have, or anything like that?

Yes. So this is Tim. Once we have all of the final data analysis done, and I presented the top line results today, the summary top-line results, we anticipate publishing the data, and this will include making things public in clinicaltrial.gov, as well as in the appropriate publication, and our target will be a top-tier journal, and so as far as any further discussion of that down the road, between now and the time when it comes off hold, we won't be sharing any additional data until studies are completed. So there won't be any additional interim analyses. We mentioned this at our call late last year that based on discussions with FDA, we made a commitment that we're not disclosing any interim data, but only the final data, and that's hence why we're presenting the final data with you today. Or sharing with you today.

Great. And then just one more on 101, I guess. Have the results that you have been seeing sort of changed maybe any of the enrollment criteria that you would be looking for in the future 101 trials, or have you identified any sort of patient populations that are maybe more at risk?

Yes. This is Paul. Let me address that. I mean just to remind you the 02 study, the study data that we have reported was our first Phase 2 study, and was designed predicated on the concept that from work done by both Merck and Gilead, that triple or quadruple combinations of oral agents, just with 4-weeks of therapy, did not have an effective response. So that was therefore our goal, was to add more than one, and we have seen that 48 week data today. We have talked before, I mean as part of our pre-IND process we engage with the FDA in discussion about greater medical need populations, and the two that we had identified, one of those were the patients who had significant renal compromise, or were on dialysis, and that was the population that we opened the IND with, and went to the first Phase 1 study in the US, and the other population potentially are those patient who have resistant variants, to some of the commercially available agents now, could 101 in a combination have utility. So that's still there in the background, but clearly we're on clinical hold, and until we satisfy the FDA's questions, we won't be talking more about potentially design the studies or patient populations moving forward.

Yes. Definitely. All right. Great, guys. Thanks.

Thank you.

Thank you. Our next question will come from the line of Jim Birchenough with Wells Fargo. Please proceed.

Hi. Good afternoon. This is Nick [Abbott] in for Jim this afternoon. Thanks for taking our questions. In the first one, Paul, given the disappointing news on 101, is it worth continuing? I mean did you seriously consider just terminating the program and moving on?

Well, Nick, yes. Thank you. Good afternoon. So at this point, obviously what the FDA has asked us for is longer-term data from studies that are ongoing. In particular the clinical studies. The protocols are design the protocol for 48 weeks and follow-up, so we have an ethical and regulatory obligation to follow those studies out through that completion. So that takes us out through to the latter part of this year. So we have to do that. That is our obligation and that's the data that the Food and Drug Administration wants. So we're not initiating anything new or significant. Obviously we're very pleased to see the 48-week data, particularly on the Harvoni now. That sort of has just proved our thesis, but 101 could play an important role with DAAs. Until we have completed those studies, we're not really in a position to do much more.

I think in three quarter as I think Tim outlined, there were five specific points you were going to address. Obviously, there was some PK, and feedback from hepatic experts, as well as detailed mechanism of, potential mechanism action data. So have all of those essentially been addressed just with one, we want to see the final 48-week data from all of clinical studies?

Yes. You are correct, Nick. So if you go back to the original hold and the request, there were five components, and it was a overall detailed human clinical safety analysis across all of the studies. It was obviously pre-clinical, pre-clinical data, and work to see if you could identify a mechanism. It was get experts safety review, and also included the PK from the renal compromise study, and finally and importantly, they asked us to provide the benefit risk on the program. All of those components were in the complete response that we submitted to the FDA.

And did you get way response back from each of those, or the FDA just felt like we want to see more safety data?

The response back from the FDA was you remain on clinical hold, and we would like to see as we described, the full 48-week protocol data for both our pre-clinical and clinical studies that are ongoing, and additional expert review and commentary on our proposed potential mechanism, that we believe is associated with these cases of increased bilirubin.

Okay. And just on the data that was released today, I noticed there was a relapse at 32 weeks. Do you know that's not a re-infection?

That's a good question. I'm not aware that we have actually that isolate yet, from that patient. So that could be the possibility. But I don't, this is top-line data that we have. We haven't delved into yet all of the details, but obviously our goal is we do sequence all of the patients who have relapsed, to look at whether or not it's potentially a re-infection, or look at the resistance mutations in though samples.

All right. And are you able to comment on what GSK's position is now as there's an additional delay?

Yes. Obviously, we have maintained and continue to maintain a very close relationship with GSK. As we talked about before, they were very helpful as a partner as we constructed all of the responses to the clinical hold last year, and they still remain very interested in the program. Jay, do you want to--?

Yes. I just want to amplify on that. I think they recognize the benefit, clear benefit that a single visit cure could provide, in terms of the global opportunity here in addressing Hep C that is not being addressed with how the disease is being treated currently with DAAs. So that profile remains compelling, and I think that is what has led to the very close working relationship that we've with them throughout this whole process.

Yes. In some way that potential is strengthened based on our 48 week data that we just announced today.

Right. Right. Okay. And then on Alport, did you ever say how many patients had enrolled in HERA prior to the pause in enrollment, and is there any opportunity to look at data from that however many patients, to increase your level of confidence that you have got the right target, and the right dose, and support the biopsy data?

Well, we received the feedback from the European regulators actually within one week of the first subject being dosed. So that subject is only a single dose so, unfortunately, we won't be able to have any analysis of that subject.

But we continue, that subject continues to be followed.

They're being followed, but it's not going to be informative for what you are you're describing in terms of efficacy.

So there was a single patient that had a single does, or you could continue dosing that patient?

No, no. Single patient, single dose.

Okay. Okay. And then just very quickly on the NASH program, obviously you have the ongoing program with AstraZeneca. These newer targets, can you try and help me understand the Venn diagram between 125 and the new targets, in terms of pathways, and whether they relate to perhaps different aspects of the disease?

Yes. Maybe I'll comment just on the AstraZeneca collaboration, and then Tim can talk about the others. As we have said before, the microRNA targets for the AstraZeneca program is near 103, 107. That's the target that's in the phagocytes. It's very much involved in the glucose insulin access and lipid metabolism, and so, you know, AZ has a real interest in patient population to potentially diabetic or pre diabetic who have fatty liver disease. That's all, that is their interest. Some of the other microRNA targets we have addressed other aspects in NASH. Perhaps you want it speak to that Tim?

Yes. Sure. So we have actually been doing some work to identify and work on validating additional target in NASH, because it's such an important unmet medical need, and as we shared with you at the R&D day, we have two programs that we consider our lead programs, and beyond that we have several others that are coming behind. One of the programs we presented at the R&D Day, has a profile that is very clearly targeting multiple components of NASH, ranging from lipid oxidation disregulation, all of the way through to fibrosis, and we presented data showing gene expression profiling in animal models, and how those are modulated by our anti-miR versus obeticholic acid as a comparator.

Another target that we just presented briefly that we have been doing some additional work on, is the stellate cell specific target. This is one that has primarily we believe the potential for anti fibrotic responses, as opposed to metabolic targeting, and so we're looking at a series of targets, even beyond those two, that actually cover the spectrum of NASH. Now one of the things we're looking at in the future, is the potential to combine our anti-miR microRNA targeted therapies with either other drugs, small molecules, as well as the potential to even combine more than one microRNA in the same molecule, and we have actually done some pre-clinical work to support the proof-of-concept pre-clinically, that this is actually feasible, and has the appropriate pharmacodynamic effects.

Great. Thank you. And then just the last one from me, and that is whatever is happening with 101, are you confident there is no read through to the other programs?

Good question, Nick. Tim, do you want.

Yes. Sure. So we have obviously learned a lot from 101, and one of the things we're doing is now going back and reviewing those learnings, not only from the standpoint of dosing and the PK, the adverse events from that particular program, and also the mechanistic work that we have been doing to understand the potential cause of hyperbilirubin anemia, and looking across our other programs, to assure ourselves that this is something we can identify as a potential risk, and if possible de-risk the programs.

So it's still a work-in-progress, but we have begun our analysis of other programs, according to what we believe this mechanism may involve. It's actually complex because it involves as you know, RG-101 is a GalNAc-conjugated nucleotide type, so we have actually driven a lot of the oligo into the phagocytes, specifically using this linkage. And what's interesting is that gives us a fairly decent hepatocyte exposure of the molecule. That is at least one component that we think may be involved because phagocytes are the cells that process and excrete bilirubin into the bile, obviously. So that's something we're looking at across programs, as well as the specific mechanism, to see if it has any potential application across any of our earlier programs.

Okay. Great. Thank you very much.

Thank you.

Thank you. (Operator Instructions). One moment for follow-up questions. There are no follow-up questions. So thank you ladies and gentlemen for your participation on today's conference. This does conclude the program. You may all disconnect. Everybody have a wonderful day.