Regulus Therapeutics Inc (RGLS) 2017 Q3 法說會逐字稿

Good afternoon. My name is Sonia, and I will be a conference operator today. At this time, I would like to welcome everyone to the Regulus Therapeutics Third Quarter 2017 Conference Call. (Operator Instructions) Miss Allison Wey, Vice President of Investor Relations for Corporate Communication, you may begin your conference.

Thanks. Good afternoon, everyone, and thank you for joining us to discuss Regulus' third quarter 2017 financial results corporate highlights. We're joined today by Jay Hagan, President and CEO; Dr. Tim Wright, Chief R&D Officer; and Dan Chevallard, our CFO. Jay will provide opening remarks. Tim will share progress on our pipeline programs, and then Dan 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 certain 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 call and 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'll now turn the call over to Jay.

Thanks, Allison, and thanks everyone on the call for joining us this afternoon.

Third quarter was marked by operational execution, driving our clinical programs, focusing our research pipeline, strengthening our balance sheet and advancing our [BD] discussions. We started the third quarter by raising $46 million, which should extend our cash runway through Q1 2019, providing the necessary capital to fund our pipeline through several expected key program milestones.

Also in the quarter, be focused on resetting organizational and operational priorities and expectations following the second quarter rightsizing with specific emphasis on our clinical programs. To that end, and hope that Tim doesn't mind me stealing his thunder, we are pleased to report that we (inaudible) on RGLS4326 recently, and are on track for first [amend test] for the quarter. Tim will talk about that and RG-012 in a minute.

Executing on the initiation of our clinical programs has obviously been the main focus for the quarter in order to set up key milestones over the next 12 to 18 months. The team has been working very hard on implementing the redesigned Phase II HERA study protocol and separate renal biopsy study protocol, both of which are now live.

When we set our time lines at the beginning of this year, we had not anticipated the breadth of the changes we and Sanofi ultimately decided to implement to this study. And while the redesigned program implementation is taking some additional time, we believe the program is in a much better place. Consequently, we anticipate data from the biopsy study in the first quarter versus the original projection of year-end, and HERA final results in Q1 2019 versus year-end 2018.

Importantly though, the enthusiasm we experienced last week at ASN among our ATHENA and HERA investigators was palpable. The novel biology seen with our anti-miR to microRNA-21, a target with broad literature supporting its role in fibrosis, and the smarter trial designs employed in the Phase II program is well understood and appreciated by the scientific community, and I had a great opportunity to meet with our investigators at the meeting.

Lastly, before I turn it over to Tim, after just 6 months as CEO of Regulus, I want to mention how particularly excited I am about the impact that changes to our scientific and organizational processes should yield for Regulus in our programs as we move forward. We've applied a much more rigorous approach to our research efforts in fully characterizing the potential therapeutics and different model systems to be able to more quickly derisk their clinical development, which should ultimately be reflected in a more focused and efficient R&D engine.

This, coupled with the promise of oligonucleotide therapeutics finally coming into the mainstream, should position Regulus as a clear leader in targeting microRNA biology. Now I'll turn to Tim to provide more details of our 2 clinical programs: RG-012 for the treatment of Alport syndrome, and RGLS4326 for the treatment of autosomal dominant polycystic kidney disease or ADPKD? Tim?

Thanks, Jay. Let's begin with our RG-102 program and Alport syndrome. We're wrapping up our ATHENA natural history study and will close it around year-end.

I would like to thank all the patients and investigators that have contributed to the study, in making it a great success. The data from the ATHENA study have been instrumental in our redesign of the RG-012 programs and will contribute significantly to the understanding of Alport syndrome, its genetics and natural history of disease.

The ATHENA investigators met with us last week at ASN, and we're planning for full data analysis publications and presentations at scientific conferences next year. Building on the learnings from the ATHENA study and, most importantly, the genetics and demographics of Alport syndrome patients with the greatest unmet medical need, we have redesigned the HERA study, and this study will now focus exclusively on X-linked male patients with Alport syndrome.

We will be examining the effect of RG-012 on the disease progression as member -- as measured by the rate of eGFR slope over a 48-week follow-up period. We anticipate a readout of the blinded interim analysis for safety and efficacy when all subjects reach 24 weeks of follow-up in Q3 of 2018 and the top line results, a 48-week follow-up in Q1 2019. As part of the redesign, we removed the renal biopsies that were part of the original HERA design and now have a new study focused on pharmacokinetics and biomarkers, including the measurements of drug levels, target engagement and disease-related markers measured in kidney tissue, obtained by percutaneous renal biopsy. We've (inaudible) from the study around the end of Q1 next year.

These changes have been made in consultation with our partner Sanofi, and they are in agreement with the revised clinical plan. In setting up the revised clinical studies, we received a great deal of support, enthusiasm and excitement from investigators from the -- and from the Alport community regarding the redesigned RG-012 program.

Let's now move on to RGLS4326 and the program for autosomal dominant polycystic kidney disease or ADPKD. As Jay mentioned earlier, we have accelerated this program and, following a very positive pre-IND meeting, we recently filed the IND for RGLS4326 with the FDA. Assuming no regulatory or operational issues that may impact study start-up, we're on track to initiate first in human dosing by year-end. We would expect data from this and our other planned Phase I studies throughout the second half of 2018 and into 2019, including a proof of mechanism study result in ADPKD patients.

Now turning to our pipeline -- preclinical pipeline. Our research efforts have been focused primarily on target identification and validation in diseases of the kidney and liver, 2 organs to which we can effectively deliver our oligonucleotide therapeutics. In parallel, we are exploring new delivery technologies to expand the tissues en route of administration so that we can leverage to open up a wider range of diseases and we can pursue a novel approach to new therapeutic.

And now I'll turn the call over to Dan to discuss the third quarter financial results.

Thanks, Tim. As you have heard today, the focus of the recent quarter has been to reset organizational and operational priorities while executing on our 2 lead programs. Fully important first to do so while operating efficiently and within the confines of (inaudible). while the organization went through a significant transition earlier this year, I have been pleased with our broadly adopted sense of fiscal discipline and accountability. With that, I'd like to step through our third quarter financial highlights.

R&D expenses were $12.7 million for the third quarter compared to $14.6 million in the third quarter of 2016. This decrease was driven by our planned reduction in personnel-related costs, including noncash stock-based compensation, subsequent to our recent corporate restructuring. Excluding the onetime associated charges incurred in Q2 of this year, R&D expenses declined by approximately 15% in the third quarter 2017 versus last quarter.

G&A expenses were $2.7 million for the third quarter compared to $4.8 million in the third quarter of 2016. Similarly, this decrease was also driven by our planned reduction in personnel-related costs. Excluding onetime charges incurred last quarter, G&A expenses declined by approximately 20% in the third quarter of 2017.

Our net loss per share, both basic and diluted, was $0.18 per share in the third quarter of 2017 compared to $0.37 per share in the third quarter 2016. Note that while our Q3 net loss decreased by approximately 20% versus the comparative period in 2016, these per-share results are further impacted by a recent equity financing.

Before I turn the call back to Jay, I'd like to provide an update on our cash position and cash burn as we look forward. As we have mentioned today, the third quarter was highlighted by our recent financing, which gives us the capital to execute on our key near-term development objectives for RG-012, RGLS4326 and continue to fund our most (inaudible) research programs.

Having ended the third quarter with $71.4 million in cash, cash equivalents and short-term investments, and with the third quarter cash burn of approximately $11.7 million, we are in line with our postfinancing cash burn guidance of approximately $48 million per year and project our cash on hand to extend through Q1 2019.

We are currently in the planning phase for our 2018 operating plan and will come back with further refined projections on our year-end earnings call.

With that, I'll like to hand it back to Jay.

Thanks, Dan and thanks to everyone for the opportunity to share today's update on our clinical programs, financial results and outlook.

2018 is shaping up to be a year during which we expect multiple milestones in the overall advancement of our Alport syndrome and ADPKD programs for Regulus. We look forward to continue execution through the remainder of the year and starting up 2018 with strong momentum to advance our overall pipeline while continuing the productive business development discussions underway.

And with that, we're ready to take your questions. Operator, could you please open the line?

(Operator Instructions) Your first question comes the line of Matthew Luchini from BMO Capital.

So now that you've redesigned the HERA study and you'll focus on the X-linked male patients with Alport. Can you give us a sense of how many of these stations are eligible for treatment?

Well, it's very interesting. We've done some preliminary analysis with a electronic medical records search, and it's actually, in terms of the patient population, the vast majority of patients with the diagnosis are actually X-linked males. There is certainly a subpopulation of females, and there are also patients with other genetic mechanisms, but the majority of patients are X-linked males in the unmet medical need population.

Matthew, I just want to further amplify this choice and what we gleaned from the ATHENA natural history study coupled with the feasibility work we've done in looking through detailed electronic medical record systems. The statistics that we project in terms of further tightening up this interdeviation around slope as well as the progression of the disease, we find that this population really enhanced our ability to detect a signal here in a 40-patient blinded Phase II study.

Your next question comes from the line of Joseph Thome from Cowen and Company.

I just had a quick question on RGLS4326. Can you just give us a little bit of an idea of maybe what the Phase I would look like in, and I think in the prepared remarks, you had indicated that there was the potential for additional Phase I studies in H2 '18. Was that just for your pipeline in general? Or was that specifically for RGLS4326?

Yes, that was generally for RGLS4326, and I'll let Tim him speak to the proposed Phase I sort of comprehensive program...

Yes, so we're going to be starting with a single ascending dose in healthy volunteers, and following that, we'll be doing a multiple ascending dose study that, at this stage, remains a little bit, how should I say, up in the air in terms of final definition of subjects. And the only reason I say that is because we're toying with the idea of incorporating the proof of mechanism into that multiple-ascending dose and doing all patients. But we want to make sure we address the feasibility of that before we move into that kind of design. The alternative is to move into multiple ascending dose in healthy volunteers or a mixed population with a stand-alone proof of mechanism, but like I said, we're getting going on the single-ascending dose between now and the end of the year, and then we'll move on to our multiple-dose study for safety PK tolerability and some biomarker work.

And just to amplify on that, you may have seen in the publication earlier this year that we saw an impact on a couple of kidney markers of disease that are measured -- measurable in the urine and plasma. And so we want to obviously see if that same effect can be recapitulated in humans. We're doing some background sort of Phase Zero work right now to set the stage for that to test then with multiple dose. From the therapeutic inpatients with ADKPD, do we see similarly an impact on disease markers that would give us confidence that, a, we're hitting the target, and, b, we're having the intended effect.

There are no further questions at this time. I would turn the call back over to Mr. Jay Hagan.

Thanks very much. I just want to emphasize that, 2 things, 1 while the HERA study is planned for X-linked males, it doesn't mean that we don't intend to pursue females more broadly and including in the biopsy trial. And separately, we will be participating in the Stifel conference next week and look forward to investor update then. Another question, I don't know, Sonia, if you want to circle back.

Certainly. Your next question is from Jim Birchenough from Wells Fargo Securities.

It's Nick in for Jim. Can I just go back to the HERA trial? Did you actually dose patients prior to the redesign?

We did dose one patient prior to administrator halting the study back when we decide -- determine to do the MAD study.

And was that patient an X-linked patient?

No. This is not -- just to be clear this is not -- this has always been the plan. We only decided -- so we had not -- when I described the earlier dosing, that was what was done late last year prior to halting the program, doing an MAD and reviewing both the results from the MAD as well as our previous and -- efficacy results to arrive at what were -- is now live on clinicaltrials.gov and the final piece in terms of a change that we hadn't disclosed up to this point was that we found that by focusing on the X-linked males, not only is that a population where we see the most significant unmet need but also that it was a population where the standard deviation around slope change was much tighter, given the homogeneity of that population, which would then yield, obviously, better statistics for us in being able to detect a signal in this trial.

Okay. And then as far as the biopsy trial, as I just caught your last comment that, that would be open to females, so that's...

Correct.

Not going to be restricted.

Correct.

And then for the ADKPD, is this first in human trial. Is that going to be...

Okay, in this SAD portion of the study, yes, and we've been encouraged by the agency to move fairly quickly, the patients, after establishing safety in healthy volunteers, and so as Tim mentioned, we're still working on putting the final touches on the second part of that MAD -- the second part of that Phase I program. And I just walked through that we intend to incorporate a mechanism pipe study design in there where we're going to see if we can recapitulate what we've seen in animals where we see improvement in certain markers of kidney function from treatment with 4326.

And that being -- then just have urine biomarkers for that or blood.

Urine and blood, correct.

Not a biopsy.

No you wouldn't want to biopsy the PKD patient.

So I think that conclude things, Sonia.

This concludes today's conference call. You may now disconnect.