Regulus Therapeutics Inc (RGLS) 2018 Q1 法說會逐字稿

Good day ladies and gentlemen, and welcome to Regulus Therapeutics First Quarter 2018 Conference Call. (Operator instructions.] As a reminder, this call is being recorded.

Now I would like to introduce your host for today's conference, Ms. Allison Wey. Ma'am, you may begin.

Thank you, Skyla. Good afternoon everyone, and thank you for joining us to discuss Regulus's first quarter 2018 financial results and corporate highlights. We are joined today by Jay Hagan, President and CEO; Dr. Tim Wright, our Chief R&D Officer; and Dan Chevallard, our CFO. Jay will provide opening remarks, Tim will share progress on the 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 forward-looking statements regarding 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 only our views 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 Jay.

Thanks, Allison, and welcome everyone to our Q1 earnings call and business update. It's been a year now since being appointed CEO here at Regulus, and I'm very impressed with how our pipeline is maturing with the changes we implemented.

As Tim will talk to later, we have announced 2 new programs where we have validated exciting new microRNA targets for important diseases, namely for the treatment of hepatitis B virus as well as immunologic disease. With this pipeline progress, 2 new internal project teams have been formed to advance these programs toward clinical candidate selection and IND filing. We believe that these 2 new programs along with our existing preclinical pipeline positions us well for a flow of potential new INDs over the next several years.

Meanwhile, our 2 clinical programs targeting genetic kidney diseases continue to progress. As we announced last week, we initiated the multiple ascending dose portion of the RGLS4326 Phase I study. We continue to expect biopsy data from the Alport syndrome program in the second half of this year. Tim will share more about the programs and pipeline in his prepared remarks shortly.

Additionally, Dan will walk through the financials, but I am pleased to see we are managing to plan here in Q1 amidst all the progress in the pipeline. We continue to have significant interest in our pipeline and intend to leverage business development to fund our aspiration where it makes the most sense. Along those lines, we've recently completed a significant market research project with physicians and payers that supports our belief that there is a very big commercial opportunity with our ADPKD program.

And finally, before I turn it over to Tim, I wanted to welcome our recent addition to the board, Ms. Kate Collier. Kate is a very experienced financial and business development executive local to San Diego at Sempra Energy. We are pleased to add someone of her caliber to the Regulus board.

Tim?

Thanks, Jay. Let's begin with an update on our RG-012 program for Alport syndrome. We continue our efforts to accelerate recruitment of the biopsy and HERA proof of concept studies. This includes adding more sites within the U.S. and expanding to other countries. We've also made significant efforts to improve the visibility of our studies to the younger male Alport syndrome population, which is the focus of the HERA study.

Moving on to the RGLS4326 program in ADPKD, we completed the dose escalation in our Phase I single ascending dose study in healthy volunteers. The subjects are now in the planned follow up phase, and we anticipate completing the study in the second half of 2018.

I can share with you some preliminary information from this study. Realize that the follow-up continues. First, we've reached the planned top dose in the study, and thus far there have been no serious adverse events and no dose limiting toxicities. The preliminary blinded pharmacokinetics are in line as expected based on preclinical species.

We have achieved and surpassed plasma levels of RGLS4326 that are consistent with our preclinical efficacy studies. And finally, RGLS4326 has been generally safe and well-tolerated. As I mentioned, we will have more data when the study completes in the second half of 2018.

As announced last week, we have initiated the RGLS4326 multiple ascending dose, or MAD, study. This study has 2 parts; first, a multiple dose component with dose escalation to evaluate the safety, tolerability, pharmacokinetics, and exploratory biomarkers in healthy volunteers. And second, there is an interleaved dose escalation component in ADPKD patients in which the safety and tolerability, PK, and exploratory biomarkers will be evaluated in these patients.

We anticipate the completion of this proof of mechanism component of the MAD in the first half of 2019. We look forward to presenting data from our comprehensive Phase I program at a conference in the second half of 2019. We're also presenting additional preclinical data on RGLS4326 later this month at the European Renal Association annual meeting in Copenhagen, Denmark.

Now on to our pipeline. Recent data from our preclinical programs have led us to initiate clinical candidate generating programs in a couple of areas. These include hepatitis B and immunology. Given our timelines from target validation to IND-enabling activities, we could be in the clinic in less than 2 years from now with these programs.

We also have exciting new data from our glioblastoma multiforme and NASH programs, and we anticipate nominating clinical candidates for these programs towards the end of 2018. Our new focus, in large part resulting from last year's organizational changes, is yielding significant progress as evidenced by the expansion of our preclinical portfolio.

And now I would like to turn the call over to Dan for the finance update.

Dan Chevallard^ Thanks, Tim. As both Jay and Tim have mentioned, we are very excited about the new and promising programs that we have announced today emerging from our research platform. From my standpoint, this is a true representation of the efficiency of our research organization given the allocation of our financial resources between our clinical programs, which represents nearly 60% of our annual operating cash burn, versus our research and discovery efforts, which represents approximately 20%.

Through the first quarter, our operating results and resulting cash burn were in line with our plan. As we have budgeted and seen in previous years, the first quarter typically includes certain periodic events and resulting cash flows such as corporate bonus payouts that will not repeat again during the year. This quarter also included a GMP manufacturing campaign to support RGLS4326 as it advances through Phase I and towards proof of mechanism.

We ended Q1 on plan and with $45.1 million in cash and cash equivalents. We continue to expect our cash runway to extend into the first quarter of 2019. Our total operating expenses for Q1 2018 reflect a 21% decrease versus the first quarter of last year. This decrease was expected, given the organizational changes that occurred in mid 2017. Importantly, however, our first quarter operating expenses were materially consistent with that of the trailing quarters over the second half of 2017.

Our first quarter 2018 R&D expenses were $11.8 million compared to $15.8 million in the first quarter of 2017. This 25% decrease was primarily a result of a reduction in personnel related costs and the absence of costs related to the RG-101 program, partially offset by Phase I clinical costs for RGLS4326. G&A expenses were $3.8 million for the first quarter 2018 compared to $4 million in the first quarter 2017.

Finally, our net loss per share, both basic and diluted, decreased to $0.15 per share in the first quarter 2018, down from $0.38 per share in the first quarter 2017. Note that while our first quarter 2018 net loss decreased by approximately 20% versus the comparative period, these per share results were further impacted by our July 2017 equity financing.

With that, I'll turn the call back over to Jay.

Thanks, Dan. Operator, we're now happy to take questions. Can you please open the lines?

[Operator instructions.] Our first question comes from Joseph Schwartz with Leerink Partners.

This is Dae Gon dialing in for Joe. Thanks for taking our questions, so just 2 quick ones. I guess going to your HERA and the renal biopsy study, I think I heard you say second half but I just wanted to clarify. The press release says anticipated by year-end '18. So perhaps I'm picking hairs here, but can you provide more context around enrollment completion and this guidance in the second half or year-end '18?

And in terms of the second question, just wondering with regards to your strategy going forward, will you be advancing more candidates throughout the year, or will you be at some point capping candidate introduction and advancing them to I guess an inflection point where you could either license it out or sell it out?

Sure. Yes, with respect to the guidance on 012, as we had indicated on our last call, we have guided to completion of enrollment, the HERA study, by the end of the year. So that would include the second half without any more precision than that, and that we would have biopsy data by the end of the year, which would also be in the second half of the year. And we're not giving any more precise timing on either of those 2. We did indicate, though, that we would update investors when we complete enrollment.

Then with respect to your second question on advancing research programs, I think as Dan had alluded to, we have a very efficient research spend internally. And as I alluded to in my prepared comments, we intend to leverage business development to fund our aspiration.

So we believe that it makes sense to continue to pursue the science and advance important programs of various unmet need where we have generated interest from potential partners. But, for instance, with the backup hep C program, as we've indicated that's the kind of program that's more appropriate for a potential partner, and so we haven't advanced that into the clinic.

So we'll modulate spend on these as we move them forward relative to the strength of our balance sheet and where we want to allocate resources appropriately, and then leverage business development to ensure they don't sit idle.

Our next question comes from Liana Moussatos from Wedbush Securities.

You mentioned with 4326 the Phase II proof of concept could start in the second half of next year. Do you have any thoughts on design, number of patients, kind of patients or all-comers? Any details?

Yes. I mean, Tim can give you some early thoughts on that. Obviously, we'll want to discuss that with the agency as we move forward and complete the Phase I program. But we have thought a bit about that. Tim?

Sure. We actually, at our pre IND meeting, discussed both the preliminary thoughts on design as well as asked for an end of Phase I meeting, and which the agency said they would agree to. So we look forward to that discussion.

But right now we're anticipating enrolling subjects who have more accelerated disease or more rapidly progressing disease. And this includes and is partly guided by the success of Otsuka's tolvaptan Phase III program, the second study that showed a 1-year endpoint in EGFR change in a population that was skewed more towards the rapidly progressing CKD stage 2/3 and early 4 subjects or patients.

So we're looking at the design now and doing some estimation of sample size. We don't have a firm commitment to that in terms of the proof of concept. But we're anticipating looking primarily as an endpoint at total kidney volume by MRI in that study, with a secondary more exploratory look at EGFR.

So you mentioned a new program in HBV. And I was just wondering, I know you're going to approach it with microRNA, but what aspect of HBV are you thinking of targeting?

Yes. Sure. I'll ask Tim to comment in a second. But as we indicated I think in our last call, we had initiated some additional sort of exploratory research projects in infectious disease based on the success we had with targeting miR-122 that, save for the isolated hyperbilirubinemia associated with the transporter mechanism that we saw, gave us some confidence that we could pursue effectively other infectious disease.

And there's quite a large body of literature on the role of microRNAs and their aid in pathogenic infection, and so that's what led us to doing that. And within a very short period of time now, we've seen success and looking now to move towards a clinical candidate. Tim, do you want to talk a little bit more about it?

Sure. And as we mentioned previously, part of this is guided by the literature, because there is a robust literature on the role of microRNAs in infectious diseases and HBV in particular, but we're complemented that with an internal screen against HBV that was actually in collaboration with a CRO. But it uses our libraries that we identified prospectively, in an unbiased way, the potential for finding novel HBV targets.

So right now we're -- because of the success of these 2 approaches, we're activating a team to work on right now 2 different targets that we've identified so far. And these look very promising.

As far as the aspect of HBV, these are targeting host factors, and the host factors then have impact on the virus replication and other aspects of the virus pathogenesis. I won't go into any more detail at this time.

Our next question comes from Alan Carr with Needham.

I guess to follow that a little bit, do you think your candidate will involve 2 different drugs, a combination going after both targets, or will you just pick one? And is this program unencumbered, or is it something that (technical difficulty)?

And another thing, can you talk a little bit more about, in the Phase I MAD trial, how you're fitting both patients and healthy volunteers into that one? Can you go over that again?

Sure. Let me just hit the middle one first, Alan. This is unencumbered. The only thing that's a partnership in our pipeline is Sanofi with the miR-21 and 221 efforts, including Alport syndrome. And this target, as well as the rest of our pipeline, is unencumbered.

And Tim, maybe you can talk a little bit about potential strategies and thinking about going after hep B virus and then hit the MAD portion.

Sure. Well, as you know, there's no cure for hepatitis B. And what currently is out there are therapies such as interferon and nucleoside, nucleotide analogs on the market right now. And there are other novel molecules in the clinic. But if hep B follows what was found for hep C, it may be that a combination therapy may be required for ultimate cure. And that's just because these are difficult to eradicate viruses that you must hit from multiple angles.

I will hearken back to some information related to our hep C program, and that is that RG-101 was the only molecule that I'm aware of that ever led to a cure of hep C with a single dose. And that was hitting a host target, miR-122, and it was 3 out of 28 subjects in Phase I, in the hepatitis C Phase I.

So is it possible that a single host target could eradicate hep B virus? I don't know, and I suspect it may require combination therapy. Those combinations will be tested both preclinically and ultimately then in the clinic. And one of the reasons to consider moving forward more than one host target is with the possibility of combining 2 oligos, maybe even in a single molecule that has dual specificity against 2 host targets. So that's the answer for the hep B virus.

And as far as the MAD, what we've done is we've incorporated staggered cohorts of healthy volunteers and ADPKD patients. So we're escalating, as I mentioned, in an interleaved fashion after a certain period of follow up of the healthy volunteers, kicking off the ADPKD patients at the same dose level. So in a staggered fashion, you can imagine that we're going be following the multiple ascending multiple dose of a given dose strength and repetition in healthy volunteers with a cohort of ADPKD patients.

So basically what we've done is to integrate our proof of mechanism. And it does allow us then to test different dose levels and establish whether we see dose related biomarker changes as we're dose escalating. And in parallel, we'll be collecting safety information and PK information. Those are going to be the primary endpoints of those cohorts of ADPKD patients as well as the healthy volunteers.

So just to wrap up the part about HBV, you have 2 good host targets at this point. You'll evaluate preclinically which one you like more or if you should be going after both. And is there a possibility that you might find more host targets?

Yes, we're still screening. So we're still in the process. We may find others. But what I can tell you, the data we have so far in the first 2 has been very encouraging, and so, therefore, we've kicked off a dedicated team to move this forward.

Our next question comes from [Kenneth Adkins] with Cowen.

Just a quick one regarding the ATHENA natural history study. Do you have a specific timeline on when we might see that study published? Do we still expect that in the second half?

Yes. We're actually working very closely with the investigators. Actually, part of it is out of our hands because obviously, the investigators are playing a big role in terms of data analysis. And I expect a series of publications and presentations to result from the data.

Our next question comes from Madhu Kumar with B. Riley.

This is [Jennifer] on for Madhu. First, to what extent do you think the Phase III arm of the CARDINAL trial from Reata has created a patient recruitment bottleneck for the RG-012 studies to date? And when do you think you might expect such a bottleneck to clear?

And the second question is, when thinking about the upcoming RG-012 renal biopsy data, what are the key measures of drug activity you were looking for in the biopsy, such as biomarkers of fibrosis? And could you please remind us how those biomarkers performed in preclinical studies?

Sure. I'll take those and ask Tim to help out on some of them. As we've indicated in the past, obviously in a very rare patient population, having a couple of competing trials ongoing presents competition for patients, and we've indicated that as much in the past. But it's not to suggest that they all flow to one study versus the other.

There is a familiarity, though, obviously in the nephrology community with that company's molecule based on past work. And I'm sure that familiarity may lend some benefit to them in that regard.

Then with respect to the renal biopsy study, maybe I'll ask Tim to respond to that.

Sure, sure. So the first component of the analysis that we're focused on would be to be able to look at the concentrations of RG-012 in kidney. Now, realize these are needle biopsies of the kidney, so there is a sampling situation here that we have to adjust for compared to extracting the whole kidney in our preclinical studies. But that will be -- the first look will be to see if we're achieving concentrations in the kidney that give us confidence that we're reaching therapeutic levels in the kidney in parallel with what we've seen in the animal models.

And I will also say that in the animal models our work there was -- these were terminal phase animals, that is we looked at them at the end of the study and measured their concentrations as well as biomarkers. So the first part is looking at the concentration in the kidney of RG-012 and ensuring that we are achieving concentrations that would give us confidence that we're in the therapeutic range.

As with other oligos, the key here is having the oligo in the target tissue and not in the blood. In fact, oligos are cleared very rapidly from the plasma and the bloodstream. And over a period of hours, usually within 24, 48 hours, these oligos are largely deposited in tissues and cleared. And so, therefore, measuring that concentration in the kidney is critical. We have measured concentrations in our animal studies, as I mentioned, as well as in nonhuman primates to be able to guide us to the dose concentration relationship that we expect to see in humans.

The other part of the study is to examine 2 different regimens. One is the regimen we're evaluating in the HERA study that is an every other week dosing versus a sampling one month after a single dose of RG-012 in the biopsy. And the purpose there is to guide us as to whether every other week dosing achieves a therapeutic level in the kidney or, by chance, could one month dose -- every 1 month dosing do that? And that would allow us to do some adjustments in our pivotal phase that is downstream.

As far as the biomarkers we're looking at, these are -- and we've mentioned this before, miR-21 level is a key biomarker for us. We did see reductions in miR-21 in the preclinical studies and as well as reductions in type 1 and type 3 collagens. As I mentioned earlier, these measurements were made at the end of the study in the animals so that any comparison in terms of magnitude of change in the animal studies versus the humans wouldn't be a fair comparison, because we're looking at measuring it after either a single dose or 4 doses in humans, after one month dosing or one month after a single dose, versus many months in a chronic efficacy study.

But what we are looking for is directionality. And that will give us, again, confidence that we're not only hitting the target but reducing the downstream biomarkers that are related to target engagement and disease-related biomarkers such as type 1 and type 2 collagen.

At this time, I'm showing no further questions. I'd like to turn the call back over to Jay for closing remarks.

Thanks, everyone, for joining us today. We appreciate your time and support of Regulus. Goodbye.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.