Viridian Therapeutics Inc (VRDN) 2017 Q2 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the miRagen Therapeutics Second Quarter 2017 Earnings Conference Call. (Operator Instructions) As a reminder, this conference call is being recorded.

I would now like to turn the call over to Luke Heagle from Pure Communications. You may begin.

Thank you, and good afternoon, everyone. On the call today are miRagen's President and Chief Executive Officer, Bill Marshall; Chief Financial Officer, Jason Leverone; and Executive Vice President of Research and Development, Paul Rubin.

Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will undertake no obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events.

Factors that could cause actual results or outcomes to differ materially from those expressed and/or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K and our other periodic reports on Forms 10-Q and 8-K filed with the SEC.

I would now like to turn the call over to Bill Marshall, President and Chief Executive Officer of miRagen. Bill?

Thanks, Luke. Good afternoon, and thank you for joining us for our second quarter update and results conference call. We made significant progress advancing our pipeline of micro-RNA-targeted therapies in the second quarter.

As a reminder, we have employed what we call a foothold progressive derisking clinical development strategy for each of our clinical programs. This means that we design early clinical trials that are focused on biomarker validation of the mechanism of drug action in a rare or genetically stratified disease. This foothold strategy is designed to potentially allow for a more rapid and cost-effective pathway to first approval.

Additionally, while we believe the drug candidate could provide benefit to patients with a rare disease, proving mechanism of action in a clinical disease state can also provide evidence that the same product candidate may benefit patients in other expansion indications that may be due to similar or overlapping pathology. We also believe that first-in-human clinical studies designed to measure biomarker readouts of drug action help to derisk the drug candidate and provide important insight that can help guide Phase II clinical trial design and expanded indication trials.

I will begin with an update on our lead anticancer product candidate, MRG-106, which is currently in a Phase I multiple ascending dose study in patients with mycosis fungoides.

Mycosis fungoides, or MF, is the most common form of cutaneous T-cell lymphoma, a rare and sometimes deadly disease that in many cases causes painful, disfiguring tumors on the skin that is estimated to affect between 16,000 to 20,000 people in the United States.

MF can be a serious condition, and there is a strong need for new treatment options with acceptable safety profiles. In June 2017, we presented interim Phase I trial results for MRG-106 in subjects with MF at the American Society of Clinical Oncology Annual Meeting. Subsequent to our presentation at the ASCO annual meeting, subjects enrolled in the trial continued to show improvement in their mSWAT score. As of July 26, 17 of 18 subjects treated systemically with MRG-106 showed mSWAT score improvement, and the magnitude of mSWAT improvements generally correlated with the amount of time the subject received MRG-106 treatment.

7 of 9 subjects who received more than a month of dosing of MRG-106 showed a 50% or greater improvement. In addition, it has been observed that subjects receiving the treatment via intravenous infusion appear to have improved at a higher rate than those receiving the treatment via subcutaneous injection.

Furthermore, MRG-106 has been generally safe and well tolerated at all dose levels evaluated to date. We expect to present additional interim Phase I data at a scientific conference in the fourth quarter of this year.

In May, we were pleased to announce that MRG-106 was granted orphan medicinal product designation for the treatment of cutaneous T-cell lymphoma by the European Commission. This follows the U.S. FDA granting orphan drug designation to MRG-106 for the potential treatment of mycosis fungoides. We continue to execute on our foothold strategy for MRG-106.

With the early safety and efficacy signals we have experienced in treating CTCL in our clinical trial, we believe we are ready to expand into additional indications, and we expect to begin dosing subjects in additional oncology indications under an amended protocol in the second half of 2017.

Based on the experience gained in developing MRG-106 for MF and following discussion with the FDA in June, we plan to evaluate MRG-106 in additional hematological malignancies within the current Phase I trial, including adult T-cell leukemia/lymphoma, diffused large B-cell lymphoma and chronic lymphocytic leukemia, as in each case the disease process appears to be related to an increase in microRNA-155 levels.

In 2018, we intend to initiate a Phase II clinical trial for MRG-106 to treat MF patients. This progress in our MRG-106 program is very gratifying and is a result of both a strong environment of collaboration with regulators and our clinical team but also the performance and safety thus far exhibited by the drug candidate.

Turning to our other lead drug candidate, MRG-201. I'm pleased to announce that the Phase I trial evaluating MRG-201 in induced cutaneous fibrosis was completed in the second quarter, as anticipated. 54 volunteers participated in the clinical trial, 47 of whom were administered MRG-201 and 7 of whom were enrolled and underwent study procedures without receiving a dose of MRG-201.

MRG-201 was generally safe and well tolerated with self-limited injection site reactions of mild or moderate severity being the most common adverse event. We plan to present complete clinical trial results for this program at a scientific conference before the end of this year.

Again, while the trial's primary endpoints are safety and tolerability, we designed the Phase I trial to measure exploratory biomarker-driven endpoints that may help to validate the product candidate's mechanism of action in humans. In 2018, we plan to initiate a Phase IIa double-blind randomized trial to evaluate MRG-201 in subjects with a predisposition for keloid formation. Future indications to be studied for microRNA-29 replacements could include other fibrotic diseases of the eye and lung.

As you may recall, in May 2017, we announced an extension of our research collaboration with Servier. Together with Servier, we intend to advance MRG-110 into clinical development in 2018. MRG-110 inhibits the activity of microRNA-92a, which has been reported in multiple peer-reviewed scientific publications to be a regulator of new blood vessel creation. This may indicate that MRG-110 could be useful in the treatment of cardiovascular disease and other diseases where vascular flow is compromised.

I would now like to discuss some recent changes to our Board of Directors. Following the resignations of John Creecy and Kyle Lefkoff as members of our board, we have appointed Chris Bowden, M.D. and Jeffrey Hatfield to our Board of Directors effective August 10, 2017. Chris is currently Chief Medical Officer at Agios Pharmaceuticals and Jeff most recently served as President and Chief Executive Officer at Vitae Pharmaceuticals until its acquisition by Allergan in 2016. Their deep pharma -- biopharmaceutical experience will be invaluable as we advance and expand our pipeline of microRNA-targeted therapies. We look forward to benefiting from their knowledge and insight.

On behalf of the board, I would like to thank John and Kyle for their significant and valued contributions to the company.

In summary, we believe we have made important progress advancing our pipeline in the second quarter and anticipate that the planned expansion of our MRG-106 and MRG-201 programs represent continued advancement and validation of our foothold strategy.

With that experience, we believe we are well positioned to advance our franchises for microRNA-155 and microRNA-29-targeted therapeutic candidates, enabling the potential creation of greater long-term value for patients and shareholders.

With that, I will turn the call over to Jason Leverone, our Chief Financial Officer, to summarize the financial results for the quarter. Jason?

Thanks, Bill. I appreciate the opportunity to update everyone today on our second quarter financial results for 2017. We ended the quarter with approximately $46.3 million in cash and cash equivalents compared to $22.1 million as of December 31, 2016.

Total net cash used in operating and investing activities was approximately $14.1 million for the first half of 2017. Based on our current development activities, we believe our current resources will be sufficient to fund our planned operations through the end of 2018.

Moving now to operating expenses. Research and development expenses increased to $5.5 million for the second quarter of 2017 from $3.4 million for the second quarter of 2016. The year-over-year increase in research and development expenses in the second quarter was due primarily to an increase in outsourced manufacturing expenses of $1.3 million and higher clinical expenses of $0.3 million. These increases were partially offset by a decrease in outsourced preclinical research and development costs of $0.3 million as our programs advance further into clinical development.

Additionally, we added to our R&D team, we experienced a year-over-year increase in personnel costs of $0.8 million, including share-based compensation.

General and administrative expenses increased to $2.6 million for the second quarter of 2017 from $1.2 million for the second quarter of 2016. The year-over-year increase in G&A expenses was due primarily to a $0.8 million increase in professional fees, expenses and generally associated with being a public company and a $0.4 million increase in personnel costs, including share-based compensation.

Finally, our second quarter 2017 net loss attributable to common stockholders was $7.3 million or $0.34 per share basic and diluted compared to $3.5 million or $5.88 per share for the second quarter of 2016.

Lastly, before I turn the call over, I'm pleased to announce that miRagen Therapeutics has been included in the Russell 2000 and Russell 3000 indexes following a reconstitution of the indexes in June 2017. We believe our inclusion in these indexes reflects our many operational and financial achievements to date, and we look forward to advancing and expanding our product pipeline to create value for patients and shareholders in the years ahead.

With that, I'll ask the operator to open the call for questions. Operator?

(Operator Instructions) We'll take our first question from Liana Moussatos with Wedbush Securities.

Congratulations on your progress. The first question is kind of simple. What is the rapid intravenous dosing mean in terms of dosing time? And are you expecting any increase in side effects? My second question is, are you going after all 3 of the ATLL, DLBCL and CLL patients at the same time in the Phase I trial? When do you think you can start the Phase II for MF? And what does the design look like? And then I'll -- I think that's all for now.

Great. Thanks, Liana. Some great questions. So in terms of the question about IV dosing, the intravenous administration that we've reported on to date has been with a 2-hour infusion. Our goal in increasing was really moving towards IV for a few reasons. One is that we can enhance the maximum concentration of drug in the blood stream, and there's a variety of literature reports for oligonucleotide therapeutics suggesting that an increase in what's known as Cmax can drive additional uptake of the drug and activity of the drug.

We have seen some encouraging results to date. We will be moving forward with additional studies where we will be continuing to dose intravenously and move towards a dosing paradigm that is the -- more of a rapid intravenous administration, allowing for additional increases in the maximal concentration in the blood. We are very much focused on monitoring the potential for any side effects in the clinical trial, and I'm happy to report to date that we have not observed any serious adverse events that have been considered drug related, independent of the route of administration. Paul, I don't know if you wanted to add anything?

Yes. I think just to add to what Bill said, I mean, what we're intending to do is go from a 2-hour infusion to essentially a 2-minute infusion. So that's a substantial difference in the time. As Bill suggests, there's 2 benefits. One relates to, we hope, increasing tissue penetration. The other, obviously, is patient and physician convenience that if you can give the dose over 2 minutes, it actually could lead to even either outpatient administration or even home administration as opposed to a 2-hour infusion, which would require an infusion center. So there's multiple benefits of going to that. And again, where -- with other oligos with rapid infusion, you might anticipate side effects. We don't believe and we haven't seen any that pertains to that. So, so far, so good.

And then in regards to the second question around new indications, we have had the appropriate discussions and protocol review with the FDA. We are working through discussions with IRB at various institutions, some of which we are currently conducting, the CTCL trial, other new centers and we will be beginning dosing in the different indications based on patients' availability that has the appropriate characteristics.

And then I think your other question was when we anticipate starting the Phase II trial in CTCL. As you know, we are continuing to dose in the Phase I setting in CTCL, really being able to better understand route of administration, dose and dose schedule optimization that will drive certain parameters around the CTCL Phase II design. So we will be sort of data driven as usual in that. What we've guided, thus far, is that we would begin that trial by the second half of 2018.

The design.

And then the design of the trial, Paul, did you want to mention a couple of words? Or I mean, we really still are evaluating the overall design based on the Phase I study.

Yes. Just to say that this will be a controlled trial, and we're still evaluating a couple of ways in which to optimize it. We want to leverage the data that we've obtained to date, so we want to capture many of the characteristics that we -- that to date we've seen. Responses, obviously, we want to incorporate that into the design of the next trial. And the way you could do it is, obviously, we've studied the Adcetris trial, Seattle Genetics trial, quite closely, and that's actually a vetted study.

So obviously, we want to take advantage of that fact. But there are also some things that we believe we can do with this disease that might actually expand what they looked at. But certainly from a primary endpoint perspective, we're going to take advantage of what's already been kind of vetted and approved by FDA, and the trial will be controlled and designed and hopefully have enough power to show a true benefit.

We'll take our next question from Madhu Kumar with Chardan.

I guess, I'll start with a comment that was just made by Paul. What are the kind of lessons you think you learned from the Adcetris trials? And how can you -- kind of what are the risks and opportunities that you've kind of taken away from those studies at this point with regards to the Phase II for you guys in MF?

That's a great question. I mean, one of the things that I thought was very interesting, albeit this is kind of a stratified population as they have to have the presence of CD30. But if you look at the response rate for known active therapies looking at this endpoint, we only see about a 12.5% response for bexarotene and/or methotrexate.

So if you take that information, and this is using this [R4], which is showing the 50% improvement in essentially mSWAT that's consistent -- once attained, consistent for 4 consecutive months. So if you look at that rate of response for an active therapy and then if you look at the response at least that we're seeing in patients that have received more than 4 weeks, the delta is actually quite large.

So I think that if we can recapitulate that particular set of data, you're not looking at a study that will require hundreds of patients to show us a statistically significant result. So that's one, I think, thing that we can definitely take advantage of, utilizing the same endpoint and looking at the response for the control. Obviously, we have some real opportunity to leverage those data.

Okay. Great. And then also kind of the other question I had, what is the timing around these additional (inaudible)? If it's open label, is there any chance for ASH? Or would you think like EHA is the kind of next logical time point to expect data from the Phase I study and its new indications?

I mean, Madhu, it's a great question. It will be driven again by how quickly we can get the sites up and running and sort of our ability to recruit patients and begin dosing. I would say, generally, our focus for ASH is going to be on extended dosing times, consistent dosing, consistent route of administration and beginning to explore really dose optimization. It's likely that we would then begin reporting out on the additional expansion indications at meetings in the future but after the ASH meeting.

So kind of following from that idea of kind of [consistent] administration, is the protocol amendment including switching patients who are being dosed with, say, subcu MRG-106 to be switched over to either just regular IV or rapid IV administration?

Well, the majority of the patients that are on the trial now, if they are responding, it's unlikely, at this stage, that we're going to switch the way that we're dosing. But all new patients that are being entered will be -- unless the data proves otherwise, we'll be dosing with IV push. The idea is once we do see -- the other aspect -- remember, we want to look at the robustness of the response. So once patients have demonstrated that they had 4 months consecutive improvement of greater than 50%, at that time, we'll start to look, even in a controlled way, at altering the maintenance therapy dose.

So exactly what you're saying, we'll start looking at switching people that are on infusion, either IV push or even theoretically, looking at patients where you could induce a response with IV push, can you then switch them to subcutaneous for maintenance, and to also look at less frequent dosing. And that some of our early data looking on a patient-by-patient basis that it looks like the benefit of the drug certainly seems to last for at least a few weeks, maybe more of an individual dose. So it could either be -- so what we want to do is can we switch for maintenance to either subcu or IV push for those patients that are on infusion and can we dose less frequency -- frequently. For example, from every 2 weeks or once a month once we've induced a significant response.

Okay. And I apologize, one more for Jason. How does this potential expansion into new indications affect your perspective on R&D spend through the second quarter and kind of -- kind of maybe previous views on how R&D spend looks going into end of '17, and into early 18?

Right. Thanks for the question. So we do -- I do expect R&D expenses to increase over the next few quarters as we advance these trials and do clinical development and have multiple trials ongoing next year. I think in terms of G&A expenses, I think those will settle out over the next few quarters from the first quarter. We're already seeing our G&A expenses come down. So we've built these into our forecast, and we have retained our cash runway guidance today with these new trials included.

And we do have a follow-up question from Liana Moussatos with Wedbush Securities.

Yes. Beyond -- for MRG-201, beyond the keloid Phase IIa trial next year, do you have some kind of timing plans to start any kind of work on eye and lung indications? And then MRG-110, what are miRagen's versus Servier's duties?

Sure. Thank you, Liana. In terms of 201, we continue to carry forward with the evaluation of MRG-201 as well as next-generation microRNA-29 mimics in the setting of the lungs. Much of that work is currently being supported through grants and collaborations. We'll continue to establish then both the efficacy and do the requisite studies that would support our ability to move into clinical trials. So we will continue to do that -- those activities and move towards the initiation of clinical trials in the setting of [IPF].

For the ocular indications, we've spent a fair amount of time recently doing a lot of preclinical evaluation, distribution studies to understand the -- where the MRG-201 and other microRNA-29 mimics are found after various routes of administration, and we have now identified a couple of interesting indications that we will then be doing some additional follow-up preclinical evaluation that will really guide our entry to the clinic with that molecule.

For MRG-110, we are focused, as you know, the molecule is an inhibitor of microRNA-92a. It is able to induce new vessel growth. And so we will be looking -- we'll be executing on our -- really our foothold strategy here, where we're -- miRagen will be focused on some of the peripheral indications and Servier will be leading on the cardiac indications, primarily focused in heart failure.

Yes. But it is a true joint development committee. So nothing is done by any company independent of complete input from the other.

And that does conclude our Q&A session for today. I would like to turn the conference back over to management for any additional or closing remarks.

Great. Thank you for your time today. If I can leave you with one takeaway from the quarter and from today's call it is that we believe that our foothold clinical development strategy is working as designed.

Despite both clinical trials for MRG-106 and MRG-201 being first-in-human studies, we have been able to show mechanistic proof of concept in each of these programs. For example, in addition to showing a differentiated safety profile, we have demonstrated the ability of MRG-106 to modulate its target, microRNA-155, in a disease state with an initial therapeutic signal, which we believe supports expansion into larger clinical trials of MF and other pathological conditions where miR-155 is elevated. We intend to continue to set and achieve goals in an efficient manner, delivering on our strategic objectives while facilitating design of future clinical trials necessary to support regulatory approval.

We look forward to keeping you informed as we execute our strategic objectives in the months and year ahead. We also look forward to seeing many of you on the road and as we attend the Wedbush and Cantor Fitzgerald conferences this quarter.

In the meantime, please reach out to us if you have any additional questions. Thank you, and have a great afternoon.

And once again, that does conclude today's conference call. We thank you all for your participation, and you may now disconnect.