Regulus Therapeutics Inc.
Q3 2021 Earnings Call Transcript

Published: 10 Nov 2021

[Operator:]

Good afternoon, ladies and gentlemen and welcome to the Regulus Therapeutics Inc. Quarter 3 2021 Conference Call. As a reminder, this conference call is being recorded. I’d now like to turn the conference over to your host, Ms. Cris Calsada, Chief Financial Officer. You may begin.

[Cris Calsada:]

Thanks, operator. Good afternoon and thank you for joining us to discuss Regulus Therapeutics third quarter 2021 financial results and corporate highlights. With me on today’s call is Jay Hagan, President and Chief Executive Officer and Denis Drygin, Chief Scientific Officer. Jay will provide opening remarks and share progress on our ADPKD program and I will review the financial results before we open the lines for questions. Before we begin, I’d like to remind you that this call will contain forward-looking statements concerning Regulus Therapeutics’ future expectations, plans, prospects, corporate strategy and performance, which constitute forward-looking statements for the purposes of the Safe Harbor provision under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in our filings with the SEC. In addition, any forward-looking statements represent our views only as of the date of this webcast and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligations to update such statements. I will now turn the call over to Jay.

[Jay Hagan:]

Thanks, Cris. Welcome everyone to our Q3 earnings call and business update. We are pleased to share an update on our ADPKD program and plans for next year. Before we get into more detail on our efforts to address this important unmet medical need, I want to spend a few minutes discussing the landscape. Autosomal dominant polycystic kidney disease, or ADPKD, is a genetic kidney disease caused by mutations in either the PKD1 or PKD2 gene and is one of the most common human monogenetic disorders and the leading genetic cause of end-stage renal disease. In the United States, there are approximately 160,000 patients diagnosed with the disease. However, it’s believed to be significantly under-diagnosed with closer to 0.5 million in the U.S. alone. The disease is characterized by slowly progressive bilateral enlargement of the kidneys due to growth and proliferation of fluid filled cysts. Patients with ADPKD experience impacts on quality of life, including pain in their sides and back due to the enlargement and their prognosis is a progressive loss of renal function, leading to kidney failure for the average patient in their 50s or 70s, depending on what type of mutation they have. Mutations in the PKD1 gene are the predominant form of the disease, accounting for 85% of the diagnoses with the remaining 15% due to mutations in the PKD2 gene. Mutations in the PKD1 gene tend to lead to more aggressive disease and renal decline. Current treatment options for patients are very limited with only one approved product, tolvaptan. Tolvaptan is a vasopressin antagonist and has safety and tolerability issues that has likely limited its uptake. It has a black box warning for potential fatal liver injury and failure requiring transplant, which requires restricted distribution in ongoing liver monitoring in patients. Due to its mechanism, it also has significant tolerability issues leading to patient discontinuation for those who cannot tolerate the medication which speaks to both the medical need and the opportunity for improved treatments in this category. That said sales are estimated to exceed $800 million in 2021 in its third year on the market. Now, turning to our approach to address this important disease, recall that we are developing an antagonist to miR-17, which has been shown to be upregulated in the disease and directly controls PKD1 and PKD2 expression. In addition to the data generated by our team and that of our collaborators at UT Southwestern, we were excited to read the recent publication out of Professor Somlo’s Group at Yale in Nature Genetics, where they described in mouse models of the disease, the rapid reversal of multiple aspects of the ADPKD phenotype after reexpression of both polycystin-1 and polycystin-2, providing further support of targeting miR-17 to treat ADPKD. As we disclosed earlier this year, we have been able to demonstrate statistically significant increases in these two proteins, polycystin-1 and polycystin-2, through treatment with an antagonist to miR-17 in patients with ADPKD. Now, I would like to update you on our recent progress with our program. In October, we announced our plans to prioritize the advancement of our next-generation compound, RGLS8429 and discontinued development of our first-generation compound, RGLS4326. This prioritization was driven by our business objective of allocating our resources and efforts towards the development of the more promising next-generation compound. 8429 has been shown to have all the favorable properties of the first generation compound without the limitations. We are excited by this progression as we believe RGLS8429 holds greater promise, including a superior pharmacologic profile with the absence of the off-target CNS effects that we are seeing with RGLS4326 in chronic preclinical toxicology studies at the top doses tested. Additionally, RGLS8429 has shown equal potency to its molecular target, miR-17 in both in vitro and in vivo efficacy studies. We have also demonstrated additive efficacy in preclinical models when combined with tolvaptan, an important clinical and commercial consideration. We are scheduled to have a pre-IND meeting with FDA for RGLS8429 in December and are on track for an IND submission and initiation of clinical development in the second quarter of 2022 subject to FDA clearance of the IND. Looking ahead to our planned Phase 1 study, these plans include a single ascending dose study in healthy volunteers to enable a multiple dose escalation study in patients with ADPKD, around the dose levels where robust clinical biomarker effects, meaning changes in polycystin-1 and polycystin-2 were demonstrated with the first-generation compound. We anticipate reporting top line biomarker data in the first cohort of RGLS8429 treated patients in early 2023. Although we decided to discontinue RGLS4326 in favor of the next-generation compound 8429, the work to date on that compound directly informs development of RGLS8429. On November 4 at the American Society of Nephrology Kidney Week meeting and yesterday at the Biomarkers for Rare Disease Summit, we presented additional data from the first cohort of patients in the Phase 1b clinical trial of RGLS4326, which reinforces our prior updates from earlier this year. In the first cohort, nine patients were enrolled and received 1 milligram per kilogram of RGLS4326 subcutaneously every other week for four doses. The mean increase in polycystins 1 and 2 at the end of study compared to baseline levels for all nine patients in the first cohort were 58% and 38%, respectively. The trajectory of changes in these biomarkers suggests that with continued dosing higher levels of polycystin may be attainable. Recall that polycystin levels are depressed in patients with the disease correlating inversely with disease severity and are believed to be directly linked to the key underlying genetic drivers of the disease. These data demonstrate further clinical proof of mechanism by showing target engagement in the kidneys through these statistically significant increases in urinary biomarkers PC1 and PC2, validating miR-17 as a potential target for ADPKD treatment. I am proud of the work our team at Regulus continued to advance our understanding of the role of microRNA in important disease areas, particularly diseases of the kidney. We remain steadfast in our mission to help patients suffering from ADPKD. I will now turn the call back over to Cris for a discussion of our financial results. Cris?

[Cris Calsada:]

Thanks Jay. Turning to our financial results, as of September 30, 2021, our cash and cash equivalents totaled approximately $35.8 million. As previously disclosed, we anticipate our current cash balance is sufficient to fund planned operations into the fourth quarter of 2022. Research and development expenses for the third quarter of 2021 totaled $5.9 million compared to $4 million in the same period for 2020. These amounts reflect the internal and external costs associated with advancing our preclinical and clinical pipeline. General and administrative expenses for the third quarter of 2021 totaled $2.5 million compared to $2.1 million for the same period in 2020. These amounts reflect personnel-related and ongoing general business operating costs. Net loss for the third quarter of 2021 was $8.6 million compared to a net loss of $1.5 million for the same period in 2020. Basic and diluted net loss per share for the third quarter of 2021 was $0.10 per share compared to basic and diluted net loss per share of $0.04 per share for the same period in 2020. With that, I will turn the call back over to Jay.

[Jay Hagan:]

Thank you, Cris. Operator, we’re happy to take questions now. Please open the lines.

[Operator:]

Your first question comes from the line of Brian Cheng from Cantor Fitzgerald. Your line is open.

[Brian Cheng:]

Hi, guys. Thanks for taking my question. So as you’re preparing to file the IND for 8429 in the second quarter, are there any specific items that you will need to discuss with the FDA next month at the pre-IND meeting. And can you also talk about how much of the work that you had done in the past for 4326 overlap with the filing that you anticipate to do in the second quarter?

[Jay Hagan:]

Sure. Yes. So the work that we’re wrapping up here for the IND filing includes the long pole in the tent, so to speak, is receipt of the final reports from the toxicology studies and incorporation into the document. The team is busy at work. And as we disclosed earlier, we had completed the in-life portion of the dosing of the toxicology study. So it’s just a matter of completion of the analytical work there. And in terms of what we’ve learned from the first program, we’ve got a sense, obviously, of where we see changes in biomarkers, which informs that dose selection here with 8429. And so our proposal with FDA includes moving quickly to dose levels where we have seen those changes in biomarkers, which speeds up development. We won’t spend as much time in a sub-therapeutic level dosing at much lower levels. And obviously, we have very significant presume margins based on the lack of any overtoxicity observed in the IND-enabling tox studies, which enables those sorts of starting doses. So those are some of the elements that will speed development. Additionally, as we’ve outlined, our proposal includes going from the single ascending dose into patients with a multiple ascending dose and skipping over MAD study in healthy volunteers, which further speed the development of the – of this next-generation compound. And in terms of the – so that will all be part of the discussion with FDA in the briefing book, which the team is just wrapping for our meeting in December includes the proposed starting doses and clinical design supported by the results of the toxicology studies as well as what we have seen previously in terms of biomarker changes. And so that’s the aim of the pre-IND meeting in addition to more typical things like the CMC package and elements like that, Brian.

[Brian Cheng:]

Okay. And then on the trial data, so we expect top line from the first cohort in early 2023. I am just curious whether you will be able to do an interim data cut in a healthy volunteer single-dose portion to get a sense of the PK/PD profile? And whether – and also whether there will be any data between now and your first patient core data in 2023?

[Jay Hagan:]

Yes. So, we will obviously have updates as we progress through the single ascending dose study in healthy volunteers. And when we wrap it, be able to articulate top line results in terms of safety and PK. We are not planning to look for any PD signal, because mIR-17 is not up-regulated in healthy volunteers. So, we wouldn’t expect to see an ability to detect statistically significant increases with the single dose. So, it will just be safety and PK out of the healthy volunteer study.

[Brian Cheng:]

Okay. And if I may, just one more on the finance side, on the expense, it seems that there is a slight increase in the R&D expense quarter-over-quarter. Cris, do you have any guidance on how we should think about your expense moving forward? And also on the BD front what’s your latest thoughts on potential partnerships or collaborations near-term? Thanks.

[Cris Calsada:]

So, on the first piece of that, Brian, so, the increase in R&D expenses was primarily attributed to the GMP manufacturing campaign that occurred this quarter in support of our upcoming Phase 1. So, that was kind of a one-time expense. So, we anticipate our expenses to kind of go back to what we have averaged in the prior two quarters.

[Jay Hagan:]

Yes. I think about it is we have had two programs we are spending money on the 4326 clinical work and then the lumpy spend associated with manufacture of your clinical material for 8429. And then with respect to BD, yes, we have ongoing discussions with folks. And I think that it certainly appears that with now regulatory clarity on how we are in planning to move forward from a programmatic standpoint has fostered renewed interest in the program. And we have ongoing discussions on it. I am not going to guide to if and whether we will do anything, but our business development group is active.

[Brian Cheng:]

Great. Thanks guys.

[Operator:]

Next question comes from the line of Yi Chen from H.C. Wainwright. Your line is open.

[Yi Chen:]

Thank you for taking my question. Since 8429 has a similar potency compared to 4326, should we expect to see a similar percentage level increase – I am sorry, a similar percentage level increase in the biomarker polycystin 1 and 2 or there are some other factors that could affect the biomarker readout? Thank you.

[Jay Hagan:]

Yes. So, in terms of what we would anticipate potentially seeing, I think the way we think about it, Yi, is that based on everything we have seen to-date in like the – and this is all in our updated investor deck in the PKD1 F/RC model the kidney of the 8429 treated animal looks a heck of a lot like the kidney of the 4326 treated animal, which looks much better, meaning not filled with cysts the way the PBS or control treated animals are. Similarly, in all the in vitro testing, in terms of the potency to the target and engagement as well as the PK profile of the molecule, it looks like it behaves very much like – 8429 behaves very much like 4326. And when we put it through pan lab screens, it doesn’t have any other off-target – unwanted off-target effects that we discovered 4326 possessed. And we have shown that as well in our updated investor deck that it has no activity on the AMPA receptor, which was, we believe, underlying the CNS side effects that were observed. And that’s been confirmed in our robust toxicology studies where we have essentially dosed the same amount of compound that would be dosed in a chronic tox study now, so really quite robust for an IND. And so with all those important points, that leads us to believe we should have a similar type of activity. Now, turning to the Phase 1 study, as we have discussed in the past, higher changes from baseline have been shown to be achievable with lower levels of baseline polycystin, meaning the more severe patients demonstrate higher changes than those with less severe disease. So, there are important nuances to comparing across studies because patients could be different from one study to the next. So, I just want to have that important caveat. But I think if I were to rephrase your question, long-term, would we expect to see a similar effect in a robust sample set, I would say absolutely.

[Yi Chen:]

Does that mean the previous animal model you built for was 4326 for safety margin is still applicable with 8429?

[Jay Hagan:]

The PK profile?

[Yi Chen:]

Yes.

[Jay Hagan:]

The PK model?

[Yi Chen:]

Yes.

[Jay Hagan:]

Well, we would have to confirm that and get PK data. But based on the PK that we have right now with – from animals, it does look like it has a similar PK.

[Yi Chen:]

Okay, great. Thank you.

[Jay Hagan:]

You are welcome.

[Operator:]

I am showing no further questions at this time. I would now like to turn the conference back to Jay Hagan.

[Jay Hagan:]

Great. And thanks very much for the opportunity to provide this update to you. And we appreciate your continued support of Regulus. Thank you.

[Operator:]

Ladies and gentlemen, this concludes today’s conference call. Thank you for your participation and have a wonderful day. You may all disconnect.