Regulus Therapeutics Inc.
Q1 2021 Earnings Call Transcript

Published: 13 May 2021

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the Regulus Therapeutics 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be question-and-answer session. And please be advised that today's conference is being recorded. I would now like to hand the conference over to Cris Calsada. Thank you. Please go ahead.

[Cris Calsada:]

Good afternoon everyone, and thank you for joining us to discuss Regulus Therapeutics First Quarter 2021 Financial Results and Corporate Highlights. Joining 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 line for questions.

[Jay Hagan:]

Thanks Cris, and welcome everyone to our Q1 earnings call and business update. Last week we were very pleased to announce top line data from the first cohort of patients who completed dosing and follow-up in our ongoing Phase 1b mechanism of action study of RGLS4326 in patients with ADPKD. We were successful in showing that measured levels of polycystin 1 and 2 increased greater than 50% and 20%, respectively by the end of study compared to baseline levels in this short treatment duration study. We shared those preliminary results from the available data set, because we believe these initial data demonstrate human proof of mechanism that the drug hits the target miR-17 in the kidney as designed. You may recall that we indicated in the press release that eight of the nine patients had completed the study follow-up with the remaining ninth patient anticipated in the next couple of weeks. That ninth patient's trends through day 44 or end of dosing were very encouraging. And as we complete the overall data analysis and have any material updates, we'll be sure to share them with you. We are also planning an earlier scientific presentation at PKD Connect in late June of this year with more detailed top line data as well as what we believe are new compelling preclinical data validating the impact of RGLS4326 treatment in animal models of the disease. Recall that the design of the molecule is to bind the miR-17 in the kidney. This then leads to increased expression of the PKD1 and PKD2 genes and the resultant proteins these genes encode for polycystin 1 and 2. Measured levels of PC1 and PC2 have been shown to inversely correlate with disease severity and are believed to be directly linked to the underlying genetic drivers of the disease.

[Cris Calsada:]

Thanks, Jay. Turning to our financial results. Our cash balance totaled $31.6 million at the end of Q1 2021, which is approximately $0.5 million more than our $31.1 million cash balance at the end of Q4 2020. We expect our cash runway to extend through the first quarter of 2022. R&D expenses in Q1 2021 and Q1 2020 were substantially similar at $3.3 million for Q1 2021 and $3.1 million for Q1 2020. These amounts reflect the internal and external costs associated with advancing our clinical and preclinical pipeline. G&A expenses were $2.5 million for the first quarter of 2021 compared to $2.4 million for Q1 2020. These amounts reflect personnel-related and ongoing general business operating costs. Net loss for Q1 2021 was $6 million, consistent with the first quarter 2020 net loss of $5.9 million. Our net loss per share on both a basic and diluted basis decreased to $0.08 per share in the first quarter of 2021, down from a net loss per share on both a basic and diluted basis of $0.25 per share in the first quarter 2020.

[Jay Hagan:]

Thanks, Cris. We're happy to take your questions now. Operator, can you open the lines?

[Operator:]

Thank you, sir. We have our first question from Shveta Dighe. Your line is open.

[Shveta Dighe:]

Hi. This is Shveta for Liana Moussatos. Thank you for taking my question. So for the RGLS4326 cohort one data, that data achieved the company's main objective of establishing safety and PK to address clinical hold and establish the proof-of-concept with biomarkers. But the stock had a negative reaction post the data without. Can you provide some thoughts around it?

[Jay Hagan:]

Sure. Yes, Shveta. We were puzzled by that as well. Frankly going into the data set, we've spent a significant amount of time with a number of institutional investors, setting expectations for what we thought we might see, and describe that, if we saw positive trends in biomarkers, we think that would be a win because this is a very short treatment duration, meaning just six weeks of dosing. And so to see the magnitude of change that we saw in both PC1 and PC2 was very encouraging to us in demonstrating proof-of-concept and hitting the target and as I alluded to in my comments, would suggest that just based on the trajectory, which we'll be sharing at the PKD Connect conference, that with continued dosing, you would expect it to continue going up. And so both markers, we could anticipate going up higher than what was recorded at the end of this study at day 71. I also mentioned the highest levels achieved were at day 71, which was a full 28 days after completion of dosing. We've known that the half-life in the kidney is approximately two weeks and I think this evidence from a pharmacodynamic standpoint, supports that understanding of half-life in a human kidney and suggests that less frequent dosing could also be utilized, which would be obviously much more advantageous in the commercial setting.

[Shveta Dighe:]

Got It. And I just have one follow-up question. When can we expect updates from the FDA meeting on the clinical hold?

[Jay Hagan:]

Yes. So we plan to reach out to them. I think we've said in the past, they've been very cooperative with us, our experience with them and this division seems focused on helping sponsors, innovate in areas of significant unmet need. And so we plan to reach out to them to better understand, should this be a formal, informal process of engaging them on the remaining hold requirements, initially because we want to get their feedback. So it could either be informal or through a Type A meeting.

[Shveta Dighe:]

Got it. Thank you.

[Operator:]

We have our next question from Yi Chen . Your line is open.

[Unidentified Analyst:]

Hi. Thank you for taking my questions. My first question is for patients with the PKD1 gene mutation, which represents 85% of the total ADPKD patients. Does it matter how much improvement does RGLS4326 deliver for the PC2 expression in order to achieve disease improvement?

[Jay Hagan:]

One could hypothesize that the need in increase in PC2 would be less than in PC1 because they don't have a mutation in the PKD2 gene. And so, we've already shared these results with some of our key scientific consultants in the community. And they're equally enthusiastic for the results. And obviously, understanding mutational status, they all anticipated that we're likely -- these nine patients given their Mayo classification of being Cs, Ds, and Es, which is the more advanced disease and the reported data that those with the mutation in the PKD1 gene have more advanced and aggressive disease that these were probably all or nearly all patients with a PKD1 mutation.

[Unidentified Analyst:]

So, it is possible that even 4326 doesn't improve the -- doesn't increase the PC2 expression that much, the drug that can still actually achieve statistical significance in terms of achieving the end point for improving the patient's symptoms with PKD1 gene mutation, right?

[Jay Hagan:]

Yes. Here's how I would answer that, Yi. So remember, we anticipate this is a chronic treatment, that we're not going to give four, six, eight doses and it's done and they're cured. And with the trends that we've observed as I said, we'd expect both biomarkers to continue to go up with continued treatment. Reaching statistical significance can be achieved through continued dosing or adding more subjects. Where the disconnect is, well, how much does it have to go up to have a clinical benefit. There we have some exciting data we hope to share soon, where as little as 20% increase in PC1 and PC2 is associated with significant efficacy in animal models. And obviously, we're pioneering work here in this first-in-human study with this first-in-class mechanism. And the great news is though, we've got a biomarker that's downstream of the gene target -- or the microRNA target that demonstrates that we're hitting a target and having the subsequent genetic changes that this molecule is designed to do.

[Unidentified Analyst:]

So, how soon can we expect to see results indicating, how much increase in the levels of PC1 and/or PC2 can lead to clinical benefit?

[Jay Hagan:]

Yes. So, we plan to present some -- these data at PKD Connect, including the trends, as well as additional preclinical data. What we know is that, all of the preclinical validation, which is in our view and those of our advisers as well as potential strategic partners quite compelling on this novel mechanism to address the disease. And with 4326, we hit the target. We see increased PKD1 and PKD2 expression. We see increased protein levels of polycystin-1 and polycystin-2. And all of that is associated with the reduction in cyst count and size and basically arresting the cystic expansion associated with the disease in animal models. Now in humans, we obviously have to advance the program to understand, how long will it take to lead to a change in total kidney volume, which would likely be the next marker as well as in -- as well as in ultimately in GFR, which we would do in a Phase II study after this. We didn't in the short-duration study measure total kidney volume or calculate GFR with just a view that it would take longer treatment duration to see those kinds of impacts. But I would also remind you that, there are other markers that are indicative of kidney health where we have seen statistically significant improvements in animal models particularly in KIM-1 and NGAL in more aggressive animal models with the disease. And in this study, we shared last week that although eight of the nine patients had NGAL levels within the normal range, which is quite broad, I would say as well it goes up to units of 0 to 72 nanograms per mil. And we did have one patient that came in though who had nearly twice the upper limit of normal and saw after each dose reduction in NGAL back to the normal level. And it's a net of one, so we don't want to make too much out of it. But it does beg the question in a larger study or one where you can enrich for some of those markers of kidney damage might you be able to demonstrate efficacy -- earlier efficacy than say a total kidney volume change or a GFR change.

[Unidentified Analyst:]

So in your view which biomarker or measurement will likely become the primary efficacy endpoint in the future Phase II trial?

[Jay Hagan:]

I think the primary -- we're very encouraged with the division's cooperation with Sanofi on venglustat where they are -- can receive an accelerated approval on a change in total kidney volume in a Phase II study, so long as they commit to fully enrolling a Phase III cohort that would continue on in the post-marketing setting for full approval if they demonstrate an improvement in GFR over placebo. And based on our estimates of trial size and design that would be -- effectively the Phase II accelerated portion would be approximately 250 patients dosed for one year to see that impact on total kidney volume with perhaps an interim look at six months and then an additional 250 that would be added to that for the full approval a year after that two years of follow-up for the GFR. So that theoretically could be something that could be starting for us sometime next year and obviously if we're successful in addressing remaining hold requirements and we've got alignment with the division as to what that pathway looks like for moving the product forward.

[Unidentified Analyst:]

Got it. Got it. Does the company currently have sufficient capital to fund the operations into 2022?

[Jay Hagan:]

Yes. I think as Cris mentioned in her prepared remarks Yi, we ended the first quarter with more cash we ended the year with. And so you'll see in our quarterly filing that we had utilized the ATM in the earlier part of the quarter and we're able to add to the balance sheet. So we haven't changed our guidance that we've got cash through Q1 but you can imagine we're burning right now about $2 million a month and we got $31 million -- nearly $32 million on the balance sheet. So my quick math would suggest that that's 16 months or so. Yes. And that's obviously without raising any additional capital.

[Unidentified Analyst:]

Right. Thank you.

[Jay Hagan:]

Thank you, Yi.

[Operator:]

We have our next question from Yanan Zhu.

[Yanan Zhu:]

Hi, thanks for taking my questions. So first question you mentioned continued dosing may further increase the effect on the PD markers. When might be the opportunity to see that? I mean after this -- the current study the three cohorts which are all -- have the same duration is there an opportunity to have another study to have a longer duration, but not necessarily the kind of final or registrational study that you just mentioned?

[Jay Hagan:]

Yes. We've thought a lot about that Yanan. That's a really good question. What additional derisking could we do at a given dose level. And we've considered that after we discuss these results with FDA, perhaps we take an interim step of doing call it a 3-month study at a certain dose level to see additional markers. And so that's all under consideration.

[Yanan Zhu:]

Okay. Got it. And then you mentioned NGAL, but also, I think you tracked KIM-1. Could you talk a little bit about the findings on KIM-1 in terms of the baseline and also any changes for all the patients?

[Jay Hagan:]

Yes. We're still in the process of analyzing those data, but I think as Denis is talking with me here internally we would anticipate that those are probably all likely within the normal range as well. That marker as well as NGAL is used to diagnose acute kidney injury. And that we would suspect would come if we enrich for patients that were even more advanced in their disease.

[Yanan Zhu:]

Right. Okay. And then I think on your last call, you mentioned two of the nine patients have PC2 increase more than 50%. So that certainly looks consistent with your estimate of 15% of the patient might be PC2 mutations. Of course, you'll do the genotyping work or look for the past molecular diagnosis to pinpoint that. But before that data is available just wondering in those two patients, what does their PC1 increase look like? I guess if they…

[Jay Hagan:]

It was also -- and we'll share all this at the upcoming scientific conferences, but they also had an increase in PC1 that was quite notable. It wasn't as if the PC2 goes up and PC1 doesn't go up. They had -- those patients had low baseline levels of both too.

[Yanan Zhu:]

I see. And lastly, maybe can you give a sense of in a PC1 patient for example, what's the level of PC1 and PC2 relative to the normal level?

[Jay Hagan:]

It's approximately, I think, three to fivefold lower in patients with the disease than in healthy volunteers. And we have that on our investor deck Yanan where you can see that it's variable amongst the disease severity. The lower the level of polycystin looks to clearly correlate with the higher disease burden as measured by height-adjusted total kidney volume. And so -- and we see that. So the most advanced patients with one E Mayo classification have the lowest levels of polycystin. And then amongst healthy, you've got quite a bit of variability. So the trend of up, we think is good, and we believe it's good, and we know that with fairly minimal changes we see an impact in animal models.

[Yanan Zhu:]

Right. Just a quick clarification. For a PC1 patient -- PC1 mutation patient is PC1, PC2 down to the -- the decrease similar, or PC1 is down much more than PC2?

[Jay Hagan:]

PC1 tends to be more down than PC2. PC2 is more abundant, and as you I think know these form these heterodimers in a ratio of 1

[Yanan Zhu:]

Got it. And my last question is with regard to the assay that you used to measure PC1, PC2 on the exosomes. Is that assay -- I understand it's immunoassay. Does that -- is that assay -- does that also pick up the mutant form of the protein? I guess, unless the mutant is all truncation mutations, but could there be a possibility that part of the truncated protein or a point mutation protein get expressed on the exosome and being detected by the assay? Thanks.

[Denis Drygin:]

This is Denis Drygin, the CSO. I'll take this question. So we have just recently had a teleconference with key opinion leaders in the field. And they told us that they do not believe or there is no evidence that any of those truncated proteins are hanging around enough. Basically their -- because of their nature their stability is very low and they are being rapidly degraded.

[Jay Hagan:]

Yes. So the ELISA wouldn't -- so we wouldn't expect the ELISA to go down.

[Denis Drygin:]

Yes.

[Q – Yanan Zhu:]

Okay. Great. Thank you.

[Jay Hagan:]

Thank you.

[Operator:]

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

[Jay Hagan:]

Great. Thank you and thanks everyone for joining us today. I do want to mention on the investor front, we'll be participating in Oppenheimer's upcoming Rare & Orphan Disease Summit later next week. And we appreciate your time and support of Regulus. Thank you. That concludes the call.

[Operator:]

Ladies and gentlemen, this concludes today's presentation. Thank you for participating. You may now disconnect.