Regulus Therapeutics Inc.
Q3 2016 Earnings Call Transcript

Published: 2 Nov 2016

[Operator:]

Good day, ladies and gentlemen and thank you for standing by. Welcome to the Regulus Therapeutics third quarter 2016 conference call. At this time, all participants are in a listen-only mode. [Operator Instructions]. As a reminder, this conference is being recorded. Now I would like to welcome and turn the call over to Ms. Alison Wey. Please go ahead.

[Alison Wey:]

Thank you, [Carmel]. Good afternoon everyone and thank you for joining us to discuss Regulus' third quarter financial results and recent events. We are joined today by Dr. Paul Grint, Chief Executive Officer, Jay Hagan, Chief Operating Officer and Dr. Tim Wright, our Chief R&D Officer. Paul and Tim will provide remarks on our clinical programs and Jay will review the financial results before we open the lines for questions. Before we begin, I would like to remind you that this call will contain 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 provisions 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’d like to turn the call over to Paul now.

[Paul Grint:]

Thank you, Alison. Welcome everyone and thanks for joining us this afternoon. We've had a very productive quarter. The third quarter for Regulus was dominated by three key activities

[Tim Wright:]

Thanks, Paul. Before I go into an RG-101 update, I'd like to share with you my first impressions of Regulus and why I believe it's a great time to be part of this company. What expects me about joining Regulus at this time is the unique opportunity to capitalize on three key strengths. First, to work with a highly talented and experienced research and development organization with deep knowledge in the oligonucleotide therapeutic space. Second, to leverage the explosion in the understanding of basic [indiscernible] microRNAs and their role in disease. And third, with a highly refined approach to target validation and screening, Regulus is poised to translate the growing body of knowledge of microRNAs rapidly into clinical candidates. This has the potential to take years of [ph] the time for clinical testing compared to traditional drug development for small molecules for biologic or cell therapies. This is exemplified by the generation of three clinical candidates in less than nine years since the founding of the company. With my background in R&D and in particular my experience in translational research, I plan to rapidly prioritize and advance of the clinical and pre-clinical pipeline. Moving on to the current status of RG-101, the work to address the clinical hold was well underway when I joined the company. Since joining, I assumed leadership for the team responsible for the responses to the FDA. As I'm sure you are aware, in late July Regulus received a formal clinical hold letter from the FDA requesting additional information which included five items. First, a detailed safety analysis from pre-clinical and clinical study. Second, exploration of potential mechanisms of hepatotoxicity in non-clinical models. Third, review and input from independent hepatotoxicity experts. Fourth, additional pharmacokinetic data from the US Phase 1 study and fifth, a risk-benefit assessment for the proposed therapeutic regimens containing RG-101. Since the receipt of the letter detailing the request for additional data and analyses, we had initiated additional mechanistic work, the data which we now believe will enhance the package we plan to submit. Furthermore we've been formulating a plan that may provide a path forward. Based on the timing of the results of these additional studies which we intend to include in our response, we pushed out our resubmission timeline several weeks and thus we’d now expect a response from the agency in the first quarter of 2017. Our goal is to get off clinical hold and initiate additional planned studies, including the single visit cure regimen in collaboration with GSK and ultimately to partner the program. While we're in the midst of the clinical hold, we have decided to focus our resources on addressing the issues outlined by the agency, completing the additional studies I mentioned and assembling this comprehensive package for the FDA response. We are not planning any further interim data cuts on our ongoing RG-101 studies. We do, however, continue to collect safety data on all active clinical trials and we’ll update our safety database accordingly. We do not plan further evaluation of the efficacy data until the hold is resolved. Now stepping back and reiterating why I decided to join Regulus, at this time it's clear that Regulus is at the forefront of developing truly novel therapeutics that can broadly address disease pathways. We look forward to sharing more with you at the upcoming R&D day on December 6 when we plan to announce our next clinical candidate. Now I would like to turn to Jay for the financial review.

[Jay Hagan:]

Thanks, Tim. We ended the third quarter with $91.7 million cash, cash equivalents and short term investments. We expect to end 2016 with approximately $75 million to $80 million in cash which we believe provides run way into 2018. We are currently in the midst of our 2017 planning cycle and we are evaluating a range of investment opportunities to advance our development programs, including our next clinical candidates and the potential timing of resolution to clinical hold. We are pleased with the significant recent progress made by our research team and as Tim mentioned, our focus on positioning ourselves to rapidly advance our clinical and pre-clinical pipeline. We look forward to providing further guidance on our future cash burn projections early next year. We recorded revenue which consisted of amortization of upfront payments from our strategic alliances and collaborations for the third quarter and nine months ended September 30 of $0.2 million and $1.2 million respectively. This compared with $1.9 million and $9.9 million for the same period in 2015, of which $0.3 million and $3.2 million respectively were pre-clinical milestones. R&D expenses were $14.6 million and $49.3 million for the three and nine months ended September 30, 2016 respectively compared with $11.0 million and $43.6 million for the same period in 2015. The increases were driven by RG-012 and RG-101 expenses as well as increased investment in our pre-clinical pipeline. G&A expenses were $4.8 million and $13.6 million for the third quarter and nine months ended September 30, 2016 respectively, a slight increase from the same period in 2015. Net loss for the third quarter was $19.5 million or $0.37 per share and $61.8 million or $1.17 per share for the first nine months of 2016. This compared with a net loss of $13 million or $0.25 a share and $48.5 million or $0.95 a share for the same period in 2015. And now I’ll turn the call back to Paul for closing remarks before we get to your questions. Paul?

[Paul Grint:]

Thank you, Jay. I hope you found this update on our clinical portfolio helping. Our timelines on providing the RG-101 response to FDA have moved out a couple of months due to our decision to generate and include additional results. We feel more confident now based on what we’ve learned over the last several months this comprehensive submission could provide a path forward to the program and look forward to the FDA’s feedback in the first quarter next year. And finally, while the RG-012 timelines of the interim Phase 2 data have been pushed out a couple of quarters, we believe aligning the global regulator requirements is the right step to take here and gathering the additional data requested by the EU regulators will ultimately give us and our partner Sanofi a more robust data package to guide later stage development. With that, we’re ready for your questions. Operator, could you please open the line? Thank you.

[Operator:]

[Operator Instructions] And our first question is from the line of Matthew Luchini with BMO Capital Markets.

[Matthew Luchini:]

Hi, thank you very much for taking the questions. So I was hoping you could maybe talk a little bit more about the drivers of the change in clinical hold timelines. Specifically was it that you needed to do more longer or more complicated mechanistic trials than what was expected? Was it something that the FDA came back to -- back to you requesting more information about? Just really what were the specifics that you were trying to answer here?

[Paul Grint:]

So Matthew, good afternoon. This is Paul. Good question. So let me just say first off that the FDA has not come back to us with any specific additional questions or proposed mechanistic studies. And perhaps I will ask Tim to talk a little bit more about the work we have ongoing and why we’re delaying, missing a few weeks.

[Tim Wright:]

Right. Well as I mentioned when I started there were already studies underway. Some of these were studies requiring some additional dosing and pre-clinical models and those take a while to read out. In the course of reviewing these clinical and pre-clinical data and putting our heads together we also identified a few other preclinical studies that we wanted to do to wrap up the package. So I think it's fair to say that this is actually not a very long period to address the hold. I've been part of holds before that, that took six to twelve months. So this is actually I think a fairly reasonable timeline given the five points I mentioned to you already that the FDA asked us to address.

[Paul Grint:]

Yes, Matthew, clearly as we said our goal and our priority is getting off clinical holds. We believe that what is important is to put the strongest data package into the FDA and that's what we plan to do and hence, the few weeks delay there.

[Matthew Luchini:]

And on the 012 trial, I guess, can you provide a little bit more color on the multiple ascending dose portion of the study, specifically -- so for example, will the sites that you need to participate in that aspect of the trial -- will you be able to activate them for the active portion of the study? Was EMA looking for -- was there anything specific from EMA that they were looking for or concerned about that led to the requests for the MAD study? Just any more details on that would be great. Thanks.

[Paul Grint:]

We’re happy to. I think as you're aware and as we've spoken to before, we’ve had ongoing dialogue with the FDA since the pre-IND discussion now which goes back -- almost goes back two years actually. At that time we had contemplated doing both single and multiple ascending doses in healthy volunteers and was guided by the FDA that really single dose in the US in volunteers would be sufficient and for us to move the patient as rapidly as possible. I would like to sort of recognize Dr. Stockbridge and the team at the FDA with regard to the sort of collaborative nature of working with them, that this allows us to design this Phase 2 study. As we moved forward, as we've said to bring on board our European site, clearly there are additional questions that the EU regulators have raised here. And I am going to hand it back over to Tim because I think what's important is his past in Novartis and Pfizer, for example of years, and he has been close to the European regulators over the last few years as compared to I have. I think he can bring a really good historical perspective to some of their questions right now.

[Tim Wright:]

Sure, thanks Paul. Well I think it's fair to say that moving from a single dose to a twenty-four week multiple dose is a bit of a league, it can be managed with very careful follow-up. And I think that the challenge that was seen by some of the European regulators was this -- basically expansion into a larger population of subjects and the duration. So it's not uncommon, in fact, it's pretty traditional drug development to go from a single to multiple ascending dose to establish the pharmacokinetic profile. In particular, Europe has been very sensitized as you can imagine based on some really unfortunate events in the Phase 1 studies that were done -- carried out in Europe over the last year. One in particular comes to mind where they had a situation during the multiple phase where they had a patient die. And some of this relates to whether adequate pharmacokinetic modeling and estimates of pharmacokinetics exposure were done, including measurements in real time during the study. So for our purposes, consider this as something that just required additional more data – additional data to make them feel more comfortable. FDA felt comfortable based on the class of therapeutics and the data we have in this single ascending dose study to allow us to go forward. But I think there's a little less experience in the part of some European regulators with this class of molecule, as well as the sensitivity that they have.

[Matthew Luchini:]

And last thing for me before I get back into the queue. Sort of the Phase 2 study, I heard, I think it's going to be about 30 patients. How big are the single ascending and multi ascending dose arms –

[Tim Wright:]

Just to clarify, so this multiple ascending dose will be in healthy volunteers and it will be at a Phase 1 site, so it won't be competing for any of the other sites nor for any of the patients that are planned to enroll in the HERA study. That’s one of the reasons why when it was suggested by the European regulators to move into healthy volunteers to perform this have been the intent initially as Paul mentioned. This is the fastest way to get this done. And it's the fastest way to get into resuming the HERA trial. So in terms of the overall size the anticipated size is roughly 24 subjects somewhere in that range. We're still working up a final protocol design but this can be done fairly efficiently in a phase one unit.

[Paul Grint:]

Matthew, I think one of your questions was around continued progress to get sites up for the HERA. So yes, wherever possible we're going to have with both enrollments now but we’re going to have the sites for the HERA study and the patients, some of whom obviously are currently in our team. And that's a risky [ph] study on standby ready to potentially being enrolled as soon as we have the data that’s required to do on the questions raised by the European regulators.

[Operator:]

And our next question comes from the line of Alan Carr with Needham & Company.

[Alan Carr:]

Hi, thanks for taking my questions. A follow-up on both of the previous ones actually. Can you elaborate a bit on what sort of mechanistic studies you’re working on there? And then also with respect to Phase 2 trial in 30 patients, can you tell us a bit more about the interim analysis, how many patients are involved in that, what we’ve learned at that point?

[Paul Grint:]

Yeah, Alan, good afternoon. So we're not at this point going to talk a lot of details from a mechanistic standpoint with regard to RG-101 and where we are. But clearly the signal that we saw was significantly increased bilirubin. So suffice it to say we've been looking at transporters of mechanisms associated with dialysis and bilirubin. We've conducted some additional studies to look at that and as we get more information in the future we'll obviously provide more update. With regard to RG-012 and the Phase 2 study, the study design is -- was or currently is 30 patients, two different doses and one placebo arm, the six months of treatment and it’s a randomized and blinded study and that’s the design we have now. So the interim look was planned to be data once every one through six months and we've talked about and I think it's very possible that what we will do which we believe is important is to offer these patients an extension study in essence to continue on therapy for some period of time after participating in the HERA study.

[Alan Carr:]

Thanks and then with – you said it's a delay for a few weeks for 101. What's your confidence level that you'll be able to submit something to the FDA by the end of the year?

[Paul Grint:]

Tim, do you want to –

[Tim Wright:]

Yes, I mean I think we've said several weeks. I think if you can read our cue lips [ph] saying that we expect a response in Q1 and it's several weeks delay, you can tell it's on the cusp of year end. Right now we're just at that range.

[Paul Grint:]

Yeah, I mean the practicalities here, Alan. We've got some additional studies being run out of house, so not everything is within our direct control. We have timelines from the contract groups we work with. Obviously there is data that’s coming in pretty much last minute. We have to include that in report, the electronically format everything for submission. So we have timelines but things can move back and forwards by few days which is why we don't want to guide to an exact date right now. But clearly our goal is to get the most comprehensive package we can, submit it in the fastest possible timeframe.

[Operator:]

And our next question comes from the line of Eric Schmidt with Cowen & Company.

[Eric Schmidt:]

Thanks for taking my questions. On 012, Paul, I think you mentioned the dosing in the U.S. was suspended. Do you dose in Alport patients and if so what's going to happen there?

[Paul Grint:]

So yeah, Eric, good afternoon. So I'll get Tim to address that. But you are correct we had.

[Tim Wright:]

Yes, just after the first subject was entered into the trial, went through screening and was dosed, is when we found out that there was significant concern in the terms of wanting an additional study before moving forward in Alport disease patients from a European regulator. And so we didn't continue with dosing in that subject. So they did not get a second dose. They are being monitored in the study for continued monitoring for safety but since we paused dosing and paused recruitment in that study, that subject will not be part of the analysis.

[Eric Schmidt:]

And then on RG-101 what's the rationale for not providing updates until the clinical hold is finished, specifically in a combination study with the GSK or sanofi?

[Tim Wright:]

Well, I think let's – suffice it to say that while a program is on hold it’s really very difficult for us to share any efficacy data without also addressing the safety concerns from the agency. So it's a situation where we could be seen in conflict with some of the things that they would want us to include in any disclosures. So it becomes very very difficult for us to share any efficacy result. So we've decided to put those on hold.

[Paul Grint:]

Yeah, I mean just to remind you, Eric, the FDA has asked us -- we talked about this in some detail when we received the clinical hold letter. The FDA has asked for detailed summaries of safety across all studies that we're doing. So part of the difficulty we have is we've got significant safety database there and that's what we're providing as part of the clinical response to FDA. As one thinks about presenting efficacy and safety data just from a given single study, I think as Tim has just outlined perhaps that doesn't give the full picture exactly at what is going on. So I think perfectly reasonable and Tim, correct me if I am wrong but not unusual actually. The companies when they are on clinical hold on the programs not to provide sort of ongoing updates with regard to either safety or efficacy, until we've met our priority which is providing relevant information to the regulators and we hear back from them with regard to the path forward.

[Tim Wright:]

Yes, this is a very sensitive phase of the program and we don't want to -- we want to maintain full engagement with the agency and basically abide and build confidence with them that we're going to do the right thing up through the resolution of the hold.

[Eric Schmidt:]

And can you say whether you've had any additional reports of liver tox in the ongoing studies?

[Paul Grint:]

Well I can just say that we haven't had any additional serious adverse events. Only the two that we previously reported.

[Eric Schmidt:]

Okay and I guess Paul looking forward, let's say, you're able to get off the hold on RG-101 the first quarter of next year. But how long do you think it would take or what do you think you would need in order to drive an appropriate partnership for that molecule?

[Paul Grint:]

Good question. So it depends on -- we're talking about different designs of studies that we might do when -- if we do to propose the FDA to get off hold, I think that maturing data that we have from the current studies is going to be helpful. But together with I think data from whatever, to continue clinical work that what we do next year, I think at this point it's difficult to be specific. However our goal got us excited with this molecule potentially moving to a one visit type of cure, it's still within our sights. I mean that's why we went to get a hold, we believe that such a therapeutic option in particular as one thinks about Hep C as a global health problem it is important.

[Operator:]

And our next question is from the line of Madhu Kumar with Chardan Company.

[Madhu Kumar:]

Hi everyone, so really two questions. My first question is, is there any reasonable discussion of the one visit combination with GSK? Is there – I guess, has there been an interaction with the GSK? Do they have information on your response, was it that the clinical hold? And then for RG-012 what proportion of the patients in the HERA study would have come -- are likely to come from the natural history study?

[Paul Grint:]

Madhu, good afternoon. Let me take the first part and I will hand the RG-012 part to Tim in a minute. So with regard to GSK, absolutely we've kept them completely apprised as a partner as we've gone through this process. To be honest with you they've been an excellent partner. I mean as a company they have resources and experience that we don't have here at Regulus that we've been able to tap into as we've gone through reviewing data, from our clinical safety database together with reviewing preclinical data and proposing designs for additional preclinical studies. So absolutely we've been sort of in lock step with them as we review the information and propose new studies and some of the data is what we're waiting for. So yes we continue to be very aligned. Perhaps I will ask Tim to address the question on RG-012.

[Tim Wright:]

Sure. Well as you know the ongoing ATHENA study is a live study in terms of still enrolling subjects and also tracking subjects in terms of their EGFRs over time. And basically as we have set up our enrollment criteria we expect -- and I'm not going to give you the exact number but it was just a double digit eligible subjects at the current time out of the 30. So that gives you some sense of where we are right now and with the additional time between now and when we restart the enrollment we expect that number to continue to increase. We are open to other subjects not being part of the ATHENA study to be able to enroll. And we're also looking carefully at the ATHENA study to inform us on criteria that would allow us to enroll subjects even faster into the HERA study.

[Operator:]

And our next question comes from the line of Liana Moussatos with Wedbush Securities.

[Liana Moussatos:]

Thank you for taking my questions. Just following up, to be clear, what is left that you need to do in order to submit the package to FDA to get RG-101 off clinical hold and how long you do each of these items but –

[Tim Wright:]

I'm sorry we missed the end of your –

[Paul Grint:]

There is only eight weeks left –

[Tim Wright:]

There’s only weeks left. Well what I can tell you is that many of these studies started before I joined, which was four weeks ago. And so there are some studies that will take a few more weeks to complete and then as Paul mentioned we have the report writing and the compiling and then the overarching work that needs to be feeding back into each of these five items. Suffice it to say that some of the items were relatively easy to address and compile the data such as the existing safety database although we're updating that in real time and we'll do so after the submission. For other items in particular some of the in vivo work that had to be done that we felt was important to do will take a few more weeks for the live portion and then we have the analysis. So that's, I think, as much detail as we're willing to share at this time. But we anticipate like I said having this done in several weeks and expect the response in Q1.

[Liana Moussatos:]

Can you repeat the five items again?

[Tim Wright:]

So the first one is detailed safety analysis from pre-clinical and clinical studies. The second is exploration of potential mechanisms of hepatotoxicity in a non-clinical model. The third is review and input from independent hepatotoxicity experts and the fourth is additional pharmacokinetic data from the U.S. Phase 1 study. And fifth is a risk benefit assessment for the proposed therapeutic regimens containing RG-101.

[Operator:]

And our last question for today is coming from the line of Jim Birchenough with Wells Fargo.

[Unidentified Analyst:]

This is actually Yenon Zou [ph] in for Jim. Most of my questions have been asked but I have a couple of questions on the 012 program. Specifically because the HERA study enrolled patients with a decline in EGFR during the screening period. So I was trying -- I'm trying to understand the variability of the decline. I think from the ATHENA interim results 55% of the patient had a decline after 24 weeks. So is the decline -- is this the dynamic of the EGFR change, is it highly variable and also for patients who had a decline, is it possible for the number to go up? So just trying to understand the dynamics of the EGFR change over time.

[Tim Wright:]

So I've been reviewing the data with the team. As recently as yesterday we looked at some additional analysis. What I can tell you is that for a given patient the rate of decline is somewhat stable over a period of months, at least five, six months. And the rate of decline over years obviously is not going to be stable. There's going to be some variability. But in order to see a difference – a statistical difference in the rate of decline or a clinically meaningful difference in the rate of decline, we need to establish what that individual's rate of decline is and whether it's in a range that we could easily see a difference. So if someone had a 0.5% drop in EGFR in a year, reducing that by 50% is not going to be detectable. So we are looking carefully at the patients but I can tell you when you map this out, the statisticians have used for a fit and almost most of these are aligned. Going through the data they're not curves that are that are steep or bending. And so it gives this a fair degree of confidence that we're going to be able to map the rate of decline both before treatment and then follow it after enrollment in the study.

[Unidentified Analyst:]

So just to make sure I understand this correctly. So on an individual patient basis if the patient has a decline, that decline is likely to continue. So on the individual patient basis is pretty predictable of a future trend.

[Tim Wright:]

It is consistent and obviously Alport as well as a lot of chronic kidney diseases you don't see the EGFRs early on in the disease. It tends to occur after the disease has progressed with stage where enough nephrons are being destroyed over time that you actually see a reduction in EGFR. It's something that -- at the upper end of the range EGFR is fairly insensitive to change and as the disease progresses you start to see an acceleration of a lot. So we're looking for subjects that are in that middle zone and not have in stage renal disease but ones that we believe that the RG-012 will have an impact on the disease progression.

[Unidentified Analyst:]

Got it and lastly I'm wondering if you wouldn’t mind commenting on the end points for HERA that you're going to analyze besides the safety end points, any pharmacodynamics or efficacy end points that you are following?

[Paul Grint:]

We talked about this before, we have lot of different end points in the study. I mean clearly EGFR is very important but it's not the only endpoint, there are other markers of – biomarkers looking out from a real function standpoint, a decline of renal function, we'll be looking at those both in blood and in urine. So the study collects a lot of different samples and clearly we will be watching what happens on those over time. End of Q&A

[Operator:]

Ladies and gentlemen thank you for participating on today's program. This concludes the conference and you may all disconnect. Have a good day.