Regulus Therapeutics Inc.
Q4 2016 Earnings Call Transcript

Published: 3 Mar 2017

[Operator:]

Good day, ladies and gentlemen and welcome to the Regulus Therapeutics Inc. Fourth Quarter 2016 Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder to our audience, this conference is being recorded for replay purposes. It is now my pleasures to hand the conference over to Ms. Alison Wey, Vice President of Investor Relations and Corporate Communications. Ma'am, you may begin.

[Alison Wey:]

Thank you, Brian. Good afternoon everyone and thank you for joining us today to discuss Regulus' fourth quarter and full year 2016 financial results and recent pipeline events. We are joined today by Dr. Paul Grint, Chief Executive Officer, Jay Hagan, our Chief Operating Officer and Dr. Tim Wright, our Chief R&D Officer. Paul will share some 2016 highlights, Tim will provide remarks on our development programs and Jay 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 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’ll now turn the call over to Paul.

[Paul Grint:]

Thank you, Alison, and good afternoon everyone. As we look back on 2016, it was a mixed year for Regulus characterized by important accomplishments and unexpected setbacks. Targeting microRNAs is a therapeutic approach to address complex diseases, is still a relatively young and evolving field. Importantly, over the last couple of years we have gained many insights and key learning in the areas of pharmaceutical developments, delivery technologies, and pharmacokinetic, pharmacodynamic relationships. These are been quickly applied to our clinical and preclinical programs. This is facilitated a more focused and efficient research and translational effort. In fact based on these learnings, I'm more convinced that targeting microRNAs offers a significant advancement in therapeutic potential for many diseases for which there are currently no or limited treatment options. Although the RG-101 clinical hold cost a cloud in us in the latter half of 2016, as we review overall Company progress, we did achieve several successes from the corporate and R&D perspectives. On the corporate site, we strengthened our management team with the addition of Jay Hagan, Chief Operating Officer a year ago in January and Dr. Tim Wright our first Chief Research and Development Officer who joined in October. Tim introduced himself and talked about his considerate experience at both Pfizer and Novartis on our previous call and he's already using that experience to strengthen our research and development teams. We secured a $30 million credit facility with very attractive terms extending our cash runway. From the R&D perspective, we presented encouraging data on many of the key scientific congresses and published them in top-tier journals. Now let's turn our attention to 2017 and beyond. We have a number of significant milestones and events over the next six quarters and our current cash runway supports achieving these goals which Jay will provide more details in his remarks. As we look forward towards advancing our programs, targeting significant unmet medical needs to late stage development and potential commercialization, the product attributes have relatively low and infrequent dosing, drugs stability potential to flat dosing and cost of goods all support the profile of a highly competitive therapeutic. Now I'll turn the call to Tim who will provide an update on our program. Tim?

[Tim Wright:]

Thanks Paul. As Paul pointed out, over the last year we've made substantial progress with our pipeline and gained valuable insights into the unique properties of microRNA and our modified [oligo] [ph] therapeutics. For example, we have advanced our ability to preferentially target the liver and kidney with novel chemistry and conjugation technologies. Having now been in Regulus for five months, I'd like to share a few perspective of someone who is relatively new to microRNA therapeutics. As a [yield] [ph] microRNA biology is still in its early stages having been first described in mammals less than 20 years ago. As a therapeutic class, we believe that microRNA therapeutics has a potential to offer major therapeutic advantages over conventional approaches. We have barely scratched the surface in terms of microRNA targets that have been associated with diseases and we look forward to continuing to build our portfolio over the coming years. As a company we have learned a lot about the process of going from microRNA targets to clinical stage compounds. Keep in mind that this process is still in its early stages and we are gaining important insights that should enable us to do so more efficiently and effectively with every compound we bring to the clinic. Speaking of clinical phase programs, let's begin with our lead program RG-012. As you know last fall we initiated a Phase 1 multiple ascending dose study in healthy subjects based on feedback from European regulators and paused recruitments of the Phase 2 HERA study. During this time we took an opportunity to take a closer look at the overall program design and regulatory path. We have modified the RG-012 clinical development programs to accelerate patient recruitment and potentially achieve proof of mechanism this year. The revised Phase 2 program will include the HERA study, a randomized double-blind placebo control study in 30 Alport syndrome patients with rapid renal function decline. We plan to formally extend this study to 48-week duration with an interim assessment at 24-weeks. The objective of the HERA study remains the same to evaluate the safety and efficacy of RG-012. We've removed the biopsy from the HERA study and have designed a separate renal biopsy study that we expect to initiate in Q2 and we’ll evaluate RG-012 renal pharmacokinetics, target engagement and its effects on downstream genomic markers of disease. Both studies will begin enrollment following completion of the Phase 1 multiple sending dose study in Q2. Based on the projected enrollment rates, data from the renal biopsy study is expected in Q4 2017 and interim data from the HERA study is expected in mid-2018. Our ATHENA natural history study for Alport syndrome continues and has yielded important data for the revised design of the HERA study. The ATHENA study has also been important to setting up our plan biopsy study, as well as prequalifying many Alport syndrome patients for participation in the HERA trial. Now on to RG-101. We were disappointed with the FDA's decision to continue the clinical hold. We felt that our response to the FDA's questions were comprehensive that we had identified potential mechanism for the hyperbilirubinemia and proposed a reasonable path forward. That said, we are pleased to share with you the summary of the topline results from our recently completed Phase 2 RG-101 direct acting antiviral combination study or DAA combo study. To refresh you on the design, this was a Phase 2 study of RG-101 in combination with four weeks of once daily approved antiviral agents. Harvoni, Olysio or Daklinza. The study enrolls 79 treatment naïve genotype one and four HCV patients. The results from the final analysis demonstrated the sustained virologic response through 48 weeks to follow up SVR48 as follows; RG-101 plus Harvoni demonstrated 100% SVR48; RG-101 plus Olysio demonstrated 77% SVR48; and RG-101 plus Daklinza demonstrated 84% SVR48. RG-101 in combination with four weeks of oral DAA therapy was generally well tolerated with the majority of adverse events considered mild or moderate with no AE-related discontinuations. Commonly reported adverse events included fatigue, headache, and injection site reactions. Over the course of the one-year study, five subjects experienced SAEs. As previously reported, there was a single SAE of jaundice in a patient at seven weeks in the Daklinza combination arm of the study. There were four patients across all arms that experienced adverse events of asymptomatic transient hyperbilirubinemia greater than or equal to two times the upper limit of normal. No cases met criteria for Hy's law. Since the interim analysis in June 2016 that we reported on last year, there were two additional SAEs

[Jay Hagan:]

Thanks Tim. We ended the year with $76.1 million of cash and cash equivalents compared with $115.3 million at the end of 2015. R&D expenses were $15 million the quarter and $64.3 million for the full year 2016 compared to $12.8 million and $56.4 million for the same period in 2015. The increases in R&D expenses were primarily driven by the advancement of our clinical programs and increased investment in our preclinical pipeline. G&A expenses were $4.8 million for the quarter and $18.4 million for 2016 compared to $5.4 million and $19.1 million for the same period in 2015. The decreases were driven by a decrease in personnel costs including non-cash stock based comp. Revenue was less than 100,000 for the quarter and $1.2 million for the full year 2016 as compared to $10.9 million and $20.8 million for the same period in 2015 during which clinical milestone payments from our partnerships were achieved. With RG-101 still on hold this year, we took a very close look at our programs reallocated resources and prioritize our most promising programs for 2017. We've also stopped other programs in order to extend our cash runway through major milestone we expect over the next six quarters. Year-over-year we lowered our cash burn by approximately 25% which provides runway into mid-2018. Now turning to business development. As we've discussed over the last couple of quarters, our strategy with regards to partnering takes into consideration what we want to keep and eventually commercialize on our own and what makes sense for partnering. Given the breadth of our pipeline and productivity of our research group, there are a number of different areas under discussion for partnering. Obviously there's a lot of interest in the NASH days current. Additionally, the novel approach of targeting microRNAs to treat complex disease in areas of high unmet medical needs were early proof-of-concept can be established also presents an attractive proposition for interested potential partners. We will advance these various discussions and consider different deal constructs to capture the value of our emerging pipeline. Before we take questions, I want to briefly summarize a list of key events expected over the next six quarters. With respect to RG-012 we’ll have multiple ascending dose standard in the second quarter. While completion will begin enrolling patients in both real biopsy study, as well as resume enrollments in HERA study midyear which we anticipate will begin midyear. We anticipate filing two INDs or equivalent in the second half of 2017 and nominate at least one new clinical candidate by year-end. We expect to submit our complete response to the FDA addressing the clinical for RG-101 around year-end and we intend to continue to present new data from current programs at the relevant scientific meetings, as well as publishing top-tier journals. Now I'll turn the call back to Paul before we open the lines for questions.

[Paul Grint:]

Thank you, Jay. So in closing, 2017 is a year focused on operations and delivering on the portfolio. We need to deliver on key milestones that Jay outlined. We remain confident in the promise of microRNA therapeutics and that Regulus maintains its leadership position with our impressive pipeline and R&D engine. So with that, we’ll be happy to take questions.

[Operator:]

[Operator Instructions] Our first question will come from the line of Matthew Luchini with BMO. Please proceed.

[Matthew Luchini:]

Hi, good afternoon, thanks for taking my questions. So a couple first maybe on RG-012. I was hoping you might be able to provide a little bit more color or details around the biopsy trial in terms of maybe the size of it, where it will be conducted, what markers it will typically focused on and relatedly maybe you could provide a little bit of color on higher thinking about the potential hurdle rate that you would need to see for target engagement or one of the other measures that can give you comfort in a potential proof of principal ahead of the heritage that's expected in the middle of 2018?

[Paul Grint:]

So Matthew, thank you for question, I'll ask Tim to address that.

[Tim Wright:]

Sure, hi Matthew. Just a couple of comments we are not disclosing all the details in the study yet. We haven’t posted it in clinicaltrial.gov yet. So at the high level I can tell you this is a relatively small study. It’s a study that will enable us to very rapidly access whether we got target engagement and appropriate PK. This is a study that's actually neared on our pre-clinical studies that have shown similar data in our animal model so we expect to see - have the ability to very rapidly address whether we’re seeing target engagement and downstream marker modulation with a very small - relatively small and short term study. So what I can tell you is that the ATHENA study has enabled us to very rapidly and effectively design the study and the study itself was designed in collaboration with our partners in OP.

[Matthew Luchini:]

Okay, thank you. And just on RG-101, it seems like obviously there has been a couple more SAEs and maybe you could just remind us or talk us through not only what we are seeing but also with the cases of the elevated bilirubin, which specific combo arms these different events were seen?

[Paul Grint:]

So as I mentioned there was only one SAE for hyperbilirubinemia and jaundice in this study and that was on the Daklinza arm, where the others were distributed - the other adverse events which were at the level of asymptomatic laboratory abnormalities, we are seeing across all of the arms, so the additional four subjects who had bilirubin changes were across the other arms, so that's all the detail we're providing at this stage, they were asymptomatic and laboratory abnormalities that were transient.

[Matthew Luchini:]

Okay. So I should interpret that to me in the every arm had at least one asymptomatic elevation?

[Paul Grint:]

Yes.

[Matthew Luchini:]

Okay. Thank you.

[Operator:]

Thank you. Our next question will come from the line of Alan Carr with Needham & Company. Please proceed.

[Alan Carr:]

Hi thanks for taking my questions. Looking at some of your earlier stage programs, I'm wondering if you can give us a sense when you might learn more about [indiscernible] 4326 with respect to preclinical data and that kind of thing. And then Jay you mentioned that some programs have stopped in this reallocation, I wonder if you could elaborate on that little bit, thanks.

[Paul Grint:]

Alan good morning, thanks for the question. This is Paul, I will hand over to Tim to talk a little bit more about the preclinical data but just to remind you two things one is this there is quite a lot that we put out there at our R&D Day and importantly for polycystic to kidney diseases if you just look back recently there was an important publication and Tim can speak to more of that perhaps.

[Tim Wright:]

Yes so our strategy here is actually to publish this work as soon as we have achieved a reasonable package that warrants sharing this publicly and regarding 5040 we are at this stage not disclosing any additional information other than what we presented at the R&D Day but for the ADPKD there is actually a fairly expensive publication that just came out with our collaborator Vishal Patel from UT Southwestern and we can get to the reference on that that would be helpful but what I would recommend is that if you look at that paper it has a lot of information on the target, the validation and the effect seen in this model.

[Paul Grint:]

Yes, now regarding the work that we deprioritize, yes we’ve gone through the budget very carefully with an eye towards extending our cash runway so that we can get through a lot of the key events that we have outlined including the additional small renal biopsy study we will get data towards the end of this year in outpatients showing target engagement in downstream markers of disease modifications. What we deprioritized in the earlier stage things that we haven’t really talked about to give an example we have worked pretty extensively historically going back to the days we are pursuing more aggressively oncology opportunities looking at specific types of conjugation technologies to get to additional tissues and those sorts of activities where we don’t have preclinical validation to where investments today, we deprioritize our stalls effectively at this point including things like lipid nanoparticles and so forth and so that's what we have done with respect to making adjustments to our plan.

[Alan Carr:]

Okay, great. Thanks very much.

[Operator:]

Thank you. Our next question will come from the line of Joseph Thome with Cowen and Company. Please proceed.

[Joseph Thome:]

Hi guys, thank you for taking my questions. I guess first on 012 are you expecting to sort of press release the multiple ascending dose data in Q2 from this trial and I guess what are the next steps, do you have any further communication with European agencies before reinitiating the phase we are going into the next trial or what are the possible outcomes?

[Paul Grint:]

Yes, thanks for the question. Yes it will be our intention obviously to make that data public from the multiple ascending dose study and Tim perhaps you could address answering the question from the European regulations.

[Tim Wright:]

Yes so since this came up as questions, our plan is to submit the additional data as an amendment to the existing protocol and so we will have to engage and share with them our revised plans and the data that goes with this but based on that we would expect a relatively rapid turnaround on the review. I can't give you specifics on that, that’s up to their regulatory agencies.

[Joseph Thome:]

Okay great. And then I appreciate the 121 trial that you are engaging with the FDA but do you anticipate releasing any additional data over the next year on those trials may be any of the collaboration between the any of…

[Tim Wright:]

Yes, so this is Tim. Once we have all of the final data analysis done I presented the topline results today the summary topline results, we anticipate publishing the data and this will include making things public in clinical trial that gov as well as in the appropriate publication and our target will be a top-tier journal. And so as far as any further discussion of that down the road between now and the time when it comes uphold, we won't be sharing any additional data until studies are completed. So there won’t be any additional interim analysis we - we mention this at our call late last year that based on discussions with FDA we made a commitment that we're not disclosing any interim data but only the final data and that's hence why we’re presenting the final data with you today or sharing with you today.

[Joseph Thome:]

Great. And then just 101 I guess, how the results that you been seeing sort of a change may be any of your enrollment criteria that you would be looking for in future 101 trials are any sort of patient populations that are may be more at risk.

[Paul Grint:]

Yes, this is Paul let me address that. I mean just to remind you the O2 study the study, the data we have reported was offset Phase 2 study and was designed predicated on the concept that you know from work done by both Merck and Gilead but triple or quadruple combinations of all agent which is the four weeks of therapy did not have effective response. So that was - and therefore our goal was to add 101 and we've seen that 48 week follow up day-to-day. We talked before I mean, as part of our pre-IND process we engage with the FDA in discussion about greater medical needs populations, and the two that we had identified the one of those with patients who had significant real compromise on dialysis and that was population that we opened the IND with went with Phase 1 study in the U.S. And the other population is potentially those patients who have resistant invariant to some of the commercially available agents now which could 101 in the combination have utility. So that’s still there in the background but clearly you know we are on clinical hold until we satisfy the FDA's questions we won't be talking more about potentially designed to study the patient population moving forward.

[Joseph Thome:]

Yes, definitely. All right great guys thanks.

[Operator:]

Thank you. Our next question will come from the line of Jim Birchenough with Wells Fargo. Please proceed.

[Nick Bennett:]

Well, good afternoon it's Nick Bennett this afternoon. Thanks for taking our questions and the first one Paul, given the disappointing news on 101 is it worth continuing I mean did you seriously consider just terminating the program and moving on?

[Paul Grint:]

Well, Nick yes, thank you good afternoon. So at this point we obviously what the FDA have asked us for is longer term data from studies are ongoing. In particular the clinical studies the protocols are designed, the protocol for 48 weeks to follow up so we have an ethical Redfield predation to follow studies out through that completion so that takes us out through the latter part of this year. So we have to do that, that's our obligation and that’s the data that the FDA wants. So we’re initiating anything new or significant. Obviously we are very pleased to see the 48 week data particularly on the Harvoni that sort of his proved off thesis but 121 can play an important role with DAAs but until we completed those studies we not really in a position to.

[Nick Bennett:]

I think in previous quarter, I think it was Tim outlined five specific points you're going to address. Obviously there was some PK and feedback from, asymptomatic experts as well as detailed mechanism of potential mechanism action data. So have all of those essentially been addressed just with one we want to see the final 48-week data from all clinical studies.

[Paul Grint:]

You're correct Nick. So if you go back the original hold and the request there were five components and it was an overall detailed human clinical safety analysis across all the studies, it was obviously preclinical data and work to see if you could identify mechanism. It was get extra safety review and also included the PK from the renal compromise study and finally importantly they asked us to provide the benefit risk on the program. All those components were in the complete response that we submitted to the FDA.

[Nick Bennett:]

And did you get response back from each of those or is just FDA felt like we want to see more safety data?

[Paul Grint:]

The response back from the FDA was you know - you remain on clinical hold and we would like to see as we described the full 48 week protocol data from both our preclinical and clinical studies that are ongoing. And additional expert review and commentary on our proposed potential mechanism that we believe is associated with these cases of increased bilirubin.

[Nick Bennett:]

Okay. And just on the data that was released today, I noticed there was relapse of 32 weeks. Do you know that's not a reinfection and…

[Paul Grint:]

That’s a good question, I don’t - I’m not aware that we've actually sequenced that from a patient so that could be the possibility but I don’t – this is topline data that we haven't delved into yet into all the details. But obviously our goal is we do sequence all the patients who relapsed to look at whether or not as potential reinfection obviously look at the resistance mutation and those examples.

[Nick Bennett:]

And are you able to comment on more GSKs positioning, now there is an additional delay?

[Paul Grint:]

Yes, obviously we maintain and continue to maintain a very close relationship with GSK. As we talked about the broadly we are very helpful as a partner as we constructed all the responses to the clinical hold last year. And they still remain very interested in the program. Jay, do you want to…

[Tim Wright:]

Just want to amplify on that, I think they recognize the clear benefit at a single visit cure could provide in terms of the global opportunity here in dressing hep C but not being addressed with how the disease is being treated currently with the DAA agents. And so that profile remain compelling and I think that's what led to a very close working relationship we had with them throughout this whole process.

[Paul Grint:]

Yes. And in some way that potentially strengthened based on 48 week day that we just announced today.

[Nick Bennett:]

Okay. And then on Alport, did you ever say how many patients have enrolled in Europe prior to pause enrollment and is there any opportunity to look at data from that, however many patients to increase the level of confidence that you’ve got the right target and the right dose and support the biopsy data?

[Paul Grint:]

We received the feedback from the European regulators actually within one week of the first subject being dosed. So that's subject is the only a single dose so of course we won't be able to have any analysis on that subject…

[Tim Wright:]

But we continue that subject continue to be followed.

[Paul Grint:]

They are being followed but it's not going to be informative for what you're describing in terms of efficacy.

[Nick Bennett:]

So single patient and single dose or you could continue to dosing that patient?

[Paul Grint:]

No, single patient single dose.

[Nick Bennett:]

Okay. And then just very quickly on the NASH program. Obviously FDA ongoing program with AstraZeneca, how do you the - these newer target, can you try and help me understand the Venn diagram between 125 and the new targets in terms of pop ways and whether they relate to perhaps different aspects of the disease?

[Paul Grint:]

Maybe I’ll comment just on AstraZeneca collaboration and then Tim could talk about the others. As we've said before the microRNA target for the AstraZeneca program it maybe 103, 107 that's the target that's in the product side, it is very much involved in glucose insulin access and lipid metabolism and so AZ has a real interest in patient population to our potentially diabetic or pre-diabetic who have fatty liver disease that's all, that's their interest. Some of the other microRNAs targets we have addressed other aspects in NASH and perhaps even, later as Tim.

[Tim Wright:]

Yes sure, so we have actually been doing some work to identify and we're consolidating additional targets in NASH because it is such an important unmet medical need and as we share with you at the R&D Day, we have two programs that we consider are lead programs and beyond that we have several others that are coming behind. One of the programs we presented at the R&D Day has a profile that is very clearly targeting multiple components of NASH ranging from lipids oxidation disregulation all the way through to fibrosis and we presented data showing Gene expression profiling in animal models and how those are modulated by our anti-miR versus better cholestatic as a competitor. Another target that we just presented briefly that we have been doing some additional work on is sell specific target, this is one that has primarily we believe the potential for anti-fibrotic responses, as opposed to metabolic targeting and so we are looking at a series of targets even beyond those two that actually cover the spectrum of NASH. Now one of the things we are looking at in the future is the potential to combine our anti microRNA targeted therapies with either other drugs, small molecules, as well as potential to even combine more than one microRNA in the same molecule and we have actually done some preclinical work to support the proof of concept pre-clinically that this is actually feasible and has the appropriate pharmacodynamic effects.

[Nick Bennett:]

Great, thank you. And then just a last one from me and that is, whatever thing that's happening in 101 are you confident that no read through to the other programs?

[Paul Grint:]

Good question, Nick, Tim do you want.

[Tim Wright:]

Yes, sure. So, we’ve obviously learned a lot from 101 and one of the things we are doing is now going back and reviewing those learnings not only from the standpoint of dosing and the PK, the adverse events from that particular program and also the agonistic work that we’ve been doing to understand the potential cause of hyperbilirubinemia and looking across our other programs to show ourselves that this is something we can identify as a potential risk and if possible derisk the programs. So it's still work in progress but we begin our analysis of other programs according to what we believe this mechanism may involve. It's actually complex because it involves as you know RG-101 is a galnac-conjugated oligo type we have actually driven a lot of the oligo into hepatocytes specifically using this linkage. And what's interesting is it, that gives us a fairly decent hepatocyte exposure of the molecule that's at least one component that we think may be involved hepatocytes are the cells that process and excrete bilirubin into the bile obviously. So that’s something where we are looking at across programs, as well as the other specific mechanism to see if it has any potential application across any of our earlier programs.

[Nick Bennett:]

Okay. Thank you very much.

[Operator:]

[Operator Instructions] There are no follow up questions. So thank you ladies and gentlemen for your participation on today's conference. This does conclude the program and you may all disconnect. Everybody have a wonderful day.