Viridian Therapeutics, Inc. (VRDN) Q4 2018 Earnings Report, Transcript and Summary

Greetings, and welcome to the miRagen Therapeutics Fourth Quarter and Full Year 2018 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Dan Ferry. Please go ahead, sir.

Thank you, and good afternoon, everyone. On the call today are miRagen's President and Chief Executive Officer, Bill Marshall; Chief Financial Officer, Jason Leverone; Executive Vice President of Research and Development, Paul Rubin; and Chief Business Officer, Adam Levy. Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of the date of this call. We will not undertake obligation to revise or publicly release the results of any revisions to these forward-looking statements in light of new information or future events. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K and our other periodic reports on Forms 10-Q and 8-K filed with the SEC. I would now like to turn the call over to Bill Marshall, President and Chief Executive Officer of miRagen. Bill?

Thanks, Dan. Good afternoon, everyone, and thank you for joining us for our corporate update call for the fourth quarter and full year 2018. We will begin today's call with an update on our clinical programs and a brief review of our financials before opening up the call for questions. Looking back over 2018, we are excited by the ongoing advancements made across our development pipeline, which includes 3 clinical stage microRNA-targeted product candidates for patients across several indications with high unmet medical need. We believe the data we have reported to date on these product candidates has been compelling and supports the continued development of the product candidates for these disease indications. During 2018, we presented top line data from our Phase I trial of cobomarsen that demonstrated durable responses in patients with mycosis fungoides, the most common form of cutaneous T-cell lymphoma, or CTCL, as measured by an improvement in total skin tumor burden scoring and quality of life. In addition, cobomarsen appeared to be generally well tolerated at all dose levels evaluated and for extended periods of time -- of treatment. This past January at the Annual T-cell Lymphoma Forum, we presented complete Phase I CTCL data and interim adult T-cell leukemia/lymphoma or ATLL data from this trial. In regards to CTCL, based on the modified severity-weighted assessment tool or mSWAT score, which is a measurement of the severity of skin disease over a patient's entire body, 33 of 36 patients or 92% showed improvements. These improvements in mSWAT scores were observed as early as 17 days after a patient's first dose, with the greatest improvement in mSWAT scores seen after 1 or more months of dosing. Additionally, 5 of 8 patients receiving 300 milligram IV infusion achieved a 50% or greater mSWAT score reduction, which is a partial response. Of those 5 patients, 4 maintained the partial response for at least 4 consecutive months. The ability to maintain the partial response for at least 4 months is also known as ORR4 and is the primary endpoint that we will measure in the SOLAR Phase II clinical trial of cobomarsen. We believe that the Phase I data for cobomarsen in treating MF patients achieved clinical proof-of-concept, which supported our decision to advance cobomarsen into the SOLAR trial. As a reminder, 300 milligram IV infusion is the dose and route of administration being used in the SOLAR Phase II clinical trial. In terms of the status of the SOLAR trial, we are focused on onboarding up to 60 sites worldwide, including those we believe will be high-enrolling sites. We expect initial dosing to begin early in 2019. While the on-boarding process for our initial clinical sites has been longer than we had originally anticipated, we ultimately believe that enrollment of patients in 2019 will be positively impacted by the site selection and patient outreach efforts of our team. I'm pleased to say that due to the ongoing efforts of our team to communicate with the sites and move ahead with direct physician and patient outreach, we believe the SOLAR trial remains on track to deliver top line data within our originally guided time frame of the second half of 2020. As a quick overview, our SOLAR trial is designed to evaluate the safety and efficacy of cobomarsen in an active control comparison trial versus vorinostat in patients with CTCL. The trial is expected to enroll approximately 65 patients per treatment group. The primary endpoint of the SOLAR trial is the rate of objective response defined as 50% or greater improvement in the severity of a patient's skin disease over the entire body with no evidence of disease progression in the blood, lymph nodes or viscera maintained for at least 4 consecutive months. Progression-free survival will be a secondary endpoint, and we plan to use patient-reported outcomes as additional secondary endpoints to monitor quality-of-life improvements. Based on our discussions with the FDA, we expect that achievement of the primary endpoint from the SOLAR trial could allow us to apply for accelerated approval for cobomarsen in CTCL in the United States. As previously disclosed, we are pleased to be conducting the SOLAR trial in association with the Leukemia and Lymphoma Society, which is providing invaluable support, including up to $5 million in funding upon the achievement of specified milestones in connection with the trial. As I mentioned earlier, we also presented new data on cobomarsen in patients with ATLL at the Annual T-cell Lymphoma Forum in January. As of December 13, 2018, a total of 8 ATLL patients had been treated with cobomarsen in the expanded Phase I clinical trial. Of these 8 patients, 5 patients with acute and lymphomatous ATLL that were in partial remission had remained stable or improved while on cobomarsen monotherapy from 3 to 13 months, and we're still continuing with treatment as of the December 13, 2018, cutoff date. In addition to no evidence of disease progression, we have demonstrated a decrease in biomarkers on the circulating tumor cells indicative of disease severity, including Ki67, a marker of cell proliferation. Elevations of Ki67 have been shown to correlate with poor life expectancy for ATLL patients. In regard to the safety while on cobomarsen monotherapy, there have been no serious adverse events, or SAEs, reported in patients related to study drug and none of the patients demonstrated evidence of opportunistic infections, which are common in patients with this disease. The patients in this trial had previously failed on other therapies and the median survival for patients with acute disease typically ranges from 4 to 10 months after diagnosis. We believe it is important to remember that the ATLL subsets seen in these initial patients are associated with extremely poor prognosis despite existing treatments, and new therapies are essential to improve patient outcomes in this devastating disease. Turning to diffuse large B-cell lymphoma or DLBCL, which is the most common type of Non-Hodgkin lymphoma accounting for up to 1/3 of patients with newly diagnosed Non-Hodgkin's lymphoma in the United States. Included in our presentation of data from the Phase I cobomarsen trial in January, we presented data on 3 patients diagnosed with the activated B-cell subtype of DLBCL and treated with cobomarsen. As of January 8, 2019, 1 patient had seen a complete reduction in 1 of 2 measured lymph nodes and stabilization in a second lymph node after 7 weeks of therapy. This patient remains on cobomarsen. The other 2 patients discontinued therapy after less than 1 month due to lack of immediate response. Previously, all 3 patients had relapsed after multiple cycles of treatments with other therapies received over 12 to 56 months from diagnosis. Prior treatments for these patients range from standard of care to experimental chemotherapy. While this was a small sample size, we are pleased with the activity reported in the responding patient. We will continue to evaluate cobomarsen in DLBCL and chronic lymphocytic leukemia patients as we believe it has the potential to improve the quality of life for these patients. Turning to remlarsen. We are currently conducting a double-blinded randomized Phase II clinical trial for remlarsen that is expected to report data in the second half of 2019. This Phase II trial is assessing the safety, tolerability and activity of remlarsen in the prevention or reduction of keloid formation in subjects with a history of keloid scars, a persistent form of hypertrophic scarring. We expect the trial will initially enroll up to a 12-subject cohort consisting of individuals that are predisposed to keloid formation after trauma. In this trial, subjects receive small matching excisional wounds that are sutured and then injected with either remlarsen or placebo. Thus, patients are serving as their own control, which increases the statistical power of the clinical trial with a relatively small number of patients. The lesions will be observed for up to 12 months to determine presence or absence of keloid formation. We believe this is an exciting opportunity to build on the Phase I data in induced cutaneous fibrosis where remlarsen appeared to reduce scar tissue deposition in human -- healthy human volunteers without affecting wound healing. Turning to MRG-110. We are developing MRG-110 in collaboration with Servier. MRG-110 is an inhibitor of microRNA-92, which has been shown to be important in the regulation of new blood vessel growth and healing. As a reminder, MRG-110 is being evaluated in 2 separate Phase I trials intended to support additional clinical trials that could allow for its potential use in the treatment of multiple indications, including heart failure and other conditions where patients would benefit from increased new blood vessel growth and better oxygenation, including burns and difficult-to-heal lacerations. We expect to announce data from these trials in 2019. We have made steady progress in advancing our 3 clinical stage programs and entered 2019 with several near-term clinical milestones. We believe the data that has been presented recently supports the current strategy for our 3 clinical stage microRNA-based product candidates. We believe that our ongoing and planned clinical trials for these candidates will provide further evidence supporting the potential of microRNA-based therapeutics to become an important new class of targeted therapies for patients in need. With that, I will now turn the call over to Jason Leverone, our Chief Financial Officer, to review the financial results we have reported earlier today. Jason?

Thank you, Bill, and good afternoon, everyone. Appreciate the opportunity to provide a summary of our fourth quarter and full year 2018 financial results. Once available, I also encourage you to read our full consolidated financial statements and MD&A contained in our annual report on Form 10-K for the year ended December 31, 2018, which can be accessed through the Investors section of our website when filed with the SEC. Starting with cash and investments. We ended 2018 with approximately $62.5 million in cash, cash equivalents and short-term investments and believe that our current resources will be sufficient to fund our operations through the first quarter of 2020. Net cash used in operations was $8.2 million for the fourth quarter of 2018 and $26.8 million for the full year 2018. We recognized revenue of $0.5 million during the quarter and $8.4 million for the full year of 2018. This compared to $1.2 million and $4 million, respectively, for the comparable periods in 2017. The increase in revenue year-over-year is primarily due to a development milestone payment of $3.7 million we earned and recognized as revenue under our collaboration agreement with Servier when we advanced MRG-110 into the first of 2 Phase I clinical trials of MRG-110 in 2018. Research and development expenses totaled $8.2 million for the quarter and $30.4 million for the full year 2018. This compared to $5 million and $19.6 million, respectively, for the comparable periods in 2017. The increase in R&D expenses year-over-year is primarily due to increased clinical development activities associated with the Phase II SOLAR clinical trial of cobomarsen, including cost to manufacture cobomarsen and together with the initiation of a Phase I clinical trial of MRG-110 in 2018 and an increase in personnel-related costs due to the growth of our research and development team. Moving to general and administrative expenses. G&A expenses totaled $2.7 million for the quarter and $11 million for the full year 2018. This compared to $2.5 million and $10.9 million, respectively, for the comparable periods in 2017. During 2018, our general and administrative personnel-related costs increased as we added to our team and incurred higher share-based compensation charges in 2018. These increases were offset by lower legal fees, primarily related to non-reoccurring expenses of a merger that occurred in 2017. And with that, I'll ask the operator to open the call for questions. Operator?

[Operator Instructions] Our first question today is coming from Jonathan Miller from Evercore.

I'd like to start with the SOLAR recruitment and site onboarding. Can you give us any color on why onboarding new sites was slow? And then leading out of that, what gives you confidence that the enrollment will be rapid now that sites have begun being onboarded?

Thanks, Jonathan. So as we mentioned in the prepared remarks, the process for onboarding, due to a variety of different factors, was simply a little bit longer than we thought. This -- while one attempts to estimate the time periods required for this, we can anticipate certain events and others really come up, and what we have tried to do is anticipate some of these delays in the onboarding in the overall time lines for the clinical trial. Again, we are focused on opening and activating the maximum number of sites, which we believe is going to result in the ability to increase the trajectory of enrollment and allow us to anticipate that we'll be able to remain on track to release top line data from the SOLAR study in the second half of 2020.

Great. I suppose, then, I would also like to ask, on the cobomarsen front, about DLBCL, which you mentioned earlier in the year that you were getting some interest from docs and other stakeholders. How is enrollment in the DLBCL segment of the Phase I continuing? And what's the likelihood that we'll get meaningful data from that in the modest term?

So the trial continues to be open for DLBCL patients. We are continuing to actively seek out and enroll patients in the study and treat them. We will continue to provide updates as we typically do at scientific meetings with additional observations in all of the expansion indications, including DLBCL.

Great. And then the one final thing before I hop back into queue. I'd like to ask about the keloid trial that we're expecting second half of this year. Can you give me an update on enrollment there? It's a relatively small's trial, and I know you started enrolling last year, but it seems like your prepared remarks weren't very clear on how far along in that process you were and whether there was any chance of getting early looks at that data?

Yes. Thanks, Jonathan. We typically don't want to give granular kind of enrollment data on a regular basis. I would simply say that we are on track to enroll the study, and we remain on track to be able to report out the data from the study in the second half of 2019. Part of the -- part of our goal in really presenting data only after we've seen results at 6 months has to do with the fact that that's a hypertrophic scar that's stable for 6 months is in the definition of a keloid from a regulatory perspective. So it's that point at which we'd really like to report out the data.

Our next question is coming from Eun Yang from Jefferies.

This is Suji calling in for Eun. So I have a follow-up question for the SOLAR trial. Could you guys comment on how many sites are open and active as of today? And then what type of outreach efforts are you planning on doing to facilitate the recruitment?

Thank you, Suji. So we won't -- we really don't -- aren't going to provide kind of granular detail on sort of numbers. And our plan is to continue to open sites, and again, as I said, we remain on track to be able to report the top line data in the second half of 2020. The question around recruitment, I mean, we have been -- we've benefited from the -- our interactions with the Leukemia and Lymphoma Society as well as the Cutaneous Lymphoma Foundation for outreach directly to patients to gain familiarity with the study. We've also had a very focused outreach to physicians to help really detail the nature of the study, the expectations of the study in terms of intent to treat for the population. And we believe that these efforts should pay off in retention of patients and attraction of patients into the study. We continue to be very active in visiting sites around the globe and having discussions with physicians to provide further education and hopefully induce excitement in these clinicians moving forward.

That's very helpful. I have a follow-up question, if I may. For ATLL, I think you guys mentioned previously that you plan to take that data to FDA to discuss the future steps. Have you scheduled a meeting with the FDA for that?

We are -- and thanks, Suji. We are in the process of gathering additional data in the trial, continuing to recruit in the trial to build a sufficient patient population as well as longevity of treatment data that will allow us to then move to the FDA for a discussion around next steps for the product candidate moving forward.

Will that take place in 2019?

We're not really guiding on that yet. It's -- again, once we have accumulated the appropriate amount of information, we will guide on any discussions with the FDA regarding ATLL.

Our next question is coming from Liana Moussatos from Wedbush Securities.

For cobomarsen in ATLL, what kind of data -- additional data should we expect in the next few months versus January? And for CLL, what are the next steps? And then for Jason, can you talk about operation expenses in -- or trends in 2019 versus what we saw in 2018? I imagine, R&D expense is going to go up.

Thanks, Liana. So let me address the questions around the ATLL. We are continuing to be active in recruiting patients with ATLL in the study. We will report on additional patients entered into the study. But I think, importantly, the sort of additional time on drug is going to be an important aspect of what we'll continue to report on at meetings in the future. The -- for CLL, we continue to be active in the Basket trial in engaging patients and recruiting patients into the study, and as we develop data from those patients, we would report that out also at scientific meetings in the future. Jason, I don't know if you want to address...

Sure. Thanks, Liana, for the question. Yes, overall, operating expenses did increase this year over last year from $30.5 million in '17 to $41.5 million in 2018. And we do expect that continues to increase in 2019 as we deliver data from 4 different trials in 2019 and also fund SOLAR and PRISM trials, the data, in the second half of 2020. You can probably guess by our run rate guidance that we do expect meaningful increases over the next few years.

Our next question is coming from Madhu Kumar from Robert W. Baird.

So thinking about cobomarsen in ATLL, what kind of efficacy profile in that disease is really necessary to pursue a larger Phase II program? I have 2 other questions after that.

Sure. Thanks, Madhu. So great question. As you know, the cobomarsen has shown very interesting activity as a monotherapy in essentially stabilizing disease after chemotherapy. And we have patients that have been prolonged -- on prolonged therapy, they show good control of the atypical cells. And at the same time, I think one of the more exciting observations is that, after chemotherapy, we've had observations of patients that have had massive reductions in their T-cells, B-cells and K-cells and red blood cells. And what we see there is that the immune complement -- the normal immune complement comes back to normal, whereas, the atypical cells are kept at bay by cobomarsen treatment. Now in that sort of a scenario, one would think of that as, then, a post-chemotherapy [ adjuvant ]. And the other possibility to think about would be treating patients that have high tumor burden that hasn't been reduced with the previous chemotherapy. Our intention will be to attempt to recruit patients of that type and understand if cobomarsen can reduce the high tumor burden in these patients. The implications of that really have to do with whether one would then propose a post-chemotherapy sort of progression-free survival study compared to another arm versus a study where we would simply be looking at the ability of the drug to induce a partial response or a complete response from a high tumor burden. So part of our goal in the continuing Phase I studies before we speak with the FDA is to gain greater clarity on what that design would hold and then get advice from the FDA on moving forward with the appropriate design moving ahead.

Okay. Then would any of the MRG-110 data in 2019, [ preview ] the Servier-led study, be the bases for an additional milestone payment from Servier if successful?

Yes. Madhu, thanks for the question. We haven't guided on specific development milestones from Servier. We received the $3.7 million when we entered Phase I with MRG-110 last year. And I think we've said that there is additional development milestones for that program of up to EUR 13.8 million, but we haven't guided specifically to the next milestone. As we get closer to the Phase II trial, we can add some clarity on that.

Okay. And does the cash runway to 1Q '20 assume only the ongoing or soon-to-start clinical trials? Or does it include additional clinical studies as well?

Yes. It includes funding our operations with the SOLAR trial, PRISM trial as well as 4 other trials that we have -- or the 3 other trials that we're funding that we have going on this year.

Our next question today comes from George Zavoico from B. Riley FBR.

I have 2. First question is regarding the cobomarsen. This is -- the SOLAR trial is a pretty -- a much bigger trail than you did before. I'm just wondering if you stockpiled enough cobomarsen? Whether the [ same seeds ] in place? Whether you need to make more in the course of the trial?

Thanks, George. So we had prepared prior to initiating -- initiation of the trial to ensure that we had sufficient supplies of cobomarsen in place. We're positioned well to run the trail with sufficient quantities of the product candidate to complete the trial.

Okay. Then I have a question about the active control using vorinostat and the significance of the 4-month ORR. Compared to vorinostat, where would you like to be in terms of the partial response -- the ORR4 rate to make it a successful trial?

Sure. So our thinking on this matter was sort of outlined in our prepared statements, where -- when we explored in the Phase I study -- our Phase I study was actually pretty broad in its scope. We were able to look at various doses and various routes of administration. And what we found in the 300 milligram IV infusion data was that if you take the 8 patients that were in that particular dose and route of administration, we observed partial responses in 5 of the 8 of those patients and the -- in 4 of those 8, they remained at a partial response for the 4 months. So they achieved an ORR4. The -- so our proxy in thinking about this was roughly in the ballpark of 50% ORR4. However, in the design of the study, we were significantly more conservative in understanding that the response rate -- given the comparison to the response rate that has been recently reported for vorinostat, if we are able to achieve an ORR4 significantly lower than that 50% point, we would still achieve statistical significance. So we believe the study is powered in an appropriate way, and we took a lot of consideration around the likely performance of vorinostat in the trial as well.

Bill, can I add something to that? Is that okay?

Sure. Paul, please.

Just -- at least in partial response to your question, if you want to know what we need to feel that the drug would be used. If you look at the standard of care, especially when you're looking at prolonged responses, all of them are not very good. Either bexarotene, methotrexate, vorinostat, Rituxan, anything that's used in the patients that we intend to treat, the average prolonged response in controlled trials at maximum is about 13% or 14%. So to get better drug, the hurdle is relatively low. But we believe that we're significantly -- at least, if we can recapitulate what we're seeing in our Phase I data, we should have a substantially better effect than what's viewed in the -- for standard of care at least in controlled trials.

And as a follow-on to the durability comment, the ORR4 is 4 months, but presumably you're following your patients much longer than the 4 months. Can you share some of that data? Or is it too early?

Our initial Phase I trial was not really designed to capture progression-free survival. Having said that, we had some patients that the response was maintained -- the patients were on the drug for almost 2 years. We've presented that to you before. Yes, we've presented that before.

And George, just for the follow-on, in the complete Phase I results that were presented at the T-cell lymphoma forum, the mean duration for patients who achieved a partial response was about 276 days. So this is one -- the durability of the response with cobomarsen, I think, is one thing that has really differentiated it compared to other agents that are used in the disease.

Our next question is coming from Aryeh Gold from Oppenheimer & Co.

This is Aryeh Gold on for Leland Gershell at Oppenheimer. So I just wanted to know, might you be able to remind us at what medical conferences and meetings you'd be presenting data later this year?

So we'll be -- before we will -- we make those presentations, we'll announce them ahead of time. So if you just keep an eye out, we'll announce the actual meetings at which the presentations will occur.

Our next question today is coming from Jonathan Miller from Evercore.

I suppose since nobody has asked about it, I'd like to get a little update on remlarsen in the ocular fibrosis indications. You've shown some preclinical data there, it looks really good. But what's the bar and timing and costs like for moving that to a clinical stage? And is there any time line for getting an update on when that might happen?

Thanks, Jonathan. So the remlarsen ocular data, we did actually have some additional -- or presented the corneal fibrosis data at a meeting this last weekend. We will also be presenting new data at relevant meetings in the first half of 2019. As you know, remlarsen has -- is currently in a Phase II study in dermal scarring. So what we're doing right now is really looking at the formulation. For the corneal application, what has been very exciting is that we simply took remlarsen in, essentially, saline and used it as a topical administration to the eye, where we see very compelling activity in preclinical models that reduces hazing and scarring and appears to really facilitate healing of corneal scars. The exploration now around optimization of formulation, dose and frequency is what we've been focused on. And with that in hand, we would have a better feel for than the discussion with the FDA around what the path would be forward in terms of clinical design and then the additional cost and time lines for doing so. We would then be able to provide guidance in the future on moving remlarsen forward in ocular fibrosis.

Our next question is from Eun Yang from Jefferies.

Since you are enrolling SOLAR trial now, have you -- what is your thought on commercializing cobomarsen outside the U.S.? And have you talked to any potential partners?

So we are typically in discussions -- various business development discussions with people about the asset. I think, we -- as we continue to move forward in the SOLAR trial, we would be open to discussions of win-win partnerships in various geographies around the world, and we'll, obviously, be updating any progress or developments in that area.

We've reached the end of our question-and-answer session. I'd like to turn the floor back over to management for any further or closing comments.

Thank you, and thank you for taking the time this afternoon for the update on the clinical programs for our microRNA-based product candidates. We remain committed to building on these results to, hopefully, bring life-changing medicines to patients in need. As always, please feel free to reach out to us at any time with questions. I hope you have a great afternoon.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.