Viridian Therapeutics, Inc. (VRDN) Q1 2019 Earnings Report, Transcript and Summary

Greetings, and welcome to the miRagen Therapeutics First Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Dan Ferry.

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 an 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 first quarter 2019. We will start today's call with an update on our pipeline followed by a brief review of our financials before opening up the call for questions. We've started 2019 with strong progress across our development pipeline, advancing our clinical and preclinical programs. We remain enthusiastic about the potential of each of our 3 clinical-stage product candidates as well as our earlier-stage pipeline, all of which are intended to address serious unmet needs across a diverse range of indications. We are encouraged by the data our team has generated, which we believe supports the rapid advancement of our pipeline. I'd like to start our pipeline update with cobomarsen, our microRNA-155 inhibitor that is currently being investigated in a number of indications where elevated miR-155 levels are believed to be drivers of disease. In April, we began dosing patients in our global Phase II SOLAR trial. As a reminder, the SOLAR trial is evaluating the safety and efficacy of 300 milligram doses of cobomarsen administered intravenously compared to the active control, vorinostat, in patients diagnosed with the mycosis fungoides form of cutaneous T-cell lymphoma or CTCL. We are initiating clinical sites in the United States, Europe and Australia with the goal of opening 60 sites worldwide to enroll approximately 130 total patients. We believe we remain on track to report primary end point data from the SOLAR trial during the second half of 2020. To quickly review, the primary end point of the SOLAR trial is ORR4 or the rate of objective response defined as a 50% or greater improvement in 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 at least 4 consecutive months. Progression-free survival will be a secondary end point, and we plan to use patient-reported outcomes as additional secondary end points to monitor quality-of-life improvement. Based on discussions with the FDA, we believe that achieving the primary end point from the SOLAR trial allow us to apply for accelerated approval of cobomarsen in CTCL in the United States. As a reminder, the SOLAR trial is being conducted in association with the Leukemia and Lymphoma Society. Partnering with the society is providing miRagen with invaluable support, which includes up to $5 million in equity funding upon the completion of specified trial milestones as well as help in identifying and supporting potential patients. Last month, we were pleased to have an oral presentation at the 19th International Congress on HTLV-1. At this conference, we reported new data derived from patients with adult T-cell leukemia lymphoma or ATLL being treated with cobomarsen. The presentation detailed results from 5 patients with aggressive ATLL subtype in partial remission treated with cobomarsen for up to 16 months. We were encouraged to report that this highly morbid disease remains stable in 4 of the 5 patients for up to 16 months after they had already received the current standard-of-care treatment regimen. In addition, the drug was generally well tolerated, and these 4 patients continue on treatment. We believe these results are particularly noteworthy, given that patients with aggressive subtypes of ATLL on average survive only between 4 to 10 months after diagnosis, depending on subtype. Additionally, reductions in biomarkers of disease severity, including Ki67, HLA and CD69 demonstrated meaningful biological evidence correlating with the observed clinical stabilization seen in these cobomarsen-treated patients. It is important to note that cobomarsen was also generally well tolerated over prolonged treatment with no deaths, dose-limiting toxicities, related serious adverse events, grade 3 or 4 adverse events, hematological events or trial discontinuations. Taken together, it appears that cobomarsen is emerging as a therapeutic candidate for ATLL with promising safety, tolerability and efficacy with the potential to provide a new treatment option for patients that currently face extremely poor prognosis and very limited treatment options. Our antifibrotic product candidate continues to progress both clinically and in preclinical studies. Remlarsen is currently being evaluated in a double-blinded randomized Phase II clinical trial assessing the safety, tolerability and activity for the prevention or reduction of keloid formation in subjects with a history of frequent keloid scars, a persistent form of hypertrophic scarring. We completed enrollment of patients in the trial and expect to report data in the second half of this year. Subjects received small matching excisional wounds that were sutured, injected with either remlarsen or placebo and then observed for up to 12 months to determine the presence or absence of keloid formation. As patients are serving as their own control in this trial, we've been able to increase the statistical power with a small number of participants. We anticipate that the outcomes of this trial will provide data on responses to the product candidate that will allow us to better understand the potential development path for remlarsen in dermal scarring. As you may know, we are excited about remlarsen as a potential therapy for the prevention of fibrosis following infection or trauma to the eye. Scarring of the cornea remains a leading cause of blindness worldwide, for which no approved pharmacological treatments exist. Earlier in the year, we reported preclinical data indicating that topically administered remlarsen is an effective treatment for corneal scarring. Building upon these results, last week, we were pleased to present additional preclinical data demonstrating remlarsen has the potential to prevent corneal fibrosis at the 2019 Association for Research in Vision and Ophthalmology Annual Meeting. In this study, remlarsen administered topically to the rat cornea resulted in reduction in corneal hazing and scarring and appeared to accelerate the healing of an induced corneal injury. We are pursuing this program in the hopes of providing a convenient topical treatment for patients that can address multiple conditions resulting in corneal scarring. Finally, I'd like to provide a brief update for MRG-110, an inhibitor of microRNA-92 currently being evaluated in 2 Phase I clinical trials in collaboration with Servier. These trials are designed to evaluate the safety, tolerability and pharmacokinetics of MRG-110. As a reminder, miR-92 has a demonstrated role in the regulation of new blood vessel growth and healing in compromised tissue and is being explored for the potential treatment of heart failure and other conditions where patients may benefit from increased vascular blood flow and accelerated healing, such as complicated lacerations and burns. In addition to safety, tolerability and pharmacokinetics, the data generated in our ongoing trials is expected to provide validation of mechanism of drug action in humans as well as clinically translatable biomarkers supportive of future trial. Enrollment has been completed in both trials, and we expect to report data later this year. Before I turn the call over, I want to thank all of our employees and partners. This is an exciting time for miRagen as we continue to make steady progress across each of our 3 clinical-stage product candidates. And I look forward to reporting on a number of clinical milestones and data announcements throughout 2019. 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. I appreciate the opportunity to provide a summary of our first quarter 2019 financial results. Starting with cash and investments. We reported approximately $51 million in cash, cash equivalents and short-term investments at the end of the quarter. Net cash used in operations was $11.8 million for the first quarter of 2019. Our current resources are sufficient to fund our operations through the next 12 months. As we look at revenue, we recognized $0.4 million of revenue during the quarter. This compares to $4.8 million of revenue recognized during the first quarter of last year. As you may recall, last year, we earned and recognized as revenue a $3.7 million milestone payment under our collaboration with Servier. Also contributing to the decrease in revenue this quarter was a decrease in R&D expenses reimbursable to us under our collaboration agreement with Servier. In terms of R&D expenses, our research and development expenses totaled $8.8 million for the first quarter of 2019. This compares to $6.4 million of R&D expenses incurred during the first quarter of last year. The increase in R&D expenses of $2.4 million was driven primarily by increased clinical development and related manufacturing expenses associated with the Phase II SOLAR clinical trial of cobomarsen. Personnel-related costs also increased by $0.6 million due primarily to the growth of our research and development team. These increases were partially offset by lower technology license fees of $0.8 million during the first quarter of 2019. Moving to general and administrative expenses. G&A expenses totaled $3.4 million during the first quarter of 2019. This compares to $3 million of G&A expenses incurred during the first quarter of last year. During 2019, our personnel-related costs increased as we added to our general and administrative team and incurred higher share-based compensation charges. Overall, our operating expenses have increased as we continued to advance each of our 3 clinical-stage product candidates, and we look forward to reporting on a number of clinical milestones and data announcements throughout 2019. With that, I'll ask the operator to open the call for questions. Operator?

[Operator Instructions] Our first question comes from the line of Jonathan Miller with Evercore ISI.

I guess I have just a few here. First, you say in the prepared comments you have cash runway now for about 12 months. Does that take you into 2Q '20? Is that actually longer than your guidance from last quarter of 1Q '20? Just a clarification there.

Yes. Jon, I'll have Jason take care of that one. Jason?

Thanks, Bill. Yes, Jon, this is Jason. That takes us into the early, the second quarter of 2020.

Sure. Now that you're 12 months out from your cash runway, I think it's time to start talking about plans for raising additional capital. Do you have ongoing plan to raise? What's the possibility of non-dilutive business development deals or interest from large pharma? Is there a likelihood of additional Servier milestones this year? What can we look forward to in terms of changes to your cash runway?

Sure. Obviously, we'll need to raise additional capital to fund our operations beyond the next 12 months. I can say, historically, we've funded the company from a combination of sources, including the collaborations, grants, foundation support, sale of stock, borrowings as well as funds received from our collaboration with Servier. So we expect we'll continue to use these methods to fund the company in the future. I think with the 3 additional clinical readouts this year and a potential pivotal readout in the second half of 2020, we feel like we have several, the company has several upcoming catalysts.

Fair enough. I noticed you said SOLAR started enrolling in April. The key end point there, of course, is ORR4. With all that taken together, is it fair to say that SOLAR is going to be a little later? It seems like we've had some delays there. Are you still on track for second half of '20? Is that really a late 2020, a 4Q 2020 event?

Jon, thanks for the question. The, right now, we are busily opening sites across the globe. We've had, again, we've had patients now enrolling in the study. We're actively enrolling. We will be monitoring the enrollment as we gain more experience with that and provide any additional updates that could really zone in on when we expect it. But for now, we're still on track to deliver top line in the second half of 2020.

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

So if cobomarsen doesn't get accelerated approval for CTCL, could remlarsen for keloid scars leapfrog it to get to the market first? And then what end point or biomarkers for MRG-110 could be released with the Phase I data? And what's the next expansion indication that we could get Phase I data for cobomarsen? Would it be CLL or something else?

Thanks, Liana. So the first question was around the sort of timing for potential approvals. With remlarsen, our view is this is, the study results are double-blinded, placebo-controlled. We're going to be looking for those results to give us data that we can really base our future planning on. And so it's a little bit early for us to provide that sort of guidance in terms of when we would anticipate it. We're going to be really focused on looking at the data and then understanding the effect size and the design over the trial, and that would drive timing and also discussions with the FDA. The second question, I believe, was around the end points for the, what study was that, Liana?

The MRG-110, Phase I biomarkers.

Biomarkers, that's right. So we've developed a set of biomarkers that are related, there are some molecular biomarkers that are related to what we've seen in terms of vessel formation, including direct targets of microRNA-92 that give us confidence and pharmacodynamic target engagement. We also are using a variety of, we use laser speckle as well as imaging technologies to look for sort of image-based biomarkers that can help in future events. And then also, we are looking at methods of vessel formation we can be able to analyze in biologic samples. So there's a whole set of different markers that can indicate pharmacodynamics as well as other opportunities and dynamic effects for the drug that we can then hopefully port into both the heart failure study as well as additional studies in incisional complications or burns. And then the...

Can I add something to that?

Sure. Paul, you want to add another comment?

Liana, there's literature suggesting that, as Bill mentioned, some of the indications we're looking at include heart failure and other complicated either burns or wound injuries that require accelerated blood flow in order to accelerate healing. There's data suggesting that if you can document that you're enhancing a new angiogenesis or blood flow, such as with laser Doppler and/or with specific markers of new blood vessel formation, that actually correlates with efficacy. So they become very valid surrogates when you're looking in Phase II. So we believe that some of this data we can derive from our Phase I trial that will both help us select doses because we could determine which doses might actually have this effect but also kind of derisk going forward how we could affect blood flow in these indications. So I think that there's a lot of really positive data that is very relevant that ultimately we'd be looking at. As Bill mentioned, we're looking at burns as a possible indication, and that's something that you can definitely look at these markers and handicap as to whether this would be beneficial. Another marker of scarring is LFUS with muscle actin, which is something we'll be measuring in this trials as well. So they can be very useful in really helping us to design and derisk our Phase II program.

And then, Liana, I think your last question was around expansion indications. We have obviously been focused on the data and the opportunity to help patients with ATLL given its dire outcomes in that disease. We have, the centers remain open and active in terms of identifying and adding additional DLBCL and CLL patients. And as usual, it will be driven by, data-driven and event-driven as we identify new results from those expansion indications.

I think the other thing you asked is whether or not the keloid indication could leapfrog CTCL. And with this data set we're at right now, that would be unlikely because a trial for efficacy for approval for keloid would probably be a prevention trial in patients that are having surgery to correct an existing keloid. So it's unlikely that we can complete that prior to the CTCL study.

Our next question comes from the line of Eun Yang with Jefferies.

I have a follow-up question on the patient enrollment in the SOLAR trial. So based on the primary outcome, it looks like you are kind of anticipating that the patient enrollment would be completed about a year from today. So question to you is that enrolling about 130 patients with the CTCL, is a 1-year enrollment period, is it kind of industry standard?

Thanks, Eun. The, what we've done is a lot of work on modeling the enrollment dynamics, and we've created analytics that allow us to follow this. We based some of our assumptions originally based on previous historical studies that have been done. One of the real focus areas here was to really rapidly expand to many different sites, so the 60 global sites are an important aspect of our total strategy here. And with that, we do believe that the enrollment can occur to allow us to be able to report out the top line results by the second half of 2020.

Okay. And then if the primary end point is met, it could lead to accelerated approval. So is there kind of an efficacy bar for accelerated approval, aside from meeting the primary end point with statistical significance?

So, thanks, Eun. The discussions that we've had with the FDA, there were no specific bars set in place. The agent, cobomarsen would need to be superior. We've designed the study, powered the study to detect that. And obviously, a component here of this is going to be both the ORR4 measurements with the secondary end points coming along as well. The ability to reduce pruritus and pain in these patients is an important aspect to patients, treating physicians as well as the FDA. But there's no specific bar. It is simply that we need to show superiority and statistical significance.

Our next question comes from the line of Madhu Kumar with Robert W. Baird.

So the first one is about cobomarsen in ATLL. So how many more patients do you guys plan to recruit to the cobomarsen ATLL trial? And when might you expect further data from this study and/or visibility on next steps in this indication?

Thanks, Madhu. So the ATLL, we reported that we had explored about 9 patients to date. One of our goals in the Phase I study is to understand the best paradigm for really creating the Phase II trial design and then getting guidance on that from the FDA. So we will likely be focusing a lot on the durability of response in existing patients on the drug, and then we'll be recruiting some additional patients to further test our hypothesis and hone in on the design that we would propose for the Phase II study. Moving forward, as usual, we will be progressing with the study, and we will provide updates at future medical meetings.

Okay. And then kind of going back on Jon's question about MRG-110. So kind of based on how the collaboration with Servier is designed, what is the timing for data releases versus central clinical milestones from Servier?

So the, again, it is a collaborative project driven through the collaboration, so we work closely with Servier in terms of release of data. The milestones that we have as part of the agreement are fairly standard in terms of gated entry into next phase of studies. So it would essentially correlate then not so much with the Phase I data release but then the sort of guidance that we'll give on the future studies and then their initiation.

[Operator Instructions] Our next question comes from the line of George Zavoico with B. Riley FBR.

I have a question regarding the ATLL trial as well. And it looks like you've got some really good responses there in 4 of the 5 patients with such long durable clinical stabilization. My question is whether you can expect or are looking at all for clinical improvement and whether you thought about, maybe in preclinical studies, what combination of drugs, since a lot of cancer indications are going to combination, might enhance the efficacy or the durability of response.

Thanks, George. So the, in ATLL, the, we have actually observed improvements in the patients, and those improvements are quite durable. I think the biomarker is also important, really are an important aspect of this because we're seeing the well-validated measure of proliferation, which is Ki67. So we're seeing reductions in that, that are, that have been observed in many patients. We are seeing changes in HLA, which are a poor prognostic indicator of future health in the patients as well; and then CD69, which is indicative of the actual clone, the cancer's clone. So we are seeing improvements. As we continue to treat the patients, we will be looking at additional biomarkers and additional time on treatment to continue to move things forward. In terms of cobomarsen in combination therapies, we've done a fair amount of work really preclinically in, in vitro systems to date so far, looking at the potential for combinations with cobomarsen. Given that cobomarsen's mechanism of action is to act where it does in terms of broad pathway we control, we believe there are real opportunities for orthogonal combinations that would then be able to result in additional activity for the compound. We, our goal really is to understand the single-agent, monotherapy potential of the compound and then consider combinations based on our preclinical studies that may lead to additional activity. Paul, I don't know if you have...

George, so what's interesting about this disease is that it's very easy to induce remission. In fact, CHOP routinely induces remission. So there really isn't a need per se, according to our experts, to induce that initial remission. The problem is the responses are not durable. They last for a very short period of time. So adding drug, it might be useful theoretically because if you can reduce drug requirements for initial remission, you might help with safety. But in terms of efficacy for the initial response, the need isn't really there. The need is to prolong life. And what we're seeing now is post this initial induction of a remission or a partial remission, where generally they would only last a few months, when you add the drug at that point in time, we now have patients that are out for 1.5 years. So that's obviously much more drug use than the initial, for example, CHOP, which is 3 or 4 cycles. So I'm not sure the right way to look at this necessarily is combination, although there might be some utility in reducing the need for things like Cytoxan and Vincristine, which might help with tolerability. But I'm not sure it will help in terms of initial response.

So it sounds like there's an unmet clinical need and that there really isn't any maintenance therapy available. This would be the first in class, or it is a different class.

Exactly, exactly.

First drug for maintenance?

Yes, that's exactly how we're looking at it. In fact at this HTLV-1 meeting in Peru that we just attended, we presented this concept to literally the world's experts who agreed with the contention that there really is a need for a compound that prolongs life in these patients. And we're hopeful that that's what this is doing today.

Based on what you just presented, it looks like you're on the way to doing that with 16 months.

Thank you. You know what they say, from your lips to God's ears, right?

Ladies and gentlemen, we have reached the end of the question-and-answer session, and I would like to turn the call back to Bill Marshall for closing remarks.

Great. Thank you. We want to thank everyone for taking the time this afternoon for an update on miRagen and for your support as we work to bring life-changing medicines to patients. I hope you have a great afternoon. Bye-bye.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.