Viridian Therapeutics, Inc. (VRDN) Q2 2019 Earnings Report, Transcript and Summary

Greetings and welcome to the miRagen Therapeutics’ Q2 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] Please note this conference is being recorded. I would now like to turn the conference over to your host, Mr. Dan Ferry. Thank you. You may begin.

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; and Executive Vice President of Research and Development, Paul Rubin. 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 second quarter 2019. We issued a few important announcements this afternoon, which will be the focus of today’s call. In addition, we will be providing updates on the events impacting each of our three clinical stage product candidates. First, we have regained EU and rest of world rights to MRG-110, in addition to the U.S. and Japanese rights that we had retained in our agreement as a result of Servier’s portfolio realignment and decision not to pursue the development of MRG-110. Servier will continue to support the program under the terms of our agreement through February 2020. While we can appreciate the difficult strategic decisions that companies such as Servier required to make, we believe that MRG-110 could benefit patients worldwide. We believe the safety and tolerability profile and preliminary proof of mechanism in humans generated in the Phase 1 studies position MRG-110 as a Phase 2-ready asset for cardiovascular indications and other indications that would benefit from tissue repair and enhanced blood flow. We expect to release Phase 1 data at an upcoming scientific conference in the fourth quarter of 2019. While we’ve not announced future development plans for MRG-110, we may seek a new development collaboration for this product candidate in the future. We also announced that the team has opened over 50% of the total sites currently planned for the SOLAR trial. While we initially experienced delays in activating sites, recruitment rates at those sites are now on pace with our initial predictions. However, due to the impacts of the delays we experienced early in the onboarding process, we now expect to report primary endpoint data from the SOLAR trial during the first half of 2021. Considering the developments around MRG-110 and the SOLAR trial as well as our current cash position we made a difficult but disciplined decision to move ahead with a restructuring of the business in order to focus our resources primarily on the clinical development of cobomarsen, remlarsen and microRNA-29 mimics. I’ll provide more details in a moment. Let me now turn to a more detailed review of our pipeline and recent updates. I will start with MRG-110. We are finalizing the analysis of the results from two Phase 1 trials which were designed to deliver safety information about MRG-110 and also provide proof of mechanism evidence that could be used to support future clinical trials for the treatment of heart failure and other conditions where patients may benefit from increased vascular flow and accelerated healing, such as complicated lacerations in high risk patients. We expect to report Phase 1 clinical data on MRG-110 at an upcoming scientific conference in the fourth quarter of 2019. We can see today that based on our review of the data from these Phase 1 trials, MRG-110 was generally safe and well tolerated and we believe the program is ready to advance into Phase 2 clinical development. MRG-110 represents the third microRNA targeted product candidate from our team has developed. That has been generally safe and well tolerated and with preliminary proof of mechanism data in humans. We believe this differentiates miRagen technology and demonstrates the capabilities of our team to develop microRNA targeting product candidates. Turning to our lead program, cobomarsen. As a reminder, cobomarsen is an oligonucleotide inhibitor of microRNA-155 being developed in a type of blood cancer known as cutaneousT-cell lymphoma or CTCL, as well as several other blood cancers where the disease process appears to correlate with the increase in microRNA-155 levels. I am pleased to report that we’ve ramped up site initiation for the SOLAR Phase 2 clinical trial which began dosing patients this past April. As a reminder, we are initiating clinical sites in the United States, Europe, and Australia with the goal of opening up to approximately 58 sites in 11 countries worldwide to enroll approximately 130 total patients. Today, we’ve opened more than 50% of the sites for this trial. As I mentioned earlier, while we have experienced delays in the activating sites, recruitment rates at these sites are now approaching the pace we initially had predicted. Considering this update on the sites and patient enrollment, we now expect to report primary endpoint data from the SOLAR trial in the first half of 2021 instead of the second half of 2020 as we previously guided. The primary endpoint for the SOLAR trial is ORR4, where the objective response rate defined as 50% or great 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 four consecutive months. Progression-free survival will be a secondary endpoint. We plan to use patient-reported outcomes as additional secondary endpoints to monitor quality-of-life improvements. Based on discussions with the FDA, we believe that achieving the primary endpoint from the SOLAR trial could allow us to apply for accelerated approval of cobomarsen in CTCL in the United States. We are conducting the SOLAR trial 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. During the second quarter, we also announced new data from the adult T-cell leukemia lymphoma or ATLL cohort of our Phase 1 trial of cobomarsen, in an oral presentation at the 19th International Congress on HTLV. This new data showed continued durability of disease stabilization observed in patients with aggressive subtypes of ATLL. As a reminder, this patient population historically has a very poor prognosis with few potential long-term treatment options. The data generated to-date for patients treated with cobomarsen combined with a favorable tolerability profile supports our belief that cobomarsen may be a meaningful potential treatment option for patients with aggressive forms of ATLL. We believe these clinical observations in another microRNA-155 elevated tumor type also supports the hypothesis that cobomarsen may have utility in treating other malignancies with elevated microRNA-155 levels. Turning to remlarsen, we are currently conducting a Phase 2 clinical trial assessing the safety, tolerability, and activity of remlarsen in the potential prevention or reduction of keloid formation in subjects with a history of frequent keloid scars, a persistent form of hypertrophic scarring. The trial has completed its enrollment and we expect to report data before the end of this year. We are also exploring the antifibrotic effects of remlarsen in the eye. In April, we announced new data from our preclinical studies at the 2019 ARVO meeting which support our belief that remlarsen may serve as a novel therapeutic for the prevention of corneal scarring and hazing following ulceration due to infection or injury. This data follows on the data announced earlier this year from our preclinical studies investigating the antifibrotic effects of remlarsen in corneal ulceration, which suggest that topical application of remlarsen may be an effective treatment to improve vision in patients suffering from multiple conditions resulting in corneal scarring. We believe these data further supports that the topical application of remlarsen may be an effective treatment to inhibit corneal fibrosis and scarring. We believe remlarsen has the potential to address a significant medical need as scarring of the cornea remains a leading cause of blindness worldwide with no approved pharmacological treatments. In May at the 2019 American Thoracic Society, we reported new data demonstrating that systemic administration of our second generation microRNA-29 mimic, our preclinical product candidate for idiopathic pulmonary fibrosis or IPF; efficiently reduced extracellular matrix deposition in a series of preclinical studies. We believe that these data coupled with previous observations in humans with IPF support the role of microRNA-29 in pathologic fibrosis in the lung as well as the use of microRNA-29 replacements as potential therapeutics in pulmonary fibrosis. This completes my review of the key programs in our development pipeline. While we are pleased with the continued progress across each of these three programs, some of the recent events that I just described have impacted our timelines and prompted our decision to implement a restructuring plan that is focused on reducing costs and directing our resources to the advancement of cobomarsen and microRNA-29 mimics, including remlarsen, while reducing investments in discovery research. This restructuring plan follows a review of our cost structure which resulted in a reduction of 26 positions. These reductions are primarily in positions relating to research and corresponding project, general, and administrative support and other costs related to these areas. We believe the alterations to our cost structure will allow us to continue to move forward with clinical and preclinical data generation that will inform future development decisions for our product candidate pipeline. Before I turn the call over to Jason, I want to thank all of our employees as we work through the cost restructuring. We appreciate their diligent efforts in advancing each of our clinical stage product candidates and I look forward to reporting on a number of clinical milestones and data announcements in the second half of 2019. With that, I will now turn the call over to Jason Leverone, our Chief Financial Officer to review the financial results we’ve reported earlier today. Jason?

Thank you, Bill, and good afternoon everyone. Today, I’ll focus my comments on the announcements we released this afternoon. First starting with cash, we reported approximately $43.9 million in cash, cash equivalents and short-term investments at the end of the quarter and net cash used in operations of $7.2 million for the second quarter of 2019. As Bill stated earlier, today we announced the cost restructuring program which we expect will reduce operating costs and extend our cash runway. As a result, we believe that our current resources will be sufficient to fund our operations into the second quarter of 2020. The cost restructuring program announced today includes rightsizing the company and other costs reductions, allowing us to concentrate our resources primarily on the development of cobomarsen with additional capital allocated to our microRNA-29 program, including your remlarsen and other microRNA-29 mimics. We expect the company will incur approximately $1.5 million in restructuring charges for retention, severance and other restructuring-related costs primarily during the third and fourth quarters of this year. In terms of the MRG-110 program and our collaboration, Servier will continue to support certain development activities through February 2020. This will allow adequate time for the collaboration to complete the two Phase 1 clinical trials of MRG-110 which we expect to report data in the fourth quarter of this year. Overall, our strategy remains largely unchanged and the team has done great work since the end of the first quarter on site initiation and the global Phase 2 SOLAR trial of cobomarsen and CTCL. And we expect that we will benefit from these efforts and investments in the coming quarters. With that, I’ll ask the operator to open the call for questions. Operator?

Thank you. [Operator Instructions] Our first question comes from the line of Liana Moussatos with Wedbush Securities. Please proceed with the question.

Thanks for taking my question. For MRG-110, have you started any re-partnering discussions yet or do you have any target companies? Also, are you going to slowdown the microRNA-29 mimics for the I and IPF indications or are you going to move forward? Also can remlarsen leapfrog cobomarsen to the market now with the delay in the SOLAR trial? And then the fourth question is how much decrease in operations expense will the restructuring result in versus what you’ve reported in Q2?

Great. Thanks, Liana. I appreciate the question. So with MRG-110, as you remember, we had retained the U.S. and Japanese commercialization rights to the compound, as part of our agreement with Servier. We have had ongoing business development discussions around those aspects of the asset. We have not specifically identified, but we’ll to develop the strategy as we really complete the analysis of the Phase 1 data and then pulled together a package that we could bring out. In terms of the, miR-29 mimics, we really – the intent of the restructuring was to allow us to focus on cobomarsen and also focus on the miR-29 program. So we sized the company appropriately and were able to continue efforts. So we should not be slowing those efforts. We have generated significant data in the ocular applications and we will continue to pursue an update on the applications for the next gen compounds in the setting of idiopathic pulmonary fibrosis. In terms of remlarsen, we’re leapfrogging. We don’t believe that that would be the case. We are diligently focused on site initiation for the SOLAR trial. We believe that’s the most important factor. As I mentioned, we’ve seen sort of accession rates at the sites that are in line with what we’ve seen, or what we had predicted. So we are really adjusting the timeframe here with – based on our ability to better model. As you know the modeling of a sort of completion dates can be a challenge. And we’re zoning in on that now. And we felt it was appropriate to sort of adjust the guidance accordingly. Jason, I’ll let you comment on Liana’s last question.

Thanks Bill. Thanks for the question Liana. So we haven’t provided an exact estimate of the cost savings that we expect from these actions. We have taken all of these actions into consideration when we update and provide a new cash runway guidance and we’ll continue to do that on a quarterly basis. In terms of our expenses, I will say that for the last – expenses have remained relatively consistent over the last few quarters. I think averaging around $11 million, $11.1 million back to Q2 last year. I do expect the next few quarters operating expenses to continue to increase with some restructuring charges that we spoke about today, expected to be incurred over the next two quarters, as well as delivering data on the remlarsen trial and the MRG-110 trial as well before the end of the year. Also, our cost related to the SOLAR and PRISM trials are mostly related to site initiation and patient enrollment. So I would expect those costs to increase in the few quarters going forward as well.

Thank you.

Our next question comes from the line of Jonathan Miller with Evercore ISI. Please proceed with your question.

Hi guys. Thanks for taking my questions. I just wanted to get a little color on recent management departures and it has been a little bit of turnover there. I’d like to get your take on that. And secondly, I know you said that you think you have cash runway noted to second quarter of 2020 in line with what you’ve previously said. So am I to understand that the impact of the Servier collaboration falling apart and your financial restructuring more or less balanced each other out getting you to about the same runway as you were as in last quarter?

Hi Jon, thanks for the questions. In terms of the departure, we did announce that our Chief Business Officer have decided to move on to another position. We appreciate all of his contributions in the past and we really wish him all the best in his future endeavors. In regards to the questions around the sort of runway cash necessity, I’ll let Jason address that. What I will say is that as we’ve disclosed the Servier collaboration does provide for continued support for ongoing parts of the study and we will certainly be conducting things to be able to have quality control data to be able to present. And it should have a relatively nominal effect on the changes in cash burn, but I’ll let Jason comments on your question more.

Thanks Bill. Thanks for the question, Jon. So a lot goes into us determining our cash guidance. And we did take into consideration the impact of Servier’s decision in dose corrects where Servier will continue to support activities through – certain development costs through February 2020. It’s safe to assume that any new trials or studies that we planned or contemplated are not going to be part of that support going forward. So to the extent that we factor that into our previous forecast that’s a change that we’ve worked through. But we’ve also included the cost of severance retention and other related costs. In the normal course sort of updating our development costs with our team that puts us in this near term runway window within a similar range we were before all things considered.

Great, thank you. For the ongoing MRG-110 trial, it seems like you do have some visibility already into safety and tolerability. Do you have anything to say about potential efficacy measures in these Phase 1 trial? And so if the trial – if the asset is Phase 2 already, is that to imply that you think it ought to be taking forward to the Phase 1 data is supportive of taking it forward to Phase 2?

Yes, thanks Jonathan. The data that we have seen, again, we’re going to report this at a meeting that we’ll talk more about in fourth quarter of this year. Clearly, the signals that we’ve seen so far suggest a good safety tolerability profile, as well as preliminary proof of mechanism in humans. So, we’ve been able to identify important biomarkers that are related to tissue repair and vascularization. And well again, we want to really reveal or discuss those in greater detail at the scientific meeting in the fourth quarter.

Can I just add something to that? We also have data from these Phase 1 trials that allow us to determine at least preliminary looking at dynamic endpoints dose and dose response. So I think when you look at safety, you look at a preliminary proof of mechanism and idea of what doses to use. I think that’s why we’re saying we believe this is a Phase 2 ready asset at the stage.

All right, that makes sense. Thank you.

Our next question comes from the line of Madhu Kumar with R. W. Baird. Please proceed with your question.

Hi everyone, this is Jennifer on for Madhu. Thanks for taking our question. Just a few sort of follow up on the 2Q 2020 cash runway, could you tell us what ongoing or future clinical study is that soon? And then in terms of the SOLAR trial, could you give us maybe a little bit more of an idea of what fraction of patients have been recruited? And then sort of in parallel, how close you are to any interim futility analysis? Thank you.

Sure. Jason do you want to speak to the 2020 runway?

Sure. Thanks. Thanks for the question, Jennifer. In terms of the Q2 2020 runway that assumes continued funding for the SOLAR and PRISM trials with cobomarsen and CTCL, as well as completing our Phase 1 study and the expansion indications that's ongoing as well. And the remlarsen study in keloids, which we expect to report out later this year, as well as the MRG-110 study with Servier that we expect to report out later this year.

And Jennifer around the SOLAR trial, we've previously stated that we're not going to really guide on accession numbers and recruitment numbers in detail. We've sort of focused in on site activation. We'll continue to update on the progress. And at this point I would say that we are as the data continues to mature and we get into out of the summer season, the fall season, we'll be in a better position to really be able to extrapolate towards the timing at which we would be ready to guide on the futility analysis.

Let me just add that as Nill mentioned, we now have more than half the sites online and on boarded. And we now have enough data where we can model kind of the patient to session rate and that's why – we did make the adjustment, but we also feel that that these predictions are reasonable because we now have a good sense of the number of patients per site per month are actually being recruited into the trial.

Great. Thank you so much.

Our next question comes from the line of Leland Gershell with Oppenheimer. Please proceed with your question.

Hey Bill and Jason, thanks for taking my questions. Of course a couple of questions on cobomarsen. Want to ask in the prior trial with the expansion indications, with ATLL you get some very encouraging data there. What to ask when we might see the next update from the CLL subset, would that be at ASH this year or perhaps some another venue? And also want to ask about thoughts for another – with the next expansion indication for cobo might be? And then I have a follow-up. Thanks.

Sure. So we are continuing – our primary focus now in the ATLL expansion is really to focus on the durability of response in the highly aggressive patients. We're building that additional data set. It turns out that the – it isn't – while there's some good sort of data around survival from diagnosis, the disease being as rare as it is, there isn't a lot of good data around kind of survival post standard of care. So we are going to be doing some additional mining activities. We're also treating patients with some different paradigms. So in other words, not necessarily after chemotherapy reduction, but with higher tumor burden so that we really get a good picture of the likely application of the drug. With the appropriate dataset in hand our plan would be to then move toward the communications with a plan in place with the FDA to understand the path forward. We will be giving some updates, were scheduled at an upcoming meeting in late sort of September to give some updates and we'll continue to update guidance on additional updates. In terms of the expansion indications, we had previously reported at the T-Cell Lymphoma Forum on some preliminary observations in DLBCL, especially in the ABC subtype. And we do have the trial open to patients with ATLL DLBCL of the ABC subtype, as well as CLL patients. And will continue to update as we make progress in those areas.

Okay, great. And then on the miR-29 side, give any bridging signals, we're seeing in the eyes? I think you had mentioned that you had also been working on and I found next couple formulations. I'll be appropriate for that. Just wanted to ask for clinical utility where you may be in development to that particular formulation?

Right. So thanks Leland we've continued to do the preclinical work to assess various alterations to the formulation that may affect sort of wettability, and viscosity and things like that. We've completed most of those studies and we'll update on the observations at future scientific conferences. But we feel like the asset is at a point where it is near ready to move forward into evaluation, necessary to move it into clinical trials.

The data that we reported on the formulation itself was just the drug in saline where we got good tissue penetration. So we don't envision there has to be much done with formulation at this stage.

I understand. That's very helpful. Thank you.

Our next question comes from the line of Suji Jeong with Jefferies. Please do with your question.

This is Suji dialing for Eun. And thanks for taking the question. So could you elaborate more on the sibelium plan for remlarsen? And given the large patient pool for keloid, do you think you're going to have to find sibelium partner before advancing to the next stage? Thank you.

Hi. Suji. Thanks for the question. So the remlarsen study that we – the Phase 2 study that we're conducting now had several important goals to it. If you member, it's an intra patient controlled study, so we could do a relatively small number of patients. We could control many factors around the development of keloids. I think one of the sort of confounding aspects of previous clinical trials has been the heterogeneity in keloid growth. And in our study we've controlled the position of the biopsy that's used to induce the keloids, its intra-patient-controlled again. And our focus is really on understanding in this trial, what is an effect size that we see? And then what would that project in terms of Phase 3? And we're really using the data from this to make those important decisions that you're alluding to. In other words, is it most appropriate based on the effect size to seek out a development partner? Is it something that we could contemplate moving forward on our own? And we do believe remlarsen actually has additional applications. One of our goals in assessing it in persistent pathological scarring was to demonstrate some proof-of-concept in pathologic fibrosis as well. So the goals of that study are multifaceted and I think really put us in a good position to determine the appropriate path and the appropriate investment decisions for remlarsen moving into different indications.

Okay. Thank you.

Thank you.

This are no further questions left in the queue. I would like to turn the call back over to Mr. Bill Marshall for any closing remarks.

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

This concludes today's teleconference. You may now disconnect your lines at this time. Thank you for your participation and have a wonderful day.