Viridian Therapeutics, Inc. (VRDN) Q3 2019 Earnings Report, Transcript and Summary

Thank you for standing by. This is the conference operator. Welcome to the miRagen Therapeutics Third Quarter 2019 Earnings Conference Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] I would now like to turn the conference over to Dan Ferry, Managing Director of LifeSci Advisors. Please go ahead.

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 third quarter 2019. I'll provide updates for each of our three clinical stage product candidates before turning the call over to Jason to provide a review of our financial results for the quarter. Starting with cobomarsen, which is currently being evaluated in three clinical trials for multiple indications including the SOLAR Phase 2 clinical trial for cutaneous T-cell lymphoma or CTCL. We've opened approximately 70% of the sites currently planned for the SOLAR clinical trial. The primary endpoint for the SOLAR trial is the objective response rate defined as a 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 four consecutive months. Progression-free survival is 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 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. Today, we updated our guidance on when we expect to report primary endpoint data from this clinical trial from the first half of 2021 to the second half of 2021. Our decision to adjust our guidance today was based on longer-than-anticipated time to activate the number of sites to support our previous patient enrollment projections, resulting in slower-than-anticipated patient enrollment. While there are no guarantees, we believe that as additional sites become active in the United States and Europe, we expect patient enrollment to increase proportionately. As a reminder, the SOLAR trial is supported in part by a collaboration with the Leukemia and Lymphoma Society or LLS. LLS through one of its affiliates has agreed to provide up to $5 million through the purchase of miRagen common stock to help support the SOLAR trial. In October 2019, this study achieved one of the enrollment milestones under the agreement. And as a result, an affiliate of LLS purchased an additional $0.5 million of our common stock. Cobomarsen is also being evaluated in a Phase 1 clinical trial in three potential expansion indications where the disease process appears to be correlated with an increase in microRNA-155 levels, the target of cobomarsen. Our initial focus is on treating patients with adult T-cell leukemia/lymphoma. The data we've released to date showed durability of disease stabilization observed in patients with the aggressive subtypes of ATLL and support our belief that cobomarsen may be a meaningful potential treatment option for patients with these forms of ATLL. In addition, we believe these clinical observations in a microRNA-155 elevated tumor type other than CTCL, further supports the hypothesis that cobomarsen may have utility in treating other malignancies with elevated microRNA-155 levels. Turning to remlarsen and other microRNA-29 mimics, we believe our fibrosis program has the potential to deliver distinct therapies in indications where pathologic fibrosis has been implicated, providing an attractive opportunity for miRagen to deliver promising therapies for patients in need. Our strategy was to initiate development by demonstrating mechanism of action with remlarsen in the skin and then expand into other potential indications with remlarsen and other microRNA-29 mimics, potentially including diseases requiring systemic administration, such as lung and liver fibrosis. As we've previously disclosed, 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 keloid scars, a form of pathological scarring. We expect to report Phase 2 interim data from this clinical trial by the end of this year. Earlier this year, we also released data from preclinical ocular studies, exploring the antifibrotic effects of remlarsen in the cornea and retina. We observed that topically administered remlarsen accelerated the healing of corneal injury, reduced the expression of multiple fibrosis associated regimes and appeared to reduce corneal hazing and scarring. In addition, we observed that intravitreally administered remlarsen showed good biodistribution across the retina with concomitant reductions in multiple biomarkers of fibrosis. Based on this preclinical data and the safety data from our Phase 1 clinical trial, we believe remlarsen may be effective in treating ophthalmic indications resulting in fibrosis including the prevention of corneal scarring and hazing following an infection or injury. This is a significant medical need as scarring of the cornea remains a leading cause of blindness worldwide, for which no approved pharmacologic treatments exist. As I mentioned earlier, we've discovered and are developing new microRNA-29 mimics that we believe could have utility for systemic treatment in indications where fibroses have been implicated in the lung and liver, such as idiopathic pulmonary fibrosis or IPF and nonalcoholic steatohepatitis or NASH. In May, we reported new data demonstrating that systemic administration of MRG-229, our second-generation microRNA-29 mimic product candidate for IPF appeared to effectively, efficiently reduce 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. We believe that the data we've generated to date evaluating multiple product candidates and our fibrosis program supports the continued development of these product candidates. Future development will require additional financial resources or potential collaborations. Turning to MRG-110. Last month, we announced data from two Phase 1 clinical trials of MRG-110. In one of the clinical trials, administration of MRG-110 was observed to increase angiogenesis in humans as demonstrated by increased perfusion and histological markers of neoangiogenesis. The data generated in these studies – in these clinical trials is expected to provide clinically translatable biomarkers that may support future clinical trials for the treatment of heart failure and other conditions such as complicated lacerations in high-risk patients. In both clinical trials, MRG-110 was generally safe and well tolerated, and we believe that the program is ready to advance to Phase 2 clinical development. While we have not announced future development plans for MRG-110, we may seek a new development collaboration for this product candidate in the future. As a reminder, MRG-110 represents the third microRNA-targeted product candidate 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's technology and demonstrates the capability of our team to develop microRNA-targeting product candidates. With that, I will now turn the call over to Jason Leverone, our Chief Financial Officer, to review the financial results we reported earlier today. Jason?

Thank you, Bill, and good afternoon, everyone. I appreciate the opportunity to provide a summary of our third quarter 2019 financial results. Today, we reported approximately $33.8 million in cash, cash equivalents and short-term investments as of September 30, 2019. Net cash used in operations was $9.3 million for the third quarter and $28.3 million for the nine months ended September 30, 2019. We believe that our current resources will be sufficient to fund our operations through the second quarter of 2020. Revenue was $0.7 million for the third quarter of 2019. This compared to $0.9 million for the third quarter of 2018. The decrease in revenue was primarily due to decrease in amounts reimbursable to us under our license and collaboration agreement with Servier. As we've previously disclosed, we received notice from Servier in August 2019 of their termination of our collaboration agreement, which will become effective in February 2020. Research and Development expenses were $9 million for the third quarter of 2019 compared to $7.4 million for the third quarter of 2018. The increase in research and development expenses is primarily due to increases in clinical trial and related manufacturing costs, primarily associated with the SOLAR and PRISM clinical trials of cobomarsen as well as increased personnel-related costs including share-based compensation charges, consulting, contract labor and restructuring costs. These increases were partially offset by decreases in technology license fees and other expenses. Turning to general and administrative expenses, G&A expenses were $2.9 million for the third quarter of 2019. This compared to $2.7 million for the third quarter of 2018. The increase in general and administrative expenses was driven primarily by increases in corporate, legal and accounting professional fees. As a result of the cost restructuring program we announced in August 2019, we incurred approximately $1.1 million in restructuring charges for retention, of which $0.9 million was recorded to research and development expenses and $0.2 million recorded in general and administrative expenses in the third quarter of 2019. The company's net loss was $11.2 million or $0.36 per share for the third quarter of 2019 compared to $9 million or $0.29 per share for the third quarter of 2018. With that, I'll ask the operator to open the call for questions. Operator?

Thank you. [Operator Instructions] Our first question comes from Jonathan Miller of Evercore ISI.

Hey, guys. Thanks so much for taking my question. I guess, I most want to focus on the push-out for SOLAR data to the second half of 2021. It seems like LLS' support for SOLAR is potentially meaningful, but it hasn't been accelerating it as much as maybe you would have hoped. What can you do to get across the finish line for SOLAR a little faster, a? And then secondly, on the BD front, do you have any updates to give us on partnerships for MRG-110 with the potential for partnerships with other assets including remlarsen or even cobo?

Great. Thanks, Jonathan. I appreciate the question. So the data push-out, LLS has obviously been a very supportive and important partner to us, not only for the financial support but also for patient outreach and by identifying additional patients and really promoting the SOLAR trial. With that being said, the primary factor that has really affected our ability to recruit effectively has been opening the sites, completing the contracts necessary, having the sites fully up to speed and capable of recruiting. We've spent a lot of time in interactions with treating physicians and clinical trial sites at meetings. We're expanding certain clinical trial sites to slightly earlier stages in the disease to try to accelerate things. And we believe that we'll see some positive results from those efforts as we move forward. As you know, it's a challenge to really model when you anticipate studies of this type in a rare leukemia/lymphoma or leukemia to be able to report the data. And as we look through our modeling and put in various parameters, we had typically looked at ranges, at which time we anticipated being able to report top line data. As we gained more information over the last quarter, we noticed that one of the ranges pushed it beyond the first half. And we, I think, appropriately, just updated guidance to reflect that. We'll be doing everything we can to accelerate patient recruitment and be able to report as soon as we can. And then on the BD front. Yes. So on the BD front, what we're really doing on the MRG-110 front, we had QCed most of the data. We presented that at a recent meeting in October. The response to that was quite positive. We're continuing to follow up on some additional work from the systemic study that was conducted and really putting together comprehensive package of the results that have been obtained as well as the opportunities. Again, with MRG-110, what we know now is that the compound is able to induce neoangiogenesis in humans. We saw enhanced tissue repair in humans. And this all really followed very nicely from our preclinical studies. This obviously has implications across a rather broad swath of diseases. We were interested in heart failure, things like peripheral artery disease as well as the ability to enhance the healing of certain wounds. And in that regard, we're really looking at multiple outreach efforts to be able to identify potential partners. And again, we benefit from the fact that, that's a Phase 2-ready asset. And Servier will continue to support the activity necessary through February 2020. The results generated with remlarsen, both the ocular results and then we anticipate the upcoming results in the keloid trial. And I think very importantly, in our next-generation compounds, where we've seen some very impressive activity in models of both pulmonary fibrosis as well as hepatic fibrosis have also prompted a fair amount of interest in discussions. So we're very active across the board in exploring opportunities with a real intense focus for obviously MRG-110 and microRNA-29 mimics including remlarsen.

Okay, great. Thank you, very much.

Thanks, Jonathan.

Our next question comes from Leland Gershell of Oppenheimer.

Hey, good afternoon. Bill, thanks for taking my questions. Just a quick question on remlarsen, presuming we see supportive data from the Phase 2, I know it will be kind of interim and then when would we expect to have the final from that? And then how should we think about kind of next steps presumably end of Phase 2 meeting, thoughts of what we would see for registration program?

Sure. So thanks, Leland. I appreciate the question. So on the remlarsen front, what the intent of the ongoing Phase II trial is really to explore in a very efficient intrapatient-controlled study, the magnitude of effect that remlarsen may have on the regrowth of keloid scars. Keloid scars are a persistent form of hypertrophic scarring. The interim data, one of the – we had completed dosing in the study, we were collecting data. One of the important definitions of a keloid is a hypertrophic scar that's stable for at least six months. So the interim results that we'll report out are the six-month interim point. We'll continue to monitor patients depending upon the data readout for an additional period of time up to one year, and then we will give guidance on the activities moving forward after we report the interim data. Our goal here is really to understand the effect size. One of the challenges in treating this type of scarring has been heterogeneity in the samples that has been explored, which leads to requirements for rather large Phase 3 powering. This intrapatient-controlled study should give us good feel for that and with that, really understanding the powering necessary to run a Phase 3, which would drive decisions around potentially attempting to move that forward ourselves or with a development partner.

Okay, that’s very helpful. Thanks for taking my question.

Thanks, Leland.

Our next question comes from Madhu Kumar of R.W. Baird.

Hey, everyone. Thanks for taking my question. So when might we expect kind of better timing on updated data of the ATLL trial and/or regulatory visibility from that trial?

Yes. Thanks, Madhu. I appreciate the question. So ATLL is our primary focus and the expansion indications right now. We just did an update at the DIA/FDA meeting on the results there. What we've seen is pretty impressive durability of stabilization of disease in patients that have the aggressive leukemic and lymphomatous form of the disease. What we're doing now is treating patients in one of a couple of paradigms. One is patients with more acute disease where the tumor burden is higher to assess the ability of remlarsen to reduce that tumor burden, which would drive a clinical design of one type. The other is the observations in patients with residual disease post chemotherapy where we've seen results with the most patients. And again, some pretty impressive stabilization and longevity in what is otherwise a very morbid disease. So we anticipate that – we'll give some further guidance on this in terms of when the next updates will occur. And we are – based on the observations that we have, the two clinical trial designs are – we will settle on one of them, and our plan would be then to pursue discussions with the FDA under reasonably near term, but we will have better guidance on that in early 2020.

So how many patients have been treated with those – that kind of like gross tumor burden versus residual disease front? How many ATLL patients have we treated so far with cobomarsen?

So I believe that we have disclosed the treatment of – I think it's up to 10 or so patients. We have looked at patients both with residual disease post chemotherapy. There is another form of the disease called chronic unfavorable that's much less common. We've looked at that. And then we've explored this in a couple of patients with acute disease. The biggest dataset we have is in sort of residual disease post chemotherapy.

Okay. And then for Jason, in terms of the cash runway, can you remind me what is your cash runway? And what are the assumptions for ongoing clinical programs that underpin that runway assumption?

Sure. Thanks, Madhu. So our runway we updated today is in – sorry, from into the second quarter of 2020 to through the second quarter of 2020. The primary assumptions that we've used in our forecast are really with a heavy allocation to the development of cobomarsen, the three ongoing trials, like Bill mentioned, with the ATLL Phase 1 trial as well as the SOLAR and PRISM trials. Those are the primary sort of direction of capital that we've done to this point.

Does it assume any more spend beyond the ongoing Phase 2 trial for remlarsen?

It assumes us wrapping up the Phase 2 trial with remlarsen as well as continuing some of the preclinical work that we have with IPF under our existing grant.

Okay, great. Thank you so much guys.

Thanks, Madhu.

Our next question comes from Liana Moussatos of Wedbush Securities.

Thank you for taking my questions. Do you think in 2020 we'll see any more cobo expansion, ATLL or maybe from the other two expansion indications where we see some data from that? And what are the next steps for MRG-229?

Hi Liana. Thanks for the question. So yes, we most definitely anticipate providing additional data on ATLL as well as any additional observations that we see in the other expansion indications. That, again, we'll guide in the not-too-distant future on when some of the firm dates are around those particular events occurring. But it's an important part as we continue to work through the CTCL study. We anticipate as we've said and guided that there will be a futility analysis at some point, which we would anticipate being able to provide further guidance on in the not-too-distant future. But the results in ATLL and the other expansion indications are an important part of our strategy for continued updates on cobomarsen throughout 2020. And then in the setting of the MRG-229, MRG-229, we have recently put out new data, both at the American Thoracic Society and then more recently at the IPF Summit and DIA/FDA meeting where we're beginning to show more data on biodistribution, the ability to dose through various routes of administration, the activity in biomarker reductions as well as work in an important translational model in precision cut human lung slices. We're continuing to advance that work, and we'll be moving into additional studies that would support preliminary toxicology for the compound that would then guide our efforts to continue to move that forward. And most recently, we've presented preliminary data with MRG-229 as well as another derivative, another second-generation microRNA-29 mimic with systemic administration in the setting of hepatic fibrosis. Our intention is to do some additional studies there that would support the foundation for moving compounds such as MRG-229 or an analog thereof into studies in the setting of hepatic fibrosis as well. And we'll continue to report on progress at scientific meetings as we move that forward.

Thank you very much.

Thanks.

This concludes the question-and-answer session. I would like to turn the conference back over to Bill Marshall for any closing remarks.

Great. 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' needs. Thank you very much. Bye-bye.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.