Greetings, and welcome to the Mineralys Second Quarter 2023 Earnings Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Ferry of LifeSci Advisors. Please go ahead, sir.

Thank you operator, good afternoon everyone and welcome to our second quarter 2023 conference call. Today after the market closed, we issued a press release providing our second quarter 2023 financial results and business updates. A replay of today's call will be available on the Investor section of our website, approximately one hour after its completion. After our prepared remarks, we will open the call for Q&A. Before we begin, I would like to remind everyone that this conference call and webcast will contain forward-looking statements about the company. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. These forward-looking statements are qualified by the cautionary statements contained in today's press release and our SEC filings, including our annual report on Form 10-K and subsequent filings. Please note that these forward-looking statements reflect our opinions only as of today, August 7th, except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events. I would now like to turn the call over to Jon Congleton, Chief Executive Officer of Mineralys Therapeutics. Jon?

Thank you, Dan. Good afternoon everyone and welcome to our second quarter 2023 Financial Results and Corporate Update Conference Call. I'm joined today by Adam Levy, our Chief Financial Officer and Chief Business Officer; and Dr. David Rodman, our Chief Medical Officer. I'll begin with a brief overview of the business and recent milestones, followed by David, who will discuss our clinical programs and then Adam will review our second quarter financial results, before we open up the call for your questions. Mineralys is focused on addressing aldosterone-driven cardio-renal disorders that now include both hypertension and chronic kidney disease or CKD. We believe the growing prevalence of abnormal aldosterone levels is linked to the rise in the obesity epidemic. This shift in the underlying biology of hypertension and we believe in CKD as well, requires new therapeutics that reduce circulating aldosterone. Based on our preclinical Phase 1 and Phase 2 data, we believe we have a highly selective, effective and well-tolerated aldosterone synthase inhibitor in lorundrostat to address this growing need and make a meaningful difference in the lives of millions of patients. The first half of the year has been a very productive one for the Mineralys team and we're expecting this momentum to continue through the second half of 2023 and into 2024. The most significant amongst our recent milestones is the initiation of patient dosing for the Advance-HTN trial during the second quarter. This is the first of two clinical trials under the planned pivotal program to evaluate the safety and efficacy of lorundrostat for the treatment of uncontrolled or resistant hypertension and we expect to have top line data in the first half of 2024. The second pivotal trial, Launch-HTN which will enroll a larger population of uncontrolled or resistant hypertension subjects is expected to begin in the second half of 2023. We expect data from the Launch-HTN trial in mid-2025. In addition after completing either of the pivotal trials, subjects will be offered the opportunity to participate in an open-label extension trial, which has already begun enrollment. This trial will contribute to our long-term safety data set. Last month, we then announced the expansion of our clinical development of lorundrostat as a potential therapy to treat patients with stage 2 to stage 4 chronic kidney disease. The roll-out of aldosterone and the progression of chronic kidney disease is well established. This study is anticipated to begin enrollment before the end of this year and we'll have top line data readout in Q4 2024 to Q1 2025. More than 35 million adults in the United States suffer from chronic kidney disease and we believe that lorundrostat has the potential to provide significant clinical benefit for many of these patients given the role that abnormally elevated aldosterone plays in the progression of this disease. Let me now turn the call over to Dr. David Rodman, Chief Medical Officer of Mineralys Therapeutics, who will provide additional details on our ongoing clinical program for lorundrostat. Dave?

Thank you, Jon and good afternoon everyone. Today I'll provide an overview of the pivotal clinical program for lorundrostat that as Jon touched on earlier has commenced enrollment. I will then provide a summary overview of the planned Phase 2 trial of lorundrostat for chronic kidney disease. Since the initiation of the Advance-HTN trial, we remain on track. During this time, we have continued to onboard additional sites and randomize subjects into the trial. As a reminder, it is a randomized double-blind placebo-controlled pivotal trial that will enroll up to approximately 300 adult subjects with uncontrolled or resistant hypertension. Patients failing to achieve their blood pressure goal on two to five antihypertensive medications are eligible for the trial. One-third of subjects will be randomized to placebo, one-third to 50 milligrams lorundrostat once daily and one-third to 50 milligrams of lorundrostat once daily and then increase to 100 milligrams at week four if the blood pressure goal has not yet been achieved and if they meet certain safety criteria. The primary endpoint of the trial will be change in systolic blood pressure as measured by 24-hour ambulatory monitoring at week-12 in the two active arms versus placebo. We anticipate having top line data from this trial in the first half of 2024. The second part of our pivotal program for lorundrostat is the larger Launch-HTN trial, which is expected to be initiated in the second half of 2023. This randomized, double-blind, placebo-controlled, three-arm trial is planned to have a similar design as the Advance-HTN pivotal trial except subjects will remain on their previously prescribed background regimen of two to five antihypertensives including a Thiazide or Thiazide-like diuretic. In the Launch-HTN trial, randomization will be stratified by body mass index, less than 30 kilograms per meter squared versus greater or equal to 30 kilograms per meter squared. Approximately 1,000 subjects will be randomized one-to-one-to-one to either placebo once daily, 50 milligrams of lorundrostat or once daily 50 milligrams of lorundrostat with the option to titrate in a similar manner as the Advance-HTN trial. The top line data from the Launch-HTN trial are expected in mid-2025. In addition, subjects from both pivotal trials will have the opportunity to roll over into an ongoing open-label extension trial. As Jon mentioned earlier, we recently announced plans to initiate an expanded Phase 2 trial of lorundrostat alone and in combination with an SGLT2 inhibitor, as a potential therapy to treat patients with stage 2 to 3A chronic kidney disease. This trial will be conducted in two parts. Part A will be a proof-of-concept trial with the primary outcome measure being change in proteinuria at week-12 compared to placebo, a very good surrogate for the registration endpoint which is the reduction in the rate of decline in glomerular filtration rate. Part A is a randomized, double-blind, placebo-controlled trial that will consist of two treatment periods. We plan to enroll up to 100 subjects with mild to moderate kidney disease and persistent proteinuria despite treatment with an ACE inhibitor or an angiotensin receptor blocker. Subjects will receive either once daily combination treatment with 50 milligrams of lorundrostat, plus 10 milligrams with FARXIGA or placebo for 12 weeks. This will be followed by a second 12-week treatment period during which subjects in the active arm will receive 50 milligrams of lorundrostat alone. As I mentioned, part A of the trial will evaluate the benefit of lorundrostat in combination and alone on proteinuria in this population. Part B of the trial will be for profiling subjects with lower kidney function. The second part of the trial is an open-label, single-arm, dose-escalation trial that will enroll approximately 20 subjects with moderate to severe chronic kidney disease with or without hypertension despite treatment with an ACE inhibitor or an ARB. Subjects will receive four weeks of treatment once daily of 25 milligrams lorundrostat followed by an increase in dose to 50 milligrams lorundrostat for another four weeks. Part B of the trial will characterize the safety profile of lorundrostat in a more renally compromised population. As this is an exploratory trial, we may conduct interim analyses of the data at one or more time points. We expect to have top line data from this trial between the fourth quarter of 2024 and the first quarter of 2025. The progress we continue to make this year speaks directly to the quality of our cross-functional team members, equally important teams at our trial sites and most importantly trial subjects who anxiously wait for a new approach to treating their hypertension and associated aldosterone mediated complications like chronic kidney disease and heart failure. We look forward to keeping you updated on the status of our pivotal program as progress on our journey to transform the hypertension landscape unfolds. Now I will turn the call over to Adam, who will provide a financial review for the second quarter of 2023. Adam?

Thank you, Dave and good afternoon everyone. Today I will discuss select portions of our second quarter 2023 financial results. Additional details can be found in our Form 10-Q, which will be filed with the SEC later today. We ended the second quarter with cash, cash equivalents, and investments of $282.8 million compared to $110.1 million as of December 31st, 2022. The company believes that its cash, cash equivalents, and investments as of June 30th, 2023 will be sufficient to allow the company to fund its planned clinical trials, as well as support corporate operations through mid-2025. R&D expenses were $11.9 million for the three months ended June 30, 2023, compared to $5.6 million for the same period last year. The increase in R&D expenses was primarily due to increases of $4 million in preclinical and clinical costs, driven by the initiation of the lorundrostat pivotal program in the second quarter of 2023, $1.3 million in higher compensation expenses as a result of additions to headcount and $1 million in clinical supply, manufacturing, and regulatory costs. G&A expenses were $3.9 million for the three months ended June 30th, 2023, compared to $0.9 million for the same period last year. The increase in G&A expenses was primarily due to $1.4 million in higher compensation expenses as a result of additions to headcount, $1.1 million in higher professional fees associated with operating as a public company, $0.3 million of higher insurance expense associated with new director and officer insurance policies, and $0.2 million in other administrative expenses. Total other income was $3.6 million for the quarter ended June 30th, 2023 compared to $0 for the same period last year, which was primarily attributable to interest earned during the three months ended June 30th, 2023 on the company's investments and money market funds in US Treasuries. Net loss was $12.1 million for the quarter ended June 30th, 2023 compared to $6.5 million for the same period last year. The increase was primarily attributable to the factors described earlier. With that, I'll ask the operator to open the call for questions.

Our first question comes from Michael DiFiore with Evercore.

Two for me. Just, the first one regarding the Phase 3 launch hypertension trial. It's again, the design is similar to Phase 2 except that in this Phase 3 trial, patients could be on as much as five background meds instead of the three that they are capped in Phase 2. So could this non-standardized background regimen that could include up to five drugs cause a greater placebo effect? And how should we think about the placebo effect here versus the much smaller, more tightly controlled Phase 2 trial? And then I have a follow-up.

Mike, let me provide some background on that. Both Advance-HTN and Launch-HTN allow patients to be on two to five background medications. In Advance-HTN, we transition them from their prescribed treatment to a standardized treatment. For Launch-HTN, they can remain on their up to five medications, and we will stabilize them during a two-week placebo run-in period. This period should address your question effectively. Regardless of whether they are on two, three, four, or five medications, we will ensure they adhere to their regimen, using our AI smart technology to monitor compliance. If, at that point, they are compliant on their regimen and do not meet the criteria for being hypertensive, they will not be randomized. However, we believe that stabilizing them on their current regimen will provide an accurate assessment of their blood pressure, and as long as it remains above 135 millimeters of mercury, they may be randomized. We are not particularly worried about the number of medications causing unusual reactions within the placebo group. Additionally, it's worth noting that this approach is similar to what we experienced in the Target study, where patients were also on more than two background medications. Patients in Target were on two, three, four, or even five medications, so the design is quite comparable. Ultimately, Mike, this reflects a real-world scenario, while Advance-HTN is more tightly curated to generate Class 1 evidence; Launch-HTN offers a slightly broader real-world perspective.

Second question is more of a big picture one. With the recent update to the CKD trial, it seems as if you're no longer 100% certain that you'll be pursuing a separate dedicated CKD indication and that it will be dependent on how this Phase 2 goes and that this Phase 2's primary purpose is to support the hypertension indication. Just what led to the sudden change in expansion, wanting to expand the CKD trial?

I'll go back to really the genesis of the company and our focus has been from the beginning, how do we bring a targeted solution to both hypertension and beyond, and beyond for us was broadly cardiorenal indications. In the case of CKD, that's our first step into that beyond world of cardiorenal. And the reason CKD is such a natural fit is that we know the change in proteinuria is a really good marker to predict clinical response. And for a CKD indication, that clinical response, as you heard Dave say, is slowing the rate of decline of glomerular filtration rate. So it's a really good marker for us to get a keen sense of the benefit that lorundrostat can add. I'll also point out that the CKD proof-of-concept study really serves two purposes. And one is to give us a derisked view of what lorundrostat could do in CKD. We know that aldosterone plays a role based on the therapeutics, based on research, and we know that lorundrostat has a 65% to 70% reduction in circulating aldosterone. So it'll give us an indication of the potential value in chronic kidney disease, but it will also show us the value in reducing proteinuria for the hypertension population at large because we know there's significant overlap. We've done qualitative research with physicians from endocrinologists, nephrologists, and cardiologists, and really next to the reduction of blood pressure and safety, probably the third rated attribute is benefit on proteinuria. And so this study basically serves two purposes, I think it really bolsters the attributes of lorundrostat as an antihypertensive, but it also gives us a real clear sense of what the benefit would be in a CKD population to inform future development in chronic kidney disease.

Our next question comes from Greg Harrison with Bank of America.

One on CKD. With that trial starting and getting some interim looks a little over a year from now hopefully, what are you looking for in terms of proteinuria reduction that you think would be meaningful and how that could translate into eGFR benefit? And then kind of related to that, how would you expect the efficacy you see there in CKD to be affected by BMI and how would that affect your later-stage development?

Greg, I appreciate the question, let me answer the first part and maybe I'll have Dave talk about the BMI component for it. I'm not going to guide to a range, I think there's a lot of evidence out there that says, if you can mitigate aldosterone, you see a benefit with a reducing circulating aldosterone in a more complete way to do it. What you typically see with an SGLT2 inhibitor is a 30% to 40% reduction in proteinuria over a 12-week period, which is the duration of our proof-of-concept study. So we're looking for a clinically meaningful reduction beyond that. I don't know that I want to guide to that just yet. As far as how that would directly translate to benefit in eGFR, I think it's premature to opine on that as well, but we're clearly looking to find a meaningful addition. We think there's significant need that remains even though the SGLT2 inhibitors are quickly being adopted in the treatment of CKD, there remains a lot of unmet need even with their advances. But let me turn it over to Dave and he can address your question on BMI.

So your question was, do we expect to see something similar to hypertension where larger BMI results in more aldosterone and a better response? It's an interesting question. Now typically, people who have proteinuria in this group of patients are often going to have Type 2 diabetes, which is a product of obesity. And so I think the majority of subjects are going to be obese, and therefore we probably won't have much of an opportunity to test it at a statistical level whether the non-obese patients have a very different response. Also, the mechanisms that increase aldosterone in chronic renal disease are often related to just volume through the more classical pathways as opposed to obesity. So good question. We'll be looking for that and we'll let you know.

Our next question comes from Jack with Stifel.

This is Jack on for Annabel. So firstly, the Advance-HTN study doesn't necessarily enrich for BMI, but in Target HTN, the lower BMI patients have less of a benefit in systolic blood pressure reduction. Do you have any prespecified analyses to identify the better efficacy in patients with BMI over 30? And are you sufficiently powering the trial to reach statistical significance even if the 25 to 30 BMI patients turn out not to have that hyperaldosteronism link?

Well, another great question. So your question was, since we're not stratifying for BMI, are we going to be able to look at the BMI effect? So just for clarification, we're stratifying for two drugs versus three, and the reason we chose to do that is because it's critical in understanding whether this drug has a place as the third-line agent for hypertension. We believe it will in people with high aldosterone, who as you mentioned are often obese. So we do have pre-planned analyses looking at BMI as a categorical again, BMI less than 30 versus greater than or equal to 30 kilograms per meter squared and we'll be looking for that. Now your last question is a great question, which was, are we powered for that? And that has as much to do with effect size as it has to do with the size of the trial. So if we see a similar effect size difference to what we saw in Target HTN, yes, we're powered for that. But it's not a primary, it's a secondary.

And then a follow-up, if I may. On a more broad scale, can you talk about the level of monitoring you might anticipate will be required for lorundrostat compared to MRAs regarding hyperkalemia? Would you anticipate that to be a burdensome for physicians to monitor their patients?

No, it won't be any more burdensome than the MRAs, and we'll be looking to see if there is any evidence that our strategy, which is to allow some excretion of potassium later in the 24-hour period instead of blocking aldosterone production for the entire day with 50 milligrams, is effective. So there is reason to be optimistic that it will be low burden. We expect that patients will be prescribed this drug and will return in two to four weeks for a blood pressure check. At that time, they'll also have their serum potassium levels checked. They can be adjusted accordingly, and this pattern will continue. Unless there is a significant change or if they have a very low eGFR, I believe the burden would be minimal, certainly no worse than an MRA.

Our next question comes from Mohit Bansal with Wells Fargo.

I have two questions. So first one, what is the overlap between CKD and hypertension? I'm asking this because having some level of proteinuria data ahead of your hypertension launch could be helpful in the marketplace?

Yes, I appreciate the question. As you can imagine, there are various ways to analyze the data. From our review, we estimate that about 25% to one-third of the hypertension population also has some form of chronic kidney disease (CKD). Conversely, around 60% to 80% of the CKD population is affected by hypertension. There is a significant overlap in these groups. This is why, during our initial target product profile research with physicians who focus on hypertension, they indicated that proteinuria is very important to them due to this overlap.

And then just wanted to touch base on the enrollment progress so far, especially in the Advance-HTN trial. Could you comment something on that front? And how comfortable do you feel about the first half '24 data readout at this point in time?

Yes, we continue to feel good about first half 2024 top line results from Advance-HTN, continue to feel confident about mid-2025 for Launch-HTN. Things are progressing as we anticipated and that's why we're continuing to guide to data readout in the first half of 2024 for Advance-HTN.

Our next question comes from Rich Law with Credit Suisse.

Based on your discussion with the FDA so far, what do you need to demonstrate in order to get approval for the higher 100 mg dose? And also what is the comparator arm for that based on your design? And I also have couple of more questions.

Rich, say the last part of your question, so based on the discussion what will be required for what, for the 100-milligram dose approval?

Yes, so for 100 mg dose approval and also what the comparator arm for that dose?

We will escalate doses for all participants based on their assigned arm, which they will not be aware of. If someone is on placebo after four weeks, they will receive two placebos. The same applies for those in the 50-milligram group, while the third group will receive 50 milligrams of the active drug. This is how we maintain the blind. As for your second question regarding specific guidelines for registering that arm versus the 50-milligram group, there aren't any. This labeling practice is quite standard. The rationale revolves around benefit-risk, as higher exposure could lead to greater benefits. For anyone initially given 50 milligrams, if they develop mild hyperkalemia beyond the normal range, they won't be dosed up. Therefore, the safety profile should be similar to that of the 50-milligram group. It's different from the Target trial where everyone started at 100 milligrams since some would have responded to 50 milligrams, and those individuals won't be escalated to 100. The same safety rules apply, and we believe the safety profile will be similar to that of the 50-milligram group, although we cannot be certain.

I just want to confirm, do you have two different placebo arms, one with the 50 mg and the other with the 50 mg that is titrated to another placebo? So essentially, there are two...

So let me explain it, I'm sure I didn't explain it clearly. There's only three arms. Everybody in this study is on one tablet that looks the same for four weeks and then they all go to two tablets that look the same for the last eight weeks. So the same people are on one tablet at placebo and then go to two tablets of placebo, but it's the same placebo group. The same thing happens in the other arms. So it's one arm all the way along, it's one pill in each arm for four weeks and then two pills in each arm for the last eight weeks. Did I do any better?

Yes, no, I get it. And then a couple more other questions too. How important is the second dose in the commercial strategy? How many patients or proportion of patients do you think would get the sole in commercial or clinical trials, I think?

This is Jon. I think its importance lies in what we in Target HTN and we know that at a subject variability level, exposures can change from one individual to the next that some patients, the 50 milligrams was a great dose, give them a great clinical response both from an efficacy and safety standpoint. We believe that for other patients, just because of how they metabolize the drug and react to it that they're going to need a higher dose. And so it becomes important to address that patient variability and frankly to fit in with an existing paradigm in hypertension that is to titrate to dose. And so we think it's providing clinicians and patients that flexibility is invaluable to really acknowledge the individuality of the subject. The latter part of your question, Rich, remind me again, the proportion?

That can...

Yes, it's hard to say right now, Rich. I think with the size and scale of the pivotal program, we'll be able to obviously communicate that. We'll see that right to that third arm for patients that run 50 they got to go safely and those that required a higher dose. But right now, I wouldn't even want to hazard a guess, and I don't know that fundamentally it will matter. The key for us is just getting the right dose for the right patient to get the right response.

And then just one last question from me. I think you mentioned the SGLT2 partner or combination partner. How do you select the agent? Is there potential to consider other agents?

As we worked with our KOLs, Rich, it became really evident to us that there's a high level of similarity whether it's epical episome, dapic episome, or conical episome. The responses that have been seen in CKD have been very positive, but very consistent. And so for us, it was just a matter of let's pick the molecule that has a good safety profile, has a good body of evidence in CKD. And so dapic episome was the one for us. And we also needed to make sure that we picked one to standardize the background response, future studies that may become more open field to be on an SGLT2 inhibitor writ large. So it could be any of them. That will be something we'll evaluate down the road. But for this proof-of-concept and they hold something constant like background meds, we chose epical episome.

There are no further questions at this time. I would like to turn the floor back over to Jon Congleton for closing comments. Please go ahead, sir.

Thank you, operator and thank you to everyone for joining us today. We're very excited about the progress we've made thus far in 2023 in advancing our clinical programs and we remain enthusiastic about the upcoming milestones for the rest of the year. We look forward to updating you as our pivotal program for lorundrostat continues to advance. With that, we'll close the call. Have a nice day, everyone.

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