Welcome to the Mineralys Therapeutics Fourth Quarter and Full Year 2023 Conference Call. This call is being recorded on Thursday, March 21, 2024. It is now my pleasure to introduce your host, Dan Ferry of LifeSci Advisors. Please go ahead.

Thank you, operator. Good morning, everyone, and welcome to our fourth quarter and full year 2023 conference call. Earlier this morning, we issued a press release providing our fourth quarter and full year 2023 financial results and business updates. A replay of today's call will be available on the Investors section of our website approximately 1 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 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, March 21. 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 morning, everyone, and welcome to our fourth quarter and full year 2023 Financial Results and Corporate Update Conference Call. I'm joined today by Adam Levy, our Chief Financial 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 fourth quarter and full year financial results before we open up the call for your questions. Looking back over the past year, we've had so much to be proud of at Mineralys. Our entire team worked together to achieve several key milestones on both the clinical and corporate level. I believe this success speaks to the dedication the team has to our exciting programs that target diseases driven by abnormally elevated aldosterone. In 2024, we're working towards achieving several clinical events, which are expected to expand the data package of lorundrostat. We believe access to aldosterone is common and is a significant contributor in approximately 25% of all hypertension patients and is tightly linked to obesity. Aldosterone is also a significant driver of cardiorenal, metabolic syndrome and thus our pursuit of an aldosterone targeted treatment approach that has the potential to benefit millions of patients who are impacted by hypertension, kidney disease and heart disease. I'm pleased by the significant progress our clinical team continues to make in implementing our development strategy for lorundrostat. Most importantly, we remain on track with our pivotal program for hypertension which includes the two pivotal clinical trials Advance-HTN and Launch-HTN. Advance-HTN is the only study of an aldosterone directed therapy that we know of that is utilizing the standardized background treatment approach, and we believe will be highly informative to lorundrostat's profile. Since initiating the trial in April of 2023, we have found the rigorous nature of the trial's design has impacted the pace of enrollment. As we discussed on our earnings call in November, we made some meaningful modifications to the Advance-HTN protocol and execution plan while maintaining our focus on delivering the highest quality data set. Based on our modeling, we have narrowed our guidance for top line data delivery to the fourth quarter of this year. The trial is designed to allow us to demonstrate the value of lorundrostat when added to standardized, optimized AHA guideline background treatment in patients with uncontrolled or resistant hypertension as confirmed by 24-hour ambulatory BP measurement. We believe this trial has the potential to generate the highest level of evidence that will be important for potential inclusion in hypertension guidelines, for treating physicians and for creating favorable access via the payers. We then initiated the Launch-HTN Phase III trial in the fourth quarter of 2023, which is expected to have top line results in the second half of 2025. The objective of this trial is to model the real-world setting of lorundrostat when added to existing treatment front-controlled or resistant hypertension in the primary care setting. This trial is expected to enroll up to approximately 1,000 adult subjects. Throughout the past year, we published or presented follow-up data and analysis from the completed Target-HTN trial which was our Phase 2 trial of lorundrostat in hypertension. These additional data have further supported our strategy for developing lorundrostat as a targeted approach to treat uncontrolled or resistant hypertension as well as our design of the pivotal program. The latest example of this came in the fourth quarter when we presented the data at the American Hypertension Association Scientific Sessions meeting in 2023. This new analysis showed that increased BMI was correlated with both increased Leptin and increased aldosterone production. These data expand our understanding of mechanisms that may link the increasing prevalence of obesity to a parallel increase in uncontrolled and resistant hypertension. Our Explore-CKD Phase 2 trial for lorundrostat in patients with hypertension and stage 2-3b chronic kidney disease was initiated in late 2023. The intent of this proof-of-concept trial is to demonstrate the benefit of lorundrostat in reducing blood pressure and provide supportive evidence for the potential benefit on chronic kidney disease. The initial design was to compare the efficacy of lorundrostat alone and in combination with an SGLT2 inhibitor in patients naive to SGLT2 inhibitor treatment. The evolving treatment paradigm in CKD resulted in the proportion of CKD patients being treated with SGLT2 inhibitors, rapidly increasing over the past year. To the point where identification of SGLT2 naive subjects has proven to be a greater-than-anticipated impediment to trial enrollment. Therefore, we will be modifying this trial designed to enroll patients who are either on SGLT2 inhibitors or naive to SGLT2 inhibitor treatment. Additionally, all trial participants will remain on an SGLT2 inhibitor throughout the conduct of the trial. Dave will provide more detail on the trial design changes, but these changes ensure that all trial participants have access to SGLT2 inhibitor treatment while allowing us to achieve our objective of evaluating the benefit of lorundrostat on BP reduction in kidney disease. We continue to anticipate top line data from this trial within the prior stated guidance of Q4 2024 to Q1 of 2025. As I mentioned earlier, our team has been growing over the past year as we ramped up our clinical activities. We recently appointed Dr. Minji Kim, our new Chief Business Officer. She brings a solid track record of generating value for multiple companies and brings more than two decades of experience in business development, strategic leadership and scientific research. During her career, she has worked with biotech companies in the U.S. and overseas across broad therapeutic and technical areas. As you can see, we've built up a lot of momentum in our clinical program over the past year, and are well positioned to continue executing on our clinical strategy. Let me now turn the call over to Dr. David Rodman, Chief Medical Officer of Mineralys Therapeutics, who will provide additional details on our clinical program for lorundrostat. Dave?

Thank you, Jon, and good morning, everybody. Today, I'll provide an update on the pivotal clinical program for lorundrostat, and then I'll give a summary update on the revised Phase 2 Explore-CKD trial of lorundrostat for hypertension and CKD. We were very pleased to announce at the end of the fourth quarter that we had dosed the first subject in our pivotal Launch-HTN trial. As Jon mentioned earlier, this is the second part of our pivotal clinical program for lorundrostat for treatment of hypertension. Total enrollment is expected to be approximately 1,000 subjects. Launch-HTN is a randomized, double-blind placebo-controlled 3-arm trial. The design is similar to the Target-HTN proof-of-concept trial, enrolling subjects who will remain on their previously prescribed background regimen of 2 to 5 anti-hypertensives. Subjects will be randomized 1 to 2:1 to either placebo, once daily 50 milligrams of lorundrostat or once-daily 50 milligrams of lorundrostat, but with the option to titrate up to 100 milligrams once daily as needed after week 6. The primary endpoint for this trial will be the change in systolic blood pressure as measured by automated office blood pressure, which was the same primary endpoint we used in Target-HTN. We believe this endpoint reflects a real-world measurement that will be relevant to the primary care provider this trial targets. In addition, subjects from this trial will be offered the opportunity to roll over into an ongoing open-label extension trial. Now turning to the pivotal Advance-HTN trial. We're progressing on track after implementation of the protocol changes and operational enhancements we discussed in our Q3 2023 earnings call. As Jon noted in his comments, Advance-HTN is a state-of-the-art, extremely rigorous hypertension trial designed and executed in collaboration with the very experienced cardiovascular research team at the Cleveland Clinic. We placed all trial participants on a standardized AHA guidelines directed treatment regimen at maximum tolerated doses. In addition, we used real-time monitoring of adherence and blood pressure assessment utilizing the gold standard 24-hour ambulatory BP measurement. In this way, we exclude any subjects whose poor blood pressure control is due to non-compliance, inadequate doses or choice of background medications or white-coat hypertension. This ensures that an extremely high proportion of trial participants truly have uncontrolled or resistant hypertension. We also believe, given the broad targeting of other standard mechanisms of hypertension, the randomized trial population will be enriched with aldosterone-dependent hypertensive subjects more likely to derive benefit from lorundrostat. We believe that the overlap between obesity-associated hypertension and aldosterone-mediated mechanisms is fundamental and our prespecified analysis of the Target-HTN data presented in our JAMA paper last year supports that hypothesis. The planned analysis of the Advance-HTN trial includes a well-powered confirmatory test of the predictive value of obesity on the efficacy of lorundrostat. We believe that in the clinical setting, the inability of an optimized 2 or 3 drug standard anti-hypertensive regimen to reduce blood pressure sufficiently in the setting of obesity will be a straightforward approach to identifying candidates for treatment with lorundrostat. In addition, we plan to continue to explore other positive and negative predictive tools using an unbiased artificial intelligence model to expand the repertoire of useful tools for targeting lorundrostat to individuals most likely to derive long-term clinical benefit. We expect to announce top line data from the Advance-HTN trial in the fourth quarter of 2024, and top line data from Launch-HTN in the second half of 2025. Moving on to our hypertension and CKD program. As Jon mentioned earlier, we're making some modifications to our Phase 2 Explore-CKD trial, ensuring all trial participants have access to an SGLT2 inhibitor. We believe this amendment better reflects the current treatment approach for subjects who have CKD. We'll be reducing the lower limit of baseline eGFR from 45 to 30 ml per minute per 1.73 meter squared which will allow us to eliminate the original Part B profiling portion of this trial. Lastly, the treatment periods will be reduced from 8 weeks to 4 weeks, which we believe will still provide ample time to demonstrate clinical benefit on blood pressure as well as insights into kidney benefit assessed by albuminuria. The primary objective remains reduction in elevated systolic blood pressure, which we believe is an important contributor to progression of CKD, particularly in individuals with obesity and cardiovascular renal metabolic syndrome. In terms of how we'll be treating subjects enrolled to date, they will be separately analyzed and offered participation in the open-label extension trial contributing to the characterization of long-term safety. We maintain our expectation to announce top line data in the fourth quarter of this year or the first quarter of 2025. We look forward to keeping you apprised of the status of the lorundrostat development program. I will now turn the call over to Adam who will provide a financial review for the fourth quarter and full year 2023. Adam?

Thank you, Dave. Good morning, everyone. Today, I will discuss select portions of our fourth quarter and full year 2023 financial results. Additional details can be found in our Form 10-K, which was filed with the SEC earlier today. We ended the year with cash, cash equivalents and investments of $239 million compared to $110.1 million as of December 31, 2022. In February 2024, we completed a private placement financing for gross proceeds of approximately $120 million before deducting fees and expenses. We believe that our cash, cash equivalents and investments will be sufficient to allow us to fund our planned clinical trials as well as support corporate operations into 2026. The R&D expenses were $70.4 million for the year ended December 31, 2023, compared to $26.3 million for the prior year. R&D expenses for the quarter ended December 31, 2023, were $23.7 million compared to $7.8 million for the same quarter of 2022. The annual increase in R&D expenses was primarily due to increases of $21.4 million in preclinical and clinical costs driven by the initiation of the lorundrostat pivotal program beginning in the second quarter of 2023, $9 million in license fees upon achieving development milestones of lorundrostat in 2023, $7.8 million in clinical supply manufacturing and regulatory costs, $5.6 million in higher compensation expenses resulting from additions to headcount and stock-based compensation, and $0.3 million in other research and development expenses. G&A expenses were $14.3 million for the year ended December 31, 2023, compared to $5.2 million in the prior year. G&A expenses were $4 million for the quarter ended December 31, 2023, compared to $2.2 million for the same quarter of the prior year. The annual increase in G&A expenses was primarily due to $3.8 million in higher professional fees associated with operating as a public company, $3.4 million in higher compensation expenses resulting from additions to headcount and stock-based compensation, $1.1 million of higher insurance expenses, primarily associated with new director and officer insurance policies, and $0.8 million in higher other administrative expenses. Total other income was $12.8 million for the year ended December 31, 2023, compared to $1.7 million for the prior year. Total other income was $3.3 million for the quarter ended December 31, 2023, compared to $0.9 million for the same quarter of 2022. The annual increase was primarily attributable to increased interest earned on our investments in money market funds and U.S. treasuries. Net loss was $71.9 million for the year ended December 31, 2023, compared to $29.8 million for the prior year. Net loss was $24.4 million for the quarter ended December 31, 2023, compared to $9.1 million for the same quarter of 2022. The annual increase was primarily attributable to the factors I described earlier. With that, I'll ask the operator to open the call for questions. Operator? Operator, we're ready for questions.

Our first question comes from Michael DiFiore of Evercore ISI. Please go ahead. Your line is open.

Hi guys, thanks so much for taking my questions, and congrats on all the progress. A few for me. Number one, regarding the Advance-HTN trial. Any color on what we could expect in terms of placebo effect here, just given the standard background regimen, if we assume that equal amounts of patients will be on 2 versus 3 background drugs. I mean I think the lorundrostat suggests around 6 millimeters of mercury for non-resistant hypertension versus 9 millimeters in resistant patients, but just want to get your view on that. And I have 2 follow-up questions.

So just so I'm sure we're both on the same page. There's a run-in period on the background regimen during which we'll establish a new baseline due to those medicines. And then after that is when they'll enter the placebo-controlled period comparing to lorundrostat. So we really don't expect that full placebo effect you were talking about to be manifest. Most of that will be in the run-in period. The run-in period is 3 weeks. And so it could be that there'd be a little residual effect, but I don't think it will change much from what we saw. And in the Target-HTN study using ABPM, our placebo effect was under 2 millimeters of mercury. So I think it will be in that under 5-millimeter mercury range for most likely, not the larger numbers that you quoted.

Very helpful. Another question. Earlier this week, a competitor anti-hypertensive drug recently got approved with its label having a black box warning, a REMS program and other notable safety warnings. Despite all of this and only having a 4-point treatment effect, the drug was approved in a seemingly broad population, just want to get your views on the KOL appetite for this drug given its benefit-risk profile and how this approval bodes for lorundrostat?

Yes, Mike, this is Jon. I think the introduction of any kind of new modalities is not a bad thing. We've seen an absence of innovation for a little over 20 years in this space. We know the unmet need with roughly 50% of the treated population not reaching their goals, which means that we need to have new approaches. As far as the KOL appetite for it, I think it's more broadly, we haven't really dug into the details around interest in Epros and Ten-Tan; the label was interesting, and that creates a bit of a challenge. But again, I think the unmet need is being addressed with new innovation. I think that's going to be valued by KOLs, certainly probably not in the first-line category. But for us, our focus has always been on how do we bring a targeted approach, how do we bring that toolkit forward for prescribers. So they can really identify those subjects that will have an enhanced response to lorundrostat. We're very confident in what we've seen to date as it relates to the safety and tolerability profile of lorundrostat. That's why we're doing the broader pivotal program that we're doing to fully characterize that. But again, I think we're on the cusp of a lot of innovation that's needed given where the unmet need exists in this space right now.

Got it. And one final question. Any color you can provide on OpEx guidance this year?

Mike, I'm sorry, OpEx guidance.

Yes, Mike, this is Adam. We haven't provided any guidance going forward on expenses. What we have said is that our cash runway brings us into 2026. We'll be running several clinical trials this year. So burn is expected to continue to ramp up.

Thanks so much.

Thank you. Our next question comes from the line of Greg Harrison at Bank of America. Please go ahead. Your line is open.

This is Mary Kate on for Greg. Thanks for taking our question. Looking at the top line data expected later this year, what are your expectations for the advanced top line readout? And maybe what would be a success for you here?

Yes, Mary Kate, this is Jon. It's challenging to predict future outcomes. If we reflect on the Target-HTN study, we observed an approximate 8 to 10-millimeter reduction in systolic blood pressure across the entire population. There was a more pronounced response from those taking a diuretic and notably, from individuals with higher BMI. We have designed both pivotal programs to manage risk, which suggests we might achieve a similar reduction of 8 to 10 millimeters of mercury. It's important to note that both Advance-HTN and Launch-HTN require diuretics as part of the treatment regimen. We've seen a greater response in patients using diuretics combined with lorundrostat, which is encouraging. Our extensive market research, involving primary care professionals and specialists, indicates that an 8 to 10-millimeter improvement in an uncontrolled or resistant patient population is highly significant. Currently, third or fourth-line agents typically only provide about a 5 to 6-millimeter reduction, as shown by extensive meta-analysis. This emphasizes why the 8 to 10-millimeter improvement is appealing to prescribers. If we can effectively identify patients who will respond well, such as those with obesity-related hypertension, we had observed a 12 to 16-millimeter improvement in Target-HTN, and we hope to replicate this in our current study. A key reason we are conducting Advance-HTN with a more structured approach, along with Launch-HTN's standardized background, is to accurately identify patients who are on the appropriate medication at the correct dosage, yet still remain uncontrolled and resistant. By integrating lorundrostat into this rigorous study, we aim to potentially confirm and enhance the findings from Target-HTN, specifically focusing on a population of specialists dealing with clear instances of uncontrolled and resistant hypertension without concerns regarding the appropriate dosage, adherence, or white-coat hypertension.

Great. Thank you.

Thank you. Our next question comes from the line of Seamus Fernandez at Guggenheim Securities. Please go ahead. Your line is open.

Great. Thanks for the question. So and congrats on all the progress. Just one of the questions that we're getting from investors is the importance and impact of GLP-1s specifically on the two things. Number one, the Flow trial is going to be presented at ACC and I think there's some enthusiasm within the, I guess, cardiology and endocrinology community for those results and its impact of 1 milligram of Semaglutide, on the outcomes in patients with limitations in disease there. Just wanted to know what your thoughts are on the impact of GLP-1s on both weight loss and in a CKD patient population. And then second question is really on the baseline patient characteristics in Advance-HTN, I assume that you've got a pretty good feel for what the baseline patient characteristics are shaping up to, but just hoping that you'll reveal the baseline patient characteristics prior to the publication? And maybe you could just share with us what you think are the most important measures that you'll be looking at in exploratory analyses. Thanks.

Yes, Seamus, thank you for the question. The GLP-1s, along with GLP-1, GIP, and GGGs, are showing compelling data related to weight loss. Additionally, we are eager to examine the complete dataset concerning their benefits for related health issues. It’s not surprising that weight loss can lead to improvements in overall cardiovascular, renal, and metabolic health. I’d like to have Dave add to this, based on the data we’ve seen, especially with tirzepatide in the past three to six months, there remains considerable residual risk that needs addressing. We believe that tackling this broader cardiovascular and renal risk will be multifaceted. Research over many years has shown that aldosterone plays a key role in hypertension, chronic kidney disease, heart failure, and heart disease. Thus, we see ASI, such as lorundrostat, as an important part of a comprehensive treatment strategy designed to minimize residual risk as much as possible. Dave, do you have any further insights you would like to share?

Thank you, Jon. I want to expand on that and then address your second question. We often receive this question, which is quite interesting. Weight loss is indeed important for reducing risk. Jon mentioned a trial that indicated a 20% reduction in major cardiovascular events, which translates from an 8% incident rate to 6.5%. That’s basically 8 out of 100 compared to 6.5 out of 100. However, in real-world terms, that’s just a 1.5% difference, and there's still over 6% of that rate that we can improve. Weight loss is just part of the equation. Jon pointed out the significance of a healthy lifestyle, including exercise and avoiding tobacco and alcohol. These factors must be considered together, and simply having a medication that promotes weight loss isn’t enough. We anticipate that people will approach this as a multifactorial treatment, incorporating lifestyle changes. In reality, there’s also an opportunity for other medications to work alongside this, which is evident in cardiovascular and renal metabolic scenarios where multiple medications are used together for improved outcomes. We believe our drug will be a crucial component of this approach and, regardless of weight loss, has the potential to reduce all cardiovascular risks. There’s a reason aldosterone-targeted therapies are effective in conditions like heart failure, and our drug represents a next-generation approach to that. I hope this gives you a clearer picture; it’s not simply an either/or situation, and we’re eager to discuss this further with companies focused on GLP-1s in the future. Regarding your second question about characteristics, I won’t delve deeply into that, but I can tell you that the demographic profile in the Target-HTN trial was quite favorable, with 40% being African-American and a roughly equal male and female split. We had about half of the participants on two drugs and the other half on three drugs. Our goal is to maintain those demographics, and currently, we see no reason why we wouldn’t achieve that based on our inclusion and exclusion criteria.

Great. And then if I could ask one follow-up. As the reduction in the baseline eGFR from 45 down to 30, can you maybe just talk a little bit more about the importance of that inclusion criteria?

Certainly. From a practical perspective, the trial sites we use are referral centers where primary care physicians direct patients with chronic kidney disease to more specialized facilities. As a result, we often see a higher concentration of individuals with GFRs under 45, indicating Stage 3b. It will be more efficient to include these patients in one arm of the trial rather than two separate arms. There might be a question regarding the importance of examining dose ranges since Part B mentioned it. One advantage of ensuring all participants are on an SGLT2 inhibitor is that it helps lower potassium levels. This is why our competitors, AstraZeneca and Boehringer Ingelheim, who are both focused on CKD trials, are exploring combination treatments. We intend to do the same. These practical adjustments—having all trial participants on an SGLT2 inhibitor and allowing eGFRs down to 30—will create a broader population, make recruitment more efficient, and provide the same important information regarding safety and efficacy of the combination.

Great. Thanks so much. Appreciate it guys.

Thank you. And our next question comes from the line of Mohit Bansal of Wells Fargo. Please go ahead. Your line is open.

Hey this is Adam on for Mohit. Thanks for taking our questions. My questions are for David, with regard to the OLE study. I'm trying to understand, firstly, in February a single-arm OLE you're pursuing, one that includes a treatment withdrawal sub-study. So I wanted to understand what you could ultimately kind of drop from that approach there. And then secondly, does the inclusion of CKD patients in the OLE give important around hyperkalemia risk? Or was this pursued for another reason?

Thank you for your questions. To address the first part regarding the randomized treatment withdrawal, the FDA requires us to conduct a randomized treatment withdrawal. This means that any participant in the open-label extension who is taking the active drug and has shown improvement in blood pressure will be randomly assigned to either continue on the drug or switch to a placebo. While the exact number of subjects is not specified, it will involve hundreds of participants. The goal is to evaluate what’s known as an on-off approach. They will start with a certain dosage of the drug, stop it, and then resume it to assess the reversibility and timing of effects. Our drug has a significant advantage with a half-life of approximately 10 to 12 hours, allowing us to quickly manage conditions like hyperkalemia and restore normal circadian rhythms. This study will provide valuable information, but it is also mandated by the FDA. Did that address your inquiry?

Yes. Thanks.

We are implementing a logistics plan that involves an open-label extension for CKD patients. We need to create an integrated safety database that includes every patient who has received at least one dose of the drug. Additionally, there will be a separate cohort analyzed within the trial. This will allow us to examine, for example, the risk of changes in potassium levels for patients whose eGFR started between 30 and 45. This information is crucial because experts at referral centers do not worry much about potassium; they are accustomed to managing it and focus primarily on lowering blood pressure. We will provide data for this specific group as well as for primary care doctors who may see patients with an eGFR of 60, who need to be cautious about potassium levels due to different management protocols. We will have solid control to present safety profiles for each subgroup, and we do not anticipate any warnings regarding high potassium. On the contrary, we expect to have a comprehensive set of data to inform our labeling.

Appreciate the detail.

Thank you. And there are no further questions in the queue at this time. So this concludes the question-and-answer session. And I'd like to turn the call back to Jon Congleton for the closing remarks.

Thank you, operator, and thank you, everyone, for joining us today. We're very excited about the progress we've made over the past year in advancing our clinical programs and remain enthusiastic about the upcoming milestones for the rest of the year and into 2024. We look forward to updating you as our pivotal program for lorundrostat continues to advance. With that, we'll close the call.

Thank you. This now concludes the conference. Thank you all very much for attending. You may now disconnect your lines.