Earnings Call Transcript - MLYS Q1 2025

Dan Ferry, Investor Relations

Thank you, operator. We'd like to welcome everyone joining us today for our first quarter 2025 conference call. Earlier this afternoon, we issued a press release providing our first quarter 2025 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 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 statements reflect our opinions only as of today, May 12, 2025, and as 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 Congleton, CEO

Thank you, Dan. Good afternoon, everyone, and welcome to our first quarter 2025 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 an overview of the business, then Dave will discuss our clinical programs and recent milestones, followed by Adam to review our first quarter financial results before we open up the call for your questions. This has been an exciting past few months for Mineralys as our team delivered on several clinical milestones to make significant progress across our entitlement pipeline. The most highly anticipated of these accomplishments was the simultaneous announcement of positive top line data from the pivotal trials Launch-HTN in Advance-HTN, which is understood in uncontrolled and resistant hypertension subjects. We were pleased to announce in March that both trials successfully achieved statistical significance and were clinically meaningful in efficacy endpoints and demonstrated a favorable safety and tolerability profile. Detailed results from the Advance-HTN trial were also published in the New England Journal of Medicine, and presented in a late-breaking presentation at the American Cardiology's ACC '25 meeting. The Launch-HTN data has been accepted for a late-breaking presentation at the European Society of Hypertension on May 24 with a planned future publication. Each of these exciting outcomes helps to underscore the strength of these clinical data and the potentially transformative nature of lorundrostat to help people achieve their blood pressure goal and potentially reduce their cardiovascular risk. The positive efficacy, safety, and tolerability data from these 2 pivotal trials, along with the data from our Target-HTN Phase II trial of lorundrostat are key elements of our planned new drug application to the FDA. We continue to believe that this aldosterone is not adequately addressed with currently available RAS directed therapeutics, including mineral corticoid receptor antagonists. These results we have seen with lorundrostat reinforce the need for a new Aldosterone-directed therapeutic approach. The Transform-HTN open-label extension trial is evaluating the safety and efficacy of lorundrostat long-term use and will be an important aspect of lorundrostat's profile and a critical component of our new drug application. We anticipate discussing the results from the Advance, Launch, Target, and Transform HTN trials as well as the Explore-CKD trial with the FDA at a pre-NDA meeting in the fourth quarter of 2025, during which we look forward to an NDA submission and potential approval of lorundrostat. We are very optimistic about the interest physicians have in lorundrostat's overall clinical profile based on the pivotal data, especially given the double-digit absolute reduction in systolic blood pressure. Supporting our excitement around the market opportunity for lorundrostat are the data we collected in a survey fielded in March, which evaluated the data from the Launch-HTN and Advance-HTN trials with cardiologists and primary care physicians. The results from that survey showed if lorundrostat is approved, 95% of the physicians are likely to prescribe lorundrostat broadly for hypertension and specifically in the third and fourth line position. This intent to prescribe is based on the healthcare professionals' interpretation of the efficacy data relative to what they currently have available for uncontrolled and resistant hypertension as well as lorundrostat's safety and tolerability profile. The overall results speak to the desire for innovative solutions that physicians want in their treatment armamentarium to address uncontrolled and resistant hypertension. Our two ongoing proof of concept trials address advanced chronic kidney disease, specifically those with uncontrolled hypertension as well as obstructive sleep apnea with nocturnal hypertension. These trials are designed to enhance and extend the lorundrostat profile in hypertension subjects with comorbid conditions, largely driven by inadequately controlled blood pressure and dysregulated aldosterone. We've made steady progress with both trials since the beginning of 2025 and anticipate announcing top line data from the Explore-CKD trial later this quarter. We're also pleased to announce the appointment of Eric Warren as Chief Commercial Officer. Eric brings approximately 30 years of experience in the pharmaceutical industry, during which he has developed a breadth of commercial and partnering expertise, focusing primarily on cardiometabolic and acute care medicine. He started his career as a pharmacist, then joined Merck & Company, where he went on to hold commercial positions of increasing responsibility for almost two decades. In addition, Eric has held commercial leadership roles at Sanofi and Nabriva and was most recently the Chief Commercial Officer of Therapeutics. As the Chief Commercial Officer of Mineralys, he will lead our commercial strategy as we prepare for the potential FDA approval of lorundrostat and support our partnering ambitions in the U.S. and ex U.S. markets. In March, we completed a public equity financing that raised gross proceeds of approximately $201.2 million before deducting fees and expenses. This financing contributed meaningfully to the strength of our balance sheet. Now to provide more color on our clinical pipeline and recent milestones, I'll turn the call over to Dave.

Dave Rodman, Chief Medical Officer

Thank you, Jon, and good afternoon, everybody. As Jon mentioned, our team has had an exciting few months with the advancement of our clinical programs. I'll start by summarizing the top line results of the pivotal Phase 3 Launch-HTN trial, which randomized 1,083 subjects in North America and Europe who had failed to achieve the U.S. guidelines specified blood pressure targets despite having been provided on multidrug antihypertensive regimen. The trial, which tested lorundrostat in a real-world clinical context, met its primary and secondary endpoints with highly statistically significant, clinically meaningful placebo-adjusted reduction installed blood pressure as well as in the observed change in blood pressure that is conventionally used by prescribing physicians to assess response to antihypertensive therapy. At week 6, the primary endpoint, the 50-milligram once daily lorundrostat arm demonstrated a 9.1-millimeter of mercury placebo-adjusted reduction in systolic blood pressure, and a 16.9 millimeter mercury reduction in observed systolic blood pressure. At week 12, the reduction in systolic BP was maintained, with the point estimate being greater than that observed at week 6, 11.7 millimeters of mercury and 19 millimeters of mercury for placebo-adjusted and observed changes, respectively. Reductions in blood pressure of this magnitude are linked to significant reductions in overall cardiovascular risk and the incidence of major adverse cardiovascular events. The Launch-HTN trial confirmed expected modest on-target increase in serum potassium that accompanies the therapeutic benefit in individuals with inadequately controlled hypertension as well as an overall safe and well-tolerated profile. The incidence of any potential measurement over 6 millimoles per liter in the Launch-HTN trial in the 50-milligram arm was 1.1% in active and 0.7% in placebo. The prespecified rate, excluding falsely elevated or factitious hyperkalemia, was comparable to placebo with the demonstrated incidences being 0.6% and 0.4%, respectively. While quantitative comparisons between different clinical trials are difficult, the incidence of moderate or severe hyperkalemia of approximately one-half of 1% compares quite favorably with most prior reports of mineralocorticoid receptor antagonist tested in a similar clinical context. The Launch-HTN global pivotal trial is the largest aldosterone synthase inhibitor trial reported to date and the benefit-risk profile compares quite favorably with previously reported smaller trials of the three other aldosterone synthase inhibitors that have been tested in hypertensive individuals. Now turning to the Advance-HTN trial. Here, we tested the effect of lorundrostat in the clinical context in hypertension intensive individuals who are the most refractory to current standard of care and often referred to hypertension specialists. The trial used highly rigorous criteria for enrollment and randomization designed to mirror best practice care provided in the most advanced hypertension referral centers, maximization of conventional best practice two and three drug treatment regimens along with active monitoring of compliance, were used to document and confirm the existence of uncontrolled or resistant hypertension. The results from the trial in the 50-milligram once-daily lorundrostat arm were highly statistically significant. The 7.9 millimeter mercury reduction in placebo-adjusted systolic blood pressure and 15.4 millimeter mercury reduction in observed systolic blood pressure measured by 24-hour ambulatory blood pressure were observed at the prespecified 12-week visit. Lorundrostat demonstrated a favorable safety and tolerability profile with modest on-target changes in serum potassium, sodium, and eGFR, and a low discontinuation rate. This trial was designed and conducted in partnership with the comprehensive hypertension center at the Cleveland Clinic and their C5 research team. Results were presented by the Co-Director of the Cleveland Clinic Hypertension Clinic, Dr. Lu Lasan, in a late-breaking session at the American College of Cardiology's ACC '25 meeting and published in the New England Journal of Medicine on May 8. As was reported in the New England Journal of Medicine paper, the Advance-HTN trial per protocol confirmed the incidence of hyperkalemia over 6 millimoles per liter in the 50-milligram arm was 2.1%. Given the high dose of olmesartan, which is a potent long-acting agent that also elevates serum potassium, we feel that this incidence of serum potassium greater than 6 millimoles per liter has an acceptable benefit-risk profile appropriate for use in these patients. Okay, now turning to our other programs, Explore-CKD and Explore-OSA Phase 2 proof-of-concept trials. Both of these trials are designed to provide data that augments the antihypertensive profile of lorundrostat by profiling its efficacy in these two special populations of hypertensive individuals. During the first quarter, we announced the completion of enrollment in the Explore-CKD Phase 2 trial. This trial evaluates the safety and efficacy of lorundrostat for treatment of hypertension in subjects with an eGFR from 30 to 90 and at least 200 milligrams of UACR despite receiving stable treatment with an ACE inhibitor or an ARB as well as an SGLT2 inhibitor. Hypertension and associated hypertensive nephropathy is a leading cause of kidney damage alone and in combination with other obesity-associated comorbidities. This is another area where unmet medical need exists as aldosterone synthase inhibition with lorundrostat has the potential for transformative benefit to patients. In this trial, the primary outcome measure is change in systolic blood pressure during a four-week treatment period relative to that seen in a four-week placebo treatment period in the same individuals. The key mechanism of kidney damage in hypertensive nephropathy is elevated blood pressure leading to glomerular hyperperfusion, scarring, and reduction of the number of glomeruli available to filter the blood. Changing proteinuria is being assessed in this trial as well. In contrast to CKD due to diabetes and metabolic syndrome, where proteinuria is a useful surrogate endpoint, individuals with predominant hypertensive nephropathy tend to have modest levels of proteinuria. Change in blood pressure, along with acute physiological reduction in eGFR, rather than changes in proteinuria, may be a more useful outcome measure for a Phase 2 trial in this population. In the first quarter of 2025, we announced initiation of the Explorer-OSA Phase 2 trial to evaluate the effect of lorundrostat in treatment of moderate to severe obstructive sleep apnea. Blood pressure increases significantly as arterial oxygenation falls during upper airway obstruction at night. By dosing lorundrostat at bedtime, we believe we will suppress the majority of aldosterone produced during sleep while maintaining 24-hour blood pressure control. Episodes of nocturnal hypertension are underdiagnosed and lack a demonstrated highly effective treatment. The current treatment armamentarium is limited to weight loss and the use of positive airway pressure. We believe that neither is sufficiently effective at minimizing the impact of OSA on major adverse clinical outcomes. In summary, we have now demonstrated the clinically meaningful benefit-risk profile of lorundrostat in individuals with aldosterone mediated hypertension. We are focused both on moving lorundrostat towards an NDA submission as well as exploring its use in prevalent comorbidities such as OSA and hypertensive nephropathy, for which normalizing aldosterone production may result in meaningful clinical benefits. I'll now turn the call over to Adam to review our financial results for the first quarter of 2025.

Adam Levy, CFO

Thank you, Dave. Good afternoon, everyone. Today, I will discuss portions of our first quarter 2025 financial results. Additional details can be found in our Form 10-Q which will be filed with the SEC today, May 12. We ended the quarter with cash, cash equivalents, and investments of $343 million as of March 31, 2025, compared to $198.2 million as of December 31, 2024. We believe that our current cash, cash equivalents, and investments will be sufficient to fund our planned clinical trials and regulatory activities as well as support corporate operations into 2027. R&D expenses for the quarter ended March 31, 2025, were $37.9 million, compared to $30.8 million for the quarter ended March 31, 2024. The increase in R&D expenses was primarily due to increases of $4.8 million in preclinical costs and $2.8 million in compensation expense resulting from additions to headcount, increases in salaries and accrued bonuses and increased stock-based compensation. This increase was partially offset by $0.5 million in lower clinical supply, manufacturing, and regulatory costs. G&A expenses were $6.6 million for the quarter ended March 31, 2025, compared to $4.6 million for the quarter ended March 31, 2024. The increase in G&A expenses was primarily due to $1.2 million of compensation expense resulting from additions to headcount, increases in accrued bonuses, and increased stock-based compensation and $0.7 million in higher professional fees. Total other income net was $2.2 million for the quarter ended March 31, 2025, compared to $3.9 million for the quarter ended March 31, 2024. The decrease was primarily attributable to decreased interest earned on our investments in money market funds and U.S. treasuries. Net loss was $42.2 million for the quarter ended March 31, 2025, compared to $31.5 million for the quarter ended March 31, 2024. The increase was primarily attributable to the factors impacting the company's expenses described above. With that, I'll ask the operator to open the call for questions.

Operator, Operator

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Your first question comes from Michael DiFiore of Evercore. Your line is already open.

Michael DiFiore, Analyst

Hey, guys. Thanks for taking my question. Congrats on all the progress. Just two for me. With regards to the CKD trial, in the past, you said that these patients are so sick that physicians will readily accept some level of hyperkalemia if it means that lorundrostat will improve their blood pressure. So I guess the question is, will it be the max level of Grade 2 hyperkalemia that would be acceptable if lorundrostat were to yield a high single-digit placebo-adjusted SBP reduction? And then I have a follow-up.

Jon Congleton, CEO

Thank you, Mike, for the question. I’m not sure we’ve defined what would be an acceptable level, but what’s important is that we engage with specialists and advisers treating patients with hypertension and advanced kidney disease. They focus on both improving blood pressure and enhancing kidney function. Many of these specialists are nephrologists who are generally more accustomed to managing higher potassium levels in these patients. They have effective methods to handle that issue and may also adjust other background treatments. For instance, if they're achieving results with lorundrostat, they might lower the dosage of an ACE inhibitor or ARB. The main takeaway for us is that through export, we can clearly demonstrate the drug's safety and characterize its efficacy, ensuring that it benefits both blood pressure and kidney function, which is what those specialists primarily seek in treating their patients.

Michael DiFiore, Analyst

Got it. That's helpful. And my final question is like despite Baxdrostat's shorter half-life and lesser selectivity for aldosterone synthase inhibition relative to lorundrostat, it still showed a high single-digit percent SBP reduction over 14 weeks in their Phase 2 CKD trial. So I guess, should we expect similar efficacy and safety with lorundrostat?

Jon Congleton, CEO

Yeah, Mike, I think it's too hard to hedge what we expect to see. I think we would anticipate seeing a clinically meaningful reduction in BP. I think the profile for lorundrostat has been well characterized now with three successful studies from Target-HTN, Advance and Launch. But it's too early to hedge what we'd anticipate seeing; however, I would anticipate certainly a clinically meaningful reduction and then we'll see how the data evolves as far for those other hemodynamic characteristics.

Operator, Operator

Your next question comes from Richard Law of Goldman Sachs. Your line is already open.

Richard Law, Analyst

Great. Thank you so much. And congrats on the progress from me as well. So a couple of questions from me. Can you discuss how the overall, like the Explore-CKD study fits in the strategy for your submission with Launch and Advance? My understanding is that the study is important to provide clinical support for patients below EGFR 45, and it will be great to hear your latest thinking on this and if that has evolved. And I have a follow-up.

Jon Congleton, CEO

Yeah, Rich, thanks for the question. We're certainly excited about the benefit-risk profile that's emerged now with lorundrostat with the successful completion of the Advance study and the Launch study, seeing double-digit reduction in BP with a really acceptable safety tolerability profile. The submission of the NDA will be inclusive of all three of those studies, as I noted, as well as the Transform open-label extension, and Explore-CKD will be a component of that. Really, the biggest driver of Explore-CKD was related to informed blood pressure response in subjects with an EGFR down to 30 as well as going with a lower dose of 25 milligrams QD. And so it will be a component. I think it's going to be part of the totality of evidence of lorundrostat that will go into the NDA. I don't know if I could opine at this point as far as the specific language that will be included in the label from Explorer, but it's certainly part of the total package we have in the dialogue with the agency on.

Richard Law, Analyst

Great. Fantastic. We observed in the New England Journal publication that patients with potassium levels greater than six have a significantly lower average EGFR compared to the overall population. In your opinion, what is the typical EGFR for study populations in the EXPLORE CKD study compared to those included in a general hypertension study, like in your pivotal study program? Is the CKD study a suitable benchmark for the patient population, or does it represent a different group?

Jon Congleton, CEO

All right. Thanks, Rich. I appreciate that. Yeah, I think that's why we're doing the Explore-CKD study. We know the eGFR in the Launch study was higher than that in Advance. Advance was a more high-risk population, truly uncontrolled, truly confirmed resistant hypertension. They had a lower eGFR. I think you're alluding to what Luke shared at the ACC about the subjects above 6 had a mean of about 58. As far as how tight is the correlation between eGFR and risk and hyperkalemia, I think we need more data and more evidence, but it's part of why we're doing the Explore-CKD trial. Looking at subjects going down to an eGFR 30. We know they have the risk of potential more challenges in managing electrolytes. That's why we're testing the 25-milligram QD that we believe is an effective dose of lorundrostat. But as far as the correlation, I think that's something that will continue to unfold. Dave, if you've got some additional thoughts, please.

Dave Rodman, Chief Medical Officer

Rich, good question. When discussing studies like this, the outliers are often more significant than the averages. For the group without any significant incidents, the average was above 60, while it was slightly lower for those who experienced incidents. In this trial, we're focusing on individuals aged 30 to 45, particularly those on the lower end, to understand their outcomes. This isn't just about identifying problems but providing guidance for clinicians on whom to monitor closely and potentially prescribe a potassium binder if necessary. Alternatively, as Jon mentioned, adjusting the ARB to maintain blood pressure might be recommended. This is a special population profiling study, and we expect to examine outliers as thoroughly as we do the averages in this trial.

Richard Law, Analyst

Got it. Very helpful. And then just one last question. Similar to Explore-CKD, do you expect to include data from the Explore-OSA in your submission package?

Jon Congleton, CEO

I think, Rich, it's a fair question. I think it's too early to opine on that. We haven't guided on top line data. We're excited about that study to address a significant unmet need within that resistant hypertension OSA population, but it's too early to comment on whether that would be included in the discussions with the FDA.

Operator, Operator

Your next question comes from Seamus Fernandez of Guggenheim. Your line is already open.

Seamus Fernandez, Analyst

Great. Thank you for the question. So Jon, I think on the last discussion call, you mentioned that as many as 47,000 physicians could actually be appropriate for promotion in the uncontrolled and resistant hypertension opportunity. And then you also at ACC emphasized that the opportunity may sit a little bit more initially in the sort of fourth line hypertension opportunity. Can you just help us understand how does the sort of intersection of that broad physician base intersect with your view of the needs of a partner in that context? And what are you really looking for in the context of either a partner or something perhaps more strategic or an opportunity to actually start advancing the opportunity to promote on your own? Thanks.

Jon Congleton, CEO

Yeah. The 47,000, Rich, those that maybe hadn't heard before, we did a significant project about a year ago with IQVIA with about 1.6 million prescription claims within that. And when you narrowed down where does 50% of the prescribing come from for third line or later priming, there's about 47,000 doctors that account for about half of that prescribing and a significant portion of the influence on the other 50%. From our standpoint, there's a very efficient commercial model, particularly with the clinical profile that lorundrostat has now demonstrated to target the 47,000 prescribers and generate significant value. But as we've talked about in the past, partnering for us is inclusive of the U.S., but certainly global, looking for partners that can help optimize the opportunity for lorundrostat U.S. because we have no intentions of creating Mineralys commercial entities stand-alone outside of the United States. So finding a partner can help maximize that opportunity ex-U.S. but then really fully tap into the opportunity in the United States as well. And that would mean some level of coverage with the targeted physicians that we've talked about, but certainly coverage of those outside of those 47,000 that we target. And in fact, that target may be a little bit smaller as we think about the initial launch of lorundrostat; the fourth line is probably going to be the ideal place to go. That's where there's minimal benefit with existing treatments beyond aldosterone-directed therapeutics. We know spironolactone is thought to be valuable there, but it's greatly underutilized. I think our clinical program to date where we've targeted those subjects failing to get to goal on to more medications shows the value of an aldosterone-directed treatment that physicians are going to want to work, patients are going to want to take and persist with. So we think there's significant opportunity there. We think we could tap into a significant portion of those prescribers, but having a partner is clearly going to help us maximize the value of the asset in the United States.

Seamus Fernandez, Analyst

Great. And maybe just one follow-up. Can you just remind us what gating factors are to sort of finalizing and filing the NDA specifically?

Jon Congleton, CEO

Yeah, happy to do that. First and foremost, we're very pleased with the benefit-risk profile that we continue to see with this molecule. Now with the two active portions of the pivotal program completed. As we've stated before, the unlabeled extension is a critical aspect of that. If you think about when the last subjects enrolled in the Launch and Advance, that was at the end of October last year. We would anticipate also just completing the 52-week open-label by Q1 of next year. Now we don't need to have all of those subjects to enable the filing, but we need certainly a majority of those subjects through 52 weeks before we'd be comfortable with the NDA. But that's part of what we'll have a dialogue with the FDA in Q4, as we've discussed in the pre-IND meeting. It will be both the pivotal programs for Advance and Launch will be part of the target data, the Explore-CKD data, and then a portion of that open-label extension will be informative for that pre-NDA meeting that will then have better guidance for timing of an NDA submission.

Seamus Fernandez, Analyst

Great, thanks guys. And congrats.

Operator, Operator

Your next question comes from Tim Anderson of Bank of America. Your line is already open.