Rain Enhancement Technologies Holdco, Inc. Q3 FY2021 Earnings Call

Thank you for standing by, and welcome to the Rain Therapeutics Third Quarter twenty twenty one Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers presentation, there'll be a question-and answer-session. As reminder, today's conference call is being recorded. I’d now like to turn the conference to the host, Mr. Glenn Garmont. Sir, you may begin.

Thank you, operator. And good afternoon, everyone. With me today on the phone are Avanish Vellanki, Chief Executive Officer; Robert Doebele, Chief Scientific Officer; Richard Bryce, Chief Medical Officer; and Nelson Cabatuan, Senior Vice President of Finance. During today's call, Avanish will provide an overall business update, Richard will provide an update on Rain’s clinical program, Bob will provide an update on research efforts and Nelson will review the financials. Before we begin, I'd like to remind you that statements made during this conference call that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of nineteen ninety five. These forward-looking statements are based upon Rain's current expectations and involve assumptions that may never materialize or may prove to be incorrect. Actual results could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties as described in Rain's quarterly report on Form 10-Q for the quarter ended March thirty one, twenty twenty one and subsequent filings with the Securities and Exchange Commission. All forward-looking statements made during this conference call are based on management's assumptions and estimates as of today, November tenth. Rain undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after today, except as required by law. With that, it's my pleasure to turn the call over to Avanish Vellanki, CEO of Rain. Avanish?

Thank you, Bob, and thanks to everyone for joining us for our third quarter earnings call. As a standard practice for these earnings calls, we will keep it brief and will address the details during the Q&A session. In the most recent quarter and since the end of the third quarter, Rain has continued to advance the milademetan and RAD52 programs. We will refer to milademetan as mila where appropriate. Firstly, our Phase III trial, the MANTRA study for mila in patients with liposarcoma, is progressing as planned, with sites being activated regularly around the globe. As this is a potential registration enabling study, there is no interim read, and we anticipate final data in 2023. Richard will provide further details on this. Secondly, we expect to dose our first patient in the Phase II tumor-agnostic MANTRA-2 study soon and will announce it when it happens. This trial assesses mila in a tumor-agnostic signal-finding basket study involving sixty-five patients in the U.S. with solid tumors showing a certain level of MDM2 gene amplification. We plan to provide an interim update for MANTRA-2 in the second half of next year. Thirdly, we announced a shift in our clinical strategy for our third planned study towards Merkel cell carcinoma, replacing the previously planned study in intimal sarcoma. This new trial will be named MANTRA-3. The decision to prioritize Merkel cell is based on three main reasons: new non-clinical data from the Dana-Farber Cancer Institute showing strong efficacy for milademetan, existing indications of MDM2 inhibition activity in Merkel cell from other studies, and the larger market potential for Merkel cell compared to intimal sarcoma, which ensures better use of our financial resources. With the larger population for Merkel cell, quicker patient recruitment rates, and a shorter trial duration, the new study will not significantly impact Rain’s cash runway. We expect MANTRA-3 to enroll thirty-four patients in the U.S. in second line or later settings among those who have relapsed from checkpoint inhibitors, which are the standard frontline treatment. We aim to commence the study in the middle of 2022. Finally, we held an R&D day yesterday, during which we hosted several prominent key opinion leaders from various treatment specialties where MDM2 inhibition could be valuable. Speakers included Dr. Wafik El-Deiry from Brown University, known for his discovery of P21, as well as doctors Grounded and David Hong from Memorial Hermann, MD Anderson Cancer Centers, who will be involved in our first two clinical studies for mila, alongside doctors Glen Hena and James Dicaprio from Dana-Farber with their expertise in Merkel cell carcinoma. Additionally, we had presentations from doctors and Sylvia Stacchiotti who highlighted other clinical opportunities for mila. Our strategy remains focused on targeting the most sensitive MDM2 dependent tumor types first, followed by combination strategies to enhance outcomes in other P53 wild-type cancers. We are very optimistic about the potential for mila to make a significant impact on patient care. Lastly, the early preclinical work surrounding RAD52 targeting programs is progressing, and we expect to provide updates at future scientific symposiums as necessary. Now, I would like to turn it over to our Chief Medical Officer, Dr. Richard Bryce.

Thank you, Avanish. Good afternoon, everyone. Following our last earnings call in August, where we discussed the initiation of our pivotal Phase III MANTRA study in Dedifferentiated Liposarcoma, we are moving forward with site activation across the U.S. and Europe. We expect to have around thirty sites operational by year-end, with the remaining forty-five sites in Europe, North America, and certain Asia Pacific regions coming online before the end of the first quarter of twenty twenty-two. Patient enrollments are proceeding as planned. I'm excited to share that our second trial, the MANTRA-2 basket study, is now active and open for enrollment. We will announce separately when the first patient is dosed. We anticipate that the MANTRA-2 study will be available at approximately ten sites across the United States, with additional sites as needed from Tempus and Caris referrals. This study is open to patients who are P53 wild type and MDM3 amplified, with a minimum gene copy number of twelve or a six-fold increase based on local testing methods. This threshold is significant because high gene amplification at these levels has been linked to the exclusion of P53 mutations, thus confirming MDM2 as the oncogenic driver in these tumors. Alongside our in-house genomic screening at the selected U.S. sites, we have partnered with Tempus and Caris for patient referrals that meet these specific criteria. We aim to enroll sixty-five patients from various solid tumors, and the treatment protocol follows the same regimen as the registrational MANTRA study, consisting of two sixty-milligram doses administered orally once daily for three consecutive days out of fourteen. We expect to conduct an interim analysis and data readout in the latter half of next year. As Avanish pointed out, we have deprioritized our internal sarcoma program to focus on the opportunity in Merkel cell carcinoma in the second line after immune checkpoint inhibitor therapy. In twenty twenty, the incidence of this aggressive skin cancer in the U.S. was around three thousand cases and is increasing annually. Between twenty and twenty fourteen, there was a notable ninety-five percent rise in reported cases, compared to fifty-seven percent for melanoma and fifteen percent for all solid tumors. With the aging baby boomer population, the U.S. incidence of Merkel cell carcinoma is projected to reach three thousand three hundred cases by twenty twenty-five. The current standard care in the U.S. for patients with advanced or recurrent Merkel cell carcinoma is with [indiscernible]. However, there is no established therapy for patients who progress on or are resistant to these immune checkpoint inhibitors, nor for those ineligible for immunotherapy. Response rates and duration of response to chemotherapy in this context are notably low, with no survival benefits documented from treatments. We expect to initiate our Phase II study, the MANTRA-3 trial, in mid twenty twenty. In summary, for MANTRA, we have teamed up with top liposarcoma sites throughout the U.S., Europe, and internationally, all known for strong enrollment records in liposarcoma trials. For the MANTRA-2 basket study, we have selected leading academic sites equipped with easy access to genomic testing and MDM2 copy number reporting, alongside a substantial potentially eligible patient base, which should facilitate quick enrollment once all trial sites are operational. For MANTRA-3, we have brought in key National and International experts in Merkel cell carcinoma to assist in developing our MANTRA-3 protocol and strategy for this indication. Recently, we convened an advisory board featuring esteemed thought leaders in Merkel cell carcinoma treatment, who expressed their enthusiasm for the milademetan investigation in this area. Our dedicated Rain team is committed to fostering personal relationships with all our investigational sites globally, and our selection of experienced oncology CROs, equally dedicated to our mission, will aid in advancing milademetan as swiftly as possible for patient benefit. Now, I will turn it over to our Chief Scientific Officer, Dr. Bob Doebele. Bob?

Thanks, Richard, and good afternoon, everyone. Since acquiring milademetan about a year ago, Rain’s team has been working hard to identify and validate the most relevant cancer populations for this MDM2 inhibitor. Our efforts recently culminated in the presentation of several abstracts at various conferences, including the AACR-NCI-EORTC Virtual International Conference on Molecular Targets and Cancer Therapeutics, which showcased significant preclinical collaborations with researchers globally. We also hosted our first Rain research and development day yesterday, featuring clinical and research experts who highlighted numerous opportunities for using milademetan in various tumor studies where MDM2 plays a crucial role. Now, let's discuss our conference presentations. Dr. Vjaya Tirunagaru, Senior Vice President and Head of Research at Rain, presented preclinical and clinical data supporting the use of milademetan in patients with MDM2 amplification and wild type p53. Preclinical models, including cancer cell lines, patient-derived organoids, and patient-derived graphs from a variety of solid tumor types, demonstrated strong anti-tumor activity. We also provided rationale for our MDM2 amplification of at least twelve copies via a mutual exclusivity analysis related to p53 mutations from over forty thousand solid tumor patients sourced from the AACR Database. Finally, clinical data from the Phase I study of milademetan showed three patients with breast cancer, sarcoma, and small cell lung cancer who had MDM2 amplification above the twelve copy number threshold, all experiencing tumor regression, with two of the three patients showing a partial response. These promising data support the rationale for the MANTRA-2 basket trial. Also presented at the Triple conference was work from Dr. Dicaprio's lab at the Dana-Farber Cancer Institute, which indicated that the polyomavirus causes Merkel cell carcinoma in up to eighty percent of cases and results in the overexpression of MDM2, correlating with wild type p53 status. Dr. Dicaprio’s presentation underscored the effectiveness of milademetan in various in vitro and in vivo virus-positive Merkel cell carcinoma models. This activity was dependent on p53, as milademetan induced gene expression of critical p53 targets like p21 and PUMA. The presentation also indicated that knocking out p53 enhanced the effects of milademetan, forming a foundation for prioritizing a Phase II trial for patients with Merkel cell carcinoma. During our R&D day, Dr. James Dicaprio presented additional new patient-derived data from milademetan, demonstrating compelling antitumor activity and tumor regression not previously shown in his work at Dana-Farber. Meanwhile, Dr. Glen Hana provided an overview of the treatment landscape for Merkel cell carcinoma, emphasizing the unmet need in the second line setting following checkpoint inhibitor treatment, given that many patients do not respond to these therapies in the front line setting. MDM2 inhibition is currently the only targeted strategy being evaluated in Merkel cell carcinoma, and there was notable enthusiasm surrounding its potential. Rain’s R&D also showcased various clinical and research experts who highlighted opportunities for milademetan across multiple cancer types. Dr. Wafik El-Dery, Director of the Brown Cancers Center, discussed the MDM2-p53 axis and the importance of restoring wild type p53 activity as an anti-cancer strategy. He emphasized the distinct strategies of restoring p53 activities with milademetan versus targeting p53 mutants. He also pointed out the potential for combining MDM2 inhibitors with immunotherapy given the association of MDM2 amplification with hyper progression on checkpoint inhibitors. Additional speakers from MD Anderson and the National Cancer Institute highlighted the rationale behind our current planned strategies for milademetan and various other opportunities being considered by Rain. These presentations support Rain’s clinical strategy and focus on differentiated liposarcoma and MDM2 amplified agnostic tumors, as well as Merkel cell carcinoma. They also lay the groundwork for exploring clinical trials in other indications like breast cancer and larger cancer populations. Now, let me turn it over to Nelson to review our financial results. Nelson?

Thank you, Bob. Good afternoon everyone. I'm happy to give you an update on our financial results for the third quarter of twenty twenty-one. I encourage you to check our Form 10-Q filed today for more details. In the third quarter of twenty twenty-one, we reported a net loss of eighteen point four million dollars compared to a net loss of ten point four million dollars in the same period last year. Research and development expenses were fifteen point three million dollars this quarter, up from seven point nine million dollars a year ago. This increase was mainly due to milestone fees associated with our Phase III clinical trial and ongoing R&D costs for our lead candidate, as well as personnel expenses. General and administrative expenses were three point two million dollars for the third quarter of twenty twenty-one, compared to six hundred thousand dollars for the third quarter of twenty twenty. This rise was largely due to various increases in third-party G&A expenses, including legal, consulting, accounting, audit fees, and personnel costs. As of September thirty, twenty twenty-one, Rain had one hundred and fifty point one million dollars in cash, cash equivalents, and short-term investments, which will help to fund our research and development pipeline. Additionally, as of the same date, Rain had approximately twenty-six point five million shares of common stock outstanding. We still anticipate our full-year operating spend for twenty twenty-one to be around fifty million dollars to sixty million dollars, with a projected year-end balance of about one hundred thirty-seven million dollars to one hundred forty-seven million dollars in cash, cash equivalents, and short-term investments. With that, I will now turn the call back to Avanish.

Thanks, Nelson. Let me now turn it back to the operator for the Q&A session.

Thank you. Our first question comes from Yigal Nochomovitz of Citigroup. Your line is open.

Great. Hi, Avanish and team. Thanks for taking my question. I have two inquiries. First, could you provide more details about the recent MANTRA-2 data from Dana-Farber regarding the Phase II study in Merkel cell carcinoma? Second, I have a somewhat unusual question about the basket trial: what occurs if multiple biopsies are taken and the originating MDM2 copy numbers vary, with some below and others above the threshold of twelve? Thanks.

Thank you, Yigal. I appreciate the question. Let me turn the first question over to Bob and ask Richard to chime in on the second question. Bob?

Hi, Yigal, thanks for the question. So, in terms of the compelling data, I think the biology of Merkel cell has been well understood for quite some time now in terms of the virus positive patients showing dependency on MDM2 to rid cancer cells of p53. I think what we found compelling is for the first time we were able to demonstrate in multiple preclinical models activity of milademetan that was potent in both cell line and patient derived models, including data that showed a significant tumor regression in patient derived model. And so I think the rationale there is to move forward based on the biology and the unmet need in those Merkel cell patients.

And the second question related to potential sampling in terms of MDM2 copy number in the basket study. So we will accept local testing as a criteria for entry. And so, any sample that meets the criteria and above the sample criteria in MDM2 copy number twelve or greater will be accepted. We do have retrospective testing at a central lab which we've discussed before. And so all patients entering will have their tumor tested and that will provide how much heterogeneity across the sites. And to some extent we will address potentially the heterogeneity that may be seen within sites.

Just that. Our belief is that like a lot of oncogenic drivers, this is likely an early event and the same way that p53 mutations are very early in the cancer; those tend to be trunk mutations and thus not in quite as much heterogeneous non-relevant mutations in cancer.

Great. Thank you.

Thank you. Our next question comes from Michael Schmidt of Guggenheim Securities. Your line is open.

Hi. Good afternoon. This is indiscernible on for Michael. Thanks for taking our questions. We had a question on the MANTRA-2 basket study. Based on the observation of the MDM2 application across different tumor types, how should we consider the mix of tumor types in this study? Additionally, what would be your registration strategy? Would you focus on specific tumor types or consider registration with a basket? Thank you.

Thanks for the question. Let me turn it over to Richard.

Thank you for the question. The study is open to all tumor types and is not limited to any specific pathology at this time. While certain tumor types may be more common, as indicated by the analysis of available data, there is no overall limit on milademetan. We anticipate that the top five tumor types will likely gain the most benefit from this study. Currently, our strategy is tumor agnostic, meaning we expect to observe responses across all tumor types regardless of the disease site. This approach aligns with the biological characteristics of oncogenic tumor types in these conditions. As with any study, this is a signal-seeking endeavor. It is a basket study, which allows us to continuously monitor responses across various tumor types and make decisions based on that data. For now, we are taking a purely tumor agnostic approach and will evaluate how things develop.

And just to add color there. So in terms of the top few tumor types would be bladder, breast and melanoma; we should expect to yield the greatest number of patients with that copy number of twelve or greater.

Got it. That’s super helpful.

There is anecdotal data from the Phase I trial of milademetan with high levels of MDM2 amplification showing tumor regression in three different and very unique tumor types: small cell lung cancer, breast cancer and sarcoma – some evidence already.

Got it That's super helpful. Thank you, guys.

Our next question comes from Joe Catanzaro of Piper Sandler. Your line is open.

Thank you for taking my question. I have a quick one. It may seem a bit naive, but I understand that MDM2 amplification is commonly recognized. Do you have an idea of the average copy number amplification that is observed? Does it often reach the point of being mutually exclusive with p53? Additionally, are there any plans within the MANTRA study to look back at that? Thank you.

Thanks, Joe. I hand it over to Bob.

Yes, we do have the average copy numbers for well-differentiated liposarcoma, which is approximately ten copies, while dedifferentiated liposarcoma has closer to seventeen copies per cell, indicating a significant level of amplification in both groups. Regarding mutual exclusivity, we observe this pattern across various tumor types that show MDM2 dependency. Additionally, well-differentiated liposarcoma exhibits a p53 mutation rate of only about two percent, which is very low compared to the overall cancer rate of around fifty percent for p53 mutations. This relationship appears consistent across multiple populations.

Sorry the second part of the question was in terms of retrospective look, yes, we are going to review tumor samples and look at MDM2 copy number, p53 status and other biomarkers as well in the MANTRA study.

Okay. Got it. And if I could just maybe ask a real quick follow-up. Appreciating that you already have a pretty broad clinical development strategy, but what needs to happen to commit to exploring that positive signal that you've seen preclinically and take that into the clinic?

So great question, Joe. I'll take that one. So, we are considering the GATA3 continuously and we will articulate when we make a decision as to whether a complete sponsored study or whether another manner of evaluation is going to be most appropriate for Rain. We're certainly taking into consideration the totality of our financial resources and the cash runway that we have to bear. And we want to direct those resources towards the highest probability tumor types and those tumor types where we think that there's much clearer pathway on a registration path. So, we are continuing to do work there? Continuing to do a lot of work on mechanism as to what's going on with the GATA3 frameshift mutations and the sensitivity to MDM2 inhibition. And as we make that progress, we'll keep the street updated.

Okay. Got it. That's clear. Thanks for taking my question.

Thank you.

Thank you. Our next question comes from Graig Suvannavejh of Goldman Sachs. Your line is open.

Hey. Good afternoon. So clearly you prioritized this MANTRA-3 studies partly because of the opportunity, but can you just help us frame that a little more specifically, how you think about the size of that opportunity?

Well, happy to take that one. So, again, from the population statistics around three thousand patients, those are twenty twenty statistics, which I did mention and this is a population that's growing far more quickly than the overall solid tumor population, given the primary demographic. Eighty percent of those patients are going to be MDM2 dependent based on their viral positivity, and about a third of those patients are going to be amenable to systemic therapy on an annual basis. We also know that from prior years of diagnosis, many of those patients with local disease are going to become metastatic. We also derive a patient population of systemic therapies per year of between one thousand to fifteen hundred patients.

Okay, that's really helpful. I know we just started the study, but how would you frame the clinical criteria regarding the types of tumors and study lines for the MANTRA-2 trial?

Sure. I’ll turn it over to Bob.

Yes, thanks for the question, Graig. So the clinical bar is quite low. When discussing this indication with KOLs from across the country, there is really no second line standard following first line pembrolizumab or nivolumab, so both are checkpoint inhibitor therapies. The second line preferred therapy is a clinical trial. And after that, a distant option is chemotherapy, which although it has decent response rates has incredibly short durability, perhaps as low as in the range of three months. So the feedback from the Merkel cell KOL community is that response rates in the range of fifteen percent to twenty percent and durability as low as four months may be meaningful in this patient population with limited options.

Was your question with regards to MANTRA-3 or MANTRA-2?

MANTRA-2.

Sorry about that, Graig. For MANTRA-2, I think we don't fully know what the FDA would consider approvable for an agnostic indication. There have only been three to date, and pembrolizumab in MFI high patients. I think the feeling is that for patients who have exhausted most other cancer therapies, response rates in the range of forty percent with durability in the range of five to six months would probably be meaningful for patients who exhausted standard of care therapies, which is the criteria for our patients, but there aren't a lot of examples to be honest in terms of precedent.

Yes, just one quick follow-up. Given that the interim readout will be about twelve months from now, do we expect most response rates, or will you be in a position at that point, considering the pace of enrollments, to provide at least early indicators of the durability of responses?

Yes, Richard will take that one.

Sure. So what we plan to do actually is have a meaningful follow-up. So we can quote not just response rates but the duration of response. And the likelihood is that we'll wait till we have about four months worth of follow-up data so that our responses are meaningful in terms of clinical durability.

That’s helpful. Thank you.

I'm showing no questions at this time. I'd like to turn the call back over to Avanish Vellanki for any closing remarks.

Thank you. And thanks everyone for dialing in today. We look forward to giving you an update on our next quarterly results.

Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.