Earnings Call Transcript - VRDN Q2 2020

Operator, Operator

Greetings, and welcome to the miRagen Therapeutics Q2 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. I will now turn the conference over to Dan Ferry of LifeSci Advisors. Thank you. You may begin.

Dan Ferry, Investor Relations / Moderator

Thank you, operator. Good afternoon, everyone, and welcome to our second quarter 2020 conference call. Today, after the market close, we issued a press release providing our second quarter financial results and business updates. A replay of today's call will be available on the Investors section of our website approximately one hour after its completion. After our prepared remarks, we will open up 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. These statements are subject to risks and uncertainties that could cause actual results to differ. Please note that these forward-looking statements reflect our opinions only as of today. 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. Factors that could cause actual results or outcomes to differ materially from those expressed in or implied by such forward-looking statements are discussed in greater detail in our most recent filings on Form 10-K, and our other periodic reports on Forms 10-Q and 8-K filed with the SEC. I would now like to turn the call over to Dr. Bill Marshall, miRagen's President and Chief Executive Officer.

Bill Marshall, President and Chief Executive Officer

Thank you, Dan. Good afternoon, everyone, and thank you for joining us for our corporate update call for the second quarter 2020. I'm joined today by the rest of our leadership team Diana Escolar, our Chief Medical Officer; Jason Leverone, our Chief Financial Officer; and Lee Rauch, our Chief Operating Officer. First, I would like to express my gratitude and appreciation to the whole miRagen team for all that they are doing to help advance microRNA-targeted therapies as a potential new class of medicines. At miRagen, we believe in the potential of therapeutic microRNA targeting and in our ability to develop potentially transformative medicines for patients in need across a wide range of diseases. Before I hand the call over to Diana to provide a review of our programs, I would like to take this opportunity to talk about miRagen's progress and our expectations going forward. I'm pleased with our business performance on multiple fronts and encouraged by the continued commitment of our team to deliver results during these challenging times. As we enter the second half of the year, we believe we are on track to achieve many of our 2020 goals, which will help position the company for future growth and continued innovation. During the first half of 2020, we released clinical data for cobomarsen in adult T-cell leukemia/lymphoma or ATLL, which we believe supports the continued development in this indication. We are scheduled to meet with the FDA to present our data and discuss the development path for cobomarsen in ATLL and expect to receive their guidance before the end of the year. We also recently announced that cobomarsen received orphan drug designation from the FDA for the treatment of T-cell lymphoma, which includes ATLL and CTCL. Further to our progress with cobomarsen, despite the challenges that COVID-19 has caused to many clinical trials, we continue to treat and evaluate a majority of the CTCL patients in our Phase 2 SOLAR trial. Finally, in the second quarter, we also released preclinical data for our next-generation targeted miR-29 mimic, MRG-229, which is our product candidate for the potential treatment of pulmonary fibrosis. We have additional preclinical studies underway and anticipate announcing new data from this program before the end of the year. Before I turn the call over, I'm pleased to welcome Lee Rauch to miRagen as Chief Operating Officer. Lee joined us in June and brings deep experience across the business landscape in the biotech industry. We are excited to welcome Lee to the miRagen family and are enthusiastic about her future contributions as we continue to build miRagen as a leader in microRNA-targeting medicines. Now let me turn the call over to our Chief Medical Officer, Diana Escolar, to discuss our lead programs.

Diana Escolar, Chief Medical Officer

Thanks, Bill. It is my pleasure to join the call today. First, let me start with cobomarsen. As a reminder, we enrolled 37 patients in our Phase 2 study of cobomarsen called SOLAR. We plan to assess the rate of an objective response in the skin that is durable for four months, defined as a 50% or greater improvement in the severity of the patient's skin disease over the entire body as measured by the mSWAT score. In our last quarterly update, we had mentioned that we had seen an impact on clinical activities at some sites where the SOLAR trial is being conducted as a result of the COVID-19 pandemic. We're pleased to report today that the majority of the patients in the SOLAR trial have continued to receive uninterrupted treatment and evaluation for clinical response. And the impact of COVID-19 on this trial to-date has been limited to a small number of patients. As of July 17, 2020, 34 of the 37 CTCL patients are being followed for response and 32 have continued to receive uninterrupted treatment with cobomarsen. Although the impact has been limited to-date, the COVID-19 pandemic is ongoing and will likely continue to provide challenges to us, our clinicians and patients in the trial. As we prioritize safety, it is important to note that the collection of patient data for the assessment of the primary endpoint in this trial cannot be performed remotely. In-person patient visits at clinical trial sites are required to evaluate each patient's mSWAT and objective response for four consecutive months. Consequently, we will continue to assess the impact on patient dosing and disease monitoring that may require additional time on drug to allow for the more complete assessment of cobomarsen's activity. We look forward to providing additional updates on the status of the SOLAR trial later this year. As part of our broader strategy to assess the potential of cobomarsen to treat miR-155-elevated blood cancers, we're evaluating cobomarsen in a first-in-human Phase 1 expansion indication trial in patients with ATLL. Earlier in the year, we announced positive data from this trial, specifically in a subset of ATLL patients with residual disease after chemotherapy or other treatments. This included the observation that cobomarsen prolonged disease stabilization and median survival time in patients with aggressive ATLL that had persistent residual disease after chemotherapy and other therapies. The disease stabilization in these patients was marked by a decrease in biomarkers of tumor cell activation and proliferation, providing evidence of the biological mechanism of cobomarsen. We believe that the overall survival, biomarker and safety data we observed for cobomarsen in this trial provides a basis for a continued development in patients with aggressive ATLL, especially considering that historically, these patients have shown a very poor prognosis. The next step for this program is to finalize development plan for cobomarsen in ATLL based on discussions with the FDA. During the second quarter of 2020, we requested a meeting with the FDA to discuss the development path for cobomarsen in ATLL, and we're currently preparing for a meeting to take place before the end of 2020. Turning to fibrosis. We are developing multiple microRNA mimic compounds that replace microRNA-29, which is found at abnormally low levels in a number of pathological fibrotic conditions. microRNA-29 is believed to play an important role in the regulation of numerous processes that contribute to fibrosis. We believe that increasing the levels of microRNA-29 with our proprietary microRNA mimics could provide benefits to patients with pathological deposition of connective tissue in an organ or tissue. We are currently developing two distinct microRNA-29 mimics, remlarsen and MRG-229 for the treatment of various forms of pathological fibrosis. Today, I will focus on MRG-229 and the data we announced earlier this quarter. As a reminder, MRG-229 is being developed as a systemic anti-fibrotic for potential treatment of patients with idiopathic pulmonary fibrosis, or IPF. We believe that the efficacy and safety profile of MRG-229 positions it as a potential differentiated approach for IPF. This program is supported, in part, by a granting collaboration with the NIH and Yale University. In June, we announced additional preclinical broadened safety and in vitro human efficacy data for MRG-229, which suggests that miR-29 replacement might represent a novel paradigm in the treatment of IPF. These data were discussed by our Director of Research, Rusty Montgomery, on a KOL call held on June 23, 2020. In summary, our next-generation targeted miR-29 mimics demonstrated potent target pathway down-regulation in normal human lung fibroblast in vitro. The mimics regulated collagen secretion in pathological lung fibrosis and showed an antifibrotic effect in precision-cut lung slices. As we move from those in vitro studies and ex vivo studies, we've seen numerous times that miR-29 blocks fibrosis in bleomycin-induced pulmonary fibrosis with increased potency over remlarsen and can be dosed systemically by either intravenous or subcutaneous administration. In addition, toxicology studies have shown no adverse events on organ histology. Considering this data, we have already advanced MRG-229 into a nonhuman primate toxicology study and expect to report additional preclinical safety and efficacy data before the end of 2020. I want to say that we are grateful for the continued support of Yale and the NIH. As you can probably tell by our call in June and by our comments today, we are excited by this data and the planned advancement into nonhuman primate studies. I want to thank again our KOLs on the June call, which included Dr. Fernando Martinez of Weill Cornell Medicine; Teresa Barnes from the Coalition for Pulmonary Fibrosis; and Dr. Naftali Kaminski of the Yale School of Medicine. Each KOL brought a unique perspective to the call and offered insights into why our work on IPF is so important. We are also evaluating remlarsen in cutaneous fibrosis and ocular fibrotic indications. We are encouraged by our progress today and plan to provide additional updates during future calls. In summary, our pipeline continues to advance, and we see opportunities for each of our programs with important milestones set for the second half of the year. And while the COVID-19 pandemic has created some uncertainty in our ability to accurately guide on the timing of certain milestones, we remain confident in our ability to deliver important results from this program. With that, I will now turn the call over to Jason Leverone, our Chief Financial Officer, to provide a review of our financial results. Jason?

Jason Leverone, Chief Financial Officer

Thank you, Diana. Good afternoon, everyone. In today's press release, we reported our second quarter 2020 financial results. We ended the quarter with $30.6 million in cash and cash equivalents. This compared to $26.8 million of cash, cash equivalents and short-term investments at the end of last year. Net cash used in operating activities was $6.8 million for the quarter, which is down from $8.5 million last quarter and $7.2 million during the second quarter of last year. We believe that our current cash and cash equivalents will be sufficient to fund the company's operations through the third quarter of 2021. Revenue was $0.2 million for the quarter compared to $2.5 million for the second quarter of 2019. The decrease is primarily due to a decrease in contract revenue attributable to a prior license and collaboration agreement. Research and development expenses were $3.8 million for the quarter. This compared to $8.6 million for the second quarter of last year. The significant decrease in R&D expenses was expected and primarily due to decreases in clinical and manufacturing activities associated with the SOLAR trial as well as lower personnel-related costs during the quarter. General and administrative expenses were $2.7 million for the quarter, compared to $2.9 million for the second quarter of last year. The decrease in G&A expenses was due primarily to decreased personnel-related costs, which were partially offset by increases in legal costs during the quarter. Finally, our net loss was $6.4 million or $0.12 per share for the quarter, this compared to $8.9 million or $0.29 per share for the second quarter of last year. With that, I'll ask the operator to open the call for questions. Operator?

Operator, Operator

At this time, we will be conducting a question-and-answer session.

Jonathan Miller, Analyst (Evercore ISI)

Hi, thanks for taking the question. I have a couple here. First, it seems like the ATLL meeting with the FDA has maybe slipped a little bit again. I wonder if that's an actual delay, or are you still waiting for firm guidance on timing from the agency? Secondly, given that the majority of SOLAR patients have been able to get uninterrupted treatment, do you have any idea when we might be able to see data? I know pre-COVID we were expecting it this quarter, but that's been interrupted. Do you have a sense of how many patients have had interrupted data collection and what that means for overall data timing? And then lastly, of the multiple partner-ready programs that you've expressed an interest in developing or out-licensing or collaborating on, can you say which you think has gotten the most interest from the rest of the industry?

Bill Marshall, President and Chief Executive Officer

Yes. Thanks, Jon, appreciate the questions today. So on the ATLL front, what we've indicated is that we do have a meeting scheduled with the agency. We're not guiding on the exact timing of that meeting. The other factors we're taking into account are the anticipated time to receive the feedback and the time to digest it and then be able to discuss it in greater detail. So we're guiding that it will take place before the end of the year; our last guidance was that we anticipated getting the meeting scheduled and having it occur, so we are on track for what we expected. On the SOLAR front, again, we have about 32 patients that have received uninterrupted doses. There are 34 of the 37 that we originally enrolled that remain on the study. The factors at play here are the continuity of the dosing and the ability to measure the mSWAT scores. For the interim analysis, we want to collect the highest-quality information from the data we are getting from these patients. Based on either some patients being affected by a break in dosing or because of the inability to have contiguous mSWAT measurements, we are monitoring this at this point, and we'll provide further guidance as soon as possible on when we anticipate it. Overall, we were quite concerned originally about the effects of COVID-19. We're happy to report that there are some effects, but our goal is to ensure that we have an optimal level of quality data from the interim analysis to enable clear decision-making. On the last front, in terms of partnerable assets and outreach, we've had discussions around a variety of different programs. Our most recent work we've been publishing has been around the MRG-110 program, which is indicated in new vessel growth particularly in the setting of cardiovascular disease. We have ongoing discussions in that regard. We also have discussions ongoing in the area of remlarsen for more local and topical administration, whether that would be dermal scarring or ocular fibrosis. Finally, we have had discussions on earlier-stage pipeline programs. We'll continue to work on those and provide further guidance as we have more solid direction on those programs, but there are multiple different assets that we're having discussions on at this point.

Jonathan Miller, Analyst (Evercore ISI)

Okay. Thank you very much.

Operator, Operator

Our next question is from Liana Moussatos from Wedbush Securities.

Andreas Argyrides, Analyst (Wedbush Securities)

Good afternoon, this is Andreas for Liana. I wanted to get your thoughts regarding cobomarsen and the communications that you're going to have with the FDA. Are those discussions around any potential indication expansions into the other T-cell leukemias or B-cell malignancies? Have you given any thought to that?

Bill Marshall, President and Chief Executive Officer

Hey, sure. Thanks, Andreas. The discussions are really focused on the development pathway for cobomarsen in adult T-cell leukemia/lymphoma. The focus is a Type C meeting to obtain guidance from the FDA on what will be required for additional clinical analysis of cobomarsen. From a broader perspective, we are focused on additional opportunities for cobomarsen, including CTCL. We've also reported previously some interesting data in DLBCL, but we are taking this stepwise to understand the path towards potential approvals and different potential indications. Our broader goal is to seek broader indications in miR-155 elevated blood cancers. This meeting is really focused on ATLL itself.

Andreas Argyrides, Analyst (Wedbush Securities)

Okay, thanks. I'll step back in the queue. Thank you.

Operator, Operator

Our next question comes from Trevor Allred with Oppenheimer. Please go ahead.

Trevor Allred, Analyst (Oppenheimer)

Hi, thanks for taking the question. Can you remind us of where the clinical trial sites are for SOLAR? And what difficulties do you anticipate encountering in those site visits? Thanks.

Bill Marshall, President and Chief Executive Officer

Thanks, Trevor. The SOLAR trial is a global trial; we have sites both in Europe and the United States and have seen effects at sites in both geographies. Principally, the effects have been centers reorienting resources in the fight against COVID or restricting the ability to monitor the endpoints in the study. We've been pleased that patients have been able to access dosing, and we had previously set up an in-home infusion service to continue dosing. There are different local geographic surges of COVID that have different effects. Overall, we've been pleased with progress on the study.

Trevor Allred, Analyst (Oppenheimer)

Got it. Thanks.

Operator, Operator

We have reached the end of our question-and-answer session. I would like to turn the call back over to Bill Marshall for closing remarks.

Bill Marshall, President and Chief Executive Officer

Great. We want to thank everyone for taking the time this afternoon for an update on miRagen. I also want to thank our employees again, our collaborators and our advisers for their dedication to our mission as we work to bring transformative new medicines to patients. Lastly, I want to acknowledge the health care workers and hospitals across the country and the other frontline workers for their selfless contributions in the ongoing battle with COVID-19. Everyone, please stay safe. Thank you, and goodbye.

Operator, Operator

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