Mineralys Therapeutics, Inc. (NASDAQ:MLYS) Q3 2023 Earnings Call Transcript

Mineralys Therapeutics, Inc. (NASDAQ:MLYS) Q3 2023 Earnings Call Transcript November 12, 2023

Operator: Good afternoon, ladies and gentlemen, and welcome to the Mineralys Therapeutics Third Quarter 2023 Conference Call. [Operator Instructions]. It is now my pleasure to introduce your host, Dan Ferry, of LifeSci Advisors. Please go ahead.

Dan Ferry: Thank you, operator. Good afternoon, everyone, and welcome to our third quarter 2023 conference call. Today, after the market closed, we issued a press release providing our third quarter 2023 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. 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, November 7, 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?

Jon Congleton: Thank you, Dan. Good afternoon, everyone, and welcome to our Third Quarter 2023 Financial Results and Corporate Update Conference Call. I’m joined today by Adam Levy, our Chief Financial Officer and Chief Business Officer; and Dr. David Rodman, our Chief Medical Officer. I’ll begin with a brief overview of the business and recent milestones followed by David who will discuss our clinical programs, and then Adam will review our third quarter financial results before we open up the call for your questions. It was only 12 months ago when we first announced the positive top line results from our Phase 2 Target-HTN trial of lorundrostat in individuals with uncontrolled or resistant hypertension. We have since published additional data from the full analysis of the trial, which provided valuable insights supporting the potential use of lorundrostat to treat uncontrolled or resistant hypertension.

Most recently, we announced the full data from this trial were published by JAMA and last week, we presented a new analysis, further providing additional data showing obesity was predictive of an enhanced response to lorundrostat across the continuum of BMI in a late breaking poster presented at ASN’s Kidney Week 2023. The data in these recent publications support our strategy of developing lorundrostat as a targeted treatment for hypertension and CKD. Now let me provide some highlights from each of our clinical programs, and Dave will cover further details in a moment. Starting with Advanced-HTN, which is one of the most rigorous hypertension trials ever undertaken. The trial is designed to allow us to demonstrate the value of lorundrostat when added to standardized background medication in confirmed, uncontrolled, or resistant hypertension subjects.

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 access via payers. Based on the addition of a washout period at the end of advanced age 10, which David will discuss and current enrollment trends, we are changing our guidance for top line data from the first half of 2024 to the second half of 2024. We’ve learned a great deal over the past several months and continue to identify ways to optimize this trial, both in speed of execution and in selection of the right subjects. Launch-HTN Phase III trial is the second of the two trials in our pivotal program for hypertension. We remain on track to initiate this trial by the end of 2023.

The objective of this trial is to model the real world setting of lorundrostat when added to existing treatment for uncontrolled or resistant hypertension in the primary care setting. We recently finalized the trial’s primary endpoint to be automated office blood pressure. The same primary endpoint we used to Target-HTN trial, which demonstrated proof of concept for lorundrostat in hypertension. Launch-HTN is anticipated to enroll up to approximately 1000 adult subjects, and we now expect to be able to share top line results in the second half of 2025. Explore-CKD is our two part Phase 2 clinical trial for lorundrostat as a potential therapy to treat the hypertension patients with stage 2 to 3B CKD. We expect to initiate the trial by the end of 2023 with top line data available in Q4 2024 to Q1 2025.

Details of this trial’s design were all recently modified, which includes a few updates from the proposed design mentioned on our last call, which David will discuss in detail in a moment. Lastly, the ongoing open label extension trial is designed to allow subjects from our hypertension and CKD trials to continue to receive lorundrostat, which will provide long term safety and efficacy data on lorundrostat. We’re also pleased to add two new independent members to the Mineralys Board of Directors. Kathy Karidis and Glenn Sblendorio both bring a depth of experience, knowledge, and expertise that will be beneficial to the company as we continue on our path to bring targeted treatment to patients with hypertension, CKD and beyond. 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 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?

David Rodman: Thank you, Jon, and good afternoon, everyone. Today, I’ll provide an update on the pivotal clinical program for lorundrostat, and then I’ll give a summary overview of the plan Phase 2 trial of lorundrostat for chronic kidney disease that we’ve named Explore-CKD. The ongoing Advanced-HTN trial continues to enroll subjects. As a reminder, this trial which we designed in partnership with the Cleveland Clinic is a randomized double blind placebo controlled design that will enroll up to approximately 300 adult subjects with uncontrolled or resistant hypertension. Patients who have failed to achieve their blood pressure goal on 2 to 5 anti-hypertensive medications are placed on an optimized 2 or 3 drug regimen along with real time compliance monitoring.

This is one of the most rigorously designed trials to be conducted in hypertension, optimizing for inclusion of truly uncontrolled or resistant hypertensive subjects. Subjects who failed to achieve 24-hour ambulatory or ABPM systolic blood pressure of 130 milligrams or lower are then randomized into the trial. One-third of subjects will be randomized to placebo, one-third to 50 milligrams of lorundrostat one day at once daily, and 100 milligrams of lorundrostat once daily that has been increased to a 100 milligrams based on pre-specified criteria. The primary endpoint of the trial will be change in systolic blood pressure as measured by 24-hour ambulatory monitoring at week 12, in the two active arms versus placebo. We have classified two key secondary endpoints, including the percent of subjects achieving 125 millimeters of mercury or below on the 24-hour ABPM, and the correlation of change in 24-hour ABPM to BMI or Body Mass Index in order to reinforce the obesity positioning relative to our targeted therapeutic strategy and potential label inclusion.

For subjects in the Advanced-HTN trial, the treatment withdrawal component of the program has been moved forward from week 48 of treatment in the open label extension trial to week 12 of the Advanced-HTN trial. This amendment was implemented to add further value to the Advanced-HTN trial by characterizing the durability of changes in blood pressure, pharmacodynamic, and other laboratory assessments following the double blind treatment period, period. As Jon mentioned earlier, we revised our expectations on timing for the top line data from the trial. In consultation with our collaborators at Cleveland Clinic, we’ve implemented several changes to the protocol and in the operation of the trial, these changes resulted from an analysis of the inclusion and exclusion criteria and we’re designed to increase our randomization rate while maintaining the rigor of the trial design.

The second part of our pivotal program for lorundrostat is the larger Launch-HTN trial, which we continue to anticipate initiation in the second half of 2023. This randomized double-blind placebo-controlled 3 on trial is planned to have a similar design to the successful Target-HTN trial enrolling subjects, who will remain on their previously prescribed background regimen of 2 to 5 antihypertensives. Up to approximately 1000 adult subjects will be enrolled in this trial. Subjects will be randomized 1 to 2 to 1 to either placebo once daily 50 milligrams of lorundrostat or once daily 50 milligrams of lorundrostat but with the option to titrate in a manner similar to the Advanced-HTN trial. The primary endpoint for this trial will be change in systolic blood pressure as measured by automated office blood pressure, which has the same primary endpoint as in the Target-HTN trial.

We believe this endpoint reflects the real world measurement that will be most relevant to the primary care provider this trial targets. AOBP was the primary outcome measure in Target-HTN and performed similarly to ABPM given the objective of this trial as confirmation of the Target-HTN trot results, we feel this is the appropriate primary endpoint. In addition, subjects from each of our trials will be offered the opportunity to roll over into the ongoing open label extension trial. As Jon mentioned earlier, we recently finalized the protocol for the two-part Phase 2 trial of lorundrostat in hypertensive subjects with stage 2 to 3B chronic kidney disease. As you may recall, on our previous call, we were considering including patients with and without hypertension.

However, after discussion with our chronic kidney disease advisors, assessment of the unmet market need and the hemodynamic profile of lorundrostat, we felt the inclusion of CKD subject with systolic blood pressure of 135 mmHg or greater provides the greatest insight and value. Part A of the trial will be a proof of concept trial with the primary outcome measure being change in systolic blood pressure relative to placebo, and the key secondary endpoint will be change in albuminuria, which is a surrogate endpoint that supports long-term benefit in CKD. Part A is a randomized double-blind placebo-controlled trial that will consist of two treatment periods. We plan on enrolling subjects with stage 2 to 3A chronic kidney disease and albuminuria despite treatment with an ACE inhibitor or an angiotensin receptor blocker.

Subjects will receive either once daily combination treatment with lorundrostat plus 10 milligrams of dapagliflozin or placebo for 8 weeks. After a 4 week washout period, there will be a second 8 week treatment period during which subjects in the active arm will receive placebo and the subjects in the placebo arm from the first 8-week period will cross over to receive lorundrostat alone. We will also be utilizing 25 milligrams once daily of lorundrostat in this cohort based on our continued assessment of the Target-HTN data and the specific needs of this population. And as a reminder, we saw good activity for lorundrostat with a total daily dose of 25 milligrams in the Target-HTN trial. So we are confident in this adjustment to the dosing. Part B of the trial will characterize the safety profile of the lorundrostat in a more renally compromised population.

This second part of the trial is an open label single arm dose escalation trial that will enroll approximately 20 subjects with stage 3B CKD with hypertension despite treatment with an ACE inhibitor or an ARB. Subjects will receive 4 weeks of treatment once daily 12.5 milligrams of lorundrostat, followed by an increase in dose to 25 milligrams of lorundrostat for another 4 weeks. Please note that the final trial dose in Part B is updated from the previously proposed design as subjects will now receive 12.5 milligrams and 25 milligrams once daily doses of lorundrostat instead of the 25 milligram and 50 milligram doses, This decision is also in line with feedback from KOLs, the data from the Target-HTN trial, and with consideration for safety as the subjects in Part B will have even more severe chronic kidney disease.

We are really pleased with the progress made in the strengthening of [Inaudible] for this new approach to treating hypertension and associated aldosterone media complications like chronic kidney disease and heart failure. We look forward to keeping you apprised of the status of the lorundrostat development program. I’ll now turn the call over to Adam who will provide a financial review for the third quarter of 2023. Adam?

Adam Levy: Thank you, Dave. Good afternoon, everyone. Today, I will discuss select portions of our third quarter 2023 financial results. Additional details can be found in our Form 10Q, which will be filed with the SEC later today. We ended the third quarter with cash, cash equivalents and investments of $265.9 million compared to $110.1 million as of December 31, 2022. We believe that our cash, cash equivalents, and investments as of September 30, 2023 will be sufficient to allow us to fund our planned clinical trials as well as support corporate operations through mid-2025. R&D expenses were $22.5 for the quarter ended September 30, 2023 compared to $6.1 million for the quarter ended September 30, 2022. The increase in R&D expenses was primarily due to increases of $12.4 million in preclinical and clinical costs, driven by the initiation of the lorundrostat pivotal program in 2023; $2.3 million in clinical supply, manufacturing and regulatory costs; and $1.7 million and higher compensation expenses as a result of additions to headcount.

G&A expenses were $3.8 million for the quarter ended September 30, 2023, compared to $1.4 million for the quarter ended September 30, 2022. The increase in G&A expenses was primarily due to $1.2 million in higher professional fees associated with operating as a public company, $0.8 million in higher compensation expense as a result of additions to headcount, $0.3 million of higher insurance expenses associated with new director and officer insurance policies, and $0.1 million in higher other administrative expenses. Total other income was $3.5 million for the quarter ended September 30, 2023 compared to $0.7 million for the quarter ended September 30, 2022, which was primarily attributable to increased interest earned on the company’s investments and money market funds and US treasuries.

Net loss was $22.8 million for the quarter ended September 30, 2023 compared to $6.7 million for the quarter ended September 30, 2022. The increase was primarily attributable to the factors described earlier. With that, I’ll ask the operator to open up the call for questions. Operator?

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Q&A Session

Operator: Thank you. Ladies and gentleman we will now begin the question-and-answer session. [Operator Instructions]. Your first question is from Michael DiFiore from Evercore ISI. Please ask your question.

Michael DiFiore: Hi guys. Thank you so much for taking my questions and congrats on all the progress. A few from me on the advanced hypertension study, just curious how many patients were already past the 12-week endpoint and had not undergone treatment withdrawal and then would therefore need to be censored? And I have two follow ups.

Jon Congleton: Yeah. Mike, this is Jon. Appreciate the question. We haven’t disclosed the number of subjects enrolled at different points. So that’s just something we haven’t addressed at this point in time.

Michael DiFiore: Okay. Fair enough. So with regards to your Phase 2 CKD trial, I think on last call you said that SGLT2s alone reduce proteinuria by 30% to 40% over 12 weeks and that the potential bogey for the combination regimen would be around a 50% plus reduction, which AstraZeneca ZENITH trial of zibotentan plus dapagliflozin met at this – at this past weekend – ASN Conference this past weekend, I think the reduction was around 52.5. So based on your market research and conversations with KOLs, like, what’s the willingness or appetite amongst cardiologists to use an effective anticancer treatment in this setting over an aldosterone synthase inhibitor such as lorundrostat.

Jon Congleton: Yeah. Mike, I appreciate the question. I think the 50% figure we’ve talked about before. I think that’s kind of what we have in mind. Obviously, ASN this week and there was a lot of interesting data, for both Endothelin Receptor Agonists as well as ASIs from Boehringer Ingelheim. I don’t know that we’ve gotten a lot of color from physicians on their interest in or not in using something like zibotentan. It was an interesting safety profile with that. From our standpoint, we think the BI data was confirming. I would say we anticipated seeing what BI reported with an ASI on top of an SGLT2 inhibitor. It’s what has informed our thinking. I think the main takeaway for us, Mike, as we’ve been talking to KOLs, is the need to have more than just, say, one benefit.

So in other words, rather than just have a benefit on CKD, having a new innovation that can provide benefit on hypertension while also providing benefit on proteinuria. That’s where our focus has really been drilling in on the last several months as we’ve spoken with KOLs as we’ve done our market research. And that’s where we think lorundrostat really has a unique profile and unique opportunity to provide benefit for those patients that have progressive kidney disease, but also have concomitant hypertension and then as we’ve spoken about in the past, there’s pretty significant overlap between those two. And so that’s why we’ve made the adjustment we did in our trial because we think that’s what the market really needs is really a full complement, benefit in cardio-renal disorders.

Michael DiFiore: That’s very helpful. And you actually preempted my – my question on Boehringer Ingelheim. I think that trial was 14 weeks long in combination with Empagliflozin, which only showed about a 40% improvement in UACR, to the extent that you can, could you provide any color on if there’s any fundamental potency difference between your drug and that drug, which may explain why this 50% bogey wasn’t met?

Jon Congleton: Yeah. A couple of thoughts on that, Mike. The interesting thing is if you dig into that data, Empagliflozin actually performed a little bit less than you would typically think, right? You made the comment about 25% to 30%. And when you look at that study, I think Empagliflozin had about 11% reduction in UACR and so that the aldosterone synthase inhibitor, are they – as a delta performed probably equivalent, to what we’re seeing if not maybe a bit better than zibotentan. The thing that was interesting to note from our standpoint was the presence of adrenal insufficiency, which could be related to the selectivity of that aldosterone synthase inhibitor. As you may recall, even at the highest doses in the Target-HTN study when we did ACTH testing, we saw no evidence of adrenal insufficiency even at the highest dose.

So that was an interesting finding. I think the – comparing the cross trials can be somewhat challenging. I think the innovations with both are informative as we move into further development, I know for us, it was kind of a final piece of the puzzle with our thinking of Explore-CKD to see all of this data, but we’re very excited to progress into that study and again we think the dual benefit of reduction in systolic BP as well as proteinuria could be a – a really interesting, component of the lorundrostat story.

Michael DiFiore: Super helpful, Jon. Thanks for all the color. I appreciate it.

Operator: Thank you. Your next question is from Greg Harrison from Bank of America. Please ask your question.

Greg Harrison: Hi. This is Mary Kate on for Greg. Thanks for taking our question. And, also in – with your recent late breaking ASM presentation and anticipated presentation at AHA, I guess, how do these analyses here highlight the potential target market for lorundrostat if approved in terms of target population and anticipated impact? Thank you.

David Rodman: This is Dave. Thanks for the question. Our theory from the beginning was that the really the highest unmet need was actually people with visceral obesity that are more and more populating the – what we used to call a hyperaldosteronism. It’s really a complication of obesity. And so we were gratified in our target trial to see that was true in the categorical evaluation we did above and below 30 BMI. In the paper that we recently presented – the poster we presented we did a continuous analysis looking from a BMI of 20 up to 40 and what we saw was there was a linear relationship that higher the BMI the greater the response, and where it really became prominent in the regression line was at a BMI of 30, just like the categorical, but what it also showed was there are people who are overweight but not obese who are also good responders and when we paired it down, what we found was that about a third of the subjects in the trial had exceptional responses of 30 or more millimeters of mercury median response, really truly exceptional responders.