Mineralys Therapeutics, Inc. (MLYS) Earnings Call Transcript & Summary

Welcome to the Mineralys Therapeutics Second Quarter 2024 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Dan Ferry of Lifesci Advisors. Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and welcome to our second quarter 2024 conference call. After the close of market trading today, we issued a press release providing our second quarter 2024 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 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, August 13. Except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events. I would now like to turn the call over to Jon Congleton, Chief Executive Officer of Mineralys Therapeutics. Jon?

Thank you, Dan. Good afternoon, everyone, and welcome to our second quarter 2024 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, our clinical programs and recent milestones, followed by Adam, who will review our second quarter financial results before we open up the call for your questions. Let me start out by saying that during the first half of the year, we made tremendous progress advancing the development program for our lead asset, lorundrostat. Specifically, we've been steadily moving towards several key milestones for our registration program in hypertension, which is comprised of 2 pivotal clinical trials titled Advance-HTN and Launch-HTN, an open-label extension trial called Transform-HTN to capture long-term safety and efficacy data and the proof-of-concept trial, Explore-CKD, evaluating lorundrostat in the hypertensive CKD subjects. Enrollment continues to progress in the Advance-HTN trial. As noted previously, this is an extremely rigorous hypertension trial designed to demonstrate the value of lorundestat when added to standardized, optimized American Heart Association guideline treatment. While we typically do not provide enrollment updates for our clinical trials, we are approximately 90% enrolled in Advance-HTN, and our projections place top line data readout in the first quarter of 2025. While we're disappointed with the change in top line data timing, we remain laser-focused on executing the best-in-class trial and ensuring a high-quality data readout. We continue to work with our partners at the Cleveland Clinic to ensure we deliver the most robust data set possible. In addition, we recently met with the FDA and aligned on maintaining the original primary endpoint of the Advance-HTN trial, given that we have already accumulated or accrued substantial trial data. As such, we will maintain the original 12-week time point of change in 24-hour ambulatory systolic blood pressure from baseline for active cohorts versus placebo. We will still collect and analyze all relevant efficacy measures at the 4-week and 12-week time points. This does not impact the timing of the data readout for Advance-HTN. The planned analysis of Advance-HTN trial includes several important subset analysis, subjects with uncontrolled hypertension, those on baseline regimen of 2 anti-hypertensives and resistant hypertension on 3 baseline anti-hypertensive treatments were separately randomized, allowing us to perform a formal test in each population. This will provide optionality and independent support for each population. We believe that demonstrating efficacy in confirmed resistant hypertension, the area of highest unmet medical need will be important in positioning lorundrostat for individuals with presumed aldosterone-mediated hypertension, including obesity. We believe positioning lorundrostat as an important option for obese individuals with increased cardiovascular risk due to resistant hypertension will be a straightforward message to prescribers, payers and patients. In addition, as we accrue more experience and data with lorundrostat, we plan to continue to explore other positive and negative predictive factors using artificial intelligence to expand the precision toolkit for targeting lorendostat to individuals with uncontrolled and resistant hypertension who are likely to derive long-term clinical benefit. Moving to Launch-HTN, which is our second pivotal trial that was initiated in the fourth quarter of 2023, we are pleased to announce that enrollment in this trial is currently ahead of schedule, and we continue to expect top line data to be available in the second half of 2025. However, the time to data may accelerate, and we will keep you informed as we move forward. Launch-HTN is a Phase III trial of larenderstat for the treatment of subjects with uncontrolled or resistant hypertension as add-on therapy who failed to achieve blood pressure control on their existing prescribed background treatment of 2 to 5 antihypertensive medications. Launch-HTN will enroll up to approximately 1,000 adult subjects, is designed with the objective of evaluating lorundrostat in a real-world setting when added to a subject previously prescribed anti-hypertension regimen. Subjects who failed to achieve blood pressure control on their prescribed background treatment during the run-in period will be randomized 1 to 2 to 1 to either placebo, once daily 50 milligrams of lorundrostat or once daily 50 milligrams of lorundrostat with the option to titrate to 100 milligrams once daily as needed at week 6. And the primary endpoint for this trial will be the change in systolic blood pressure as measured by automated office blood pressure. We believe this endpoint reflects real-world measurements that will be relevant to the primary care provider, this trial targets. Subjects from these 2 trials will be offered the opportunity to roll over into the ongoing open-label extension trial called Transform-HTN. In addition to our pivotal program in hypertension, we are conducting the Explore-CKD Phase II clinical trial for lorundrostat when added to background treatment with SGLT2 inhibitor in patients with uncontrolled or resistant hypertension and Stage II-IIIb chronic kidney disease. The amended protocol has been implemented and enrollment is ramping up. We anticipate announcing top line data in the first half of 2025. Explore-CKD is a within-subject comparison trial designed to demonstrate the benefit of lorundrostat in reducing blood pressure and provide supportive evidence for potential benefit on chronic kidney disease on the background of stable SGLT2 inhibitor treatment. This proof-of-concept trial will enroll approximately 60 subjects with hypertension in Stage II to IIIb CKD. We look forward to keeping you apprised of the status of lorundrostat development program over the coming weeks and months. Let me now turn the call over to Adam, who will provide a financial review for the second quarter of 2024.

Thank you, Jon. Good afternoon, everyone. Today, I will discuss select portions of our second quarter 2024 financial results. Additional details can be found in our Form 10-Q, which was filed with the SEC today. We ended the quarter with cash, cash equivalents and investments of $311.1 million compared to $239 million as of December 31, 2023. We believe that our cash, cash equivalents and investments will be sufficient to allow us to fund our planned clinical trials as well as support corporate operations into 2026. R&D expenses for the quarter ended June 30, 2024, were $39.3 million compared to $11.9 million for the same quarter of 2023. The increase in R&D expenses was primarily due to increases of $22.8 million in preclinical and clinical costs driven by the initiation of the lorundrostat pivotal program in the second quarter of 2023 and the Explore-CKD trial in the fourth quarter of 2023. $2.6 million in clinical supply, manufacturing and regulatory costs, $1.7 million in higher compensation expenses resulting from additions to headcount, increases in salaries and accrued bonuses and increase in stock-based compensation and $0.3 million in other research and development expenses. G&A expenses were $5.9 million for the quarter ended June 30, 2024, compared to $3.9 million for the same quarter of the prior year. The increase in G&A expenses was primarily due to $1.5 million in higher compensation expenses resulting from additions to headcount, increases in salaries and accrued bonuses and increased stock-based compensation and $0.5 million in higher professional fees and other administrative expenses. Total other income was $4.2 million for the quarter ended June 30, 2024, compared to $3.6 million for the same quarter of 2023. The increase was primarily attributable to increases in interest earned on our investments in money market funds and U.S. treasuries. Net loss was $41 million for the quarter ended June 30, 2024, compared to $12.1 million for the same quarter of 2023. The increase was primarily attributable to the factors I described earlier. With that, I will ask the operator to open the call for questions. Operator?

[Operator Instructions] Our first question comes from Michael DiFiore with Evercore ISI.

Two for me. I just want to get more clarity on why exactly the time lines were extended for Advance-HTN and the CKD trial? And then separately, obviously, the Phase II advanced hypertension primary endpoint is now back at 12 weeks. The FDA rationale was just because you had so much accrued data. I want to clarify that. And now that it's back at 12 weeks, are you concerned that now that the waters will be muddy at 12 weeks with the inclusion of patients on 100 milligrams.

Glad to have the questions. The first one regarding the timing, when we originally established Q4, I think it was late last year for guidance on Advance-HTN at that point in time, we were still earlier in the enrollment, particularly with the protocol amendment. We, as we've discussed before, the rigor and complexity of Advance-HTN had made it difficult to really try to project when we thought we would see top line data is. We've spent the last several months, 6, 7, 8 months since that guidance. We've obviously gotten further along in the enrollment of the study, the ability to project the time for the top line data has progressively become easier, as we noted in the press release and in the earnings call here, we're at 90% enrolled at this point. So we have high confidence on where we're at currently with enrolled subjects where we're forecasted to continue to enroll that we'll have the top line data in Q1 of 2025. Kind of in a similar construct, Mike, with Explore-CKD. We announced earlier this year that we were doing a protocol amendment just based on the changing dynamics within the hypertension CKD space and the utilization of SGLT2 inhibitors. We put that protocol in place. It's had the intended effect as far as improving enrollment within that study as that protocol has gone into effect, and we began to enroll subjects. It's been able to give us a clearer sense of timing, and that's why we adjusted the readout for Explore-CKD from Q4 to Q1 to Q1, Q2. And so that's really what's driven and it's just having more data, more experience with these trials and to try to give a really clear sense of when we anticipate that top line data. Before I turn it over to Dave to answer the Advance-HTN primary endpoint, any follow-up on that?

Just to clarify, too. You said that the protocol amendment you made now has boosted enrollment as intended. So why was the time lines moved up if enrollment has been enhanced?

It's been enhanced relative to what it was, Mike, and we thought there was an opportunity to see that top line data in Q4 to Q1. While it's been enhanced, it's -- from our perspective, it's prudent to change that guidance to Q1, Q2 at this point.

Got it. Okay.

Dave, do you want to address Mike's question on the primary?

Mike, it's Dave Rodman, just to reiterate, and let me know if I've got it right, is are we going to encounter less -- more confusion or less clarity, let's say, at 12 weeks because we have some people in 50 milligrams straight through and others who could have their dose increase to 100. Is that your question?

That's correct. And I also want to clarify, is the FDAs rationale for keeping it at 12 leak, which is purely because you had so much data already accumulated.

Got it. I'll answer the second one first. The answer to that is yes. It was just simply that we're past halfway enrollment. They just thought stay the course at that point. So in terms of your other question, it's a good question. We're going to kind of have our cake and eat it too in a sense because we are going to do the full analysis at 4 weeks that we proposed, and we're going to do the 12-week analysis. So we'll have the clarity of the [indiscernible] analysis when everybody is on 15 milligrams at 4 weeks, but then the primary is going to be done at 12 weeks. So the only difference is really what -- when is that primary going to be done? That's kind of just a key value question, if you will. We'll have the clarity at 4 weeks that will allow us to have lots of power for subset analysis like obesity, et cetera. So we won't really lose anything there, and we'll still have apples-to-apples between the 2 trials because of that as well. Did I answer your question?

Yes, very much.

Our next question comes from Richard Law with Goldman Sachs.

Just following up on that, what patients will be included in the 12-week endpoint analysis for Advance-HTN. So were the patients in that 50 to 100 mg cohort, would those be included in the 12-week primary analysis? And also what is the powering on just that pure 50 mg group alone, and I have a couple of more questions.

Good question. So the primary analysis at 12 weeks is a comparison between placebo and each of the active arms. They're not co-primaries where you have to hit both. They're just dual primaries. And so the way that works is we'll take everybody who started on 50 and ended on 50 in well -- that started on 50 in that second arm, they'll all be essentially treated with 50 milligrams compared to placebo. And then the other arm, if they went up to 100, they're still included in the analysis. So it doesn't matter if they end on 50 or 100. There's a second -- so -- and that's again versus placebo. So that's for the P values. You'll see 2, one for the Arm 2, one for Arm 3. There's also a key thing here, which is what we want to know is in Arm 3, the reason we're doing it is if you're a clinician and somebody doesn't respond to 50 milligrams, you think they belong on the drug. And everything else looks good, potassium and everything else. What you want to know is can I just double the drug safely and rescue that guy and get them the benefit, I think he should accrue. That's a within-subject question, right? To take a person who hasn't responded give them the drug and now you say did he get better from that point. So that's what's going to happen at 12 weeks. Let me stop there and see if that was responsive to your question.

Yes. So the patients who are on the 50 to 150 mg arm, so just that titration cohort. Can you pull those 50 mg patients who did not get a petro 200 mg, can you put them into the other like the pure 50 mg cohort? Or are these patients completely like separately analyzed by cell?

Yes, it's a good question. So in terms of 12 weeks, no, you can't pool them. But in terms of the 4-week analysis, absolutely. And so -- and we know from the target HTN trial that we saw the full benefit by 4 weeks. So we'll also be looking at 4 weeks and 12 weeks in the same people and asked the question, did they maintain the benefit within subjects? And so that will also be answered. Now I forgot to answer your powering question. And let me just repeat that. You said what's our power going to be for just the 50 milligram arm at 12 weeks. Is that what you were asking?

Yes.

Yes. So our initial power calculations were designed to have 90% power for -- to do that. And we were looking at, I think, let me like maybe 6 or 7 -- was it 7 millimeter mercury difference. So that's where our pairing estimates were. Obviously, at the end, we'll redo that based on a bunch of other things. And it's -- the statistics are obviously complicated, but that's the bottom line. 90% power, difference is 7 in HR.

I see. So is the data for that 50 to 100 mg cohort for the patient who did not get a part 100 mg, is there any use for that 12-week data point for those patients?

Yes, absolutely. So we can do a sensitivity analysis on that, and we will -- we can do a pooling analysis. As you suggested, all of those are essentially sort of sensitivity analysis kind of questions. And so there probably won't be enough power. We could ask to the people who finish on 50 different from the people who increased to 10 but there's just so much you can do. But to answer your question, yes, there's going to be use to them. Those things will be deep in the data, but they'll be available.

I got it. And then the last question for me is do you control a cap as a number of patients coming into the study who previously have been exposed to MRA or spironolactone and if not, what proportion of the patients do you expect to be eroded in the Advance HTN set.

So they all have to wash out of any MRA or an ENaC blocker. On the other hand, they will have a medical history. So if we choose to do so, we could do a look back, but we're not going to -- they can't come in and just switch into the new regimen write-off of the MRA, that has to be washed out.

Our next question comes from Annabel Samimy with Stifel.

Just on the 4-week measurement, can you remind us the rationale for wanting to look at the 4-week time point in the first place. I just want to make sure I understand what importance that 4 week time point is for you? And I have some follow-ups from that.

Annabel, it's Dave. So your question, just to repeat, if I got it right, is what was the rationale for wanting to make the change? Or why are we looking at it just from basic principles.

Well, why were you looking at it in base for basic principles. Just you had a 4-year endpoint and a 12-week endpoint. I'm just curious what the 4-week endpoint measurement was going to give you -- was that a just for just the importance of that end point?

So it's a good question. By 4 weeks, you've achieved the maximum benefit. And by having 2 data points, so baseline, but then 4 weeks and 12 weeks, you manage a lot of issues to answer the question, is -- we think 4 weeks will be the maximum. Is it predictive of 12 weeks? In other words, is there any loss of activity over at least the 12-week time period because we only went out to 8 weeks before and didn't see any loss. From a statistical standpoint, it allows you to -- let's just say somebody later in the trial has a problem or whatever, and you stop their drug. As long as we have the 4 week, we do have mechanisms for imputation that can be used. Now, that's a complicated thing. But as long as they stay in the study, that 4-week data point is informative for the modeling. So there's a couple of reasons to do it. The third one is the ability to pool the 2 groups that are replicates up to 4 weeks. And so you do have a 4-week super power in terms of getting a point estimate.

Okay. That's helpful. And then just a question that we've been grappling with some investors. Just can you remind us again what the difference was in the patients you saw 24-hour blood pressure monitoring benefits and target versus those who did not? And I guess, how it could have been at the AOBP measurements overall, such a -- such a strong response from the 24-hour and not. So I just want to try to reconcile those 2 figures.

If I understand your question, I'm not sure -- let me just say what we saw. So first of all, ABPM, because of the replicate measures every 20 to 30 minutes over the course of the day, you've got lots of measurements. So the precision is better when you average it. So the standard deviation is smaller. But remember, a normal person's blood pressure goes down significantly overnight. And so the average blood pressure over the course of 24 hours will be lower with ABPM than the automated office done just in the morning. The same is true of changes then because you're changing from a lower baseline. So typically, what you'll see is a lower baseline pressure with ABPM and a smaller treatment effect, but a smaller standard deviation. So we saw extremely good concordance between AOBP and ABPM, but there is this systematic difference of smaller numbers. Now, the other thing that happened, however, is there is this phenomenon of white coat hypertension. In other words, when you get an AOBP, when you come into the clinic at 10 in the morning, you've got a lot of adrenergic tone because you had to find a parking space. You had to walk up 2 flights of stairs, you had to wait in the waiting room, et cetera. And so that all goes away with a 24 hour. And so we have this thing where people have hypertension with AOBP,but not with ABPM. And we tend to assume they don't have true hypertension that leads to adverse outcomes, but rather they just have apparent hypertension. Was that the question kind of you were thinking of asking.

A little bit. I'm just curious, so the ABPM where you reached statistical significance was when -- you reached statistical significance after you moved some outliers of the study. So I'm just trying to understand what those outliers were, they make you comfortable that it was a fair assessment? And how do you control for those outliers in this next coming trial so that you don't have some of the divergences?

Yes, good question. So first of all, those were small trials, ends of 30 with ABPM and all the technical issues with it are extremely challenging to get to statistics. And the -- for instance, it was a few patients. There was 1 patient in particular who on the office blood pressures had a 60 millimeter of mercury, I think, increase in blood pressure recorded. In other words, an implausible value. It just can't be accurate. And that's what kind of thing we censored was just numbers that were just not plausible and not reproduced. So there was only a few. It was really the white coat hypertension, where most of the loss of information from ABPM was the issue.

And Annabel, just to add to Dave's point, the distinction between Target and Advance in Target AOBP was part of the randomization rule, not ABPM and AOBP was the primary endpoint. In this case of Advance-HTN, they have to be hypertensive on the 24-hour ABPM to be randomized. And so that rule or randomization rule itself should eliminate that phenomenon that we saw in target HTN.

Our next question comes from Mohit Bansal with Wells Fargo.

I have 2, but I'll ask one by one. So first question, I'm a little bit confused by all the talk about Advance-HTN and then 12-week thing. If I go back to the launch trial, can you just help us understand what was the confounding issue that probably made FDA to ask you to move to 6 weeks versus 12 weeks because the way I see the trial, there are 3 different arms, there is 150 milligram. There is under 50 milligram moving to 100 milligrams. So you can still compare the 50 milligram arm to the placebo arm. So I'm a little bit confused by the change here.

So it wasn't them telling us what to do. It was us suggesting that it would be better to do it that way. It doesn't have to do with the primary. It didn't matter in that trial with as big as it was if you did the primary 4 weeks or 12 weeks. It has to do with power or the subset analysis. In other words, because you have 2 replicate arms, both at 50 milligrams, we can do the independent tests for the primary each arm versus placebo. But let's say we want to ask a question, does it matter whether you're African-American. Well, we expect maybe 40% of the subjects will be African-American. So now you're down to half the sample size. But by pooling the two, now you get back up to the number, and so you get much more precision to get accurate answers to the subsets. So that's what we went back to the agency with and said in this big data set, we want to make sure that we can fully realize the power of the study. And we think for the subsets, we'd be better at 6 weeks. And basically, the decision was, okay, if you're going to do that, let's just do the primary 6 in weeks too.

Got it. So that is basically to make sure that you can do the subgroup analysis properly the bigger data set here.

It just makes it much more simple and higher productivity. It's just a good idea.

Got it. And then I have one more question. So we have seen a couple of readouts from MRAs. So obviously, Novo had some data, which was not that successful, but then Bayer had some data in type 2 diabetes related CKD and that was quite successful. So how do you see, obviously, different classes, but related, how do you see these 2 data sets? And what do you learn from them, those data sets to inform your own CKD studies?

Well, first of all, MRAs generally are pretty similar. It doesn't matter if it's spironolactone from 1959 for a very new one. The only difference is the steroidal side effects, things like breast development in man and infants and [indiscernible] and that kind of stuff. As far as everything else mechanistically, they're the same. What we observed with the MRAs is almost always you are unable to achieve the maximum therapeutic benefit on something like blood pressure because you're limited by the on-target increases in potassium and also sodium going down, those kind of things. For instance, with Spironolactone the maximum efficacious dose is probably 200 milligrams. The conventional dose that's used is 25 milligrams, 50 milligrams by nephrology specialists sometimes, that's different. So we found in our drug, we can go above the maximum efficacious dose, 100 milligrams is the same as 50. So we can safely give 50 milligrams, which is the maximum efficacious dose. So overall, what I would say is the biggest difference that's apparent in the trials we're running is that the benefit risk, the ability to dose people all the way up to their efficacious dose from getting rid of Aldo is probably more achievable with an ASI like ours than an MRA. Now long term, there are a lot of aldo effects that aren't blood pressure and kidney their effects on adipocytes on insulin sensitivity on inflammation, on heart and blood vessel fibrosis. And not all of them are mediated through the MR that's blocked by those MRAs. And in fact, if you give an MRA, you increase aldosterone by 200% or 300% and you drive it into these other pathways. So if you did a longer trial and looked at things like vascular stiffness, maybe even [indiscernible], I think eventually, they would differentiate. But that's for us, something to define once we're in the market for hypertension, we will certainly be looking at that. Those are really the 2 aspects we would say that look pretty likely to differentiate and show the advantage of ASI over MRA.

[indiscernible] Our next question comes from Rami Katkhuda with Lifesci Capital.

First, I just wanted to make sure that I heard you correctly in that you'll be able to do a subset analysis of lorundrostat efficacy and uncontrolled and resistant hypertensive patients in advance. I guess do you expect the difference in efficacy between these populations?

Well, I can answer the first question. So we separately block randomized uncontrolled and resistant. In other words, if we have 150 people who are resistant and we have 200 people who are uncontrolled, we'll have 200 uncontrolled placebo and 150 resistant placebo. They're matched in terms of the randomization. And so that means we have full statistical power to do those comparisons and they're informative. Now your question of, can I be prosthetic and tell you whether it's going to work better in one or the other? I can't answer that. In the Target-HTN trial, when we asked that question, we didn't see a difference, but let's wait and see on this trial. I don't want to predict.

Fair enough. And then maybe switching to CKD. I guess given the previous results we saw with Boehringer's ASi, the recent failure with the MRA, is there a threshold of [indiscernible] blood pressure reductions that you're looking for in Explore to advance lorundrostat into a larger trial?

For CKD? So where we think our drug is going to differentiate is we made the primary hypertension and the secondary is going to be albuminuria. And the reason for that is we're going to be dosing at any hypertensive doses in people who have both a hypertensive component to their CKD and probably also a metabolic syndrome component. And so we believe that by targeting that subpopulation, we will define a niche where our drug can differentiate from other approaches, which are much more a general CKD population. That's the -- that's why even though it's a crowded field with multiple players, we still think we've probably got the best-in-class ASi, and it has potential in that way.

Got it. And I guess one more, if you don't mind. Can you just remind us of the rationale for using the 25 mg dose instead of 50 mg in the Explore-CKD study? Is it just hyperkalemia and lower EGFR patients? Or is there more to it?

Right. So it's an abundance of caution at this exploratory stage. We didn't want to take on the hyperkalemia risk. Now, I'll tell you, our nephrology advisers say they're perfectly comfortable using potassium binders if needed to get the blood pressure down in these patients. So this is just the first step on the journey, but that's the main reason.

There are no further questions at this time. I would like to turn the floor back over to Jon Congleton for closing comments.

Thank you, operator, and thank you to everyone for joining us today. And we're very excited about the program's progress to date that we've made in the first half of 2024 and advancing our clinical programs. And we remain very enthusiastic about the upcoming milestones for the rest of the year and into 2025. We look forward to updating you as our pivotal program for lorundrostat continues to advance. With that, we will close the call.

Thank you. This concludes today's conference. All parties may disconnect. Have a good day.