ProKidney Corp. (PROK) Earnings Call Transcript & Summary

Okay. Welcome, everyone. Let's go ahead and get started. This is the fireside chat with ProKidney. My name is Vikram Purohit. I'm one of the biotech analysts with the research team. Before we get started, I need to read a brief disclosure statement. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representatives. With that, happy to have with me Tim Bertram, CEO of ProKidney. Tim, thanks for joining us.

Yes. Look forward to it.

Tim, maybe just to level set for everyone in the audience. Could you just quickly walk us through the REACT technology, what it is, the thesis that drove the formation of ProKidney and then we can go from there?

Sure. And I'll be making forward-looking statements. Also, they can be found on the ProKidney website. Yes, the technology was started many years ago, about 20 years ago. It is a cell-based therapy. It was driven largely around the concept that there's been no successful products, small molecules in particular, that have been able to show a major impact on chronic kidney disease. It's largely because of the multimodal mechanism of kidney disease. So what we thought about was is does the kidney have the ability to heal itself in the earlier stages. We know that the acute kidney can respond quite well. So we asked the question, is there something in the kidney that exists and is lost in chronic kidney disease. And what we found is, is that there are 3 cell types, which are important in the maintenance of the kidney, the development of the kidney and then the healing of the kidney. And what that allowed us to do was to develop a proprietary method of isolating these, manufacturing these and then reimplanting these into patients. And what we were very pleased to see was that there were the effects that we saw in animals could be reproduced and translated into early-stage clinical trials, Phase I. That observation really drove us to recognize that there was a therapeutic value here. And one other point that was quite significant, that was value to the investment decision, and that was turned out humans have pharmacologically more active cells, these 3 key cell types than do animals. And that observation really told us there was something there. And we followed that up in our mechanism of action work where we have to show that those -- that pharmacologic capability of these cells still exists when they're isolated. But that was what drove the formation. That's what we are. It's an autologous homologous admixture of 3 cells that's used in patients with late-stage chronic kidney disease.

Got it. Got it. And for those 3 cell types, what do you know about the BMOA? And is there 1 cell that there contributes proportionately more to the therapeutic effect that you're proposing?

Yes. Very good question, Vikram. So what we know about these cells is, is that they integrate. They're chemotactic, they migrate from the injection sites throughout the kidney. They integrate into the parts of the nephron that they came from. So you can think of the nephron being composed of 2 pieces: the filtering piece, if you will, and what's generally thought of as the estimated glomerular filtration rate, which is measured, a lot of the ACE and ARBs, the current therapeutics focused on that; and then the tubular metabolic piece. What we realized is that these 3 cells, one comes from the glomerulus itself, the cap mesenchyme. One forms the formation of the filtration barrier of the podocyte, and the third one is the ureteric bud, which contributes to the cells. They go back, integrate into the location from which they came from. They replace the damaged cells, begin to function. And then what they also do is they release cytokines that are responsible, and I alluded to that, is that the pharmacologic activity is centered around VEGF, vascular endothelial growth factor, which is needed to keep the nephron functioning, and TGF-beta2 which is responsible for maintaining the integrity as well as influencing the interstation. So these cells, we understand that's how they work. We also understand that they remain in the kidney for an extended period of time. Because it's autologous, the value is, is that you've got a chronic disease process and you need this pharmacology to be active over an extended period of time. They integrate. And then, as a result of that, you see the changes in the function. And also, then what we found in animal studies is that the fibrosis and the chronic inflammation are down-regulated by these cells. So that's what's there. Last point, and we're very excited. We'll be releasing some information at ASN this year. And that is if any one of the cell's more important, it turns out that doing interactome analysis, we realize and using the fundamentals of kidney biology, all 3 of these cells are needed and they talk to each other in a way that allows them to execute the function in this complex disease and complex organ.

Got it. Okay. That's helpful. So now that we've talked about the science and the mechanism a little bit, maybe walk us through the manufacturing process. What needs to happen from a patient's kind of initial and a prescriber's initial indication of interest all the way to actually receiving REACT?

Yes. Yes. So we have a proprietary method of manufacturing. And this was worked out over a number of decades actually and has been reviewed extensively by both FDA and EMA. The manufacturing process, because it's an autologous homologous, we start with taking something from you or the patient. The value of that is, is the kidney is highly immunogenic. So we don't have to worry about rejection. So by taking that biopsy, it's shipped to our in-house manufacturing. We've done all of our manufacturing in-house. And so for the past 2 decades, our ability to control quality and produce, 95% of the time, a product from the biopsy is driven because of our tight control of the manufacturing process and doing it internally. So once it comes in, we use our proprietary methods to expand those 3 cell types. What we know in a biopsy, normal biopsies, there's about 100,000 of these cells that are present, and that's in a disease state. Our manufacturing process increases those to almost 250 billion. So we can make 5 to 10 products from a single biopsy. And because it's autologous and homologous, we can reinject that multiple times. That allows us then to have only 1 biopsy that gives the product then back to the patient. It takes about 12 weeks from biopsy to preparation and being able to inject. We use a frozen formulation so we can preserve those extra product for subsequent injections. And then it's administered back into the patient using a conscious sedation, minimally invasive 25-gauge non-cutting needle. It takes a few minutes. Cells are reinjected and the patient returns to a normal life. All of this has been extensively reviewed. We anticipate that we'll be able to take this into commercial setting as well.

Okay. And just to clarify. So when you say 5 to 10 products, does that mean 5 or 10 doses?

Oh. Good question. So a dose is 2 injections. Our dosing is controlled by the volume injected into the kidney. In chronic kidney disease, a patient kidney is slightly small. And so the dictation, we use an allometric scaling method to reinject the dose. It takes 2 injections to be able to make a full dose. So 5 to 10 would give you 2.5 to 5 doses, but product, 5 to 10 product.

So one, I guess, for lack of a better word, manufacturing run based on a biopsy is roughly 2 to 5 doses.

Yes. Yes. Right. And we can always go back and read biopsy because it's an autologous homologous, for some reason, the cells don't grow or the patient needs additional dosing, we can do that.

Okay. Great. I'll ask you one more platform-related question, and then we should get into some of your clinical data. In terms of administering REACT, does the center need to have any sort of specialized training or infrastructure in place in order to be able to give out the therapy?

Yes. Yes. We use interventional radiologists to administer the product. Interventional radiologists are highly skilled and trained physicians that are used to taking needles and putting a therapeutic into small areas in different parts of the body. We do have a training program that has been reviewed by both FDA and EMA, and it really just simply allows the interventional radiologist to know exactly where to place it and how to deliver it. But the training itself is relatively minimal. These are highly skilled professionals.

Got it. Okay. Before we go on to the 002 study and any -- straight underway, I'll take a pause for any questions on the platform or some of the basics around REACT. Okay. If not, let's go over to RMCL-002. So you've presented data there, but everyone may not be familiar with that. So maybe we can just kind of hit some of the highlights that you saw that gave you conviction that this is a therapy worth pursuing into pivotal program.

Yes. So the 002 trial is quite significant, and it did form the information, as you said, that allowed us to believe that we could take this into later-stage development procedures. So it's a Phase II 1:1 randomized controlled trial. We used very high-risk CKD 3, 4 patients with eGFR between 20 and 50ml per minute. What we did is by assigning these 1:1, 1 patient was assigned to a deferred or a standard of care and 1 patient was assigned to be active for a total of 83 patients that were enrolled in this. And what we did in that trial was -- is, again, we took the biopsies, made the product, administered to the patients that were in the active group, same kidney was biopsied and injected this 6 months apart, 2 times for the full dose. And then they were followed for 2 years. The -- to get a concurrent control, the other patients that were enrolled, again, approximately 40 patients were put on best standard of care, and we followed the best standard of care for 1 year. We chose one year because these were very high risk, and we wanted to make sure that the patients were able to cross over after their 1 year. So it gave us a concurrent control. We could see what best standard of care provided. And then it gave us a population of patients that we could come back and treat later. The outcome of that trial was actually quite interesting and it convinced us to be able to go on to later-stage development. What were those outcomes? First and foremost, the standard of care declined at a rate that was very consistent for this late stage. They lost about 3.5ml per minute per year. In contrast, what we had in the active was preservation of kidney function. And this preservation of kidney function was important because what that did is it foretold the potential to be able to delay dialysis. So that active patient population then allowed us to see the effect of the drug when administered in 1 kidney. Because we saw good preservation kidney function, it told us that what we wanted to do was, is this could go on to develop for later stages. What I want to alert you to is that for us, the very other important observation was is all we had to do was show that we could show an improvement over standard of care. That comparison, that concurrent control give us a very clear picture in a patient population where there really is not good standard of care. What we could do was is we could preserve kidney function in a way that was better than standard of care. So that was the observation that said, okay, we've got good preservation. We've got good delta or a difference from standard of care. We had a very good safety profile. We were impressed with the tolerability. So when you put the whole package together, this had development or potential development success.

Got it. And you have 2 pivotal studies underway right now, proact 1, proact 2. Kind of tease out for us, how are these studies different from 002 in terms of the patient population enrolled and also in terms of the actual product itself.

Yes. Very good question. The differences are several. First and foremost, the product itself. Commercially, we wanted to get into a frozen product the fresh product we use in 002. So we wanted to test and evaluate. And we've run another Phase II to show that the frozen product was effective in comparability stage. But the difference is that the frozen product will be used in the Phase III. That's number one. Number 2 is that the -- instead of injecting in 1 kidney, because our safety and tolerability has been quite good, it was very clear that we could inject both kidneys. So now we had access to the whole renal mass with these cells that we're capable of promoting healing and maintaining kidney function. So that is a big difference. Both kidneys are injected. In addition to that, one of the things that we wanted to do was look very carefully at the control situation. Our -- the 002 trial was an open-label trial, was not blinded. The Phase III will be sham or sham biopsy, sham injection, but they'll also be blinded. So it's blinded for us, and we -- so we haven't released follow-up information because it is a blinded trial, a big difference from the 002. And then I think one of the other major aspects, in the 002, we used eGFR. eGFR is only one of many endpoints that can be assessed. For the Phase III, it is a time-to-event trial. It's a composite with 3 components. One of them is a 40% decline in eGFR. One of them is dialysis or a 15ml per minute that is sustained for 1 month. And then the third component is death from either renal or cardiac. So endpoints were different, design was different, the product is different, but wholly same active biological ingredients. The patient population, which is an interesting difference, we saw effects in a broad range of patients from REACT. In the Phase III trial, we used, again, this 20 to 50ml for the study that's active here in the U.S., which is actively recruiting. But what we recognized was, is in working with payers the past year, is that they were more interested in seeing the sicker patients being used. As you know from our other trials in Phase II, we have effects on these sicker patients. And so what we've decided to do was to really focus on the later stage, 44 to 20 or the 3b/4 patients or sicker patients. So that's a big difference. We knew in 002 that we could get the effect, but that's a difference in the Phase III. And then lastly, what's happened since we ran the 002 trial is the basic standard of care for these patients has changed. It's really been a renaissance in health care for the kidney. We're seeing the SGLT2s, the MRAs, some situations where the triple therapy patients are put on all 3. So what we decided to do was stratify the 016 to accommodate this. And we feel that that's important because this will -- trial will read out when these are standard of care. And so those are some of the differences that -- what existed between 002 and the Phase III program.