ProKidney Corp. (PROK) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to UBS Organ Restoration Day. My name is [ Eric Massanza ], and I am one of the SMID-cap biotech analysts here. We're very pleased to have Bruce Culleton from ProKidney with us this morning. And before we jump in, I'm just going to read a couple of our disclosures. For important disclosures, please see the UBS Research Disclosures website, ubs.com. And if you have any questions, please reach out to us or your UBS sales representative. So with that being said, Bruce, I'll turn it to you real quickly. Could you give us a brief introduction of ProKidney and your REACT technology?

Sure. Well, I'll start with just a thank you for the invitation to join you today. And I'm delighted to be here, delighted to actually take your attendees through our company, our product and some of the evidence that we have and obviously, our path forward. So just a brief overview of our company. We're a publicly traded company on NASDAQ. We have about 200 employees -- full-time employees. Our offices are in North Carolina, in Raleigh and Winston-Salem -- our manufacturing facility is Winston-Salem. And we have an office in Boston where some of the executive team sits. We went public in mid-2022. Our primary asset has intellectual property that goes back for over a decade and is based upon well over a decade of preclinical work, but actually origination of the IP goes way back to some work that was done at Boston Children's Hospitals. Today, our asset is rilparencel. You may hear the term REACT. We are using term, primarily rilparencel. It's a product that's made from the patient's own kidney cells, and we generate -- we take a biopsy from patients, essentially transport that biopsy sample to our manufacturing facility and through a series of steps from digesting that sample to expanding it, putting it through a series of steps to select out the renal cells that we're primarily interested in. And after a harvest of those cells and formulation of those cells into our product, we cryopreserve it, ship it and back to the clinical study site. And at the study site, it's actually injected back into the outer lining of the patient's kidney or the kidney cortex.

Perfect. And just now you described rilparencel as certain cell type that you had selected. How did you go about deciding which cell types to contribute and include? And how do they -- if you know, how do they each contribute to kidney function?

Yes. So those cells -- the selection of those cells goes back to some really early preclinical work, which identified on a layer -- a series of layers of cells after digestion. And in some of this very early work, it was identified that a certain layer of those cells was more likely associated with improved outcomes in animals, improved kidney function and less inflammation on histology when you look at the animals' kidneys. So improved survival, improved kidney function and histology less inflammation. And so it's based upon that work, that the prior team involved, the scientists involved and the leaders of the team before ProKidney went public, actually said, "Okay, well, this is the product that we're going to focus on." And eventually, that product became a fresh product, a fresh manufactured product that was tested in early clinical studies. And over time, now we've gotten to a place where we have a cryopreserved product and that cryopreserved product is the product that's been tested in a Phase II study and is also now the same product that we're using moving forward in our Phase III program.

Got it. So it sounds like you had a lot of supportive preclinical animal data that helped to develop this. I also understand that in second half of next year, in 2025, we'll be getting an update on the mechanism. What information should we expect to learn from this? And how do you see it helpful from a regulatory perspective?

So I like to separate sort of as we talk about mechanism to sort of overlapping features or interest. So one is a regulatory piece and that's associated with primarily our CMC activities. This has a focus, not the only focus, but has a focus on potency assurance. The second is the biological mechanism. And so that biological mechanism is really trying to drive a better understanding of how actually does rilparencel work when it's injected into kidneys. This is of interest to regulators, but it's really not necessary for approval. And as you and your audience -- many of your audience may note today, there are lots of examples of drugs that have been approved by regulators without a really defined biological mechanism. But despite that history, we think this is a really important story to evolve. And we've got some new data that's being presented at the ASN this year that's talking a little bit about our product characteristics and the evolution of that story. I actually think that story is going to evolve over time. We'll definitely have some more data in the second half of next year, likely presenting that at the ASN again. That's sort of our target at this point in time. And I think that will help us sort of explain at least to the scientists that we work with and the physicians and the patients a better understanding of how this works when it's injected into kidneys. But I always consider this to be an evolving story that likely is going to be without an aha moment. It's not going to be one of those days where we wake up and we say, we've solved this. It's probably just a story that's going to evolve over time, and we'll have more of that data next year.

Perfect. We'll be looking forward to seeing that for sure. So rilparencel technology described is being leveraged for diabetic chronic kidney disease. Could you tell us a bit more about the standard of care in that disease and how that might be evolving?

Sure. Well, I mean if you're a patient today and you've got -- unfortunately, you have chronic kidney disease due to your diabetes, you are in a way better place today than you would have been 5 years ago with regards to your treatment options. And so there's been a real advance in care patients who have diabetic kidney disease, not just slowing progression, but also treating comorbidities. And some of the classes of drugs that are now available for patients include renin-angiotensin system inhibitors. They've been around for 15 to 20 years, and they were really the mainstay of treatment until 2021 when one of the first -- when the first SGLT2 inhibitor got approved in the U.S. for -- or at least got a label for a kidney indication, and that's expanded to other SGLT2 inhibitors. We have data from finerenone non-steroidal MRA, and now even more data on GLP-1s, all around their not just renal protection, but also cardiorenal protection, much broader. So if you're a patient, you've got diabetic kidney disease, clearly, you should be on one or some or both of -- one or many of these agents. The guidelines often are a little bit slow to evolve. The data comes first and then the guideline committees start coming out with their opinions, but there's a general feeling that we're now living within an era of 4 pillars of care and those 4 different agents that I just talked about, and that's great for patients. So what does that mean for us? I mean that's a question that pops up all the time. You've got this evolving landscape. What does that mean for a cell therapy company that's also in this space? We recognize that, a, these agents are either drugs or agents that patients can easily take at home, not as complex as what we have for ProKidney in our cell therapy. And so we're likely going to be sort of, after those agents are tried, we see ourselves in a position where the data will show. The data continues to show that some patients continue to progress. These 4 pillars of care are not a cure despite the advancements that have been made. Patients will continue to progress. And we see ourselves in that niche of patients have continued to progress, and now they're at a point where the providers are talking to them about needing dialysis or needing a transplant. And their GFR is often less than 30. So they've lost over 70% of their kidney function. And that's where we see -- should our Phase III program prove itself out, that's where we see as almost like a rescue therapy for those patients. And not only is that important for patients, but providers are telling us that they've got nothing else to offer those patients. So it meets the provider need too. I think it's really important for payers as well because payers want to keep people from preventing to go on to dialysis, and that's high cost for them. So it does meet the needs of not just patients but providers and payers as well. And we think there's a real unmet need for patients by focusing on that late-stage chronic kidney disease population.

Got it. And you've previously presented some of this data in the CKD setting. I wanted to discuss briefly the Phase II trial, RMCL-002. For our audience, could you quickly go over that trial and the design and your insights from there?

Yes, happy to. So the 002 study was a study that was conducted. I think it started in 2016 and the last patient last visit was at the end of 2023. It was conducted through COVID, right, which a lot of the data was collected actually during the COVID period and all the challenges that came with that. But in essence, it was a study that looked at patients with type 2 diabetes, the GFR between 20 mL and 50 mL per minute and those patients were randomized into 2 groups. And the first group was a group that after they had their kidney biopsy done, and the cells were made in our manufacturing facility they got injected. The product got shipped back to the site. It was a fresh product, not the frozen product that we're using now. It's a fresh product. It got shipped back to the site. And the initial injection went into the same kidney that was biopsied. And then 6 months later, a second injection was given in that same biopsy kidney. So that was group 1. And then group 2 was, if you got randomized to group 2, you essentially didn't get an injection. You've got a biopsy, you made your cells and you didn't get injected until a year later. And so that was a year of standard of care. All the sites, all the PIs, the investigators were told, "please treat your patients according to standard of care, good glycemic control, good blood pressure control, renin-angiotensin system management, treatment and there were primarily no SGLT2 inhibitors approved for kidney disease, but they were available for diabetic control." And so some patients got SGLT2 as part of that standard of care. So you had 2 groups and those 2 groups were essentially after treatment or deferred treatment. In the second group, after that 12 months, those patients ended up getting treated and then we followed them -- in the same way, and then we followed them over time. So Phase II study, here are the takeaways from my perspective, 2 big takeaways. So one is in the patients who were initially exposed to standard of care and then got treated, in that sort of that 12 months of standard of care, there was a decline in their kidney function. And what happened then after 12 months when those patients got injected, that decline in kidney function actually stabilized and it flattened out over the next 18 to 24 months. And so that was a signal to us in this population that there was a potential efficacy signal because we saw that layer decline and then a flattening of kidney function in those same patients. The other thing that perhaps had the most meaningful impact on us, and it certainly affected how we made a change to our Phase III program, was when we looked at those patients who had the highest risk of kidney failure. So their GFR was less than 30, and their UACR or their albumin excretion was greater than 300 milligrams per day. Highest risk of kidney failure generally accepted in the literature that these people are at the greatest risk. When we looked at those patients, what we saw was a real clear separation in patients who were treated with rilparencel versus patients who were not treated with rilparencel, sort of that active treatment versus deferred treatment. And then what we also saw, which was impressive was those patients who got deferred treatment standard of care initially, they lost about 6 mL per minute per year of kidney function a lot. And then when they got injected with rilparencel, we saw a real stabilization of their kidney function. So to us, that meant there's something that's working here. We've got some clinical data to support it. And so those were the 2 big takeaways from that Phase II study. And then I'll just skip forward. So that data -- we saw that data around this time last year. We presented it publicly, I think, around mid-November. We presented final data at a nephrology congress in Europe at the end of May. And we used that data to inform our Phase III program -- in our Phase III study, a study called 006. We used that data to narrow the inclusion criteria so that we're more focused on patients with advanced chronic kidney disease.

Got it. So it sounds you saw an efficacy signal. It helped you hone in on a specific subset of patients that you think will have the most benefit. And you've helped use that information designed around your Phase III.

You said it a lot more concisely than I did.

One thing I do want to touch on that real quick. What did you learn on safety and tolerability from that trial?

That's a great point. So, a, we didn't see any serious adverse events related to the drug itself, which was good. What we did see is we saw some serious adverse events related to either the biopsy or the injection. And that wasn't unexpected for us. You're putting a needle into a patient's kidney, someone with advanced kidney disease and whether it's a biopsy needle or an injection needle with the drug. And so even with the best training, you're going to see some events happen, mainly local hematomas or local bleeding events. What we did see was the rate of those events is very, very similar to what's been described for kidney biopsies in the literature. In fact, if you take a really critical look at our overall safety profile of all the patients that have been injected, of all the patients that have been biopsied, our serious adverse event rate is actually a little bit lower than what you'd expect based upon reports from the literature. And I think that just comes with patients who come in to studies are typically a little bit more stable than patients who aren't coming into studies and also the fact that we've got a training program that's wrapped around this. And so that training program, I think, also limits the serious adverse events.

Got it. Very helpful. Separately, you had another Phase II trial, REGEN-007. Could you tell us a bit about that trial design and some of the interim data you presented on that?

Yes, of course. So REGEN-007 is an interesting study for us because it's the -- it was the first time patients were exposed to our cryopreserved product, which is now being used in our Phase III program. And also the first time where we, as a company, but also the FDA got comfortable with injecting both kidneys because we had the safety data from our prior experience. And so now instead of just injecting the kidney that was biopsied in 007, we were injecting patients in the biopsied kidney when the product was available, and then in the contralateral kidney 3 months after the initial injection in the first kidney, not 6 months, but 3 months after. So cryopreserved product, and that treatment of injecting both kidneys. Now 007 type 1 and type 2 diabetic patients, so both type 1 and type 2. GFR was from 20 to 50. There was a cap on UACR of 5,000. And again, we learned something from 002. Patients who have like really substantial amounts of urine protein loss are less likely to benefit, I think, from almost any treatment. There's certainly a more challenging population. So we capped it at 5,000 milligrams per gram. And those patients were then randomized into 2 separate groups. And just to be clear, there was no control group. So this wasn't a randomized controlled trial. This was a randomized trial. And group 1 is a group that we've got most interest in because it's very similar to our Phase III study. Group 1, in essence, patients, if you get randomized to that group, you got a biopsy. We made a product, injected into the biopsied kidney, and 3 months later, we injected into the other kidney. It's a treatment paradigm, which is the same as our Phase III program. If you got randomized to the other group, you actually got a biopsy, and you've got a product made. That product was injected into your biopsied kidney, and then we waited. We waited for a trigger. And one of those triggers was either a decrease in GFR to a certain degree or an increase in UACR to a certain degree that was sustained and then you got a second injection. And so what I can tell you right now is that everyone's been enrolled. I think we enrolled 53 people. We presented interim data with a focus on group 1 because that mirrors our Phase III population, but really a focus on Group 1. And we really wanted to see what was the effect on eGFR after someone had been -- had gotten 2 injections and stayed on and had a follow-up for at least 12 months. We were really keen on seeing that follow-up for at least 12 months. So what we saw in Group 1 was in 13 patients, so we've talked about this before, we'd like to -- obviously, we're going to have bigger numbers next year. So this was an interim analysis. We had 13 patients. And what we saw was really a flattening of the EGFR. Again, no control group. So the EGFR change was preserved, we thought over the course of 18 months -- 15 months, over the course of 15 months, and we're still following those patients. But -- so we asked ourselves like, there's no control group here. What does this actually mean? So we tried our best to find a synthetic control group, an external control group that was outside of the study. So we worked with Dr. Nav Tangri, who's an expert in kidney failure risk prediction. He's a globally recognized expert, spends time on a lot of guideline groups, works with hospital systems and other companies. And so Nav was able to find us about 10 patients for every one patient in that group of 13 patients. And they were matched into a database that he had, which was a database involving patients who were previously recruited into SGLT2 inhibitor trials. And he came out with about 125 patients who are really well matched to those 13 patients. And what he saw was over the course of 12 months, those patients, as you'd expect, this high-risk population, they lost about 4 mL per kidney function, and our patients lost just under 1 mL for kidney function or there about. So we saw at least in a synthetic control group, it gave us even more confidence that we're seeing an efficacy signal with patients treated with rilparencel.

Got you. And what are the safety and tolerability that you learned from that same interim data?

Yes. I mean same thing, right? So same kind of picture that there were some SAEs related to small numbers related to the injection or the biopsy, but nothing related to the product itself.

Got it. And what do you expect to see with the full data. And what's the benchmark for clinical efficacy there?

Yes. I mean the full data, we expect will have full data in the first half of next year, latter part of the first half of next year. We're looking at eGFR and changing kidney function based upon eGFR. And my hope is that we continue to see a reasonably flat line with regards to change in kidney function. I don't expect an upswing, I'm also not expecting a precipitous decline. So I am looking for something that's hopefully around what you tend to see with just normal kidney function loss in patients that you get older, and that's around 1 mL per minute per year. That would be my hope.

Got it. Got it. And so with all that being said, I know you briefly touched on the PROACT 1 Phase III trial and some of the trial design. But just a quick recap on what that looks like now, and what the endpoints you're looking at are?

So that's, as you said, a Phase III study. It's focused on type 2 -- on patients with type 2 diabetes and eGFR between 20 and 35 mL per minute. So we really narrowed that eGFR range to patients with the most advanced kidney disease -- with more advanced kidney disease. And we're expecting the sites to follow standard of care before patients come into the study. The patients are then randomized to receive rilparencel or a sham/placebo, right? And I'll explain that in a little bit more detail. So the patient is blinded, principal investigator is blinded, the radiologist -- the interventional radiologist is not blinded. And if patients are randomized to rilparencel, we make the product after the biopsy when patients get injected twice in the same way that I just described for the 007 study. If you're randomized to sham or placebo, then it's really important that we try to protect that blind. So patients actually go to an interventional radiologist -- primarily an interventional radiologist, they get sham biopsy. So as far as the patients are concerned, there's a little nick in the skin, some pressure applied, procedure takes 20 to 30 minutes. So patients actually think they are a getting biopsy. There's -- and the patients leave, and they're monitored just as if you got a kidney biopsy. In 8 to 12 weeks, they come back, and they get a sham procedure. So this speaks to -- and I think in many ways, we've seen this in other disease states. It speaks to the power of placebo. And our regulators see the power of placebo, and that's why they want us to actually sham treat half of our randomized patients. And then just from an endpoint perspective, this is a time-to-event point study, and it's time-to-cardiovascular death, renal death, dialysis or transplant, or greater than 40% decline in eGFR. So those are accepted -- commonly accepted composite endpoints, and that's how the study is designed from an endpoint perspective, time-to-event point. So we anticipate we're going to need somewhere between 600 and 700 subjects enrolled. And our goal right now is 685. But again, it's time-to-event. So that might change based upon the events and the event rate that we actually see.

Got it. And I guess just to quickly summarize all the learnings from the previous Phase II. There is the cryo product now versus the fresh product. You are now injecting both kidneys instead of this one, and the injections are 3 months apart instead of 6, correct?

Correct. And we've narrowed the population, so that we've got patients with even more advanced kidney disease that are enrolling in the study.

Got it. Perfect. Now with PROACT 1, as you touched on briefly, there were some protocol amendments. Could you explain what those changes were, and why they were made?

So we made those changes in the first quarter of this year, and we submitted to the FDA, I think, in April and received IRB approval in March. And we actually enroll patients under this version of the protocol, starting in -- I think, it was starting in May or early June. And we continue to make some progress on enrollment. So the reason for the change was primarily around limiting that eGFR criteria, learning from our Phase II study, but we also took advantage of -- if we're going to go in and change the protocol, we took advantage of a lot of other things just to make the protocol easier, easier to understand, easier to execute, just some good house cleaning, I would say, that you normally do if you're going in and changing your protocol.

Got it. I know you mentioned briefly, both in the press release and in today's call that the goal for the Phase III is disease stabilization. In this context, does that mean like 0 milliliters per minute lost annually? Is that the target?

So no, the target is to keep people off dialysis, or to keep them alive without being on dialysis. So that's really the target of the study. Now the actual change in kidney function as measured by eGFR. That's a secondary end point. We will look at that, and we hope to see that we stabilize the kidney function. That doesn't mean 0, but it means doing a better job at preserving that kidney function for a longer period of time. And that might be a loss of 1 mL per minute per year, for example. But I think the more meaningful thing there would be if we could demonstrate that we can keep people off dialysis or alive longer and not end up on dialysis.