Mineralys Therapeutics, Inc. (NASDAQ:MLYS) Q4 2023 Earnings Call Transcript

Mineralys Therapeutics, Inc. (NASDAQ:MLYS) Q4 2023 Earnings Call Transcript March 21, 2024

Mineralys Therapeutics, Inc. beats earnings expectations. Reported EPS is $-0.61, expectations were $-0.85. MLYS isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Welcome to the Mineralys Therapeutics Fourth Quarter and Full Year 2023 Conference Call. [Operator Instructions] This call is being recorded on Thursday, March 21, 2024. It is now my pleasure to introduce your host, Dan Ferry of LifeSci Advisors. Please go ahead, sir.

Daniel Ferry: Thank you, operator. Good morning, everyone, and welcome to our fourth quarter and full year 2023 conference call. Earlier this morning, we issued a press release providing our fourth quarter and full year 2023 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 the call for Q&A. Before we begin, I would like to remind everyone that this conference call and webcast 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, March 21. 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 morning, everyone, and welcome to our fourth quarter and full year 2023 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 a brief overview of the business and recent milestones, followed by David, who will discuss our clinical programs and then Adam will review our fourth quarter and full year financial results before we open up the call for your questions. Looking back over the past year, we've had so much to be proud of at Mineralys. Our entire team worked together to achieve several key milestones on both the clinical and corporate level. I believe this success speaks to the dedication the team has to our exciting programs that target diseases driven by abnormally elevated aldosterone.

In 2024, we're working towards achieving several clinical events, which are expected to expand the data package of lorundrostat. We believe access aldosterone is common and is a significant contributor in approximately 25% of all hypertension patients and is tightly linked to obesity. Aldosterone is also a significant driver of cardiorenal, metabolic syndrome and thus our pursuit of an aldosterone targeted treatment approach that has the potential to benefit millions of patients who are impacted by hypertension, kidney disease and heart disease. I'm pleased by the significant progress our clinical team continues to make in implementing our development strategy for lorundrostat. Most importantly, we remain on track with our pivotal program for hypertension which includes the 2 pivotal clinical trials Advance-HTN and Launch-HTN.

Advance-HTN is the only study of an aldosterone directed therapy that we know of that is utilizing the standardized background treatment approach, and we believe will be highly informative to lorundrostat's profile. Since initiating the trial in April of 2023, we have found the rigorous nature of the trial's design has impacted the pace of enrollment. As we discussed on our earnings call in November, we made some meaningful modifications to the Advance-HTN protocol and execution plan while maintaining our focus on delivering the highest quality data set. Based on our modeling, we have narrowed our guidance for top line data delivery to the fourth quarter of this year. The trial is designed to allow us to demonstrate the value of lorundrostat when added to standardized, optimized AHA guideline background treatment in patients with uncontrolled or resistant hypertension as confirmed by 24-hour ambulatory BP measurement.

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 creating favorable access via the payers. We then initiated the Launch-HTN Phase III trial in the fourth quarter of 2023, which is expected to have top line results in the second half of 2025. The objective of this trial is to model the real-world setting of lorundrostat when added to existing treatment front-controlled or resistant hypertension in the primary care setting. This trial is expected to enroll up to approximately 1,000 adult subjects. Throughout the past year, we published or presented follow-up data and analysis from the completed Target-HTN trial which was our Phase 2 trial of lorundrostat in hypertension.

These additional data have further supported our strategy for developing lorundrostat as a targeted approach to treat uncontrolled or resistant hypertension as well as our design of the pivotal program. The latest example of this came in the fourth quarter when we presented the data at the American Hypertension Association Scientific Sessions meeting in 2023. This new analysis showed that increased BMI was correlated with both increased Leptin and increased aldosterone production. These data expand our understanding of mechanisms that may link the increasing prevalence of obesity to a parallel increase in uncontrolled and resistant hypertension. Our Explore-CKD Phase 2 trial for lorundrostat in patients with hypertension and stage 2-3b chronic kidney disease was initiated in late 2023.

The intent of this proof-of-concept trial is to demonstrate the benefit of lorundrostat in reducing blood pressure and provide supportive evidence for the potential benefit on chronic kidney disease. The initial design was to compare the efficacy of lorundrostat alone and in combination with an SGLT2 inhibitor in patients naive to SGLT2 inhibitor treatment. The evolving treatment paradigm in CKD resulted in the proportion of CKD patients being treated with SGLT2 inhibitors, rapidly increasing over the past year. To the point where identification of SGLT2 naive subjects has proven to be greater than anticipated, a greater-than-anticipated impediment to trial enrollment. Therefore, we will be modifying this trial designed to enroll patients who are either on SGLT2 inhibitors or naive to SGLT2 inhibitor treatment.

Additionally, all trial participants will remain on an SGLT2 inhibitor throughout the conduct of the trial. Dave will provide more detail on the trial design changes, but these changes ensure that all trial participants have access to SGLT2 inhibitor treatment while allowing us to achieve our objective of evaluating the benefit of lorundrostat on BP reduction in kidney disease. We continue to anticipate top line data from this trial within the prior stated guidance of Q4 2024 to Q1 of 2025. As I mentioned earlier, our team has been growing over the past year as we ramped up our clinical activities. We recently appointed Dr. Minji Kim, our new Chief Business Officer. She brings a solid track record of generating value for multiple companies and brings more than two decades of experience in business development, strategic leadership and scientific research.

During her career, she has worked with biotech companies in the U.S. and overseas across broad therapeutic and technical areas. 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 on 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 morning, everybody. Today, I'll provide an update on the pivotal clinical program for lorundrostat, and then I'll give a summary update on the revised Phase 2 Explore-CKD trial of lorundrostat for hypertension and CKD. We were very pleased to announce at the end of the fourth quarter that we had dosed the first subject in our pivotal Launch-HTN trial. As Jon mentioned earlier, this is the second part of our pivotal clinical program for lorundrostat for treatment of hypertension. Total enrollment is expected to be approximately 1,000 subjects. Launch-HTN is a randomized, double-blind placebo-controlled 3-arm trial. The design is similar to the Target-HTN proof-of-concept trial, enrolling subjects who will remain on their previously prescribed background regimen of 2 to 5 anti-hypertensives.

Subjects will be randomized 1 to 2:1 to either placebo, once daily 50 milligrams of lorundrostat or once-daily 50 milligrams of lorundrostat, but with the option to titrate up to 100 milligrams once daily as needed after week 6. The primary endpoint for this trial will be the change in systolic blood pressure as measured by automated office blood pressure, which was the same primary endpoint we used in Target-HTN. We believe this endpoint reflects a real-world measurement that will be relevant to the primary care provider this trial targets. In addition, subjects from this trial will be offered the opportunity to roll over into an ongoing open-label extension trial. Now turning to the pivotal Advance-HTN trial. We're progressing on track after implementation of the protocol changes and operational enhancements we discussed in our Q3 2023 earnings call.

As Jon noted in his comments, Advance-HTN is a state-of-the-art, extremely rigorous hypertension trial designed and executed in collaboration with the very experienced cardiovascular research team at the Cleveland Clinic. We placed all trial participants on a standardized AHA guidelines directed treatment regimen at maximum tolerated doses. In addition, we used real time -- we're using real-time monitoring of adherence and blood pressure assessment utilizing the gold standard 24-hour ambulatory BP measurement. In this way, we exclude any subjects whose poor blood pressure control is due to non-compliance, inadequate doses or choice of background medications or white-coat hypertension. This ensures that an extremely high proportion of trial participants truly have uncontrolled or resistant hypertension.

We also believe, given the broad targeting of other standard mechanisms of hypertension, the randomized trial population will be enriched with aldosterone-dependent hypertensive subjects more likely to derive benefit from lorundrostat. We believe that the overlap between obesity-associated hypertension and aldosterone-mediated mechanisms is fundamental and our prespecified analysis of the Target-HTN data presented in our JAMA paper last year supports that hypothesis. The planned analysis of the Advance-HTN trial includes a well-powered confirmatory test of the predictive value of obesity on the efficacy of lorundrostat. We believe that in the clinical setting inability of an optimized 2 or 3 drug standard anti-hypertensive regimen to reduce blood pressure sufficiently to go in the setting of obesity will be a straightforward approach to identifying candidates for treatment with lorundrostat.

In addition, we plan to continue to explore other positive and negative predictive tools using an unbiased artificial intelligence model to expand the repertoire of useful tools for targeting lorundrostat to individuals most likely to drive long-term clinical benefit. We expect to announce top line data from the Advance-HTN trial in the fourth quarter of 2024, and top line data from Launch-HTN in the second half of 2025. Moving on to our hypertension and CKD program. As Jon mentioned earlier, we're making some modifications to our Phase 2 Explore-CKD trial, ensuring all trial participants have access to an SGLT2 inhibitor. We believe this amendment better reflects the current treatment approach for subjects who have CKD. We'll be reducing the lower limit of baseline eGFR from 45 to 30 ml per minute per 1.73 meter squared which will allow us to eliminate the original Part B profiling portion of this trial.

Lastly, the treatment periods will be reduced from 8 weeks to 4 weeks, which we believe will still provide ample time to demonstrate clinical benefit on blood pressure as well as insights into kidney benefit assessed by albuminuria. The primary objective remains reduction in elevated systolic blood pressure, which we believe is an important contributor to progression of CKD, particularly in individuals with obesity and cardiovascular renal metabolic syndrome. In terms of how we'll be treating subject enrolled to date, they will be separately analyzed and offered participation in the open-label extension trial contributing to the characterization of long-term safety. We maintain our expectation to announce top line data in the fourth quarter of this year or the first quarter of 2025.

We look forward to keeping you apprised of the status of lorundrostat development program. I will now turn the call over to Adam who will provide a financial review for the fourth quarter and full year 2023. Adam?

Adam Levy: Thank you, Dave. Good morning, everyone. Today, I will discuss select portions of our fourth quarter and full year 2023 financial results. Additional details can be found in our Form 10-K, which was filed with the SEC earlier today. We ended the year with cash, cash equivalents and investments of $239 million compared to $110.1 million as of December 31, 2022. In February 2024, we completed a private placement financing for gross proceeds of approximately $120 million before deducting fees and expenses. 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. The R&D expenses were $70.4 million for the year ended December 31, 2023, compared to $26.3 million for the prior year.

R&D expenses for the quarter ended December 31, 2023, were $23.7 million compared to $7.8 million for the same quarter of 2022. The annual increase in R&D expenses was primarily due to increases of $21.4 million in preclinical and clinical costs driven by the initiation of the lorundrostat pivotal program beginning in the second quarter of 2023, $9 million in license fees upon achieving development milestones of lorundrostat in 2023, $7.8 million in clinical supply manufacturing and regulatory costs, $5.6 million in higher compensation expenses resulting from additions to headcount and stock-based compensation, and $0.3 million in other research and development expenses. G&A expenses were $14.3 million for the year ended December 31, 2023, compared to $5.2 million in the prior year.

G&A expenses were $4 million for the quarter ended December 31, 2023, compared to $2.2 million for the same quarter of the prior year. The annual increase in G&A expenses was primarily due to $3.8 million in higher professional fees associated with operating as a public company, $3.4 million in higher compensation expenses resulting from additions to headcount and stock-based compensation, $1.1 million of higher insurance expenses, primarily associated with new director and officer insurance policies, and $0.8 million in higher other administrative expenses. Total other income was $12.8 million for the year ended December 31, 2023, compared to $1.7 million for the prior year. Total other income was $3.3 million for the quarter ended December 31, 2023, compared to $0.9 million for the same quarter of 2022.

The annual increase was primarily attributable to increased interest earned on our investments in money market funds and U.S. treasuries. Net loss was $71.9 million for the year ended December 31, 2023, compared to $29.8 million for the prior year. Net loss was $24.4 million for the quarter ended December 31, 2023, compared to $9.1 million for the same quarter of 2022. The annual increase was primarily attributable to the factors I described earlier. With that, I'll ask the operator to open the call for questions. Operator? Operator, we're ready for questions.

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