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spk05: Greetings and welcome to the Miro Matrix Medical Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Hannah Jeffrey. Thank you, Hannah. You may begin.
spk00: Good afternoon, and thank you for joining us today. Earlier today, Miro Matrix released financial results for the quarter and year ended December 31st, 2021. The release is currently available on the company's website at www.miromatrix.com. Jeff Ross, Chief Executive Officer, and Jim Douglas, Chief Financial Officer, will host this afternoon's call. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements, within the meeting of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical fact should be deemed to be forward-looking statements. All forward-looking statements are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the materials, risks, and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, March 30th, 2022. Mural Matrix disclaims any intention or obligation, except as required by law, to update or revise any information, financial projections, or other forward-looking statements, whether because of new information, future events, or otherwise. I will now turn the call over to Jeff.
spk02: Thanks, Hannah. Good afternoon, and thank you for joining us today.
spk03: For all the biotechnology investors on our call, the volatility we saw in our sector last year expanded into the broader stock market indices with the tightening interest rate environment and geopolitical tensions. On top of that, our specific segment of the Oregon transplant market experienced excessive volatility earlier this month, which I will touch on later. At MiroMatrix, we are focused on what we can control. and our team is committed to utilizing the cash on our balance sheet to accomplish key preclinical and clinical milestones. We are very excited about our future. MiroMatrix is a life science company pioneering a novel technology for bioengineering fully transplantable human organs to help save and improve patients' lives. We completed our IPO in June 2021, and we had $52.8 million of cash on hand at the end of 2021. We are well capitalized from our IPO, enabling us to achieve key milestones for our first three bioengineered organ programs, mural liver ELAP, mural liver, and mural kidney. In addition, we use a small portion of the IPO proceeds to build out our new headquarters, incorporating world-class in-house manufacturing capabilities, allowing us to manufacture our bioengineered organs under our own control and timelines. We are one of a small group of companies at the forefront of developing alternatives to human donor organ transplant. Within this small group of companies, there are important differences between the technologies being developed. Our proprietary technology is a scalable platform that uses a two-step method of decelerization and resellerization designed to effectively remove the porcine cell from the organs obtained from pigs and replace them with unmodified human cells. While our initial development focuses on liver and kidneys, our technology platform is also applicable to developing other organs, including hearts, lungs, and pancreas. We have collaborations with the Mayo Clinic, Mount Sinai, and Texas Heart Institute and have received strategic investments from Baxter, Cardiacs, and DaVita. Before we go deeper into our business, I would like to highlight four recent transplants that took place at leading transplant centers. Because of their unique situation, these transplants were not part of official FDA clinical trials. However, they demonstrate some of the great advancements occurring in the organ transplant field, culminating from decades of scientific research. We thank these institutions and the patients for their commitments to advancing the field of organ transplant. In September, surgeons at NYU Langone Medical Center successfully attached a genetically modified pig kidney to blood vessels in a brain-dead patient's leg. The kidney wasn't rejected and produced urine during a 54-hour observation period. Also in September, surgeons at the University of Alabama at Birmingham went a step further and fully implanted genetically modified pig kidneys into a brain-dead patient. These kidneys were also not rejected and produced urine during a 77-hour observation period. In November, NYU Langone Medical Center completed another transplant using a genetically modified pig kidney, and they were able to replicate the successful results of their first study. Finally, in January, surgeons at the University of Maryland Medical Center reported the first transplant of a pig's heart into a living human being. A 57-year-old man with severe heart disease who is ineligible for a traditional heart transplant received a genetically modified pig heart under a compassionate use exemption. This transplant was initially deemed success. as the patient didn't experience an immediate rejection and the organ continued to function for over two months. Sadly, the patient passed away on March 8th, and our condolences go out to his family. Doctors continue to analyze the results and have not given an exact cause of death that we are aware of. After the sad news of this occurrence, we experienced significant volume and volatility in our stock. It is important to reiterate that doctors have not established an exact cause of death. And it was a challenging case. While I can't comment on the specifics of any of these cases I just highlighted, what I can say is we continue to believe mural matrix technology is the most differentiated in the category. First, our technology does not rely on genetically modified pigs. And our decelerization step removes all living biologic material from the porcine organ resource. Therefore, we believe we will not be classified or regulated as a xenotransplantation. Second, we resellerize the decelerized organs with unmodified human cells, which we believe could result in a favorable organ rejection profile. These two important points of differentiation support our goal of being first to market with alternatives to human donor organ transplants. To help you further understand why we believe we will be first to market, it is essential to distinguish between our bioengineered organs and xenotransplantation. The FDA defines xenotransplantation as the transplantation of live cell, tissue, or organs from a non-human animal source. The agency has also published xenotransplantation guidance, which we believe will increase the regulatory timeline for that technology classification. Beyond the potential regulatory challenges for xenotransplantation, organ rejection is a significant issue xenotransplantation will have to overcome as well. Unfortunately, the length of the recent studies have been relatively short. and the long-term survivability of genetically modified living pig cells in humans remains unknown. Let me provide you a little deeper understanding of our technology platform, and I think this will help everyone better understand and appreciate how our bioengineered organs are differentiated among our peers. At the highest level, our proprietary technology is a scalable platform that uses a two-step method of decelerization and recelerization. The first step, decellularization, is a process that is designed to remove porcine cells from the organ obtained from pigs to create a purified acellular extracellular matrix, or ECM. The elimination of animal cells from the ECM is why we believe our bioengineered organs will not be regulated as xenotransplantation. To support this view, we rely upon two commercialized products we developed for hernia and wound care applications utilizing porcine liver decelerization, and neither of these products have been classified or regulated as xenotransplantation. In 2019, we licensed these products to a third party to focus 100% of our resources on developing bioengineered organs. During decelerization, our bioengineered organs are individually perfused with a gentle solution, to purify the organ while preserving the mechanical structures and vascular networks. This is a good time to point out that maintaining or replicating mechanical structures and vascular networks is a significant challenge for other organ transplant technologies such as 3D printing to overcome. The second step, resellerization, incorporates a perfusion process that reseeds BCM with unmodified human cells inside of bioreactors. The integration of unmodified human cells into the acellular ECM is why we believe our bioengineered organs will have a favorable organ rejection profile. We source the human cells from human kidneys and livers not placed for transplant. We have agreement with several organ procurement organizations, or OPOs, to secure our supply of human kidneys and livers. Hopefully, this brief discussion of our two-step technology platform helps everyone better understand and appreciate how our bioengineered organs are differentiated among our peers. This is a good spot to segue into an update on our three bioengineered organ programs. Our first program, Mural Liver ELAP, is our external liver assist product, or ELAP, and is designed to treat acute liver failure patients. The system consists of an external perfusion system and our initial bioengineered liver that will reside outside the human body to provide temporary liver support. We believe this will be the first ever clinical trial program designed to assess the ability of a bioengineered organ to deliver critical liver function in humans. We are pioneering a new class of therapy, and like other new classes of therapy such as CAR-T and gene therapies, the innovators work closely with the FDA to establish the original regulatory pathway to approval. We are very appreciative with how constructive the FDA has been during our regulatory interactions. And just this month, we received a formal response to our pre-IND submission. This was an important step in further establishing our regulatory pathway, and based on these interactions, we anticipate filing an IND application for mural liver ELAP in the second half of 2022 and initiating a Phase I clinical study shortly after our IND clearance is received from the FDA. Our second program is Mural Liver, our fully implantable bioengineered liver intended to treat patients with acute and chronic liver failure that we have been developing in collaboration with the Mayo Clinic. Mural Liver is bioengineered by resellerizing a decellerized porcine liver with human vascular, liver, and bile duct cells. Mural Liver will be implanted using orthotopic liver transplantation, where the native liver is completely removed and replaced with a Mural Liver. Orthotopic procedures are the standard of care for liver transplants, which means surgeons won't need to learn a new procedure. On the regulatory front, we have had consultations with the FDA, and we anticipate submitting our pre-IND request in 2023. Similar to mural liver ELAP, after the FDA responds to our pre-IND submission, we'll have a better sense of timing regarding the filing of our IND application for mural liver and our path to the clinic. In October 2021, in collaboration with the Mayo Clinic, we published a study in Nature Communications Biology announcing the first-ever heterotopic implantation of our bioengineered livers into large animals. The results showed that the pigs that received our bioengineered livers maintained detectable hepatic health in the graft, sustained blood perfusion, and demonstrated early liver function post-transplantation. This study provided excellent proof of concept regarding our bioengineered livers as we progressed towards human trials for mural liver and mural liver elapse. Our third program is mural kidney, our fully transplantable bioengineered kidney intended to treat patients with end-stage renal disease. Mural kidney was awarded the Kidney X Prize from the Department of Health and Human Services and the American Society of Nephrology in 2019. Mural kidney is bioengineered by resellerizing a decelerized porcine kidney with human vascular and renal-specific cells. Mural kidney will be implanted using heterotopic kidney transplant procedures where the native kidneys are left in place and a single kidney is grafted into the vasculature. Heterotopic procedures are the standard of care for kidney transplants. which means surgeons don't have to learn a new procedure. On the regulatory front, we will begin consultations with the FDA this year, and we anticipate submitting our pre-IND request in 2023. Consistent with our other programs, after the FDA responds to our pre-IND submission, we'll have a better sense of timing regarding the filing of our IND application for mural kidney and our path to the clinic. Switching to the operational front, One of the things I'm most excited about is our new headquarters in suburban Minneapolis. The state-of-the-art facility includes world-class in-house manufacturing capabilities. We believe our in-house manufacturing facility provides us with adequate capacity to manufacture our bioengineered organs under our control and timelines through clinical trials. As we continue to make strides towards fundamentally transforming the organ transplant industry, we are focused on ensuring the company has the right team to execute our strategy. As part of building out this team, we recently hired Jim Douglas as the company's new chief financial officer who brings significant life science experience. Jim joins us from Piper Sandler. where he was a managing director on the healthcare investment banking team, specializing in advising biotechnology and med tech companies. Prior to Piper Sandler, Jim was at Abbott Laboratories and PricewaterCoopers. Jim will succeed Brian Niebuhr, who will remain a vital part of Mural Matrix team in his new role as vice president of finance. Brian played a critical role through the company's IPO, and we are excited that he will work alongside Jim during this next phase of our development. In closing, a special thank you to the MiroMatrix employees who work tremendously hard on a daily basis to make bioengineered organs a reality for patients. We believe that MiroMatrix is uniquely positioned and well capitalized from our IPO to hit the milestones I have outlined today. we remain dedicated to saving and improving patients' lives with our bioengineered organs. Thank you for your continued support, and I will now turn the call over to Jim Douglas, our Chief Financial Officer, to discuss our financial results in the fourth quarter and full year 2021.
spk01: Thank you, Jeff, and it's truly an honor to be a member of the MiroMatrix team working towards one of the most aspirational and noble missions a company could have. On a personal note, My father received a kidney transplant after years of dialysis, so I've seen firsthand the positive impact organ transplants have on patients and their families. Moving to our financial results, MuralMatrix generates a small amount of licensing revenue from two commercialized products that we licensed to a third party in order to focus 100% of our resources on developing bioengineered organs. Cost of goods sold represents the royalty we paid at the University of Minnesota to license our platform technology. The licensing revenue and cost of goods sold should fully offset each other as both have $500,000 annual minimums. The gross loss position arises because we are reserving against a significant portion of the licensing revenue due to us while we are not reserving against the royalty payments we are obligated to make to the University of Minnesota.
spk02: Transitioning to operating expenses.
spk01: In the fourth quarter of 2021, total operating expenses were 5.3 million versus 2.2 million in the fourth quarter of 2020, a $3.1 million increase. For the full year of 2021, total operating expenses were 16.5 million versus 9.8 million for the same period in 2020, a $6.7 million increase. The primary drivers of the spending growth in both reportable periods are costs attributable to being a public company, hiring of additional employees, and the purchasing of clinical and lab supplies to advance our bioengineered organ programs. Net loss for the fourth quarter of 2021 was 5.5 million, or 27 cents a share, as compared to a net loss of 1.1 million, or 50 cents per share, for the fourth quarter of 2020. For the full year of 2021, net loss was $14.7 million or $1.28 per share as compared to a net loss of $10.3 million or $4.76 per share for the same period in 2020. The $4.4 million increase in net loss during the fourth quarter was primarily driven by the increase in total operating expenses as well as net investment gains that were recorded in the fourth quarter of 2020 without similar gains recorded in the fourth quarter of 2021. The $4.4 million increase in net loss for the full year was driven by the increase in total operating expenses and partially offset by a $2.4 million equity loss in affiliate recorded in 2020, which was significantly larger than the amount recorded in 2021. Net loss per share was impacted by the items mentioned, as well as the significant increase in our weighted average number of shares following our IPO. Finally, we ended the year with $52.8 million of cash, which we believe is sufficient to last us through 2023 and will allow us to achieve key milestones for our bioengineered organ programs that Jeff highlighted earlier. And with that, I will turn the call back over to the operator to open up the line for questions.
spk02: Thank you.
spk05: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.
spk02: Thank you. Our first question is from Alex Nowak with Craig Hallam Capital Group.
spk05: Please proceed with your question.
spk04: Great. Good afternoon, everyone. Jeff, I was hoping we could kick things off by getting a little bit more diving into the feedback you received from the FDA on eLAB and the pre-IND submission. What were some of the comments that you got back? Were you comfortable you already had the data necessary that FDA is requesting? And Where, in addition, do you think that more data is going to be needed over the next couple months here?
spk03: Yeah, I appreciate the question, Alex. Well, I can't go into the specifics exactly what the dialogue was or what some of the requests were. What I can say is that everything that we were asked, we believe, is very achievable. So, you know, as we talked about earlier, being the pioneer in a field, we were very We felt the feedback was incredibly constructive, straightforward, and most of it really relied around just a key area of boosting up some of our data packages that we've already been working on. So that's really what led to some of the guidance of increasing our confidence and being able to submit our IND and then moving forward with that. So we were very happy with the response.
spk04: That's good. And maybe just a little bit more, do you think there's going to be a need for additional animal studies, potentially different models beyond the pigs that you've done, potentially non-human primates, or is this more all bench data for the most part?
spk03: Yeah. I mean, the FDA always has the capability to ask for more at various steps, but we feel confident in the approach that we have. And no comments on anything that we received from them. Was there any requests for primate data associated with anything? So as I mentioned before, I think we have a really good path forward in understanding where we are to the IND. And I think given the guidance on where we put the timelines, that should signify the level of data that's needed. You know, the additional data that is needed isn't overly onerous or something that we feel isn't achievable.
spk04: Yep, understood. That makes total sense. So maybe speak to some of the actions you're taking to get transplant centers ready to start enrolling in the eLab liver clinical study here once you do get that IND accepted. And what sort of timeline or lead time should we expect from once IND acceptance is received to starting that clinical trial?
spk03: Yeah, that's a great question, Alex. And, you know, what we look at with that are what are some of the key centers that would be seeing these e-lab patients. So we look at it both from what's the capabilities of the centers, what are some of the physicians that are there, as well as the ability to bring those centers relatively active, relatively fast. You know, the best guidance in the field usually is, you know, we try to target around that 90 days post-IND approval to be able to have that center up and live. And those are the timelines that we're striving towards in terms of really working with centers moving forward to be able to move as fast as we possibly can once we have that IND in hand.
spk04: All right, perfect. And then just lastly, once you do file the IND, maybe walk us through the process towards seeking various FDA designations such as Breakthrough or FastTrack. And then any additional studies or publications, abstracts that we should be watching for over the remainder of the year?
spk03: Yeah, I think if we look at it from that standpoint, you know, once we have that IND, our focus is really going to be on that phase one clinical study and driving that forward. That's our opportunity to demonstrate the safety of our product. But again, you got to remember, we believe that this is going to be the first bioengineered organs. that's going to be cleared for IND so our focus is really going to be on executing that phase one clinical study and then we'll look at the options on the backside of that for a breakthrough or fast track or any of those other things once we have some of that clinical data in hand and then anything on the publications or studies to watch for yeah I think on the publication I wouldn't expect much on the elap over the next year really because we're moving towards the clinic, and that's really where our focus is in generating that human clinical data. On our other programs, you know, we continue to move those forward and continue to look at opportunities to publish when available, but our focus is really on generating those pre-IND packets and moving that forward as well. Understood.
spk04: Makes sense. Thank you, Jeff and Jim, for the update. Appreciate it.
spk02: Absolutely. Thanks, Alex, for the questions.
spk05: Thank you. There are no further questions at this time. I'd like to turn the floor back over to Jeff Roth for any closing comments.
spk02: Great. Well, I appreciate all the shareholders tuning in today and everyone else.
spk03: And we look forward to continue to execute on our plan. Thank you, everyone. Have a great day.
spk05: This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
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