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spk01: Good day, and welcome to the Miro Matrix Medical, Inc. Second Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one on a touchtone phone. To withdraw your question, please press star, then two. Please note this event is being recorded. I would now like to turn the conference over to Max Forgan with Gilmartin Investor Relations. Please go ahead.
spk00: Good afternoon, and thank you for joining us. Earlier today, Miro Matrix released financial results for the quarter ended June 30, 2023. 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 meaning of 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 facts including statements regarding the potential timing of pre-IND and IND filings and the initiation of related clinical trials, future expenses and revenue, capital requirements, cash runway needs for additional financing 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 descriptions of the material risks and uncertainties associated with our business, please see our filings, the Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, August 14, 2023. MiroMatrix 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. With that, I will now turn the call over to Jeff.
spk03: Thanks, Max. Good afternoon, and thank you, everyone, who has joined us for today's earnings call. We continue to make significant progress on addressing the items identified within the FDA clinical hold letter relating to our mural liver ELAP IMD submission. Our goal remains to submit a full response to the FDA in the second half of 2023, and we envision gaining authorization to treat patients with acute liver failure shortly thereafter. As a reminder, we are prioritizing mural liver ELAP in the near term because we believe it provides us with the fastest path to treating organ failure patients with our bioengineered organs. And that program provides us with valuable insight to our fully implantable bioengineer organ programs. As I consistently mentioned, we may decide to invest more heavily into any of our fully implantable organ programs if a partnership arises or circumstances change. Specific to mural liver ELAP, you may recall a couple of longer lead items that we are addressing as part of the clinical hold related to a preclinical animal study and biocompatibility study. I am happy to report that we commenced both studies during the second quarter and are nearing completion for the in-life portion of the animal study and the biocompatibility study. As a reminder, the animal safety study has two arms consisting of eight animals in each, four treats and four controls. This safety study is smaller than our original safety study that was submitted as part of the IND package. In our original animal safety study, there was no evidence of systemic toxicity in the mural liver ELAP group or the control group. However, there was substantial mortality in all groups due to the anesthesia required to provide therapy in a pig model, which makes longer therapies in an immobilized animal model challenging. The current safety study utilized improved immobilization techniques and anesthesia to reduce mortality in all animals. We are currently gathering all the data relating to this study to incorporate into our response to the FDA. Regarding the biocompatibility study, the FDA requested that we do additional testing regarding the final finished fluid path comprised of third-party components. The biocompatibility testing we submitted on our liver graft as part of the IND was not part of the FDA's questions, only the third-party components. We envision the biocompatibility study will be wrapped up by the end of the month. In addition to the clinical hold work, we continue to progress with our manufacturing and clinical readiness plans to ensure that once we obtain IND clearance, we can quickly initiate our phase one clinical trial. This involves ensuring our manufacturing process meets GMP standards and the preclinical sites are identified. As part of the clinical trial, each site will be consigned a Baxter Prismac system running software developed specifically for mural liver ELAP. In summary, we believe we are taking all the necessary steps to submit a thorough response to the FDA's clinical hold letter in the second half of this year, and we look forward to being able to treat patients with acute liver failure in a phase one clinical trial as soon as the FDA authorization is obtained. Moving beyond Mural Liver eLab to our fully implantable bioengineered programs, we continue to make progress and gain industry recognition for the promise of our fully implantable bioengineered programs. During the second quarter, we represented the cell and gene therapy sector to Capitol Hill policymakers at the Alliance for Regenerative Medicine's Congressional Fly-In. We presented at the American Transplant Congress, and we were awarded Best in Congress for our Mural Kidney poster. The National Kidney Foundation invited us to participate in their Innovation Day, highlighting innovative solutions for patients with renal failure. And the Association of Organ Procurement Organizations invited us to participate in their annual meeting to discuss how bioengineered organs may someday benefit transplant patients and how Mural Matrix is aligned with AOVO. We also had a manuscript published in Frontiers in Bioengineering and Biotechnology titled Sustained In-Vivo Perfusion of a Re-endothelialized Tissue-Engineered Kidney Graph in a Human-Scale Animal Model. that demonstrated how a bioengineered kidney graft could maintain patency with consistent blood flow. Those results established a foundational platform for our ongoing research and to add to our growing body of evidence on the potential of using bioengineered kidneys as an alternative to human allograft kidneys. Amidst all of this activity, our medical director, Dr. Jack Lake was presented a Lifetime Achievement Award by the American Transplant Congress, which really capped off a busy and rewarding second quarter. So I'd like to extend my congratulations to Dr. Lake for being acknowledged by the transplant community and a key thought leader in the industry. Looking forward to the rest of the year, we will be presenting at ARM's Tissue Engineering and Therapeutic Workshop and ASN's Kidney Week, And finally, AASLD's liver meeting. These upcoming high-profile events should sequence well with our responses to the FDA from Merrill Liver eLab. Now, I'll turn the call over to Jim Douglas, our Chief Financial Officer, to discuss our financial results.
spk02: Thank you, Jeff. We finished the second quarter of 2023 with unrestricted cash and investments totaling $20.4 million, which we believe is sufficient to operate our business through the second quarter of 2024. Additionally, we received cash payments for $457,000 of the $527,000 employee retention credit receivable subsequent to the second quarter, and the remaining amount has been confirmed for upcoming receipt by the IRS. Moving to the income statement, operating loss was $6.7 million and $14.8 million for the three and six-month periods ended June 30, 2023, respectively, as compared to $8.2 million and $15.4 million for the three and six-month periods ended June 30, 2022, respectively. The decrease in operating loss for comparable periods was primarily attributable to decreased research and development lab supply costs. Net loss was $6.5 million, or 24 cents per share, and $14 million, or 56 cents per share, for the three and six months ended June 30th, 2023, respectively, as compared to $8.2 million, or 40 cents per share, and $15.4 million, or 75 cents per share, for the three and six months ended June 30th, 2022, respectively. The decrease in net loss for comparable periods was primarily attributable to decreased research and development lab supply costs, in addition to one-time employee retention credits totaling $527,000 that was recorded as other income in the first quarter of 2023. With that, I will turn the call back over to the operator to open the line for questions.
spk01: We will now begin the question and answer session. To ask a question, you may press star then one on your touchtone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. The first question comes from Alex Nowak with Craig Hallam. Please go ahead.
spk06: Okay, great. Good afternoon, everyone. Sounds like the biocomp study is wrapping up here at the end of the month. The animal study potentially maybe ends in September. Those are my own words. So maybe could you resubmit to the FDA by the end of September, early October? What are your thoughts there?
spk03: Yeah, Alex, thanks for the question. As we highlighted in the call, I'm really happy with the progress that we made on the two kind of lead long poles of the tent that we've been working on. And As you highlighted, really excited that the biocomp will wrap up by the end of this month. Happy to report that everything that we've tested so far has passed. There weren't many surprises there, but it's good to get that passing grades on those as well. So we're just remaining on two additional tests that are scheduled to come in at the end of the month. On the preclinical safety side, as we highlighted, there's eight animals that make up that total cohort. Excited to report that seven of those are completed. We have one one test animal to complete, and then that's ready to go out to the pathologist and get the final report to be able to submit that. So if you look at the timing associated with that, certainly aren't going to provide additional guidance on that. I think our guidance is still the second half of this year, but I think the reassuring thing is that those tests are going well and looking forward to that data coming in so we can submit a very strong response to the FDA.
spk06: That is very helpful, Jeff. Appreciate it. You know, with regards to the preclinical animal study, the problem in the past was the pig model that you had to rely upon. And I think you had to engineer a unique pig model for the new preclinical study. Can you maybe speak to how that new animal model ultimately, you know, how did it fare with the seven out of the eight pigs so far? Were you pretty happy with those results?
spk03: Yeah, as you highlighted and we've highlighted in the past, I mean, our biggest complication was really coming up with a model where you could deliver, you know, this life-saving new type of technology. But to be able to do that, you got to immobilize the pig for, you know, a duration of time. And that was really the challenge in our initial study where we saw high levels of mortality associated with it. So even inside the control, which is just being anesthetized, we saw a fallout in the study of that happy to report that preclinical team here has done a phenomenal job of really redesigning that study and working with veterinarians working with thought leaders to be able to come up with the solution and we really tested that at various pilot studies and proved that out so we were able to roll that out and as part of our ongoing we have not lost any animals prior to the termination of the study itself when everything is up and running. We've still had some minor complications associated with things that you normally see in a preclinical study, like a catheter coming loose or something like that, that isn't really excluded as part of your cohorts. But when the therapy is actually being delivered in the new model, it's been incredibly stable, which gives us a lot of confidence to be able to round out this last test subject and move forward with the data set.
spk06: Okay, excellent. Good to hear. Maybe speak to the activities that you're doing underway on the clinical trial sites and getting transplant centers interested and ready to perform the first in human study. Have you picked the first site yet?
spk03: We have, as we talked about on our last earnings call, the list of activity associated with that. We see high level of interest within the clinical community to be part of our clinical study. We've now whittled that list down to eight, and we've pre-qualified at least five clinical sites that would be ready to go once we receive our IND clearance. In prioritizing those out of the gate, we have eight that are, you know, an additional three that are lined up ready to go as well, but we're really trying to evaluate is what are the clinical sites where we can be activated as soon as possible because we know there's going to be a lot of excitement and demand for this therapy once our IND is cleared.
spk06: Excellent. Maybe just last question. The Lancet last month had a full write-up on the cardiac xenotransplant patient that happened about a year ago or so. As you've reviewed the case study there, how does that influence your view around mirror matrix approach to organ development versus the xenotransplant approach? What are you hearing in the industry?
spk03: I think it still highlights. um the importance of the process that we're undertaking and going forward with and i think it highlights two things with the bioengineered organ approach that we've highlighted before and one is because we've already commercialized the matrix itself and as part of our decelerization process we get viral clearance so the side and the safety side from the from the porcine virus standpoint we feel we've already addressed that And the other big unknown, and the Lancet article looks at that as well, is immunosuppression. As we look at our therapy and the bioengineered approach, we're recelerizing with allogeneic human cells. So we believe that our immunosuppression protocol will be similar to the gold standard that's used today as part of cadaveric and organ donation today. So I think it was helpful to see you know, highlight how that case had gone forward, but some of the challenges associated with that, that I see more on the technology side that needs to be solved than the xeno side. And I think our bioengineered organ approach has really addressed those risks well as we move forward. So, you know, again, that's why the focus that we talked about before, the importance of ELAP as our first product, and then the read-through to the fully transplantable organ platform is It's really our first opportunity to start to demonstrate that with a bioengineered organ, which we believe then opens up the opportunity for our fully transplantable programs to continue forward.
spk06: Absolutely. All right. Well, appreciate the update. Thank you.
spk04: Absolutely. Thanks, Alex.
spk01: The next question comes from Matthew O'Brien with Piper Sandler. Please go ahead.
spk05: Hey, this is Phil on for Matt. Thanks for taking our questions. Just one or two for us. The first one being Jeff new role. I guess old role just kind of doubled up here. Can you give us your puts and takes on, you know, kind of stepping back into this role and how you're going to kind of double up the CEOs head of research there are indeed. Thank you.
spk03: Yeah, I appreciate the question, Phil. You know, that was partially a natural transition as you, as you have highlighted before, my background is strong in the technical side and it came from the R and D side. So as we really started focusing on where we needed to go forward, um, as we focused on ELAP, it really was a natural transition to be able to bring that role back in and really be able to focus at that allows us a lot of focus at the company. Um, with that said, um,
spk04: things continue to go very well from that standpoint.
spk05: Makes sense. And my final one, just being, you know, you've presented, you know, three posters, uh, at ATC, uh, association of organ procurement organizations, et cetera, et cetera. Just how is interest building over time and what are docs saying?
spk03: Yeah. I mean, it's exciting to go to those conferences and see the excitement around, um, around the technology and start to open up the opportunity to think about what the future could look like with these types of organs going forward. I think as we look at ATC, I think the community was certainly, say, surprised or impressed with the level and the quality of data that was put forth on the renal side, not only showing the revascularization sustained ability to perfuse the organ, but also some of the stuff that we're starting to show on the protein retention and the filtration effect of the resellerized kidney that we've started to release that data out. So I think from that standpoint, the community continues to be impressed and surprised with the progress that we continue to make.
spk04: Glad to hear it. And congrats again on all the progress made in the quarter. Thanks a lot.
spk01: This concludes our question and answer session. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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