Mineralys Therapeutics, Inc.

And welcome to the Mineralis second quarter 2023 earnings 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 our host, Dan Ferry of LifeSci Advisors, Please go ahead, sir.

Thank you, operator. Good afternoon, everyone, and welcome to our second quarter 2023 conference call. Today, after the market closed, we issued a press release providing our second quarter 2023 financial results and business updates. A replay of today's call will be available on the investor's section of our website approximately one 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 will 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, August 7th. 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 John Congleton, Chief Executive Officer of Mineralis Therapeutics. John?

Thank you, Dan. Good afternoon, everyone, and welcome to our second quarter 2023 financial results and corporate update conference call. I'm joined today by Adam Levy, our Chief Financial Officer and Chief Business 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 second quarter financial results before we open up the call for your questions. Generalis is focused on addressing aldosterone-driven cardiorenal disorders that now include both hypertension and chronic kidney disease, or CKD. We believe the growing prevalence of abnormal aldosterone levels is linked to the rising obesity epidemic. This shift in the underlying biology of hypertension, and we believe in CKD as well, requires new therapeutics that reduce circulating aldosterone. Based on our preclinical phase 1 and phase 2 data, we believe we have a highly selective, effective, and well-tolerated aldosterone synthase inhibitor in lorundrastat to address this growing need and make a meaningful difference in the lives of millions of patients. The first half of the year has been a very productive one for the Mineralis team, and we're expecting this momentum to continue through the second half of 2023 and into 2024. The most significant amongst our recent milestones is the initiation of patient dosing for the advanced HTN trial during the second quarter. This is the first of two clinical trials under the planned pivotal program to evaluate the safety and efficacy of lorunderstat for the treatment of uncontrolled or resistant hypertension. And we expect to have top-line data in the first half of 2024. The second pivotal trial, LAUNCH-HTN, which will enroll a larger population of uncontrolled or resistant hypertension subjects, is expected to begin in the second half of 2023. We expect data from the LAUNCH-HTN trial in mid-2025. In addition, after completing either of the pivotal trials, subjects will be offered the opportunity to participate in an open label extension trial, which has already begun enrollment. This trial will contribute to our long-term safety data set. Last month, we announced the expansion of our clinical development of lorunderstat as a potential therapy to treat patients with stage 2 to stage 4 chronic kidney disease. The role of aldosterone in the progression of chronic kidney disease is well established. This study is anticipated to begin enrollment before the end of this year, And we'll have top-line data readout in Q4 2024 to Q1 2025. More than 35 million adults in the United States suffer from chronic kidney disease. And we believe the Orunder stat has the potential to provide significant clinical benefit for many of these patients, given the role that abnormally elevated aldosterone plays in the progression of this disease. Let me now turn the call over to Dr. David Rodman, Chief Medical Officer of Mineralis Therapeutics, who will provide additional details on our ongoing clinical program for lorundrastat. Dave?

Thank you, John, and good afternoon, everyone. Today I'll provide an overview of the pivotal clinical program for lorundrastat that, as John touched on earlier, has commenced enrollment. I will then provide a summary overview of the planned Phase II trial of lorundrastat for chronic kidney disease. Since the initiation of the advanced HCN trial, we remain on track. During this time, we have continued to onboard additional sites and randomized subjects into the trial. As a reminder, it is a randomized, double-blind, placebo-controlled pivotal trial that will enroll up to approximately 300 adult subjects with uncontrolled or resistant hypertension. Patients failing to achieve their blood pressure goal on two to five antihypertensive medications are eligible for the trial. One-third of subjects will be randomized to placebo, one-third to 50 milligrams lorundrastat once daily, and one-third to 50 milligrams of lorundrastat once daily, and then increased to 100 milligrams at week four if the blood pressure goal has not yet been achieved and if they meet certain safety criteria. The primary endpoint of the trial will be change in systolic blood pressure as measured by 24-hour ambulatory monitoring at week 12 in the two active arms versus placebo. We anticipate having top-line data from this trial in the first half of 2024. The second part of our pivotal program for lorundrastat is the larger LAUNCH-HTN trial, which is expected to be initiated in the second half of 2023. This randomized double-blind placebo-controlled three-arm trial is planned to have a similar design as the advanced HTN pivotal trial, except subjects will remain on their previously prescribed background regimen of two to five antihypertensives, including a thiazide or thiazide-like diuretic. In the launch HTN trial, randomization will be stratified by body mass index, less than 30 kilograms per meter squared, versus greater or equal to 30 milligrams per meter squared. Approximately 1,000 subjects will be randomized one-to-one-to-one to either placebo, once daily 50 milligrams of lorundrastat, or once daily 50 milligrams of lorundrastat with the option to titrate in a manner similar to the advanced HTN trial. The top-line data from the launch HTN trial are expected in mid-2025. In addition, subjects from both pivotal trials will be offered the opportunity to roll over into an ongoing open-label extension trial. Now, as John mentioned earlier, we recently announced plans to initiate an expanded phase 2 trial of lorundrastat alone and in combination with an SGLT2 inhibitor as a potential therapy to treat patients with stage 2 to 3A chronic kidney disease. This trial will be conducted in two parts. Part A will be a proof-of-concept trial with the primary outcome measure being change in proteinuria at week 12 compared to placebo. A very good surrogate for the registration endpoint, which is reduction in the rate of decline in glomerular filtration rate. Part A is a randomized double-blind placebo-controlled trial that will consist of two treatment periods. We plan on enrolling up to 100 subjects with mild to moderate kidney disease and persistent proteinuria despite treatment with an ACE inhibitor or an angiotensin receptor blocker. Subjects will receive either one stalely combination treatment with 50 milligrams of lorundrastat plus 10 milligrams of farcega or placebo for 12 weeks. This will be followed by a second 12-week treatment period during which subjects in the active arm will receive 50 milligrams of lorundrastat alone. As I mentioned, Part A of the trial will evaluate the benefit of lorundrastat in combination and alone on proteinuria in this population. Part B of the trial will be for profiling subjects with lower kidney function. The second part of the trial is an open-label single-arm dose escalation trial that will enroll approximately 20 subjects with moderate to severe chronic kidney disease with or without hypertension, despite treatment with an ACE inhibitor or an ARB. Subjects will receive four weeks of treatment, once daily, of 25 milligrams lorundrastat, followed by an increase in dose to 50 milligrams of lorundrastat for another four weeks. Part B of the trial will characterize the safety profile of lorundrastat in a more renally compromised population. As this is an exploratory trial, we may conduct interim analyses of the data at one or more time points. We expect to have top line data from this trial between the fourth quarter of 2024 and the first quarter of 2025. The progress we continue to make this year speaks directly to the quality of our cross-functional team members, the equally important teams at our trial sites, and most importantly, trial subjects who anxiously wait for a new approach to treating their hypertension and associated aldosterone-mediated complications like chronic kidney disease and heart failure. We look forward to keeping you appraised of the status of our pivotal program as progress on our journey to transform the antihypertension landscape unfolds. Now I'll turn the call over to Adam, who will provide a financial review for the second quarter of 2023. Adam?

Thank you, Dave, and good afternoon, everyone. Today I will discuss select portions of our second quarter 2023 financial results. Additional details can be found in our Form 10-Q, which will be filed with the SEC later today. We ended the second quarter with cash, cash equivalents, and investments of $282.8 million compared to $110.1 million as of December 31, 2022. The company believes that its cash, cash equivalents, and investments as of June 30, 2023 will be sufficient to allow the company to fund its planned clinical trials as well as support corporate operations through mid-2025. R&D expenses were $11.9 million for the three months ended June 30, 2023, compared to $5.6 million for the same period last year. The increase in R&D expenses was primarily due to increases of $4 million in preclinical and clinical costs driven by the initiation of the Lurundra-STAT pivotal program in the second quarter of 2023, $1.3 million in higher compensation expenses as a result of additions to headcount, and $1 million in clinical supply, manufacturing, and regulatory costs. G&A expenses were $3.9 million for the three months ended June 30, 2023, compared to $0.9 million for the same period last year. The increase in G&A expenses was primarily due to $1.4 million in higher compensation expenses as a result of additions to headcount, $1.1 million in higher professional fees associated with operating as a public company, $0.3 million of higher insurance expense associated with new director and officer insurance policies, and $0.2 million in other administrative expenses. Total other income was $3.6 million for the quarter ended June 30, 2023. compared to $0 for the same period last year, which was primarily attributable to interest earned during the three months ended June 30, 2023, on the company's investments in money market funds and U.S. Treasuries. Net loss was $12.1 million for the quarter ended June 30, 2023, compared to $6.5 million for the same period last year. The increase was primarily attributable to the factors described earlier. With that, I'll ask the operator to open the call for questions. Operator?

Thank you. We'll 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 would 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. Our first question comes from Michael DeFiore with Evercore. Please, go ahead.

Hi, guys. Thanks so much for taking my questions, and congrats on all the progress. Two for me. The first one regarding the Phase 3 launch hypertension trial, it's, again, the design is similar to Phase 2, except that in this Phase 3 trial, patients could be on as much as five background meds instead of the three that are there capped in Phase 2. So could this non-standardized background regimen that could include up to five drugs cause a greater placebo effect? And how should we think about the placebo effect here versus the much smaller, more tally-controlled Phase 2 trial? And then I have a follow-up.

Yeah, Mike, let me try to give you a background on that. So, both advanced HTN and launch HTN allow patients on two to five background meds. Now, we know in advanced HTN, we're taking them off of their prescribed treatment and putting them on a standardized treatment. launch HTN, they could be on two to five meds, we will stabilize them on that prescribed background through a two-week placebo run-in period. And we believe that two-week placebo run-in period should largely take care of what your question points out. So whether they're on two, three, four, five meds, we'll make sure they're compliant, and we will use our AI cure smart technology to ensure that compliance. And if at that point, compliant on whatever the regimen is from two to five, they no longer hit the criteria of being a hypertensive, then they would not be randomized. But we think that stabilization on their background will give us a true sense of their blood pressure. If they continue to be above, I think it's 135 millimeters of mercury, then they'd be randomized. So we're not overly concerned about the number of meds causing an odd reaction within the placebo group.

Got it. Very helpful.

And Mike, I'd be remiss if I didn't say that's very similar to what we had with Target. Target was greater than two background meds. And so we know that we had patients in Target on two, three, four, even five background meds. So it's a very similar construct. And at the end of the day, Mike, it's kind of the real-world version where we're tightly curating advanced HTN generating class one evidence, LAUNCH-H10 probably has a little bit more of a real-world feel.

Got it. Super helpful. Second question is more of a big picture one. With the recent update to the CKD trial, it seems as if you're no longer 100% certain that you'll be pursuing a separate dedicated CKD indication, that it'll be dependent on how this phase two goes. and that this is phase two's primary purpose is to support the hypertension indication. Just what led to the sudden change and expansion wanting to expand the CKD trial?

Yeah, Mike, I appreciate the question. I'll go back to really the genesis of the company, and our focus has been from the beginning, how do we bring a targeted solution to both hypertension and beyond? And beyond for us was broadly cardiorenal indications. In the case of CKD, that's our first step into that beyond world of cardiorenal. And the reason CKD is such a natural fit is that we know that change in proteinuria is a really good marker to predict clinical response. And for a CKD indication, that clinical response, as you heard Dave say, is slowing the rate of decline of glomerular filtration rate. So it's a really good marker for us to get a keen sense for the benefit that Lurundersat can add. I'll also point out that the CKD proof of concept study really serves two purposes, and one is to give us a de-risk view of what lorundrastat can do in CKD. We know that aldosterone plays a role there based on the therapeutics, based on research, and we know that lorundrastat does, you know, 65% to 70% reduction in circulating aldosterone. So it'll give us an indication of the potential the potential value in chronic kidney disease, but it will also show us the value in reducing proteinuria for the hypertension population writ large because we know there's significant overlap. We've done qualitative research with physicians from endocrinologists, nephrologists, cardiologists, and really next to the reduction of blood pressure and safety, probably the third rated attribute is benefit on proteinuria. And so this study basically serves two purposes. I think it really bolsters the attributes of lorunderstad as an antihypertensive, but it also gives us a real clear sense of what the benefit would be in the CKD population to inform future development in chronic kidney disease.

Got it. Very helpful. Thank you. Yeah, absolutely.

Our next question comes from Greg Harrison with Bank of America. Please go ahead.

Hey, good afternoon. Thanks for taking the question. One on CKD. With that trial starting and getting some interim looks a little over a year from now, hopefully, what are you looking for in terms of protein area reduction that you think would be meaningful and how that could translate into EGFR benefit? And then kind of related to that, How would you expect the efficacy you see there in CKD to be affected by BMI, and how would that affect your later stage development?

Yeah, let me, Greg, appreciate the question. Let me answer the first part, and maybe I'll have Dave talk about the BMI component for it. You know, and I'm not going to guide to a range. I think there's a lot of evidence out there that It says if you can mitigate aldosterone, you see a benefit. We think reducing circulating aldosterone is a more complete way to do it. What you typically see with an SGLT2 inhibitor is a 30% to 40% reduction in proteinuria over a 12-week period, which is the duration of our proof-of-concept study. So we're looking for a clinically meaningful reduction beyond that. Don't know that I want to guide to that just yet. As far as how that would directly translate to benefit in EGFR, I think it's premature to opine on that as well. But we're clearly looking to find a meaningful addition. You know, we think there's significant need that remains, even though the SGLT2 inhibitors are quickly being adopted in the treatment of CKD. There remains a lot of unmet need, even with their advances. But let me turn it over to Dave, and he can address your question on BMI. Thank you.

Sure. So your question was, do we expect to see something similar to hypertension where larger BMI results in more aldosterone and a better response? It's an interesting question. Now, typically, people who have proteinuria in this group of patients are often going to have type 2 diabetes, which is a product of obesity. And so I think the majority of subjects are going to be obese, and therefore we probably won't have much of an opportunity to test at a statistical level whether the non-obese patients have a very different response. Also, the mechanisms that increase aldosterone in chronic renal disease are often related to just volume through the more classical pathways as opposed to So, good question. We'll be looking for that, and we'll let you know.

Great. Thanks for taking the question.

Our next question comes from Jack Pandovano with Stifel. Please go ahead.

Hi. This is Jack on for Annabelle. Thanks for taking our question. So firstly, the advanced HTN study doesn't necessarily enrich for BMI, but in target HTN, the lower BMI patients had less of a benefit in systolic blood pressure reduction. Do you have any pre-specified analyses to identify the better efficacy in patients with BMI over 30? And are you sufficiently powering the trial to reach STAT-SIG even if the 25 to 30 BMI patients turn out not to have that hyperaldosteronism link.

Well, another great question. So, your question was, since we're not stratifying for BMI, are we going to be able to look at the BMI effect? So, just for clarification, we're stratifying for two drugs versus three, and the reason we chose to do that is because it's critical in understanding whether this drug has a place as the third-line agent for hypertension, and we believe it will in people with high aldosterone, who, as you mentioned, are often obese. So, we do have pre-planned analyses looking at BMI as a categorical, again, BMI less than 30 versus greater than or equal to 30 kilogram per meter squared, and we'll be looking for that. Now, your last question is a great question, which was, are we powered for that? And that has as much to do with effect size as it has to do with the size of the trial. So if we see a similar effect size difference to what we saw in target HTN, yes, we're powered for that. But it's not a primary. It's a secondary.

Got it. And then a follow-up, if I may, on a more broad scale. Can you talk about the level of monitoring you might anticipate will be required for lorundrastat? compared to MRAs regarding hyperkalemia. Would you anticipate that to be as burdensome for physicians to monitor their patients?

No, it won't be any more burdensome than the MRAs. And we'll be looking to see whether there's any evidence that our strategy which is to instead of blocking aldosterone production for the entire day with 50 milligrams, we do have a bit of a window so that subjects can excrete potassium later in the 24-hour period. So there's reason to be optimistic that it will be a low burden. What we're thinking will happen is that patients will be put on this drug And as standard of care, they'll come back in two to four weeks for a blood pressure, and at that time, they'll have another serum potassium checked. They can be titrated, and the same thing will happen. And then after that, unless there's a change or unless they have a very low EGFR, I think the burden would be pretty small, certainly no worse than an MRA.

Got it. Thank you. Our next question comes from Mohit Mansal with Wells Fargo.

Please go ahead.

Great. Thank you for taking my question. Congrats on all the progress. I have two questions. So first one, what is the overlap between CKD and hypertension? I'm asking this because if having some level of proteinuria data ahead of your hypertension launch could be helpful in the marketplace.

Yeah, there's, appreciate the question. And as you can imagine, there's a lot of different cuts of data. I think the data that we've reviewed and kind of the position we look at broadly for the market, it's probably 25, call it a quarter to a third of the hypertension population have some form of CKD. And then conversely, probably 60 to 80% of the CKD population have hypertension. So pretty significant overlap either way. And I think that's why, as we did our initial target product profile research with physicians focused on hypertension, proteinuria was an attribute that was very critical to them because of the significant overlap.

Got it. This is very helpful. And then just wanted to touch base on the enrollment progress so far, especially in the advanced HTN trial. Could you comment something on that front and how comfortable do you feel about the first half 2024 data readout at this point?

Yeah, we continue to feel good about first half 2024 top line results from advanced HTN. Continue to feel confident about mid 2025 for launch. HTN, yeah, things are progressing as we anticipated, and that's why we're continuing the guide to data readout in the first half of 2024 for advanced HTN.

Awesome. Thank you very much, and congrats on the progress again. Thank you, John. Yeah, absolutely.

Our next question comes from Rich Law with Credit Suisse. Please go ahead.

Hey, guys. Good afternoon. I have a couple questions. Based on your discussion with the FDA so far, what do you need to demonstrate in order to get approval for the higher 100-mix dose? And also, what is the comparator arm for that based on your design? And I also have a couple more questions.

I'd say the last part of your question, so based on the discussion, what would be required for what, for the 100-milligram dose approval?

Yeah, so for 100-mix dose approval, and also what's the comparator arm for that dose?

So the way we're doing it is everybody's going to get dose escalated with either placebo or drug, depending on which arm they're in. They won't know what arm they're in, and if they're on placebo, at four weeks they'll get dose escalated to two placebos. And the same thing for the 50 milligram group. And only in the third arm will they get 50 milligrams active. So that's how we blind it. Now you're Second part of your question was, is there a specific set of guidelines for registering that arm as opposed to the 50 milligram arm? And there isn't. And this is a very common label to do this sort of thing. And the reason is it's always benefit-risk. And the benefit obviously can be greater when the exposure is greater. And because you start at 50 milligrams, anyone who develops, say, mild hyperkalemia above the normal range won't be dose escalated. So the safety profile will essentially be similar, if not the same, to 50 milligrams. It won't be as the same as we saw in the target trial where we started everybody on 100 milligrams, because some of those people would have also responded to 50 milligrams. And so those people will no longer go up to 100. So it'll be same rules, and I think the safety will be similar to 50 milligrams is our thought. We don't know for sure, of course.

Okay, got it. So I just want to confirm, so you guys would have two, is it two different placebo arms, one with the 50 mc and then one is the 50 mc that gets up titrated to another placebo? So basically, there's two.

Let me explain it. I'm sure I didn't explain it clearly. There's only three arms. Everybody in this study is on one tablet that looks the same for four weeks. And then they all go to two tablets that look the same for the last eight weeks. So the same people are on one tablet of placebo and then go to two tablets of placebo. But it's the same placebo group. The same thing happens in the other arms. So it's one arm all the way along. It's one pill in each arm for four weeks and then two pills in each arm for the last eight weeks.

Okay. Did I do any better?

Yeah, no, I get it. And then a couple more other questions, too. How important is this second dose in the commercial strategy? How many patients or proportion of patients do you think would get this dose in commercial or clinical triathletic?

Yeah, Rich, this is John.

I think its importance lies in what we saw in Target H10. And we know that at a subject variability level, exposures can change, you know, from one individual to the next. We know that some patients, the 50 milligrams was a great dose, gave them a great clinical response, both from an efficacy and safety standpoint. We believe that for other patients, just because of how they metabolize the drug and react to it, that they're going to need a higher dose. And so it becomes important to address that patient variability and, frankly, to fit in with you know, an existing paradigm in hypertension, that is to titrate to dose. And so we think it's, you know, providing clinicians and patients that flexibility is invaluable to really acknowledge the individuality of a subject. The latter part of your question, Rich, remind me again, the proportion, that I can't, yeah, it's hard to say right now, Rich. I think we'll With the size and scale of the pivotal program, we'll be able to obviously communicate that. We'll see that right to that third arm for patients that were on 50 that got to goal safely and those that required a higher dose. But right now, I wouldn't even want to hazard a guess. And I don't know that fundamentally it will matter. The key for us is just getting the right dose for the right patient to get the right response.

Okay, got it. Thanks. Thank you. And then just one last question for me. I think you guys mentioned Particula as a FTLT partner or combo partner. Is there, like, how do you guys select this agent? And then is there any potential to do other agents?

Yeah, it's a good question. You know, as we worked with our KOLs, Rich, it became really evident to us that there's a high level of similarity. You know, whether it's empiglifasone, dapiglifasone, caniglifasone, the responses that have been seen in CKD have been very positive but very consistent. And so for us, it was just a matter of let's pick the molecule that has a good safety profile, has a good body of evidence in CKD, and so dapiglifasone was the one for us. And we also needed to make sure that we picked one to standardize the background response. Future studies that may become more open field to be on an SGLT2 inhibitor writ large. So it could be any of them. That'll be something we'll evaluate down the road. But for this proof of concept and to hold something constant like background meds, we chose dapaglifasone.

Great. Thank you so much. Absolutely.

There are no further questions at this time. I would like to turn the floor back over to John Congleton for closing comments. Please go ahead, sir.

Thank you, Operator, and thank you to everyone for joining us today. We're very excited about the progress we've made thus far in 2023 in advancing our clinical programs, and we remain enthusiastic about the upcoming milestones for the rest of the year. We look forward to updating you as our pivotal program for La Ronda STAT continues to advance. With that, we'll close the call.

Have a nice day everyone.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.