Metacrine, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to MediClean's fourth quarter 2020 earnings conference call. At this time, all participants' lines are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone.

Thank you, and good morning, everyone. Earlier today, we issued a press release outlining our fourth quarter and full year 2020 financial results, as well as our key clinical development milestones. The press release can be found in the news section of our website at MediCrin.com. On the call with me today is our CEO, Dr. Preston Klassen, our Chief Medical Officer, Dr. Hubert Chen, and our Chief Financial Officer, Tricia Milliken, will also join us for the Q&A session. Today's discussion will include forward-looking statements related to MediCrin's current plans and expectations, which are subject to certain risks and uncertainties. Actual results may differ materially due to various factors, including those described in the risk factor section of our most recent SEC filings. These forward-looking statements represent our views as of this call and should not be relied upon as representing our views as of any subsequent date. We undertake no obligation to publicly update these statements. With that, let me turn the call over to Preston.

Thank you, Steve, and thank you all for joining us today. I'm thrilled to be speaking with you on MediCrim's first ever public call about the progress we've made throughout 2020 across both our business and pipeline and about the important milestones slated for the months ahead. We are fast approaching my one-year anniversary as CEO, and I am as encouraged as ever by the significant opportunity with our FXR program in Nashville and by the potential of our scientific platform. At Medicrim, we are driven by a vision of transforming human health by building a sustainable, vibrant, biopharmaceutical innovator for patients with liver and GI diseases. And our focus is on the development of best-in-class programs that will help define standard of care for patients and their treating physicians. Our product candidates are targeted at the underlying pathophysiology of disease, designed to be orally administered, tolerable, and easy for patients to take, and are based on a deep and integrated understanding of disease biology and small molecule chemistry. Over the last year, we've achieved a number of milestones, led by the advancement of our two novel FXR agonists, MET409 and MET642. Both of these agents have broad potential across liver and GI disorders, and our initial focus is on advancing these candidates to address the critical unmet needs of patients with NASH. This is a highly prevalent liver disease today and is expected to affect up to 27 million people by 2030 in the U.S. alone. And if left untreated, NASH is a life-threatening disease with a significant impact on patient outcomes. Despite years of research by our industry, there are still no approved treatments for NASH today. We believe that an FXR agonist therapy with the right benefit-risk profile can play a foundational role in treating this disease, both as monotherapy or in combination with other agents, specifically because the FXR mechanism addresses all the key aspects of NASH pathology. It's well established that FXR activation can positively impact steatosis, inflammation, and fibrosis, the last of which best correlates with disease progression and liver-related morbidity and mortality. We believe that it is important to activate FXR in both the liver and intestine to maximize therapeutic potential, as FXR is highly expressed in both organs and drives multiple liver and intestine-specific mechanisms that ultimately impact the spectrum of liver pathology that is present in NASH. Now, further to the success of an FXR program for NASH, it's essential that treatment be able to drive strong pharmacology and clinical activity while maintaining a favorable safety and tolerability profile, particularly in terms of limiting both LDL change and pruritus. Lastly, given that NASH is a chronic disease, we believe that oral once-daily treatment is important to enabling treatment adoption and long-term use. Our FXR program achieves all of these attributes. Our in-house expertise in FXR biology and nuclear hormone receptor small molecule chemistry has enabled the creation of an FXR platform from which we are able to generate multiple FXR assets and drive a differentiated profile of potent pharmacological activity while minimizing the liabilities that have been seen in essentially all other FXR programs tested in NASH patients. The foundation of the differentiation behind our FXR candidacy rests on a proprietary chemical scaffold originating from the lab of one of our co-founders, Dr. Ron Evans at the Salk Institute. This hexaramine scaffold is a non-bioacid structure and a neutral chemical entity that lacks the carboxyl acid moiety that is present on other FXR agonist structures. This unique structure drives differentiated targeting regulation, and through our in-house expertise in structure-activity relationship, we have tweaked the scaffold further to drive potency and continuous target engagement. resulting in sustained exposure while minimizing peak to trough drug concentration, which may help mitigate side effects. We believe that the combination of a unique gene regulation profile and sustained PKPD activity is what enables our differentiation. Both MET409 and MET642 are derived from this same chemical family, and both agents have demonstrated the sustained PKPD profile that we look for in a successful FXR treatment. MET409 has shown strong evidence of pharmacological activity expressed as liver fat reduction with a reassuring safety and tolerability profile in NASH patients. We believe this profile is class-leading among FXR programs, and our second FXR asset, MET642, continues to look very promising as we drive towards characterizing its clinical profile in NASH in the second half of this year. So I'll briefly walk through the progress that we've made with both of these programs and highlight how we intend to move into late-stage development in NASH as well as plans to initiate work in additional indications next year. Starting first with MET409. Early in 2020, we reported 12-week data in NASH patients where MET409 demonstrated a mean relative decrease of up to 55% in liver fat from baseline, with up to 93% of patients responding with a greater than 30% relative reduction of liver fat at the highest dose tested. The level of liver fat reduction that's reported with metformin in this trial is as good as or better than that reported for all other oral mechanisms of action over a similar treatment duration. Equally important is the favorable safety and tolerability profile observed with metformin, particularly at the 50 milligram dose, with a low 16% incidence of mild to moderate pruritus with no drug discontinuations, and single-digit increases in LDL cholesterol with no proactive management. No other FXR agonist in development has generated this kind of profile in NASH patients to date over 12 weeks of treatment. The strength of that profile supports MET409's potential to serve as both monotherapy and as a backbone of combination therapy, which we believe will play an important role in NASH treatment over time. And to demonstrate the opportunity of our FXR assets in combination therapy, at the end of last year, we expanded MET409 development into a Phase IIa combination study with the SGLT2 inhibitor and pagliflozin, in patients with type 2 diabetes and NASH. These two indications coexist in many patients with abnormal liver fat content seen in up to approximately 70% of patients with type 2 diabetes and biopsy-proven NASH in up to approximately 25% of patients. Given this, we believe that combining our investigational FXR agonists with approved diabetes therapies that on their own have demonstrated some liver fat reduction is a strong mechanistic combination approach that could over time become standard of care for these patients. This combination study is a 12-week randomized placebo-controlled Phase IIa clinical trial designed to evaluate the safety, tolerability, and pharmacological activity of metformin at 50 milligrams in combination with empagliflozin at 10 milligrams as measured by reductions in liver fat content by MRI PDFF. Enrollment is underway, and eligible patients are randomized into one of four cohorts, metformin plus empagliflozin, metformin alone, empagliflozin alone, or placebo. The trial will enroll up to 120 patients in the U.S., and we anticipate assessing initial data in the first half of 2022. In addition to MET-409 development, we've recently initiated a Phase 2A trial of MET-642 in patients with MASH. While MET-642 is derived from the same chemical family as MET-409 and as such shares a number of the same properties, MET-642 has two primary distinct pharmaceutical attributes. First, it is approximately 10-fold more potent, which makes it more cost-effective to produce and reduces the potential risk of off-target effects. And second, where MET-409 has a mild to moderate CYP3-4 inhibition, we have engineered this out of MET-642. Late last year, we reported results from the completed Phase I trial of MET-642 in healthy volunteers, demonstrating a sustained pharmacokinetic profile after 14 days of daily oral dosing and robust FXR target engagement as reflected by C4 suppression, which is a blood biomarker of bile acid synthesis that decreases with FXR activation. In addition, MET642 was well tolerated with no observations of pruritus or LDL cholesterol increase at any dose level and no serious adverse events reported. We are encouraged by the overall safety profile of MET642, and with meaningful target engagement seen as low as the 2.5 milligram dose level, we have proceeded into a phase 2A trial in patients with NASH, evaluating 3 milligram and 6 milligram dose levels, as these two doses are projected to suppress C4 to levels that are likely to result in meaningful reductions in liver fat content. This phase 2A trial of MET642 in NASH is currently enrolling patients. This is a 16-week randomized placebo-controlled multi-center trial evaluating the safety, tolerability, and pharmacological activity of MET642 as measured by levels of liver fat reduction by MRI PDFS. The trial will enroll up to 180 patients in the U.S., and an interim analysis is planned in the fourth quarter of this year after approximately 60 patients have completed 16 weeks of treatment. followed by top-line data expected from up to 180 patients in the first half of 2022. Now, based on the data generated with MET-409 and MET-642, we believe both FXR assets represent an important advancement in the treatment of NASH, and we're very pleased that the FDA has granted MET-409 as well as MET-642 fast-track designation, which underscores the agency's acknowledgement of the significant unmet need for treatment in patients with NASH. We plan to take only one of these compounds forward in the NASH indications, By advancing both MET-409 and MET-642 through Phase IIa development, we've given ourselves the greatest opportunity to select the optimal candidate based on the totality of data and their overall profiles in patients with NASH. We plan to assess the MET-409 monotherapy data in NASH that we've already generated alongside the interim findings of MET-642 in the same patient population anticipated in the fourth quarter. And then from this, we intend to pick the compounds that will progress into later stage development in NASH as a monotherapy and combination agent. Importantly, we also believe that the learnings about the potential combination of FXR agonism with SGLT2 inhibition that's gained from our ongoing study of metformin combined with impagliflozin may be applied to whichever FXR candidate we advance for NASH. Now, while NASH is the major focus of the company today, we have enormous opportunity even beyond this one indication. There's strong biological rationale for FXR agonist development in other indications, including the large chronic indication of inflammatory bowel disease, or IBD, as well as orphan cholestatic diseases. We plan to expand our development footprint into IBD and further evaluate the potential for orphan cholestatic indications in 2022, and we look forward to discussing these plans in the upcoming months. In addition, our research and discovery team is actively investigating multiple novel non-FXR programs in the liver and GI space, which supports our approach to building a sustainable pipeline for the future. So in summary, we've made remarkable progress and have a clear set of priorities for the next 24 months. The first priority is to rapidly bring our FXR agonist program to registration development for NASH, which involves assessing clinical data from both MET-409 and MET-642 later this year and selecting the candidate of choice for late-stage development. Second priority is to expand the reach of our FXR agonist program, leveraging its pipeline interproduct potential, beginning with IBD clinical trial work in 2022. Given the size of the markets for both NASH and IBD, we plan to advance the same candidate for both indications. We then plan to evaluate our other FXR agonists for one or more orphan liver cholestatic indications, which we'll talk more about in the future. Third priority is to leverage our deep research and discovery capabilities to develop a portfolio of novel treatments for patients with liver and GI diseases. There are a number of compelling areas that our research team is exploring, and we look forward to providing updates as we advance our discovery programs. Fourth priority is maintaining a strong financial position and disciplined approach to capital allocation. Our current cash and investments, including the funds raised through our IPO last fall, fuel our currently planned operations through 2022. And lastly, as we focus on these priorities, we will continue to foster a company culture centered around effectiveness, efficiency, and enjoyment. At the core of any good company is its people, and we are committed to enabling a culture that empowers our employees to apply their individual talents and capabilities to to further our corporate goals because there are patients and families who need the therapies that we are developing. As we look ahead, Medicron has a significant opportunity for long-term value creation with both an industry-leading FXR platform and deep R&D capabilities to bring multiple first and best-in-class programs to patients. By doing so, we believe we can build a sustainable, vibrant biopharmaceutical innovator for liver and GI diseases. And with that, we thank you for joining us today, and we'll open the line for any questions. Operator?

Thank you. As a reminder, to ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Brian Abrahams with RBC Capital Markets. Your line is now open.

Hi. Good morning, and congrats on all the continued progress. Thanks for taking my questions. I guess my first question is, as you look towards the potential decision as to which candidate to move forward, I guess what What are your latest thoughts on, like, what the most important parameters are going to be coming out of the 642 study to compare it to 409? Is it more about sort of PKPD, you know, things like AUC and C4? How important are the PDFF results? How important will safety and drug-drug interaction potential be? How do you sort of weigh all the different things that might come out of the study, and what are the most important things in your view?

Sure. Good morning, Brian, and thanks for the question. It's a really great question. The focus of examining our asset, FXR assets, is really to do that in NASH patients. So we can't do this from a preclinical perspective or even, you know, in phase one. You can get really great information, but really in order to understand and be able to thread that needle in terms of the benefit-risk profile, we believe it needs to be tested in NASH patients, and so that's what we're doing. And so, you know, of the characteristics that you mentioned, clearly a focus on pharmacological activity, clinical activity in the form of liver fat reduction with MRI, PDFF is very important, but also that safety and tolerability profile. Look, you know, NASH is a chronic disease. Patients often don't have symptoms until later in the course of disease, and so it's critical that you have a therapy that patients can take over a long period of time. And that's kind of been the Achilles heel for many of the other FXR programs in development in terms of things like pruritus and increases in LDL. And so we're really focused on that. And so from our perspective, what we've seen with 409 to date looks really great. In NASH patients, as a profile, we think it looks potentially class-leading. And we think that 642 can look as good as or perhaps even better. Some of the characteristics that we talked about, a tenfold greater potency, and a few other biopharmaceutical attributes that we think could potentially demonstrate an even better profile than 409. But just to be clear, we really like the profile of 409. We think that's potentially class-leading. And so when we look at the data with 642 that we'll get later this year, it'll be that focus on pharmacological activity from a clinical perspective based on liver fat reduction, as measured by MRI-PDFF, And then really that safety and tolerability profile, what are we seeing in terms of paritis or increases in LDL? What we've seen with 409 is very low single-digit increases in LDL and very low incidence of mild to moderate paritis, where essentially nobody comes off drug as a result of that. And if we can see that, or potentially even better with 642, then that'll be a really nice set of assets to choose from in terms of picking one to move forward into NASH. And then for the compound that does not move forward into NASH, we have the opportunity to think about orphan liver cholestatic conditions where we fundamentally believe the FXR mechanism makes sense.

Got it. That's really helpful. And then there's been a number of developments on the clinical and regulatory side in NASH over the last six to 12 months, particularly amongst FXRs. And I guess I'm curious how maybe some of the concepts coming out of the recent FDA workshop, as well as some regulatory challenges that others have faced, are shaping your latest view as to the safety bar and the benefit and risk profile that regulators might look for, how that might guide your development strategy overall.

Yeah, another great question. I think overall, you know, our position is what we've heard from the FDA is that the bar has not changed. There's clear guidance. It is based on an accelerated approval pathway. Liver biopsy, of course, is a regulatory endpoint. And then in the post-approval setting, the studies continue in terms of gathering information around clinical outcomes. And we're encouraged by what the FDA has said repeatedly over the recent months related to their commitment to this accelerated approval pathway. We're also encouraged by the fact that, for example, we've received fast track designation for both of our FXR assets. Again, underscores the agency's recognition of the unmet need that there is in that. And so we're essentially just focused on what the guidance is, focused on demonstrating that. We recognize that everything comes down to benefit, risk, And so that's why we're so focused on developing a differentiated profile with our FXR assets. We believe that we've done that, that we've got a potential class-leading FXR profile with MET 409. We think MET 642 looks fantastic in terms of Phase 1 and has an opportunity to show up in the same way or even better. than 409. And so it's really about developing a compound that you can stand behind from a risk-benefit perspective. We think the kind of guideposts are well laid out, and we don't think that anything has changed fundamentally as a general rule in terms of what agents, what classes, what mechanisms have to show in order to get approved. And so we think we're in a good place, and we've just got to continue forward with our progress and get into late-stage development.

Great. That's really helpful. Thanks so much. Thanks for the question. Thank you.

As a reminder, to ask a question, you will need to press star 1 on your telephone. Our next question comes from Michael Yee with Jefferies. Your line is now open.

Hey, guys. Hey, Preston. Good morning. I had two questions. One was maybe just on the Phase 2 study, you could talk to the timing

In case of enrollment, how things are going and the timing of the Q4 interim announcement, I feel like that might have been changed from mid-21. So maybe just talk a little bit about that or being conservative and how the process of that is going, particularly during COVID. And then the second question is, remind us how you're thinking about plans in GI or maybe that is also liver, orphan, and cholestatic indications just in terms of whether you were still thinking about going into UC, et cetera, and is that the plan for the molecule that you don't take forward? Thank you.

Yeah, yeah, both great questions. So just in terms of our progress with the 642, as well as, frankly, 409 and the combination study that we're doing with 409 and the HLT2 inhibitor and pagliflozin, the short answer is that we are on track. And, of course, COVID has impacted the entire industry in a variety of ways. But to date, we have not seen a material disruption in our clinical development efforts. We're obviously being very vigilant, pursuing all avenues to ensure that our programs do not have material delay. And so we're providing more specific guidance, as you always do, over time. We don't view this as a shift in any way. And Hubert can speak to kind of additional aspects of our operational programs that we're making sure that we're very vigilant with related to COVID-19 and moving forward. And then I'll just say in terms of getting into inflammatory bowel disease with ulcerative colitis and the opportunities that we may have in terms of orphaned cholestatic conditions, our first priority right now in terms of expanding beyond NASH. NASH is clearly our primary focus today. We're really excited about it. Kind of the next wave in terms of expanding those indications is really a focus on inflammatory bowel disease. That would be an ulcerative colitis and a proof-of-concept trial. And, you know, those trials are typically 12 weeks in duration and endoscopic findings in terms of primary endpoints, et cetera. And we'll talk about that more as we get closer to making that decision with respect to which asset we take forward into NASH, 409 or 642. Whichever asset we take forward into NASH, it makes sense that that's also the one that you test in inflammatory bowel disease because of the size of the patient population for these two chronic diseases. We will also then be evaluating opportunities for the asset that does not move forward into NASH. What can work in terms of orphan liver cholestatic conditions? We think there's opportunity there. We're looking into that further now. And that will be kind of the second wave of consideration after inflammatory bowel disease. We are definitely committed to moving forward into a POC trial in ulcerative colitis patients for IBD. Hubert, do you have any additional comments about the operational progress?

Hey, Mike. Thanks for the question. No, I think Preston covered it quite nicely. We're always vigilant in terms of the enrollment. Right now we are on track. deliver those MED642 results in the fourth quarter, as we stated. And McCrow and I, of course, in the first half of next year. And, of course, we will refine those guidance as we get more operational data. But right now, though, we've had the pleasure of visiting several of our investigators with the proper COVID protocol. And I would say that every site is really engaged and we do believe that they are working on optimized FXR development candidates. So stay tuned, but we're quite encouraged by the progress we're making to date.

Thank you, guys. And, Preston, that makes sense about the size of the population versus orphan for the fear of the molecules. Thank you. Great. Thanks, Mike.

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Preston Claston for closing remarks.

Fabulous, and thank you, everyone, for joining us on the call today. Thanks for the questions. We look forward to keeping you updated on our progress, of course, and we hope that everyone stays safe and healthy. Have a great day, and we'll talk soon. Bye-bye.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.