Regulus Therapeutics Inc (NASDAQ:RGLS)
Cowen and Company 33rd Annual Healthcare Conference
March 05, 2013 08:40 am ET
Garry Menzel - Chief Operating Officer & Executive Vice President of Finance
Good morning, everyone, and welcome to Cowen and Company Annual Healthcare Conference. It is my pleasure to introduce, our next presenting company Regulus, which is the leading company in the field of microRNA, and presenting here for the company is the Chief Operating Officer, Garry Menzel. Garry?
Thank you, (Inaudible). So, first of all, I would like to say thank you very much to Cowen for the invitation to present at this conference as it's an excellent conference, very well attended. (Inaudible) said I am, Garry Menzel, I am the Chief Operating Officer, Chief Financial Officer for Regulus, so I am going to talk to you today about the power of microRNA therapeutics and in particular the road to the clinic that we are on in 2013. So, just to remind you with the safe Harbor statement, I am going to be making forward-looking statements.
Last year was a very good year for Regulus; we executed some major strategic objectives. As you can see, we completed our IPO in October of last year, we raised about $80 million in the IPO along with some strategic deals we did both, with AstraZeneca and Biogen Idec during the course of last year. We took investments for all of our major strategic partners. As you can see Alnylam, AstraZeneca, Biogen Idec, GSK, Isis and Sanofi, so our technology platform has been validated by some very good companies and they have put significant amounts capital into the company that left us with a year-end cash position of greater than $95 million. That's going to allow us based on our current burn rate of around $30 million to last well into 2016, so we are very well capitalized as a company right now. And that's important, because in 2013, it's a significant year for us as we describe the road to the clinic. We're going to be advancing our proprietary programs into the clinic nominating two clinical candidates. One of those will be in the first half of this year. We're also going to demonstrate the potential of our microRNA biomarkers platform, which will talk about in a little while and that's the subject of the Biogen Idec collaboration, when we'll get the first readout in the middle of the year. That will position us importantly for 2014 when we will file our first INDs, obviously, the first will be in the early part of the year. We expect to do at least two INDs in that time and then march on towards commercialization.
The leadership team at Regulus, just to dwell on that for a moment is one with very deep biotech experience led by the President and CEO, Kleanthis Xanthopolis who was with Anadys, where he founded that company, as a HCV company. That's important for us. And the reason that's important for us is that one of our leading compounds is a HCV compound. It's good to have an expert on board. He's actually been at two companies that were ultimately acquired. Anadys was acquired by Roche. Aurora by Vertex, I got to know him at both of those companies, because I was an investment banker for a while at Credit Suisse and Goldman, and I did both of those transactions. I was also a consultant with Bain & Company.
Our Chief Scientific Officer, Neil Gibson came to us from Pfizer, where he was running their global oncology discovery and he was doing that for a number of years. In fact coupled with his time there and then as the Chief Scientific Officer at OSI, he actually has four drugs to his name that has been commercialized. So, he was a major hire for us when he arrived two-and-a-half years ago. Given that we are on the clinic this year, we have subsequently hired VP of Pharmaceutical Development, Victor Knopov. He has over 30 years of experience in developing drugs as well, especially in oligonucleotide and that's important to us given that we're a microRNA therapeutics company.
We're also backed by a very good board of directors and scientific advisory board. Our scientific advisory board is really who is who of a scientist David Baltimore, Nobel Prize winner is Chair of that scientific advisory board, but it also includes Thomas Tuschl, who is the first person to characterize microRNAs in humans and that’s important. Because, in 2001-2002, when this field really began to open up, our scientific expertise began.
There, we have, John Maraganore from Alnylam and Lynne Parshall, from Isis. They are significant board members, because Regulus was created by Alnylam and Isis and the relationship still exists. It's a very dynamic one. Anything that they discover in the broader field of RNA, which we can use specifically for microRNA comes to us on an exclusive basis. So, in essence, we have three discovery organizations working for us, because Alnylam and Isis as I said any of their discoveries come to Regulus. Douglas Williams, he runs R&D at Biogen Idec. Bruce Carter was the CEO of ZymoGenetics, so a very significant board.
We have a disciplined financial strategy. As I mentioned before, we are backed by a number of pharma companies. To-date, we've taken in $107 million from our founding companies on our selected strategic partners. The bio world's dollars, if you like, represent $1.7 billion in total milestones, but importantly preclinical milestones which is the stage we are at right now represent $106 million, so that all the milestones are early and they are often once we get to the point where we are filing INDs as they become more significant. So, for example in the Sanofi deal, each time we file an IND, it's a $15 million milestone payment, and importantly, once we cross the Rubicon into the clinic, we end up with all of our clinical costs paid by the partners, so it's a point what typically you would see cost rising, we're able to control our burn, because the partners will begin to pick up the bulk of those costs.
On the right hand side, I have highlighted who those partners are, the GSK deal, $600 million-deal that was focused in the field of immunology. Sanofi, the $750 million-deal focused in fibrosis and oncology. AstraZeneca were $500 million-deal that focused in atherosclerosis and metabolic diseases and then Biogen Idec a much smaller deal. It's a pilot study to look at the field of microRNA biomarkers. We'll talk more about that in a second. All of these strategic partners are also shareholders in Regulus. That's the degree of their commitments and it’s what allows us to maintain a very low burn rate and the capitalization to last into 2016.
So, that's allowed us to build a very substantial asset and status. I mentioned, we began life as a joint venture between Isis and Alnylam. We subsequently become a fully independent company. We were born with over 900, patents we've since added another 100 to those, so that's why we have more than 1,000 patents and patent applications today in the field of microRNA therapeutics both, on the biology side with the targets that we are chasing and also on the chemistry side. There are about 700 microRNAs that are known, and we have patent surround many of those along with the chemistries that we need to target the microRNAs.
We have specific microRNA oligonucleotide design expertise, we've also taken a very disciplined approach to drug development, so that has helped us obviously and supplemented with the biomarkers franchise that you will see in a second. So, we're by far away the leaders in the microRNA field and people working in this space have needed to come to us for licensing.
More broadly, we believe that RNA therapeutics have come of age, I think many of you will have noticed Kynamro being approved by the FDA through Isis. That's the first of systemic approved drug in the RNA field that of course will be marketed by Sanofi and Genzyme that were on the left-hand side of the page. On the right-hand side of the page Alnylam in the field of RNAI has been achieving human proof-of-concepts in a number of its programs. Most notably, TTR DML doses and human proof-of-concept has been achieved in our field. A company called Santaris in HCV has dosed patients successfully and been able to reduce viral load and we'll talk a little bit more about that later, but proof-of-concepts and approvals occurring in the RNA field, there are 30 RNA drugs in clinical development right now in microRNA. It's just the latest RNA technology to be added to the basket.
So, what are microRNAs? Well, not surprisingly with the name micros are very small about 20 to 25 nucleotides in length. They are very small genetic elements that are responsible for regulating genes approximately one-third genes are in a cell are regulated by microRNAs transcription is an on/off switch microRNAs and appear as a feedback regulator to maintain homeostasis in the sell. So, what happens, as we've shown in this diagram is that microRNAs that transcribe from DNA in the nucleus are exported into the cytoplasm. They associated with the microRNAs [complex] and then is risk which you can see here and that complex will then basically interfere with the translation of a messenger RNA into its protein. It's literally a binding it's a block aid, and the messenger RNA doesn't get translated that regulates the amount of the protein in the cell.
What's interesting about microRNAs is, that binding isn't imperfect binding, so there isn't perfect [cosmology] and what that does is it allows an individual microRNA to interact with many different messenger RNAs, and so those messenger RNAs as it turns out will be on the same biological pathway. So, one microRNA can regulate numerous messenger RNAs on the same biological pathway which means that if we target a single microRNA, we are actually able to regulate entire biological pathways, and that's why pharmaceutical companies are interested in microRNAs, because most diseases are most not caused by single genes or single proteins that cause by several, which sit on the same biological pathway, so that’s what we do and the disease state, we find in almost every disease that we can find microRNAs are dysregulated, so whether it's oncology, whether it's fibrosis, metabolic diseases, neurological diseases, you will find dysregulation of microRNAs, both up and down.
What we do is, we take diseases where there is an over production microRNAs and in essence, we design a track which we call, (Inaudible), which is anywhere from 15 to 20 nucleotides chemically modified molecule that will essentially be directly homologous to the microRNA. And, as shown in this diagram, point number three, that will interact with the microRNA it will bind to it and prevent it from binding to the messenger RNA and therefore shutting down the translation of that messenger RNA into a protein, so what we do that for is, we restore normal cellular normal cellular function by restoring the amount of the protein that is being lost loss by the over production of the microRNAs.
It turns out that microRNAs as well as being a useful therefore in therapeutic context are found in the bloodstream, so the dysregulated in disease, they often get exported into the bloodstream and it turns out that the amount of the microRNAs found in the bloodstream correlates with the degree of the disease are very stable when they are in the bloodstream and we've developed technologies where we can measure those microRNAs reliably and specifically and therefore track diseases and we contract diseases before other technologies are able to identify them, so take glioblastoma for example.
Glioblastoma cells serves the shared microRNAs before you can detect it even in the symptoms of a person, and so therefore the opportunity for blood-based biomarkers is tremendous here for us at Regulus. We are a therapeutics company, but nevertheless the use of biomarkers as many of you know as companions to therapeutic agents is becoming much more broadly applicable across the pharmaceutical industry and this is something that we intend to pursue. We are working on this with Biogen Idec in multiple sclerosis attempting to develop a microRNA signature for MS. We are working with several hundred human patients' samples that Biogen Idec has provided and we expect to get a day to readout in the middle of the year.
So, let me talk a little bit then about the therapeutics side of the business. We have a number of development programs and I want to dwell on this slide for a few minutes. The first thing want you to notice is that there are a number of programs. As I mentioned earlier, microRNAs are dysregulated in a variety of diseases. There is almost no that we have come across, where microRNAs are not dysregulated in some way and where if we with is we cannot return the cell to their normal state, So, microRNAs remember, because they are regulating one-third of all genes in the body and they are doing so in the this feedback loop as opposed to transcription which is the on/off switch. They play an important role in the regulation, so and therefore when they go wrong, you get disease. So, we are working in Hepatitis C, we are working in fibrosis, not just of kidney, but a number of other organs. We are working in oncology on a number of different diseases within oncology, atherosclerosis, metabolic diseases like diabetes. Glioblastoma, we highlight that, because that's one of our own programs and using the biomarkers technology that I was talking about before, the significance of that in oncology is that we can stratify patients using our biomarker technology and that's important, because it will allow us to go off the orphan disease. You are hearing a lot of that I think from biotech companies. It's important for us, because it's a way that we can control our cost, where there is a big disease that requires big trials and big commercial investments, we won't go after that. We will go after the smaller orphan diseases that our capital is better applied to.
So, the first thing I want you to know is the broad applicability of the technologies, I do however want to say very clearly that Regulus is focused. We are not going to be a looking at numerous diseases. As I mentioned, we are focused on orphan diseases and primarily, we are going to focus within oncology, because Neil Gibson, our Chief Scientific Officer I mentioned before, who came to us from Pfizer is an oncologist and we have to focus our capital and that what we are going to focus it.
Also, on the right-hand side, we are partnered as I mentioned with GSK, Sanofi and AstraZeneca, we have lead programs, which are moving at the clinical candidate stage with each one of those companies and that's kind of going to be the news flow from Regulus over the coming year, which is the identification of clinical candidates for these programs which will put us in a position to file INDs next year, but we are trying to achieve a balance between what we do for our partners and what we account as I mentioned will primarily be in the field of oncology.
So let me, as an example, because we don’t have the time to go into each one of the programs, let me as an example talk to you a little bit about microRNA-122 to show you, if you like, in the real world exactly how microRNAs function.
So, miR-122, which is actually our most advanced program right now, and as we telegraphed in our earnings call, likely to be the one that provides our first clinical candidate, it's actually a host factor for the replication of the Hepatitis C Virus. It turns out that is involved in fat metabolism within that somewhere along the line in evolution, the HCV virus managed to hijack it essentially by using it as a host factor for it's replication.
We discover that that if you block 122 with an anti-miR, the Hepatitis C virus no longer has the host factor for replication and you can block replication I mentioned Santaris earlier, and to quickly show you some data from them. They showed human proof-of-concept for this idea about a year or so ago and as you can see from the red line is the normal load HCV in hepatocytes, the yellow line is when you treat with an anti-miR to 122, they were able to get 2.6 log reduction which for anybody who is HCV here knows is kind of the standard for anti- Hepatitis C agents.
Now, the drawback for them is that then we have weekly administration for this particular compound. We have been developing and we own all of the IP. I'll go back, we own all of the IP within the space in terms of 122, 122 itself, the method which is going after the disease HCV, the chemistries, we own the IP, so we're in a great position in terms of controlling the space and thank Santaris for providing us the human proof-of-concept, which de-risks the program for us and we've been developing molecules of our own which have a 10-fold improvement potency, but most importantly I think in the HCV space have the ability for monthly dosing and there's a significance to that monthly dosing. Patients have to go back once a month to have their blood drawn so that they can do a viral load to see how they are progressing with their therapies, and so therefore going back once a month is something that they used to doing. We have an injectable we recognized that the field isn't all oral field at the moment, but since you have to go back once a month and you’re your blood drawn, the monthly dosing is therefore is significant to us because what’s important about 122 is that it's pangenotypic. In the sense that all of the genotypes of HCV rely on 122 and all of the orals are not pangenotypic, and so therefore there will be no responders to oral therapies. There will also be patients that ultimately develop resistance. It's just the nature of viral replication. And so, as a result of that there will be an opportunity for us within the HCV space to capture a percentage of patients, which for a small biotech company like ourselves will lead to sufficient revenue to drive the growth the company, so a great position for us to be in.
If I just go back to the portfolio slide for a moment, as I said that is the program that at the moment is most likely to yield the clinical candidate that you will see in the first half of the year, remember that was one of the goals that we had at the beginning at the JPMorgan conference and then we have 21 in both, kidney fibrosis and oncology. That's a program with Sanofi. There is a disease called the Alport syndrome which is the collagen for a three mutation and that leads to a rare form of genetically inherited kidney fibrosis, which is an orphan disease, so we'll be able to get orphan disease categorization. We are working with Genzyme not surprisingly given their expertise in orphan diseases, which was of acquired by Sanofi.
On the oncology side, hepatocellular carcinoma, so it turns out that miR-21, same microRNA is involved in hepatocellular carcinoma. It's over produced in HCC, and when you treat with an anti-miR-21 you can reverse with hepatocellular carcinoma, so those are the two programs with Sanofi, and we think one of those will end up being a clinical candidate the end of the year.
The AstraZeneca program was started last year. In August, we started work on microRNA-33 which is a reverse cholesterol transport inhibitor and so that program is being worked on in both, Sweden and London. We also have a metabolic disease program and an oncology program with AstraZeneca, so there were three different programs that we are on there and it's possible you will see a clinical candidate from one of those before the end of the year. Then in glioblastoma, we are relying here on the expertise of Neil Gibson along with a partnership that we have with Samsung in Korea and currently doing preclinical proof-of-concept for that as many of you know they are no treatments for glioblastoma.
So, as I mentioned before, we're in a strong financial position and we ended the year than $95 million in cash. This was basically, because we did an IPO for $81 million along with some of the other financial transaction related to both, AstraZeneca and the Biogen Idec partnerships that we signed last year. Those players continue to provide us both, R&D funding and also milestones, so that while our expenses for this year will be in the range of $30 million to $35 million, the net burn will be a lot lower because of the milestones and R&D funding, so that means we are positioned to operate into 2016.
To remind you again of our key corporate goals for 2013, which as I mentioned before describing as the road to the clinic, we'll select at least one clinical candidate by the first half, which we are in now and obviously that means second one in the second half of the year, because our goals is to file at least two INDs during the course of 2014. We are targeting year-end cash of more than $60 million without the need to finance. Our hope it will be higher than that, because of milestones and the R&D funding, and the goal here of course is the little portal on the right-hand side shows is to develop best-in-class medicines. I would also highlight, which we haven't the biomarkers business where the readouts will come in the middle of the year for the multiple sclerosis signatures with Biogen Idec, because that could become important in the future.
So with that, I'll finish up and I think it's (Inaudible) where we are going to do the Q&A session and thank everybody for coming to the presentation.
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