All right, good afternoon, everyone, and welcome to Oppenheimer's 35th Annual Healthcare Life Sciences Conference. My name is Andreas Argyrides. I'm one of the senior biotech analysts at Oppenheimer. And today I have the pleasure to be joined by Jay Hagan, CEO of Regulus and Preston Klassen, head of R&D of Regulus Therapeutics. Quick intro here, just a little background. Regulus is focused on the discovery and development of innovative medicines targeting microRNAs. It's advancing farabursen, a novel next-generation oligonucleotide for the treatment of ADPKD. It's designed to inhibit miR-17 and to preferentially target the kidney. The company recently reported positive data from a fourth cohort, along with FDA alignment on a single pivotal phase II for accelerated approval. Congrats on the updates, by the way. Thanks, Jay and Preston, for being with us today. Let's dive into the stock reaction to the update. Stock was down day of, but it's since rebounded quite nicely, and rightly so. Probably also attributed to some of the buying of stock from you guys, which is a good sign of encouragement here. But we'll just start with, can you walk us briefly through the important takeaways from the last update? Sure. I'll just hit it at a high level, and then ask Preston to get more detail. Yeah, so we had an end-of-phase I meeting with FDA in the middle of December, and we're waiting for the minutes, [which] typically take 30 days to receive. Once we received them, we took a look at the available data from our fourth and final cohort, where we were studying 300 milligram fixed dose. The rationale for that is to migrate from a weight-based dose to a fixed dose to be amenable to a prefilled syringe and ultimately an autoinjector format. The reason for that is because our next study, as you alluded to, will be a pivotal study. We need to introduce the ultimate product form into the clinical studies in order to be incorporated into a potential NDA, if successful. And so we read out, as you already mentioned, that we had alignment with FDA on the adequacy of the totality of our data sets, both nonclinical, clinical, and CMC, and our plans for those in order to move forward into this pivotal program where we'll be dosing chronically. Preston can give you more detail on the trial design and so forth. Then what we had available from Cohort IV, importantly, all the subjects had completed dosing. So we had all the safety data from this last cohort, which was 26 subjects. The safety and tolerability profile of that fixed dose continually looks very encouraging. That was important for us because, obviously, testing a fixed dose could have a higher exposure than a weight-based dosing if you are a light individual. And the range of exposures we had in that fourth cohort ranged between 2.4 milligrams per kilogram for the heaviest individual to as high as 4.5 milligrams per kilogram for the lightest individual. And we saw no patterns of concern from a tolerability standpoint or, frankly, from an efficacy standpoint in terms of biomarker changes or otherwise. We did have 14 of the 26 subjects complete an efficacy assessment. And what we mean by that is looking at biomarker changes as well as kidney volume changes and GFR changes. And we reported those out as well and continued to see consistent results in terms of what we anticipated from a biomarker change standpoint and our understanding of dose exposure and the dose response and continued evidence of an impact on kidney volume growth rates. And so, yeah, that's the update we shared. Preston, if you want to kind of amplify on that. No, I mean, I really think you hit it. Of course, this update was 14 of the 26 total subjects, and for the reason we took a look at the data in this fashion is that coming out of a successful phase I at end-of-phase I meeting with FDA, we now know we have alignment on that phase III study design, the main elements of it, as Jay mentioned, so now it's time to finalize protocol. Getting to a final protocol enables you, with your vendors, CRO, etc., to really begin all of the operational planning and execution that's needed to get the study up and running, and industry standard is generally around six months between having a final protocol in hand and getting started with enrollment, and so we're really focused on getting that final protocol. And so it was important for us to at least take a look at the available efficacy data with the 300 milligram fixed dose. We don't have it all yet, but we have complete polycystin and TKV volume data on the 14 subjects. We actually have safety data on everyone, so that was great. And with that in mind, we decided to look at it twice, once now with the 14 subjects and then obviously at the end. So we're not looking at each subject as they come by. It's grouped. We did the 14 now to finalize the protocol, just to make sure we saw what we had hoped to see. And then we'll do it again at the end in the March-April timeframe. We have all 26. And as Jay already covered, the three things we needed to confirm: a favorable safety and tolerability profile with the 300 milligram fixed dose, confirmation that we were at the top end of the dose range in terms of optimal engagement of miR-17, and that certainly was the case with statistical significance. And then three, just get another shot on goal for an early read at kidney volume impact. And again, for the third time now, we have seen that notable impact. And it's even more notable when you combine Cohorts III and IV, the 300 mg per kg group and the 300 milligram fixed group, because those are essentially the same dose that we will be taking into the phase III program. And so I do think it's very de-risking. No, absolutely. And I don't think it's trivial that the FDA has given you guys a very clear path to accelerated approval on TKV. Kudos to the team on executing on that as you had guided, too. So I think that's, and I guess maybe one comment around that is that around maybe the safety, the comfort that the FDA has around safety in giving you guys the go-ahead. Do you want to provide a little bit more color around that? Yeah. I mean, I think what we needed to demonstrate was it's a relatively small study. They're going to want to see the larger data set in phase III. But there was just nothing of note in terms of no serious adverse events across the board. We had one unrelated case of appendicitis. Sometimes that happens back in the day at the 1 mg/kg cohort. But otherwise, no SAEs, no discontinuations due to AEs in the 300 milligram fixed dose, quite a handful in some of the other cohorts. Again, very easily explained. Just nothing that we saw clustering, nothing problematic. And on the tolerability side, I mean, we really think of injection site reactions as more tolerability issues. We just didn't see anything that we thought was problematic at all. If anything, the 300 mg fixed dose, which is a larger cohort, n=26 had a lower overall percentage than did the Cohort III, the 3 mg/kg. When patients do mention an ISR, they're reporting pain and/or tingling at the site of the injection lasting 5 to 15 minutes and then going away. We just don't see anything rate-limiting for us from a safety and tolerability perspective. Fantastic. Very important to consider there. I think just add one other element. I'll just mention real quick, sorry. The reason that's so important, the safety and tolerability, the reason that's so important is that is the rate limiter for tolvaptan, the only drug available on the market today, right? Tolvaptan is a very challenging drug to take from the tolerability side because of the massive free water excretion that occurs, polyuria with unquenchable thirst and the need to take in vast amounts of fluid just to keep up, and then, of course, a black box warning for fatal liver tox. And between the two, it just really limits the population of patients that take that drug, and so it's less than 7% of the addressable population. And so anything that has at least tolvaptan-like efficacy, but a far better safety and tolerability profile, I think we'll have a very commanding space in the market, and that looks like what we're developing. Jay, do you want to add something? I think I was just going to add, Andreas, yeah, the other element of safety, too, in terms of long-term dosing is the margins that we have as well. Preston, maybe you want to touch on that. Yeah. We completed our two species chronic tox. It's the mouse and non-human primate, and in both, no adverse findings, no accumulation in the kidney. Top dose is a NOAEL for both, and that does lead to, as Jay mentioned, large safety margins, so there's just really nothing standing in our way in terms of moving into this pivotal study. Good. Good. So I'm glad investors should play this back if they have any questions around safety. I think it's very clear-cut that you have a very clean safety profile to date. So now turning to efficacy and looking at the phase III design. So how should we think about the chances of success with a one-year endpoint on TKV and then two-year eGFR? Yeah. So you want me to take the- Yeah, I just want to just start with a preamble, if you don't mind. Yeah, so when we talk about success, I think we need to clarify what is the target product profile we're trying to achieve, and Preston began to allude to that. tolvaptan does work in slowing the rate of growth of the kidney, and that ultimately leads to a slowing of the rate of kidney function decline, GFR decline over time. The result of that is delaying your time to end-stage renal disease and the need for dialysis and transplant, so that's the treatment objective in terms of our baseline product profile. If we achieve that but we are safe and well tolerated, our market research indicates a very high intent to utilize such a therapy, and so that's how we're thinking about success. And that's how we're powering the study, basically to show that we can slow the rate of growth of the kidney at 50% or greater, but 50% slowing of the rate of growth. So in an untreated population in general, large longitudinal data sets or those in clinical trials that are on placebo typically go around 6% per year. And so our objective would be to demonstrate that we can slow it to 3% per year. But I'll let Preston touch on the data we've seen to date. Yeah. So just a high-level answer to your question about chances of success. I think the chances of success for a one-year total kidney volume endpoint are extremely high from a statistical significance perspective and from the perspective that Jay said of essentially our threshold is we want to see at least tolvaptan-like efficacy, which would be that 50% reduction in the rate of growth in the kidney. Everything that we've seen to date suggests that our actual impact is far greater than that. We need to see it's small numbers, etc. All of those caveats in a study where we didn't necessarily plan to see a difference. We certainly didn't power it. But we're actually seeing repeatedly evidence that we are coming close to halting kidney progression over four months. If you are halting kidney progression over four months, the likelihood that you'll have at least a 50% reduction in the growth rate compared to placebo at 12 months is exceedingly high, just to be clear. Now, if you then ask the question, "Okay, well, what's your likelihood of a win on GFR at two years?" Two things are kind of in play. The first is that we, unlike volume, where we believe we're getting a glimpse of efficacy, you would really never expect to get a glimpse of efficacy in 10 to 14 patients over three months of treatment when you need many more subjects over a longer period of time and, more importantly, with multiple measures of GFR along the way to really define that slope of change in renal function because it is quite variable measurement to measurement within a patient and, of course, variable across patients, but more importantly, within a patient, it actually varies quite a bit, and so we just don't have a way to get an early read on anything related to GFR efficacy in this study compared to two years, so the second point is, well, what do you rely on? What you rely on is, in fact, the reason that FDA accepts kidney volume as a surrogate endpoint for accelerated approval because it has been shown in multiple longitudinal trials, three in particular, the tolvaptan program, phase III program itself, the CRISP study, the HALT study, have shown about a 50% reduction in the rate of GFR. Sorry, 50% reduction in the growth rate of the kidney volume corresponds to about a 33% reduction in the rate of decline in kidney function or GFR. And that relationship has been shown to be generally the same across different studies, those three that I mentioned, all of which are multi-year in duration. And so that's what we rely on. And it makes sense because if you just think about why is renal function declining in PKD? Renal function is declining because as cysts grow and enlarge, they compress adjacent normal renal mass and essentially cause ischemic injury. They squeeze it out because the kidney is an encapsulated organ. It can only withstand so much pressure from the cysts, and so if you are slowing the rate of that growth of the cysts, you will be preserving some amount of renal function or at least slowing the decline of that, and so with all the data we have to date suggests we're actually in a very good stead in terms of halting kidney growth over at least a four-month period of time. We'll see what we get at 12 months, but as long as we can hit that 50% reduction, we should see the corresponding improvement in GFR that's been documented across multiple data sets, so that's kind of how we think about it. That's why we're powering this study, I think, relatively conservatively, using that 50% threshold on kidney volume, 33% threshold on GFR to where we get to around 336 subjects. This is very high power for both of those endpoints, even though, again, with the volume endpoint, we're showing something far greater than that thus far. Absolutely. I mean, for those listening in, we hosted a KOL expert call with two nephrologists two weeks back, and they were very excited and encouraged by these data. They also note that there is definitely a lack of alternative treatments and tolvaptan really isn't enough. Maybe just back to this correlation between TKV and eGFR, maybe some investor questions have been around while there were two programs that didn't show it ultimately, and maybe you guys can, off the top of my head, I can't remember the names, but it seems like they're the case studies for not showing the correlation. Any comments around that or whether it was specific to the mechanism or what would you, how would you answer that? You want me to start? Jay? I want to hit one high point, and that is in all the animal work we've done where we've demonstrated an impact on cyst index or kidney weight to body weight, a couple of different metrics for growth of the kidney, that's always corresponded with an impact of preservation of renal function in terms of creatinine and BUN and ultimately survival in a number of different animal models, so our mechanism appears to address both cystogenesis and the consequence of that being preservation of kidney function, as Preston described the disease sequelae in humans, but Preston, why don't you touch on those two precedent examples? Yeah, and I think in particular, it was a phase II study with an mTOR inhibitor that demonstrated some impact on kidney volume and no real impact on GFR, and that was actually a pretty long study. It was a two-year study, phase II. What was interesting is that when you look at kind of the details of how the volume changed, there wasn't a change in renal cyst volume. There was actually a reduction in parenchymal volume in the treated group. Now, parenchyma means the normal renal mass, right? Normal functioning kidney tissue, and as I just mentioned earlier, the whole reason why you're going to have a decline in renal function over time is that as the cysts grow, the cysts are nonfunctional. They're just filled with basically free water, right, and they push up against the parenchyma and cause ischemic injury. I'm not really sure what to make of that from a mechanistic perspective if what you're doing is not impacting cyst volume, but actually reducing parenchymal volume. Yeah, that would appear to be a bit counterintuitive. In fact, the active arm in that trial had a bit of a greater reduction in GFR. I don't think it was stat-sig from placebo, but a bit of a numerically greater reduction in GFR over time, which is what you might expect if you're reducing parenchyma or renal mass. That's kind of how we look at it. What we know from our study, and we specifically had examined this in the earlier cohorts, we haven't taken a look at it yet in the current 300-milligram fixed dose. We will when that study closes out. We are measuring cystic architecture using MRI. So cyst number, cyst volume, and in particular, total renal cyst volume in our study has a very direct, so the slope is one, one-to-one correlation with total kidney volume. And with a very, very tight, that relationship is very tight, highly statistically significant. And so what that means is we know when we're seeing changes in total kidney volume, it's because we're impacting renal cyst volume. And that is exactly what you want to do. Great. That was some great color there. Very helpful for all of us listening in. Okay. Maybe let's turn to the Cohort IV data, the rest of the Cohort IV data that you plan to present in March. How do you think these results add to the emerging profile of farabursen at the 300-mg fixed dose? Go ahead, Preston. Sorry, can you repeat that? Oh, yeah, sure. No problem. So you're going to present the rest of the Cohort IV data in March? Oh, how will I add? Yeah. So I basically believe that the 12 patients that we're going to add will, for the most part, as long as they're generally in line with what we've seen across Cohort III and Cohort IV, right? Again, 3-mg/kg cohort, Cohort III, and 300-mg fixed dose Cohort IV, those are essentially the same dose, right? 3-mg/kg fits right in the range of the 300 mg fixed dose. And so as long as those additional 12 patients are kind of in line with what those two Cohorts have already shown, what we'll be doing is further clarifying the true treatment effect, at least over four months, right? Three months of treatment, one month of follow-up, that's what we're looking at. And it'll just tighten up the error bars and such that I think it's going to make sense to actually, to date, we haven't run any stats. It'll all be post-hoc, and all of that will be nominal statistical testing. But I think we're going to be in good stead to really take a look and just get greater clarity on the true effect that we're seeing over four months, even though it's a small study. And that is going to be just additionally de-risking for heading into the phase III study where you just got to go to 12 months for kidney volume. And so if you're looking this good at four months, I think it says a lot about where you can expect to get at 12 months. We'd agree. All right. Great. Thanks for that additional color. We look forward to the results in March. Okay. So maybe taking a higher view of the market opportunity, the current treatment landscape and the market opportunity, maybe you can paint the picture for us, what it looks like in the U.S., Europe, rest of the world? Sure. I'll take a stab at that and Preston jump in here as well. So what we know with one market therapy is how are they tracking? And the first nine months of 2024, Otsuka, the innovator of tolvaptan, reported, I think, $1.3 billion in sales. It was approximately 30% growth year over year. So they're tracking to probably do $1.6 billion this year. I think they report out next week on the final year. The drug loses exclusivity this year in the United States. It's already lost exclusivity in Europe. And so it'll be going generic. But when you dig into the claims data, which we've done, and we've done a pretty extensive market research study with both physicians and payers in the U.S. and Europe, you see that it's not really widely utilized. About 7% of the addressable population in the U.S., 7,000 individuals are on therapy. And of those, two-thirds roughly are at the half dose. The drug, when it's introduced into a patient, it starts at a low dose, and then based on tolerability, is titrated up. So there's a mid-dose and then a high dose. And roughly two-thirds are at the mid-dose and often skip. It's a BID drug, and they skip the evening dose. So question about whether or not that's even effective. But nevertheless, with that sort of utilization pattern, it generated those types of sales. So obviously, you can do the math, what are typical penetration rates for a disease like this. And you can see you can get multiples of the sales figures they've achieved. It did have a bit more utilization in Europe and Japan, but it had been introduced earlier, so it had more time for commercialization. The number of patients identified as a percentage of the population is actually higher in Europe and Japan, presumably due to national health systems and, again, the fact that they had a therapy available. The diagnosis usually goes up as therapies are introduced. We see a very significant opportunity for a product that has tolvaptan-like efficacy that would be safe and well tolerated. We did not bother testing in our market research the kind of profile that's been emerging thus far just because you don't need to hit that level of efficacy in order to have a very important therapy for patients. Our market research indicates from both physicians and payers a high utilization to a high intent to utilize and really no pushback on the payer front when looking at parity pricing to where tolvaptan was. The issues around genericization and step edits do not appear to be a major barrier per se in terms of uptake. Yeah, that would make sense given the profile. Okay. Great. So yeah, there's a big opportunity, and it presents a really attractive opportunity for shareholders at these levels with a phase III asset ready to go in the U.S. How are you thinking about the path to market in Europe? Have you guys thought about that yet? Or rest of the world? Preston? Yeah, sure. So we are going to go to talk with EMA for scientific advice. And we're preparing that document now and we'll be scheduling that meeting for later in Q2. And that will help inform overall study design. We're at the final protocol coming out of the FDA meeting, but any adjustments we need to make, we'll do it as an amendment. And generally speaking, it'll be the same kind of way of thinking in terms of studies that we don't anticipate major changes. I do think that unlike the U.S., which is a very clear path in terms of accelerated approval, how EMA views conditional approval and whether conditional approval even makes sense from more reimbursement perspective, that will be the question. It wouldn't surprise me if after talking with European regulators overall, particularly from a reimbursement perspective, it might make more sense to just go for the full study, full approval at that point, but that's still TBD where we're going to go interact with EMA around scientific advice, but generally speaking, how they view volume, how they view GFR, I don't think that should be a whole lot different other than what they might accept, again, particularly on the reimbursement front, and then just in terms of global trial execution, we'll be focused on the U.S., on Europe, Australia, New Zealand, and we do hope to get a few sites in Japan, so we will also be talking with Japanese regulatory authorities later in the year just to confirm that we can enter patients into the study ahead of getting what is typically that pharmacokinetic in Japanese studies. You used to need to have the PK study in Japanese patients completed before they could go into a phase III study, and that has recently changed from the regulatory perspective, and so as long as that's still the case, we just need to go chat with them, then we would be bringing sites up in Japan as well. We do plan to do that PK study in Japanese patients during the development program before we would submit, but that enables us to get them in now, we think. I guess it would, given some just general development constraints, it would make sense to consider going into ex-US territories with a partner potentially. Is that probably the way of thinking about it as well? In terms of the trial execution, our team is more than capable of executing on the trial that Preston described. But we are actively talking to potential partners because beyond the development part, the commercialization effort is a much more significant lift than just having a U.S.-based commercial footprint. And so yeah, we're actively entertaining some of those opportunities and evaluating them in the context of how much you get for how much you give up, pretty straightforward mathematical approach to thinking about partnering and when to build value for shareholders. Yeah. I mean, this fits the bill if you ask me for a potential partner at this stage. You guys have done all the heavy lifting. You've really got a, as I said, a phase III ready asset in an untapped market, so this is setting up really nicely for you guys this year. It's one of our favorite undervalued, under-the-radar stocks at the moment, so if anybody has any additional questions, please feel free to reach out to me, and I'm happy also to connect you guys to Jay and Preston, and I guess with that, we're over time a little bit, but it's been a great discussion, and thank you guys for joining. Really appreciate it. Good to see you guys. Thanks for the time. Thanks so much, Andreas. Appreciate it. You got it. Bye-bye. All right.