Cyclerion Therapeutics Inc

NASDAQ:CYCN

Earnings Call Transcript 2019-Q1

[Operator]

Good day, ladies and gentlemen. Thank you for standing by, and welcome to the Cyclerion Therapeutics corporate overview conference call. [Operator Instructions] As a reminder, this conference is being recorded.

At this time, I'll turn the call over to Brian Cali, Senior Vice President of Investor Relations and Corporate Communications. You may begin.

[Brian Cali, executive]

Thank you, Skyler, and good morning, everyone. A press release was issued at 7:00 a.m. Eastern time this morning that provided an overview of recent corporate progress and first quarter 2019 financial performance. We have also posted an updated corporate presentation on our website.

Before we begin, let me review our safe harbor statement. Today's discussion contains forward-looking statements. Such statements are based on current expectations and assumptions that are subject to risks and uncertainties and involve a number of risk factors that could cause actual results to differ materially from projected results, in particular statements that include, but are not limited to, the sufficiency of our cash and cash equivalents to fund operations, the anticipated timing of the release of data from our clinical trials, the progression of our discovery programs into clinical development and our future financial performance and expense levels. For discussion of material risks and other important factors that could affect our actual results, please refer to those contained under the heading Risk Factors in our filings with the SEC, which are available on the Investor Relations section of our website at cyclerion.com.

While we may elect to update forward-looking statements in the future, we specifically disclaim any obligations to do so even if our expectations change except as required by law. You should not rely on these forward-looking statements as representing our expectations as of any date subsequent to today. Okay. So with that said, let's get on with it. Because today's call is our inaugural one as a company and we will be joined in the call by those new to the story and some who know it well, we have 3 primary objectives this morning: we want to provide you with an overview of Cyclerion and the science that underpins our pipeline; we want to give a more detailed view of our clinical development programs; and we will highlight recent progress that we've made to advance our strategic priorities. After I provide a brief overview, our President, Mark Currie, will share some thoughts on the science that has enabled our approach here at Cyclerion. Following Mark, our Chief Medical Officer, Chris Wright, will discuss our clinical development programs and the progress and decisions we have made. We will have brief closing comments from our CEO, Peter Hecht, and they're joined by several other members of management: our Head of Corporate Development, Mark Gaffney; our Head of Strategy, Cheryl Gault; and Chief Financial Officer, Bill Huyett, who will be available for questions and answers in that portion of the morning's call.

So let me say that we are excited to be launched as a fully independent public company. Having completed our spinout on April 1 and started -- and we started trading on NASDAQ under the CYCN ticker on April 2. Cyclerion's launch was enabled by a private placement with net proceeds of $165 million, which included investments from leading biotechnology-focused investors. We are starting from a position of strength.

So let me tell you a few of our highlights. We have 5 programs that we're advancing with 4 ongoing clinical trials including 3 Phase II studies and each of these Phase II studies is focused on an indication with high unmet medical need, a strong scientific rationale and the potential to provide differentiated solutions to patients and we are also moving quickly and decisively right out of the gate. As Chris will highlight further in his section, we recently completed enrollments of 2 of our Phase II studies and we are seizing upon the opportunity created by favorable tolerability data to add a higher dose into our ongoing Phase II clinical study in sickle cell disease, which will enable us to explore the potential for this molecule over a full range of tolerated doses. We launch with a cash position that we expect to support the achievement of multiple clinical value inflection points. And we continue to attract talent to a team that combines deep expertise in the sGC pathway, soluble guanylate cyclase pathway, which is a singular area of focus at Cyclerion, with a track record of developing successful therapeutics.

As I hope you saw on our recent announcement, we're fortunate to have Dr. Andreas Busch joining the team, as our Chief Innovation Officer. Andy brings a wealth of R&D and portfolio experience most recently from Shire, where he has headed R&D and CSO. And prior to that, he was an Executive Vice President at Bayer Pharmaceuticals, where he played an important role in the discovery and development of sGC stimulators. Andy is already hard at work and we look forward to having him join us for future investor discussions. Before I pass the call on to Mark, I want to say that we intend to keep an open dialogue with the investment community and expect to hold future conference calls to provide periodic R&D pipeline updates. In the interim, we are eager to engage with current and future owners of our business and sincerely welcome your interest in our company. Please feel free to contact me directly with your questions at [e-mail]. I'd like to turn the call over now to Mark.

[Mark Currie, executive]

Thank you, Brian. And my thanks to all of you for joining us today. I am quite excited to share more information regarding our scientific strategy to creating novel innovative medicine.

Our mission is to create breakthrough treatment for patients with serious and orphan diseases by taking full advantage of the therapeutic potential of the nitric oxide signaling pathway and leveraging the foundational science that we and others have recently discovered. This signaling pathway is a powerful regulator of human physiological system. And our entire team is focused on developing stimulators of a key molecular target in this pathway, soluble guanylate cyclase or sGC.

Our sGC stimulators are small molecules that have been designed to preferentially target the pathway in tissues most relevant to the specific diseases they're intended to treat. We have an extensive intellectual property position and all of our drug candidates have been discovered by our team and are protected by a broad portfolio of patents and patent applications. Nitric oxide signaling is a fundamental regulatory pathway in the body and its discovery was a subject of the 1998 Nobel Prize in Medicine. The nitric oxide pathway is involved in multiple key biological activity throughout the body including the regulation of blood pressure and local blood flow, inflammation and fibrosis, glucose and lipid metabolism and cognitive function. Targeting the nitric oxide pathway is clinically validated and there are several marketed therapeutic approaches that act through this mechanism. These include nitroglycerin for angina, PDE5 inhibitor for erectile dysfunction and pulmonary arterial hypertension and riociguat, an sGC stimulator for pulmonary arterial hypertension. We believe the sGC stimulator mechanism that we are focusing on offers unique therapeutic advantages over other approaches to therapeutically utilizing this pathway.

By synergizing with nitric oxide, sGC stimulators have the potential to enhance pathway signaling precisely where nitric oxide deficit is adversely impacting physiology and resulting in disease-related pathology. This feature in the broad expression of sGC created opportunity for us to develop a powerful set of next-generation sGC stimulators. Our strategy is designed to allow us to preferentially stimulate sGC in tissues most relevant to the disease this molecule is intended to treat. This unique targeting approach is intended to maximize the desired effect for the target disease while reducing potential mechanism-related side effects.

Our 2 most advanced clinical compounds, praliciguat and olinciguat, have successfully completed Phase I with encouraging tolerability profile, robust pharmacokinetic profiles that are suitable for once-a-day dosing and demonstration of target engagement. These 2 compounds are currently being studied in 3 Phase II trials.

We are also evaluating IW-6463, our CNS penetrant molecule, for serious and orphan neurodegenerative diseases in a Phase I study. We believe this is a very exciting opportunity that potentially represents an important CNS breakthrough by enhancing both the neurotransmitter and the broader physiological actions of nitric oxide.

With regard to our late-stage discovery program, we have 2 programs, one that selectively targets the liver and a second program that targets the lungs. We believe each of our programs have the potential to create enormous value for patients and shareholders. We intend to use a partnering strategy for each program that maximizes this value. We expect to focus our own late-stage and commercialization efforts on programs targeting orphan rare diseases like sickle cell.

For our praliciguat, we've targeted the large patient populations of diabetic nephropathy and heart failure with preserved ejection fraction or HFpEF. We expect that a company with a global cardiometabolic franchise will be best suited to execute late-stage development and commercialization. I'll now turn the call over to Chris Wright, our Chief Medical Officer and Head of Development, to discuss our clinical programs in more detail.

[Christopher Wright, executive]

Thanks, Mark. As we expect, our praliciguat Phase II studies of diabetic nephropathy and HFpEF to be the first Phase II studies to read out, let's start there. Praliciguat, a once-daily systemic sGC stimulator, has attributes, we believe, make it particularly well-suited to treating cardiometabolic disease. Based on our preclinical studies, praliciguat distributes broadly into tissues including adipose tissue and skeletal muscle and we have observed beneficial effects on glucose and lipid metabolism.

In a Phase IIa study completed earlier, we observed translation of these metabolic effects on patients with diabetes and hypertension. In that study, patients receiving once daily praliciguat on top of standard of care demonstrated greater reductions in fasting glucose, LDL and triglycerides as well as improvement in insulin sensitivity compared to placebo patients. As we've presented and published on -- extensively, praliciguat has also shown preservation of kidney and cardiac function as well as anti-inflammatory and anti-fibrotic effects in multiple preclinical models. We are evaluating praliciguat in both diabetic nephropathy and HFpEF based on these supportive data, our earlier Phase I clinical trials and the connection between nitric oxide signaling deficiency and the underlying ideology of these diseases. Let's dive into diabetic nephropathy first. Diabetic nephropathy is a serious and highly prevalent condition that has experienced a recent upsurge and focus from both regulatory agencies as well as the biopharmaceutical industry. It's the leading cause of end-stage renal disease and for patients that progress to dialysis, the 5-year survival rates are actually less than those for many types of cancer. There are over 400 million diabetics worldwide and this number is rapidly growing. Up to 40% of these individuals have diabetic nephropathy and currently available treatments remain suboptimal. Praliciguat is being studied in a randomized placebo-controlled Phase II study in patients of diabetic nephropathy and type 2 diabetes. This 3-arm, 156-patient study has 2 dose levels of praliciguat and the treatment duration is 12 weeks. We've made excellent progress with our praliciguat trial and today, we are happy to announce that the study is now fully enrolled.

We look forward to top line clinical data in the fourth quarter of this year. The primary endpoints are safety and efficacy measured by the change in urine albumin creatinine ratio, a measure of kidney dysfunction. We will also explore key metabolic parameters as secondary endpoints. We designed our praliciguat diabetic nephropathy study to provide a clear lead on efficacy, such that if the results are positive, we believe they will enable and support our out-licensing goals. Let's now talk about HFpEF. Heart failure is a rising epidemic with over 38 million patients globally and just about half of all new heart failure diagnosis are now of the preserved ejection fraction type. HFpEF is expected to soon become the most common form of heart failure and yet there are no currently approved therapies for its treatment.

Patients with HFpEF suffer from significantly impaired quality of life. They're often out of breath, have trouble with routine activities like walking upstairs and they're frequently hospitalized with heart failure symptoms. We believe that many of the same properties that make praliciguat an excellent candidate to study for diabetic nephropathy also make it an excellent candidate for HFpEF. These include potential effects on heart inflammation and fibrosis as well as impacts on metabolism, particularly as diabetes is a frequent comorbidity of HFpEF. Based on our data and the significant unmet need in this population, we received FDA fast-track designation for treatment of HFpEF with praliciguat.

We are evaluating praliciguat in a randomized placebo-controlled Phase II trial, the CAPACITY study, in patients with HFpEF. We're pleased to announce today that this study has also completed enrollment with 196 patients and we expect top line data in the fourth quarter of this year. This is a 2-arm trial assessing a single-dose level of praliciguat, the higher of the 2 doses used in the diabetic nephropathy study, with the treatment duration of 12 weeks.

The primary endpoints in this study are safety and efficacy as assessed by exercise tolerance. We're utilizing cardiopulmonary exercise testing to objectively measure peak oxygen extraction during exertion, an endpoint that's correlated with cardiovascular outcomes. Secondary endpoints include other measures of exercise capacity such as ventilatory efficiency, 6-minute walk test and patient-reported measures of exercise capacity and quality of life.

As in our diabetic nephropathy study, we will also evaluate metabolic parameters. Looking ahead, we expect that the results of the CAPACITY study, if positive, will enable and support our out-licensing efforts. There's a tremendous unmet need in HFpEF and therefore significant potential for any new drug in this space.

Let's now turn to olinciguat for sickle cell disease. Sickle cell disease or sickle cell is a severe and debilitating genetic blood disorder with a life expectancy that's roughly half that of healthy individuals. Sickle cell disease affects approximately 100,000 patients in the U.S. and another 50,000 or so in Europe. Sickle cell patients experience bothersome daily symptoms of pain and fatigue, pronounced anemia and painful vaso-occlusive crisis or VOC, that are caused by aggregation of blood cells in vessels. Progressive organ damage including to the brain, kidneys and lung ultimately leads to an early death.

We believe we have the opportunity to provide patients with a differentiated treatment option by addressing key aspects of the underlying disease with our multidimensional sGC pharmacology. An important need exists for new medicines that more effectively address one or more of the 4 key clinical domains in sickle cell, which are daily symptoms, anemia, VOC and end-organ failure. Current sickle cell treatments and compounds in late-stage development may provide increased control of VOC and/or anemia, but we don't believe that any of these treatments on its own is likely to fully address the unmet needs in this disease. Biologically, sickle cell is characterized by a low nitric oxide state. Data indicate that this is caused by rupture of the fragile red blood cells whose contents deplete nitric oxide via several mechanisms. This nitric oxide deficiency leads to vasoconstriction, vascular inflammation and endothelial dysfunction that contributes to the acute and chronic symptomatology of the disease. We believe treating sickle cell patients with an sGC stimulator has the potential to restore nitric oxide signaling and potentially address one or more of the key clinical domains by improving local blood flow, decreasing systemic inflammation and reducing anemia. Olinciguat is a once daily, oral sGC stimulator designed to primarily target the vasculature and the highly perfused organs in sickle cell, such as lungs and the kidney. In preclinical models of sickle cell, olinciguat reduces vascular inflammation, decreases hemolytic anemia and improves vascular function. These and other data, some of which we've presented at scientific conferences, supported our sickle cell orphan drug designation granted by the FDA.

The STRONG SCD study is a randomized placebo-controlled trial designed to be data-rich and evaluate safety as a primary endpoint. Pharmacokinetics, our patient-reported outcome instrument and a number of pharmacodynamic biomarkers are the secondary endpoints. This includes evaluation of effects on daily symptoms, such as pain and fatigue, anemia and biomarkers of vascular inflammation. The study is expected to enroll up to 88 patients with a 12-week treatment duration. Our objective with the STRONG SCD study is to enable a data-driven decision on whether to progress to Phase III. Based on favorable tolerability results from a recently completed ascending-dose clinical pharmacology study in healthy volunteers as well as the blinded safety profile from the ongoing STRONG SCD study, we are expanding the number of dose levels in this study in an adaptive fashion. We're planning to add a fourth higher dose level of olinciguat. This provides the opportunity to explore a broad range of tolerated doses and deepen our understanding of olinciguat's therapeutic potential on sickle cell disease. We are also in the process of adding ex-U.S. sites to our study. With the revised study design including the higher dose level, we expect top line data to be available mid-2020.

I'd like to close by spending a few minutes on IW-6463, our CNS penetrant molecule. 6463 represents, to our knowledge, the first CNS penetrant sGC stimulator to enter clinical trials. As a practicing neurologist, I know firsthand about the tremendous unmet need in the neurological diseases and I'm excited about the potential new frontiers opened up by this area -- in this area by having a CNS penetrant sGC stimulator.

Nitric oxide is a known neurotransmitter and data have demonstrated the role of nitric oxide signaling in memory and other aspects of cognition. This mechanism also plays a key role in controlling brain blood flow and also neuroinflammation.

Preclinically, as an orally administered sGC stimulator able to access the brain, we've seen really compelling data including effects on enhanced neural function measured by EEG and cognitive tests, reduced neuroinflammation, neuroprotection and increased blood flow to brain regions associated with memory and arousal.

We're currently evaluating 6463 in a single and multiple ascending dose Phase I trial. In this study, we're examining safety, tolerability and pharmacokinetics including confirming the ability of 6463 to cross the blood-brain barrier. Additionally, the study was designed to explore whether effects observed preclinically translate to humans. An indication that we're hitting our target and having the desired CNS pharmacology in humans could substantially derisk future development.

Enrollment in the 6463 Phase I study is ongoing and we expect to obtain top line results at the end of this year in Q4. We've identified several specific serious orphan diseases for which sGC stimulator pharmacology may be particularly well-suited and we look forward to providing further updates on these indications in the future. To conclude, we have several exciting programs currently in the clinic and we look forward to seeing these results as they read out over the coming months and year.

I'll now pass the call to Peter to wrap it up.

[Peter Hecht, executive]

Thanks, Chris. As you just heard, Cyclerion has burst out of the starting gate. And over the first 6 weeks, the newly formed team is already acting decisively to advance our programs.

Recent moves provide some examples for how we will operate our new company. Expanding the strong sickle cell study with a higher dose demonstrates our intent to act quickly as new data become available, so we can best serve patients and our shareholders. Successfully completing enrollment of both the praliciguat Phase II studies during the period of dramatic corporate change shows the team's attention to operational excellence.

The 3 Phase II programs that we expect to read out over the next year, each address areas of enormous clinical unmet need. It's also the case that HFpEF, diabetic nephropathy and sickle cell each present opportunities where breakthrough therapies could lead to major brands. We believe we've designed each of the ongoing trials to provide clear answers on the impact of our sGC stimulators in each of these indications. Success in any one of these programs could create tremendous potential for these patients so desperately in need of new solutions and for Cyclerion and our shareholders, they can deliver substantial value and strategic possibility.

I want to close by recognizing our people. None of the progress we're making is possible without the amazing efforts of our teams here in Cambridge. We're honored to represent their fantastic work in the discussion today and we look forward to discussing many future innovations from them as we continue our mission to bring transformational medicines to patients suffering from serious and orphan diseases.

Thanks for your attention. We welcome your questions. Skyler, can you open it up?

[Operator]

[Operator Instructions] And our first question comes from Yatin Suneja with Guggenheim Partners.

[Yatin Suneja, analyst]

Congrats on all the progress. Maybe just a couple of questions. First on the doses that you are using for praliciguat in HFpEF and DN. It seems like in the HFpEF, you're going with the higher dose versus the 2 doses that you are testing in diabetic nephropathy. Can you just comment on the rationale behind that? And then the second part of the question is, for the DN study, could you also comment on what do you think is a clinical meaningful change in USC or the primary endpoint that you are looking at?

[Peter Hecht, executive]

Thanks for the questions, Yatin. Chris, can you take this?

[Christopher Wright, executive]

Yatin, it's Chris Wright. Thanks for your question. So in terms of the dose rationale for the 2 studies, you may not recall, but earlier and for the HFpEF study, we actually had 3 doses and we made a decision to narrow the dose ranging in that study to the 1 higher dose level because we saw good tolerability there and we wanted to focus on primarily getting our proof-of-concept answer out of that study in an efficient way. For diabetic nephropathy, we have 2 doses there to give ourselves a little bit more of an opportunity to look at dose ranging in that disease. And so that's the -- those are the higher 2 doses. And then the high dose in each of the 2 studies is a same dose.

So as for your question around diabetic nephropathy and what is a meaningful UACR change, so for our study, we're looking at UACR and we're looking at a number of other measures including metabolic changes and we're making a decision on our studies based on the data in total. But if you look at the literature and you look at what other sponsors have done, a UACR of 20% or greater is probably a reasonable target if you look at what's been done externally.

[Yatin Suneja, analyst]

Got it. That's helpful. Then on the sickle cell program, can you maybe just give a little bit more color on the decision to add the higher dose in the STRONG trial? I mean, specifically, how in depth you looked at the blinded dataset? Was the decision mainly driven by the healthy volunteer data that you have? Or is there sort of certain need of concentration that you need to hit and that's why you're going a little bit higher?

[Christopher Wright, executive]

So Chris again. Thanks for that question as well. So based on the emerging data that we saw, we really thought we had a great opportunity to evaluate higher doses of olinciguat and increase our probability of success in the POC study. So we conducted a clinical pharmacology study that was a multiple ascending dose QT study and in that we saw -- from the unblinded safety, we saw good tolerability over the dose range that was higher than that, that we -- than we were exploring in the SCD STRONG study. In addition, we had a blinded data from the ongoing STRONG SCD study. And on the basis of that blinded data and the unblinded data from that clinical pharmacology study, we made the decision to move forward and to expand the dose ranges and include a higher dose level.

[Yatin Suneja, analyst]

Got it. And just one final question. So for the STRONG SCD study, what is the primary efficacy endpoint? I know you are looking at that biomarker hemoglobin, fetal hemoglobin and other. What about -- like, are you also looking at the VOC? Based on the mechanism, do you think there could be -- the mechanism should help in reducing crisis?

[Christopher Wright, executive]

So for the sickle cell, the STRONG SCD study, our primary endpoint is safety. And then we have a number of secondary endpoints, which include PK and a number of PD markers, as you mentioned. So we'll be looking at anemia, we'll be looking at markers of vascular inflammation and so those are the key measures. As far as VOC is concerned, because of the duration of the study only being 12 weeks, we don't expect to see a significant impact on VOC. It's possible we'll see a trend, that will be great, but it's only 12 weeks.

Then the last thing I would mention in terms of important endpoints is our patient-reported outcome that we are developing as fit-for-purpose in sickle cell and we're testing this PRO in this study as well. And we'll be looking for impacts on fatigue and on daily pain, cognitive function, which are really the things that the patients find themselves to be most bothersome.

[Operator]

And our next question comes from Ravi Mehrotra with Evercore.

[Ravindra Mehrotra, analyst]

You've certainly hit the ground running for a 6-week old company, so congrats on that. For those of us which aren't so familiar with the new company, can you remind us -- and you talked a little bit about the team, but give us more color on the team, the culture and the experience you guys have had working with each other, which allows you to hit the ground running so fast.

[Peter Hecht, executive]

Thanks, Ravi. It's Peter. I'll take the question. It's a great blend of folks who have worked together, in some cases, for many years and in previous experience at Ironwood, blended together with great new folks who are coming and joining us from fabulous sets of previous experience. We announced recently Andy Busch joining us. Andy is already out on the road and is on the call this morning, but was lead in the research program in cardiovascular there when they were developing the first set of sGC stimulators, really the first-generation program in this category and then was the Head of R&D at Shire in the orphan efforts there.

Larry Miller, here in the room, is very experienced General Counsel, was a senior in the legal group at Pfizer and also in a consumer company called Blue Buffalo. And then we've got -- you've heard a number of the names around the table, but some of the folks here you haven't heard from yet have great experience from either the previous company we worked at together or other folks around -- other places around the industry. It's really a fabulous blend of new and current folks. And we're doing, I think, a great job setting a new tone for urgency and focus in execution. One of the great things about focusing into these more focused patient populations is the ability to move more quickly and work constructively with the agency on paths to the market that may be quicker as well. So there is tremendous energy here.

[Operator]

And I'm showing no further questions. I would like to turn the call back over to Peter for any closing remarks.

[Peter Hecht, executive]

Well, thanks very much for your attention today. As Brian said at the outset, we're really just getting out into the public consciousness and we appreciate your joining us and tuning into the new story. We're very excited as I think you can hear to launch our new company.

We expect this introductory call to initiate what should be an ongoing dialogue with all of you and with our broader shareholder group and investment community. We're eager to let you know about our new company and to tell you about our performance and our mission. And we're very grateful to you this morning for your time and interest. If you have follow-up questions during the day, reach out directly to Brian, and have a great day. Thanks.

[Operator]

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.