Mineralys Therapeutics, Inc. (NASDAQ:MLYS) Q1 2024 Earnings Call Transcript

Mineralys Therapeutics, Inc. (NASDAQ:MLYS) Q1 2024 Earnings Call Transcript May 11, 2024

Mineralys Therapeutics, Inc. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, ladies and gentlemen, and welcome to the Mineralys First Quarter 2024 Earnings Conference Call. At this time all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Thursday, May 9, 2024. I would now like to turn the conference over to Garth Russell of LifeSci Advisors. Please go ahead.

Garth Russell: Thank you, operator. Good morning, everyone, and welcome to our first quarter 2024 conference call. Earlier this morning, we issued a press release providing our first quarter 2024 financial results and business updates. A replay of today’s call will be available on the Investors section of our website approximately one hour after its completion. After our prepared remarks, we will open up the call for Q&A. Before we begin, I would like to remind everyone that this conference call and webcast will contain certain forward-looking statements about the company. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company’s business.

These forward-looking statements are qualified by the cautionary statements contained in today’s press release and our SEC filings, including our annual report on Form 10-K and subsequent filings. Please note that these forward-looking statements reflect our opinions only as of today, May 9. Except as required by law, we specifically disclaim any obligation to update or revise these forward-looking statements in light of new information or future events. I would now like to turn the call over to Jon Congleton, Chief Executive Officer, Mineralys. Jon?

Jon Congleton: Thank you, Garth. Good morning, everyone. Welcome to our first quarter 2024 financial results and corporate update conference call. I’m joined today by Adam Levy, our Chief Financial Officer; and Dr. David Rodman, our Chief Medical Officer. Considering the relatively short period of time between this call and our fourth quarter call, we’re going to keep our prepared remarks today fairly brief. I’ll begin with an overview of the business and recent milestones followed by Adam, who will review our first quarter financial results before we open up the call for your questions. Let me start now by stating that we continue to make great progress with our clinical trials and reaffirm our previously stated guidance on the timing of our top line data readouts, which I will review in a moment.

Before getting into each trial in detail, let me take a moment to touch on our overall strategy and basis for our pipeline, which is focused on targeting dysregulated aldosterone. Aldosterone is known to be a significant driver of cardiorenal metabolic diseases. And thus, we’re developing an aldosterone targeted treatment approach with lorundrostat. We believe lorundrostat has the potential to benefit millions of patients who are impacted by hypertension, kidney disease and heart disease. For example, dysregulated aldosterone levels are a key factor in driving hypertension in approximately 25% of all hypertension patients. This is a significant population as there are an estimated 115 million patients in the United States who have hypertension.

And of the 60 million treated patients, more than half fail to achieve their blood pressure goal. The outcome can be severe for these patients. As according to the World Health Organization, there are 7.5 million deaths attributable to hypertension per year globally. Given the impact of uncontrolled hypertension on cardiorenal outcomes, we made hypertension our lead indication for the development of lorundrostat. In addition to hypertension, we’re currently investigating the benefits of lorundrostat in subjects with hypertension in CKD. We entered 2024 with clear goals for our registration program in hypertension, which is comprised of two pivotal clinical trials titled Advance-HTN and Launch-HTN, an open-label extension trial called Transform-HTN to capture long-term safety and efficacy data and the proof-of-concept trial Explore-CKD evaluating lorundrostat in hypertensive CKD subjects.

Advance-HTN is the first of the two pivotal trials we have initiated, which started enrolling patients one year ago. Enrollment in the trial remains ongoing, and we anticipate top line data to be available in the fourth quarter of this year. This is a state-of-the-art, extremely rigorous hypertension trial, which is designed and executed in collaboration with the experienced cardiovascular research team at the Cleveland Clinic. The trial is designed to demonstrate the value of lorundrostat when added to standardized, optimized AHA guideline background treatment in patients with uncontrolled or resistant hypertension as confirmed by 24-hour ambulatory BP measurement. We believe this is the only trial of an aldosterone directed therapy that is utilizing this rigorous standardized background treatment approach.

As such, this trial has the potential to generate high-quality evidence that will be important for potential inclusion in the hypertension guidelines for treating physicians and for creating favorable access via payers. As you may be aware, the targeted treatment of hypertension is a major point of our strategy. Data presented last year from Target-HTN trial laid the foundation for identifying patients who best respond to lorundrostat, such as those patients with an elevated BMI. The planned analysis of the Advance-HTN trial includes a well-powered confirmatory test of the predictive value of obesity on the efficacy of lorundrostat. We believe the inability of an optimized two or three drug standard anti-hypertensive regimen to reduce BP to goal in the setting of obesity will be a straightforward approach to identifying candidates for treatment with lorundrostat.

In addition, we plan to continue to explore other positive and negative predictive tools using an unbiased artificial intelligence model, to expand the repertoire of useful tools for targeting lorundrostat to individuals most likely to derive long-term clinical benefit. Launch-HTN is our second pivotal trial, which we initiated in the fourth quarter of 2023. We continue to anticipate top line data to be available in the second half of 2025. This Phase 3 trial, which will enroll up to approximately 1,000 adult subjects is designed with the objective of evaluating lorundrostat set in a real-world setting when added to subjects previously prescribed background regimen of two to five antihypertensives. Subjects who fail to achieve blood pressure control on their prescribed background treatment during the run-in period will be randomized 1 to 2:1 to either placebo, once daily 50 milligrams of lorundrostat or once daily 50 milligrams of lorundrostat with the option to titrate to 100 milligrams once daily as needed at week 6.

The primary endpoint for this trial will be change in systolic blood pressure as measured by automated office blood pressure. We believe this endpoint reflects real-world measurements that will be relevant to the primary care provider this trial targets. In addition, subjects from these two trials will be offered the opportunity to roll over into the ongoing open-label extension trial called Transform-HTN. In addition to the hypertension pivotal program, we’re conducting the Explore-CKD Phase 2 clinical trial for lorundrostat in patients with hypertension and Stage 2 to 3b chronic kidney disease. We continue to anticipate top line data to be available in Q4 2024 to Q1 2025. Explore-CKD is a within subject comparison trial designed to demonstrate the benefit of lorundrostat in reducing blood pressure and provide supportive evidence for potential benefit on chronic kidney disease on the background of a stable SGLT2 inhibitor treatment.

This proof-of-concept trial will enroll approximately 60 subjects with hypertension in Stage 2 to 3b CKD. We are pleased with the steady progress the team has made in the strengthening of our clinical program for this promising new approach to treating hypertension and the associated complications like chronic kidney disease and heart disease. We look forward to keeping you apprised of the status of the lorundrostat development program. Let me now turn the call over to Adam, who will provide a financial review for the first quarter of 2024. Adam?

Adam Levy: Thank you, Jon. Good morning, everyone. Today, I will discuss select portions of our first quarter 2024 financial results. Additional details can be found in our Form 10-Q, which was filed with the SEC earlier today. We ended the quarter with cash, cash equivalents and investments of $338.6 million compared to $239 million as of December 31, 2023. In February 2024, we completed a private placement financing for net proceeds of approximately $116 million. We believe that our cash, cash equivalents and investments will be sufficient to allow us to fund our planned clinical trials as well as support corporate operations into 2026. R&D expenses for the quarter ended March 31, 2024, were $30.8 million compared to $12.3 million for the same quarter of 2023.

The increase in R&D expenses was primarily due to increases of $16.8 million in preclinical and clinical costs, $3.7 million in clinical supply, manufacturing and regulatory costs, $1.7 million in higher compensation expenses resulting from additions to headcount and stock-based compensation and $0.3 million in other research and development expenses, partially offset by a decrease of $4 million in license fees. G&A expenses were $4.6 million for the quarter ended March 31, 2024, compared to $2.6 million for the same quarter of the prior year. The increase in G&A expenses was primarily due to $1.3 million in higher compensation expenses resulting from additions to headcount and stock-based compensation, $0.5 million in higher professional fees associated with operating as a public company and $0.2 million in higher insurance and other administrative expenses.

Total other income was $3.9 million for the quarter ended March 31, 2024 compared to $2.3 million for the same quarter of 2023. The increase was primarily attributable to increased interest earned on our investments in money market funds and U.S. treasuries. Net loss was $31.5 million for the quarter ended March 31, 2024, compared to $12.6 million for the same quarter of 2023. The increase was primarily attributable to the factors I described earlier. With that, I’ll ask the operator to open the call for questions. Operator?

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Q&A Session

Operator: Thank you, ladies and gentlemen. We will now conduct a question-and-answer session. [Operator Instructions] Your first question comes from Geoff Meacham from Bank of America. Your line is now open.

Unidentified Analyst: Hi. Thanks for the question. This is John Joy [ph] on for Geoff. So with top line data expected in 4Q 2024, what would be a positive readout for you in terms of clinical response and safety profile?

Jon Congleton: Yes, John. Thanks for the question. We’ve done a fair amount of market research with payers and physicians with the Target-HTN data, where we saw an 8 to 10 millimeter mercury placebo-adjusted drop. We believe if we replicate that that is a transformative change for subjects using lorundrostat in the third or the fourth line. That’s based on the fact that with the currently available treatments, when you go to a third and fourth line agent, you typically see a 5 to 6 millimeter mercury drop at best. And so if we replicate what we’ve seen in Target-HTN of 8 to 10 millimeters of mercury placebo adjusted, we believe that will be very resonant within the market and support the opportunity that lorundrostat represents in the hypertension space.

Unidentified Analyst: Awesome, thank you.

Jon Congleton: Yes.

Operator: Your next question comes from Annabel Samimy from Stifel. Your line is now open.

Jack Padovano: Hi. This is Jack on for Annabel. Thanks for taking our questions. So could you remind us the powering for the Advance-HTN trial? And what magnitude of placebo response you might be expecting here, acknowledging that these patients should have the truly uncontrolled hypertension. And then with Launch-HTN, because those background treatments are going to be variable, what kind of steps have you taken to help minimize the noise and the variability there when it comes to the top line data generation?

David Rodman: This is David Rodman, CMO. Thanks for the questions. So the first question was in the Advance trial, some of the statistical questions, what’s the powering and what do we expect the placebo to be. So I’ll remind you in Advance, we’re using 24-hour ABPM as the primary. And with 24-hour ABPM, because you’re averaging over the course of the day, you get much more stable averaging measurements. We saw a placebo effect of around 2 millimeters of mercury in our first trial. And I think that’s about what we would expect. That’s obviously a very, very quiet placebo effect. As far as powering, we’re certainly sufficiently powered to detect the range that Jon mentioned, the 8 to 10 and actually overpowered for that. Now you asked also in your second question, Launch, which is more real world, what steps have we taken?

Let me first say that our placebo effect, when we did the Target-HTN trial on that population was about 4 millimeters of mercury. And so all of the steps we took in that trial to get essentially a best placebo effect and lowest variability are incorporated into this trial. We’ve made a few other steps to look at things further. Probably the most important one is we do use a home – an app-based AI-interpreted adherence tool. And as you probably know, a great proportion of the reason why people don’t respond to their anti-hypertensive regimen is, in fact, that they don’t take it. A great contributor to placebo effect is that people do start taking it on trials. We get rid of that problem because we – in the run-in, we do adherence already, and we use a placebo in the run-in.

So we already have a baseline taking that big variable out of the picture. We piloted a number of different adherence tools and target. This was the one that has the best performance and it’s really proven itself to be a remarkable way to get better data. There are other things, but that’s really what I would emphasize.

Jack Padovano: Got it. And then if I could just sneak in one more, maybe. So now that you mentioned the differences in the placebo effect of maybe 2 millimeters, 4 millimeters, about how much variance is there between the ABPM and AOBP measures. Basically, trying to ask here if you’re expecting to see like vastly different result ranges in Advance versus Launch?

David Rodman: Well, that’s a great question. And when Jon mentioned 8 to 10 millimeters of mercury earlier, the primary was AOBP in the Target-HTN trial, and the primary in the Launch trial is also AOBP. So in that trial, we expect things to be pretty comparable, 8 to 10. Now when you – in a person with normal blood pressure control, when you go to sleep, your blood pressure goes down. And so when you average 24 hours, you end up with a lower value for blood pressure and a proportionately lower response. The primary in the Advance trial is 24-hour average ABPM. And typically, you will see about a 1 to 1.5 millimeter lower systolic blood pressure change in trials when you compare the two. We also have the ability, however, to look at 24-hour day time and that will be closer to what you see with AOBP. Did that answer your question?

Jack Padovano: Yes. That was very helpful. Thank you.

Operator: Your next question comes from Seamus Fernandez from Guggenheim Securities. Your line is now open.

Seamus Fernandez: Hi, guys. Thanks for the question. So, just wanted to clarify, Dave, a couple of those last points. So when we’re thinking about the difference between 24-hour ABPM and the AOBP measures, I think that 8 to 10 millimeter threshold. I just wanted to clarify a couple of things. Number one, we do know that the half-life is a bit shorter and – with lorundrostat. So just trying to get a better characterization of how much you would anticipate that overnight average to change. And how you’re actually measuring blood pressure overnight, is that a continuous monitor that you’re using to average over time? And then when you’ve looked at other studies in terms of that comparison, as you look at comparisons of the design of Advance versus other programs?

Just trying to get a more complete understanding of what typically happens during that overnight period. For placebo as well as for a full kind of long acting once a day versus a program that has a shorter half-life in that regard? Thanks.

Jon Congleton: Hi, Seamus. I will start and Dave add some thoughts. And if we miss any of your points there, let me know. But I want to address the question on the half-life because the point I do want to reiterate from Target-HTN, the primary endpoint was AOBP that was in-office. And those measurements were taken in the morning before that day’s dose. So we were looking at Nater [ph] within the office and we actually saw that 8 to 10 millimeter mercury reduction that was also replicated within the 24-hour ABPM. So we’re very confident in the once daily dose. And we actually think it the 10 to 12 hour half life creates kind of an ideal mix of efficacy and safety, based on what we’ve seen and we’ll continue to evaluate that. Now to some of your deeper questions on the 24-hour monitoring, I’ll have Dave address those.

David Rodman: Thanks, Seamus. We put a lot of thought into what pharmacology would be optimum. And as Jon mentioned, we like this idea of having a time for some release in the sort of the predawn hours, so that aldo can do its job in terms of excreting potassium. But if you think about the mechanism of action, this is a diuretic. It lowers your blood volume. And overnight, you don’t really take on more volume, you’re asleep. In the morning when you get up, you take our drug and within one hour, you’ve gotten rid of aldosterone. And so essentially, during the period of time, when you need the sodium loss, the natural releases, you get it from our drug. During the amount of time when you can switch out and lose potassium, you get that window with our drug.

And so the other thing that I’ll mention is that when we measure aldosterone levels in blood before the dose in the morning, the median value is a 70% reduction from the baseline of value that you get without drug. So we still have a substantial reduction even though we have the shorter half life, it’s just not 0. We get complete suppression of aldosterone an hour after a dose, 70% in the morning. So don’t think of it as a switch that’s on and off. I like to think of it as restoring normal circadian rhythm. This is what you should be doing. You should have a lower aldo, which is what we produce, but it should be highest in the morning and then go down during the day, which is exactly what happens.

Jon Congleton: Seamus, did we get to your – all of your questions?

Seamus Fernandez: I think that covered the majority of it. But just as you look at other clinical studies and the performance of placebo versus an active, whether it be with an ACE or an ARB or mineral corticoid targeted agents, MRAs, what do you typically see during that overnight period?

David Rodman: Yes. So, good question. So let me start with the placebo piece. So first of all, as I said, in our study, the first study, even with the relatively small numbers of 30 per arm, we saw a 2-millimeter of mercury placebo effect. And so that’s de minimis. It’s not going to change over the course of the day because that’s really not a treatment effect, that’s just a measurement variability. And to answer your question that I completely forgot to answer, people wear a cast and a recorder 24 hours, whether they’re awake or sleep. The only difference is we do measurements around every 20 minutes during the day, and we space them out a little bit more at night because it can tend to disturb sleep a little bit, which can raise your blood pressure.

So that’s how we do it. We don’t expect to see a difference in placebo effect overnight. We do expect to see a reduction in blood pressure. In fact, we will often see what’s called restoration of nighttime dipping. So for you and I, without sleep apnea, without untreated hypertension, our blood pressure will dip at night. It will go down, as I mentioned. Hypertensive patients will first just lose the dipping then get actually hypertensive overnight. So that’s what we expect to see at night.

Seamus Fernandez: Great. And as we think about the – this is just my last question. The importance of having a diuretic on board like HCT. As we think about the differences between your two programs, how do you expect the sort of diuretics to come into play? Is that consistently baseline therapy across the board for all patients and then add-on therapy from there in both trials? Just trying to get a sense of how that sequencing is likely to incorporate standard thiazide-based type diuretics?

David Rodman: Yes. Thanks, so letting me clarify that. Everyone in both trials needs to be on a thiazide or a thiazide-like diuretic. And I’ll mention also that in the United States, at least, the first-line drug now is recommended to be a fixed-dose combination between an ACE or an ARB and a thiazide diuretic. And so this mimics what guidelines would say. You come in on two drugs, but they’re in the same pill, and there is always a thiazide in that. So we’re following to the letter the way we expect patients to show up in the doctor’s office. And therefore, when we give them guidelines and say, if they don’t respond, if they’re on that regimen, if they’re obese, you should think about our drug as a next step. Our data are going to exactly support that sort of practice pattern.

Jon Congleton: And Seamus, as you’re well aware, in Target-HTN, we had a little over half of the subjects on a diuretic, a little under half not on a diuretic. And we saw a clear additive benefit of lorundrostat with the diuretic. So when we think about what we hope to see from an effect size in Advance and in Launch of that 8 to 10 millimeter mercury, which is replicating target. That doesn’t take into account the potential additivity of the diuretic, which, as Dave said, will be part of the background medication in both Advance and Launch-HTN.

Seamus Fernandez: Great. Thanks so much guys. Appreciate it.

Jon Congleton: Seamus, good talking to you.

Operator: Your next question comes from Michael DiFiore from Evercore. Your line is now open.

Michael DiFiore: Hi, guys. Thanks so much for taking my question. Just a general one for me. It’s regarding – just any preliminary thoughts you may share on how Mineralys may proceed in cardio or renal metabolic syndrome if the CKD trial is successful, just given that the people are starting to look at the [indiscernible] more holistically nowadays.

David Rodman: Yes, Mike, thanks for the question. I appreciate it. I think you’re right. We’re seeing this shift from treating hypertension and CKD and heart failure and OSA as these independent stand-alone conditions, but really looking at the interplay between them and can we find benefits from a single agent across that spectrum. That’s really kind of the basis of how we’ve been advancing forward for us. Hypertension is really kind of the beachhead indication. It’s really, in a lot of ways, the genesis of these conditions. So you have hypertension that leads to CKD, heart disease, stroke. And so from our standpoint, the first step forward into that broader cardio renal metabolic syndrome is the Explore-CKD study that’s going to give us a perspective on not only addressing hypertension, but also the renal insufficiency within those patients.

We also believe that, that’s a white space for us. There are a lot of agents for hypertension. There are a lot of agents for kidney disease, but to have a benefit on both is a little bit unique and distinct and that’s something that we think lorundrostat can point out. As we continue to learn more information about lorundrostat through our development program, we’ll continue to contemplate where else can we extend the value of an aldosterone synthase inhibitor that has best-in-class selectivity like lorundrostat. And it could be some of these other areas that begin to get into heart disease, heart failure. There are a variety of places we can go. And I think as we’re seeing a renaissance within research and in the pipelines right now, we’re seeing more and more focus on aldosterone, which we believe is an important thing to do, given the rising prevalence of dysregulated aldosterone, which Mike, you’ve heard us say before, we believe at least 25% of all hypertension patients are dealing with this and that probably extends into full cardiorenal metabolic syndrome as well.

Michael DiFiore: Great. Very helpful. Thanks again.

David Rodman: Thanks, Mike.

Operator: [Operator Instructions] Your next question comes from Rami Katkhuda from LifeSci Capital. Your line is now open.

Rami Katkhuda: Hi, guys. Thanks for taking my questions as well. I guess first, is there any risk that the three-week run-in period in Advance-HTN is not long enough to have patients get to stable blood pressure on the standardized background regimen?

David Rodman: So good question. Many of the people who come in will already be on most or not all components of that given the type of patients we’re screening for and screening out. And so I think the risk is relatively modest. It’s taken care of, though, in the design because the placebo group stays on that regimen. So let’s just say over 12 weeks in the run-in period, let’s just say their blood pressure dropped by 8 millimeters of mercury, but it drops another 3 from the regimen over those 12 weeks. That will then be in the placebo effect, but it will also be in the treatment arms and it will just get subtracted out. So in the placebo adjusted, there is no risk.

Rami Katkhuda: Got it. That makes a lot of sense. And then I guess with BI’s ASI, it was recently shown to have a cell activity of 250 to 1, but they still saw a number of cases of adrenal insufficiency in their CKD study. I guess, does this change your view at all on the selectivity threshold that’s needed to kind of avoid the off-target suppression of cortisol?

David Rodman: Well, it’s a really good question. I’m going to point out that – when we had LCI 699 at Novartis, when I was there, that’s essentially what killed the drug, and that’s why it actually is sold now as a treatment for hypercortisolism, not hyperaldosteronism. So the regulators are extremely, if not super sensitive about this issue. When we do those selectivities, what we do is we take recombinant human enzyme and test it. But once you’re in a patient there are other variables, so I don’t think I can answer your question and say we know an exact cutoff in vitro. Proof is in humans. We haven’t seen this so far, and it hasn’t been a close call for us. But we’re continuing to look at that. Why BI saw it, I can’t say.

We’re very careful about not including people who’ve been using high-strength steroid creams or taking inhalers for asthma and things like that and confounding the data. We will look at that in profiling later because the real world is people do that. So it’s possible they’re taking people who are predisposed and showing that their drug can suppress them. We’re going to take that more carefully in our development programs, so that when we eventually have guidance for physicians, they know exactly what our drug does and doesn’t do.

Rami Katkhuda: Got it. Thanks so much.

Operator: Your next question comes from Rich Law from Goldman Sachs. Your line is now open.

Rich Law: Hi, guys. Good to be back and congrats on the progress so far. For Advance-HTN, can you discuss how the patients are enrolled and randomized 2 to 3 week background standardizing period? Since you’re taking patients off to 2 to 5 meds and then putting them on the background of 2 to 3, how do you think that change in treatment from the sanitization could affect the results in the study? And then how do you mitigate against that?

Jon Congleton: Yes. Rich, the way Advance has built is really to address the question of, is somebody truly uncontrolled or truly resistant. And we really have four main vectors that we address that during that run-in period before subjects ever get randomized to either placebo or active. And the first is following AHA prescribed guidelines for what subjects should be on. So if patients are on two meds coming into the trial, we take them off of those two meds and put them on olmesartan, an ARB and a diuretic. If they’re on 3, 4, 5 meds, we put them on olmesartan, a diuretic and amlodipine, a calcium channel blocker. So we’re putting them on the right drugs according to the AHA guidelines. Secondly, we ensure that they’re on the proper dose of those medications.

So in the case of olmesartan, it’s 40 milligrams. In the case of the diuretic, it’s in depth mine it’s 2.5 milligrams. If it’s HCTZ, it’s 25, and amlodipine 10 milligrams. So now we’ve got the right drugs at the right dose. The third piece that we do is we ensure compliance. We know compliance is a factor in patients’ inability to get to goal. We’re working with a firm called AiCure that’s done, I think, up to 300 different registrational studies with this technology. And its smartphone technology that captures their consumption of that – these standardized medications during the run-in and then we use it during the randomization period as well for background meds as well as placebo and active. But during that run-in period, this allows us to have daily confirmation that subjects have taken their medications.

This is Bluetooth, cloud-enabled. So we get daily feedback are subjects being compliant or not. It goes to the site. It goes to our CRO and it comes to us as far as that information. And we’re able to actively reach out to these subjects if they’re missing doses and reinforce the importance of taking the study drug. So now we have them on the right drug at the right dose and we’re ensuring they’re compliant. And then at the end of that three-week period, which as you heard Dave said, when it is sufficient to get subjects to peak plasma and probably maximal effect with that background regimen, we do 24-hour ambulatory blood pressure measurement. That’s the gold standard measurement. As you heard Dave say earlier, it has a very de minimis placebo response, takes out a lot of noise in what can sometimes be a noisy measurement in the office.

If after that measurement they continue to be hypertensive, so they have not achieved goal, then we randomize. If they do achieve goal, we don’t randomize them and they’re not included in the study.

Rich Law: Great. And then for patients who are treatment resistant on 4 or 5 med coming into the trial and you take them down 3 background med and then adding lorundrostat. Do you think these patients are more difficult to treat compared to others since they are already treatment resistant on 4 or 5 and then you take them back down to 4?

David Rodman: Yes. So this is Dave Rodman. So traditionally, the definition of resistant is having not reached goal on 3 medications, an ACE or an ARB, a thiazide ot a thiazide-like diretic and then either a beta blocker or a calcium channel blocker. And so they may be on 4 or 5 drugs. But once you get to 3, without a drug like ours, you can expect maybe a 3- or 4- or maybe at best case 5-millimeter mercury fall, with adding any one of those as a fourth drug. But once you – the more you add, the less the benefit generally. And the reason for that is you’re not going after the main reason that they have this problem. That’s the reason why guidelines say, go after aldosterone as your fourth line. The problem is there isn’t a great drug to do that.

Eplerenone just simply is too weak. Spironolactone, you can’t dose up to the maximum efficacious dose of 100 to 200 milligrams without running into problems. And so the reason why we think we’re actually going to be very effective in that population where we cut them down to 3, is that we’re going to be the first drug that really can go after that guideline of going after aldo as fourth line because we can dose up to maximum efficacious dose with our drug and get a robust blood pressure response. So I don’t think it’s a bug. I think it’s a feature of cutting them down to 3 and then giving them the drug they really need, which is what we anticipate we’re going to see.

Rich Law: I see. And then one more question from me. So looking at the data you guys presented at ASN last year where you show BMI versus the SBP reduction. And we see around like 20% of patients who did not respond to treatment across the BMI spectrum, meaning that the SBP trajectory went up in the study. Have you characterized these patients further on why they did not respond? And was there any difference of nonresponder rate between the 50 mg and 100 mg dose in Target-HTN? And going forward, what do you expect is the nonresponder rate for your pivotal studies? Thanks.

David Rodman: So that’s a really good question. What we actually – and I’m going to – hopefully I don’t give you a wonky answer because I’m a wonky guy. But when we do a frequency histogram and ask the question, what’s the distribution. On the right side of no response, it’s a perfect – it’s nearly a perfect normal distribution. In other words, it’s just statistics. They didn’t respond on that day but they might respond a similar amount on the next time they’re measured. It’s just noise in the measurement when you do AOBP. On the left-hand side, it’s a left skew distribution, meaning we see responders and we see super responders. And so we really don’t think it’s a confounder. Sure, there will be people in a general population that don’t respond to our drug more than an average drug.

But it’s not really responder, non-responder. It’s really the normal distribution on the right-hand side, and this really interesting left skew distribution where we see people with 30-millimeter mercury falls in blood pressure. The higher the blood pressure, the bigger the fall essentially and that’s because they’re aldosterone dependent. So it’s a really good question. It’s easily controlled in our placebo-controlled design and the use of our statistics. So it doesn’t introduce any kind of a confounder.

Jon Congleton: And Rich, I’ll just add, and you’re well aware of this. Our whole intent is to really identify those positive and negative predictors for response to lorundrostat. BMI clearly was a prespecified analysis that we did in Target-HTN. We saw a very tight correlation as far as response magnitude relative to BMI. That’s something that we’re going to continue to analyze in Advance and Launch-HTN. But as I noted in my opening comments, we’re partnering with an AI firm to continue to really identify those predictive values that would say this is the type of patient that’s going to respond to lorundrostat very exquisitely. Dave made the point, the data is out there that as you get into that resistant state, we are on 3 or more background meds.

There is an enrichment of an aldosterone-dependent form of hypertension in that population because fundamentally, those patients aren’t being addressed with an aldosterone-directed therapeutic. And so all of those, I think, are really going to enable us in this development program to come forward with a really clear toolkit of who should be on lorundrostat and the kind of benefits that they can derive from it.

Rich Law: Got it. And then just following up based on what you guys said. Is there like a certain percentage of patients who are just not aldo driven in that fourth – that third and fourth line? Have you guys thought about there could be other drivers of hypertension?

Jon Congleton: I think the literature would say that there are going to be other drivers. Our interest has always been on where aldosterone is driving it. Hypertension is a multifactorial disease. We’re not developing lorundrostat as a monotherapy. We actually think an ideal combination would probably be an ARB, a diuretic and lorundrostat for those patients who have aldosterone-dependent hypertension. So there are definitely other factors driving this condition, but that’s where frankly, we’re taking the vantage point of let’s bring a level of precision on the treatment of hypertension and acknowledge those different variables and in our case, very specifically, let’s identify those subjects that have dysregulated aldosterone and will benefit extremely well from lorundrostat.

Rich Law: Great, that makes sense. And then just another final follow-up. And are you able to quantify how much of those patients are just not aldo driven at that point and may not respond to an ASI?

David Rodman: So it’s a great question. Just to embellish one statement that we’ve made. If you look at the classical teaching, the most common cause of hypertension beyond what we used to call essential hypertension or primary hypertension is too much aldosterone. Previously, that was called hyperaldosteronism and it had a very specific and complex way of diagnosing it. We now call it inappropriate aldosterone. The field recognizes that you can have a low aldosterone but be aldosterone dependent. And so while we will be measuring blood aldosterone, urinary aldosterone, at the end of the day, the gold standard is does your blood pressure go down when you reduce that aldosterone. And so we’ll be looking at that and saying, do we have people who didn’t reduce their aldosterone and is that why they didn’t respond.

And if that’s the case, we will see that in the 50 to 100 dose escalation arm of the trials. Or are they truly, truly, truly resistant? Aldo doesn’t go down, blood pressure – aldo does down, blood pressure doesn’t. And then we’ll be able to answer your question with data, and we’ll have those data.

Rich Law: Great. Thank you so much.

Jon Congleton: Thanks, Rich.

Operator: Your last question comes from Mohit Bansal from Wells Fargo. Your line is now open.

Mohit Bansal: Great. Thank you very much for taking my question. [Technical Difficulty]

Jon Congleton: Mohit?

Mohit Bansal: Can you hear me?

Jon Congleton: It was a little bit difficult to hear you. I just wonder if you could reorient the phone.

Mohit Bansal: Can you hear me better now?

Jon Congleton: Yes, thank you.

Mohit Bansal: Yes. So I just wanted to ask – yes, sorry. Can you hear me?

Jon Congleton: Yes.

Mohit Bansal: Okay, sorry about that. So I just wanted to ask about the kind of magnitude of benefit you want to see in the CKD proof-of-concept trials here, given the shorter treatment period here because – I mean, I think in the past, you talked about SGLT2 inhibitors could have 30% to 40% improvement in proteinuria. So can you talk a little bit about that? And how would you compare and contrast when the data come with and what is out there? And how would you make the [indiscernible] decision here? Thank you.

Jon Congleton: I think what we would anticipate, Mohit, and thank you for your question. In Target-HTN, again, we saw the 8 to 10 millimeter mercury placebo-adjusted drop in blood pressure with a really nice safety profile. The majority of that response was seen in about 2 weeks or with 2 weeks, we saw the beginning of the drop and the majority of it was at 4 weeks. So I think we’re comfortable that we’ll see that level of drop within systolic BP. As far as the renal benefit, I’d hate to extrapolate at this point in time. We know that the kidney benefit to a large degree, is derisked within ASI based on what the Beringer Ingelheim data that was presented last fall. We wanted to confirm that we see the same benefit with lorundrostat.

We think that, that UACR effect is likely driven from the reduction in blood pressure. And so that’s what we anticipate seeing from a BT standpoint of 8 to 10, and then we’ll be evaluating what we see from an UACR reduction standpoint. But again, our perspective is ASIs within CKD have been significantly derisked based on some of the other work with the class.

David Rodman: Jon, can I just talk a little bit to that?

Jon Congleton: Yes, sure.

David Rodman: Well, thanks for the question. It’s really a good question. First of all, we made blood pressure the primary because we have a very effective blood pressure drug. And if you just treat the metabolic piece of this and you don’t treat the hypertension piece of it, you’re still going to lose your kidney. And so you have to treat those and we think our drug is going to be particularly effective there. But flipping over to your question about proteinuria, which is a – UACR is what we’re measuring. It reads through to decreased decline in GFR over a year or 2, but you can’t measure that in a short study. And your point is, well, can you really wait for something in 4 weeks. The answer is yes. We’ve talked to many experts about it.

Will it be the maximum? It will be most of it. It won’t be necessarily all of it, but enough. But I want to caution you, everybody is going to come down on an SGLT2. This is going to be the benefit of our drug above SGLT2. We don’t think we need to do a monotherapy trial anymore because that’s already been – question has been asked and answered by BI and also AC is doing that. And so we just want to know what’s that increment above standard of care. So when you compare it, it’s got to be apples-to-apples. Make sure it’s not our addition of lorundrostat compared to the combination product, say, with BI or AZ, which starts from a lower baseline. It is only the comparison to what they get above the SGLT2. And we expect to see a similar magnitude of what they’ve reported in their prior trials for that increment.

Mohit Bansal: Got it. This is super helpful. If I may ask one more. I know I understand that you are approaching CKD or chronic kidney disease with hypertension angle. But there is a lot of activity in rare kidney disease space as well. And I mean the relationship between hypertension and kidney diseases is very much intertwined. Is there an angle which lorundrostat can play in those rare kidney diseases as well? Or I’m just too – like is more of a wishful thinking right now?

David Rodman: Well, that’s a really good question. We’ve been excited to see, for instance, the IgA nephropathy data. That’s a group of – it’s often children. It’s a bad disease, and now it has multiple treatments. We expect we can play in that space, not against IgA. We do have some ideas. Right now, we’re not at liberty to discuss them. But yes, the answer is I think there is an opportunity there for lorundrostat.

Mohit Bansal: Got it. Helpful. More work for us to do that. Thank you.

Jon Congleton: Thanks, Mohit.

Operator: There are no further questions at this time. Mr. Jon Congleton, please proceed with your closing remarks.

Jon Congleton: Thank you, operator, and thank you to everyone for joining us today. We’re very excited about the progress we’ve made thus far in 2024 in advancing our clinical programs and remain enthusiastic about the upcoming milestones for the rest of the year. We look forward to updating you as our pivotal program for lorundrostat continues to advance. With that, we’ll close the call.

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