Q4 2022 Miromatrix Medical Inc Earnings Call

Speaker 2: Greetings and welcome to the Mirror Matrix Medical Inc. 4th Quarter and Full Year 2022 Earnings Conference Call.

Speaker 2: At this time, all participants are in a listen-only mode.

Speaker 2: A brief question and answer session will follow the formal presentation.

Speaker 2: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad.

Speaker 2: As a reminder, this conference is being recorded.

Speaker 2: It is now my pleasure to introduce your host, Hannah Jeffrey, with Investor Relations. Thank you, Ms. Jeffrey. You may begin....

Speaker 2: Good afternoon and thank you for joining us. Earlier today, MiroMatrix released financial results for the fourth quarter and full year ended December 31, 2022. The release is currently available on the company's website at www.MiroMatrix.com.

Speaker 2: Jeff Ross, Chief Executive Officer, and Jim Douglas, Chief Financial Officer, will host this afternoon's call.

Speaker 2: Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker 2: Any statements contained in this call that are not statements of historical fact, including statements regarding the potential timing of pre-IND and IND filings and the initiation of related clinical trials, future expenses and revenue, capital requirements, cash runway, or

Speaker 2: and needs for additional financing should be deemed to be forward-looking statements.

Speaker 2: All forward-looking statements are based upon current estimates and various assumptions.

Speaker 2: These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated or implied by these forward-looking statements.

Speaker 2: Accordingly, you should not place undue reliance on these statements. For a list and descriptions of the materials, risks, and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission.

Speaker 2: The information provided in this conference call speaks only to the live broadcast today, March 31, 2023. MirrorMatrix disclaims any intention or obligation, except as required by law, to update or revise any information, financial projections, or other forward-looking statements, whether because of new information, future events, or otherwise.

Speaker 2: I'll now turn the call over to Jeff.

Speaker 3: Thanks, Hannah. Good afternoon and thank you to everyone who has joined us today for our fourth quarter and full year 2022 earnings call. The past year was very rewarding and challenging at the same time. One of the most rewarding accomplishments was the submission of our IND application for MuralLiver ELAP in November .

Speaker 3: We believe this was the first IND submission for a bioengineered organ therapy, putting us on the forefront of pioneering a new class of therapies to treat patients suffering from organ failure.

Speaker 3: The FDA then notified us in December that our IND application was placed on clinical hold and in January we received the formal clinical hold letter from the FDA detailing the specific deficiencies and the information needed to resolve the clinical hold.

Speaker 3: After evaluating the clinical hold letter internally and with our outside advisors, we remain optimistic about the ultimate success of MuralLiver eLab.

Speaker 3: We are focused on providing patients with acute liver failure access to Muraliver ELAP as soon as possible and over the coming months we will focus our efforts on resubmitting the IND in the second half of 2023 with the goal of gaining IND clearance from the FDA shortly thereafter.

Speaker 3: We believe gaining IND clearance for MuralLiver ELAP is a significant value creation event for MuralMatrix because it will be the first time one of our bioengineered organs is authorized for human use in human clinical trials.

Speaker 3: Following IND clearance for Muralliver eLab, our attention will immediately turn to enrolling patients in a phase one clinical trial, which our clinical team is preparing for in parallel to our IND resubmission.

Speaker 3: As a reminder, MuralLiver ELAP is designed to provide liver dialysis by connecting a MuralMatrix single-use bioengineered liver with a software modified Baxter PRISMAC system.

Speaker 3: outside of the body to treat patients suffering from acute liver failure.

Speaker 3: The potential addressable market for Mural Liver ELAP includes the approximately 80,000 patients who are hospitalized each year due to various types of acute liver failure.

Speaker 3: Our initial clinical trial will be targeting patients who represent approximately 5,000 of the 80,000 hospitalizations. An expansion study would likely be required to address the remaining ALS segments.

Speaker 3: The prioritization of Muraliver ELAP enables MuralMatrix to sharpen our focus on gaining IND clearance and initiating a Phase I clinical trial, while maintaining a disciplined operational approach with our strong cash position.

Speaker 3: As a result of our prioritization of Mural-Liver ELAP, investment in our fully implantable kidney and liver programs will be reduced during this time of Mural-Liver ELAP focus.

Speaker 3: which will push out our targeted pre-IND submission dates. That said, we remain very enthusiastic about our fully implantable bioengineered organ programs. Of course, we could potentially reinvigorate any of our fully implantable bioengineered organ programs if the appropriate partnership arises or circumstances change.

Speaker 3: I'd like to remind everyone on today's call that we have already achieved essential proof of concept milestones.

Speaker 3: for both fully implantable organ programs and look to maintain that momentum.

Speaker 3: For Mural Kidney, we previously announced that we demonstrated urine production and protein retention in a preclinical testing model.

Speaker 3: We believe this is the first time a bioengineered kidney has produced urine in any model.

Speaker 3: We were also selected as one of four finalists by KidneyX to participate in the Innovate KidneyX Winner Showcase at ASN Kidney Week.

Speaker 3: which was the second time MuralMatrix has been a KidneyX award recipient.

Speaker 3: For Mural Liver, we previously published the results of a study done in collaboration with the Mayo Clinic, announcing the successful implantation of our bioengineered livers into large animals.

Speaker 3: This study showed proof of concept data for Mural liver and our deceleration-receleration technology.

Speaker 3: In closing, I am proud to announce that we recently had three presentations selected for the upcoming American Transplant Congress in June 2023, two relating to Miro Kidney and one relating to Miro Liver E Lab.

Speaker 3: We look forward to continuing to share our progress with the transplant community.

Speaker 3: With that update, I will now turn the call over to Jim Douglas, our Chief Financial Officer, to discuss our financial results.

Speaker 3: turn the call over to Jim Douglas, our Chief Financial Officer, to discuss our financial results. Thank you, Jeff.

Speaker 3: Starting with our balance sheet, we finished 2022 with cash and investments totaling $25.2 million.

Speaker 3: Adding the 10 million of common stock financing we completed earlier this month.

Speaker 3: We believe we have adequate capital to fund the company into or past the second quarter of 2024.

Speaker 3: Additionally, we have not accessed our ATM facility at any point since it was put in place.

Speaker 3: Next, I'll discuss our fourth quarter 2022 income statement results.

Speaker 4: Licensing revenue for the fourth quarter of 2022 was 930,000.

Speaker 4: compared to 8,000 in the fourth quarter of 2021.

Speaker 4: Licensing revenue for the fourth quarter of 2022 was $930,000 compared to $8,000 in the fourth quarter of 2021.

Speaker 4: Licensing revenue for the fourth quarter of 2022 was $930,000, compared to $8,000 in the fourth quarter of 2021. The increase in licensing revenue

Speaker 4: represents collection of minimum royalties due from reprised biomedical for 2020 and 2022.

Speaker 4: The remainder of minimum royalties due from reprise for 2021.

Speaker 4: has been deferred to 2023.

Speaker 4: Cost of goods sold was $125,000 for both the fourth quarter of 2022 and 2021.

Speaker 4: Cost of goods sold for both periods relates to the minimum royalty due to the University of Minnesota under our license agreement.

Speaker 4: Operating loss for the fourth quarter of 2022 was $7.2 million.

Speaker 4: compared to $5.5 million in the fourth quarter of 2021.

Speaker 4: Net loss for the fourth quarter of 2022 was $6.9 million.

Speaker 4: or 33 cents per share, compared to 5.5 million or 27 cents per share in the fourth quarter of 2021.

Speaker 4: The increase in operating loss and net loss was primarily attributable to increased research and development costs.

Speaker 4: and general and administrative costs, notably cost increases relating to payroll.

Speaker 4: lab supplies, and costs associated with being a public company.

Speaker 4: And finally, I'll review our full year 2022 income statement results.

Speaker 4: Licensing revenue for 2022 was $953,000.

Speaker 4: compared to 33,000 in 2021.

Speaker 4: The increase in licensing revenue represents collection of minimum royalties due from reprise for 2020 and 2022.

Speaker 4: The remainder of minimum royalties due from reprise for 2021 has been deferred to 2023. The amount of goods sold was $500,000 for both 2022 and 2021.

Speaker 4: Cost of goods sold for both periods relates to the minimum royalty due to the University of Minnesota under our license agreement.

Speaker 4: An operating loss for 2022 was 30.4 million compared to 17 million in 2021.

Speaker 4: Net loss for 2022 is $30 million or $1.45 per share.

Speaker 4: compared to $14.7 million or $1.28 per share in 2021.

Speaker 4: The increase in operating loss and net loss was primarily attributable to increased research and development costs and general and administrative costs. Notably, cost increases relating to payroll, lab supplies, and costs associated with being a public company.

Speaker 4: Additionally, the increase in net loss was magnified by one-time gains recognized in the first quarter of 2021 that impacted the full year comparison.

Speaker 4: Finally, the increase in weighted average shares used in computing net loss per share for 2022 compared to 2021 is attributable to the issuance of IPO shares in June of 2021.

Speaker 4: With that, I will turn the call back over to the operator to open the line for questions.

Speaker 5: Thank you. We will now be conducting a question and answer session.

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Speaker 5: One moment please while we pull for questions.

Speaker 5: Thank you. And our first question is from Matthew O'Brien with Piper Sandler. Please proceed with your question.

Speaker 6: Hey, this is Phil on format. Thanks for taking our questions.

Speaker 6: For starters, can you speak to the clinical hold letter and maybe what the FDA was looking for? As I understand it, there were both clinical and non-clinical aspects to it. And then you said second half, 23 clearance. Is approval still expected about 30 days following resubmission? And will you... Yes, I can speak to the clinical hold letter and maybe what the FDA was looking for. And then you said third half, 23 clearance. Is approval still expected about 30 days following resubmission? Yes, there were both clinical and non-clinical aspects to it. And then you said third half, 23 clearance.

Speaker 6: let us know when that resubmission occurs.

Speaker 3: Phil, great question. Thanks for asking it. As we look at the clinical hold and what we kind of highlighted in...

Speaker 3: in the earnings call as well as just how

Speaker 3: forward we believe we are in terms of progress ahead of others as we pioneer a new class of therapeutics like this. And if you recall from our last earnings call even upon submission

Speaker 3: we had talked about the potential for being put on clinical hold, just because the FDA had never seen a therapy like this before. So we had anticipated it if you went back to that call, we had talked about potentially a three to four month clinical hold. With our current guidance that was certainly extended a little bit longer as we gave our guidance in the second half of 2023.

Speaker 3: to provide the blood from the patient to our bioengineered liver graft. So that was one area that unfortunately, because of the length of some of that testing and the facilities to do that in the backlog of those, that led to a longer time associated with that request.

Speaker 3: The second request that the FDA asked for was some additional animals inside of our safety study. We had essentially done kind of a dosing study with that where we kind of did a high, a mid, and a low dose. And the request came back for some additional animals kind of at that mid-range or likely dose associated with that.

Speaker 3: some other questions associated with our process. But as I talked about in the irony call, we feel really good about where we're at and now the ability in the roadmap to be able to execute on this and bring this forward with the goal of getting IND clearance.

Speaker 6: Thank you so much for that color on the IMD side of things. My follow-up question, can you just remind us on your current expectations for trial design, maybe number of sites, patient numbers. I know you talked about it on the last call, but just a refresher there would be great. Has anything changed on that front?

Speaker 3: Yeah, nothing's really changed on that front. We're still targeting up to eight clinical sites. We've been actively engaged with some of the clinical sites with the additional time that we have that we're hopeful brings in the time to be able to activate those sites upon IND clearance. Our goal is for the city and in some manner to focus on program monitoring, marketing, and audit

Speaker 3: still targeting up to 15 patients in the clinical study. So as we talked about before, you know, this is really a needed therapeutic out there because nothing exists today. But at the same time, we anticipate enrollment and completion of this clinical trial to be relatively fast as we're looking at just the...

Speaker 3: you know, multiple days of therapy after their...

Speaker 3: given the Mural Liver ELAP therapy. So you'd look at enrollment in a couple days later and then our primary endpoint is, as it sits today, is between 48 and 72 hours and secondary endpoint would be 21 days.

Speaker 6: Super helpful. I'll jump back in Cuba. Thanks so much.

Speaker 3: Super helpful. I'll jump back in queue, but thanks so much. Absolutely. Thanks, Phil.

Speaker 5: Thank you. Our next question is from Alex Novak with Craig Holland Capital Group. Please proceed with your question.

Speaker 3: Okay, great. Good afternoon everyone. Around the animal study, was the FDA trying to get to questions around organ function, how long the organs can last when they're sitting in the external pump? Was this solely the questions really with regards to safety and biocompatibility? Just trying to understand the nature of what FDA was trying to get to there.

Speaker 3: Yeah, thanks Alex for that question. I mean, as we look through those, it was the latter. You know, the requests have been on the biocompatibility and additional animals inside the safety study. Obviously, we put forth a lot of data associated with functionality of the graph at various endpoints and various times.

Speaker 3: So, the FDA, we didn't see any questions directly related to that coming back from the FDA.

Speaker 7: Okay, and I know you're doing the bench studies, doing the animal studies now. Is there a time point in the next few months where you're going to have visibility to say, yes, we can in fact resubmit everything in the second half of this year? Or is there going to be a certain time period where the study needs to be delayed, or the bench studies need to be delayed, or the animal studies taking a little bit longer where you're going to have a Chloe went see a perite DeP

Speaker 3: but also demonstrating the willingness to be able to work with the FDA and to be able to move one of our bioengineered organs into human clinical studies. And with that prioritization, we're really focused on moving this forward, Alex.

Speaker 3: but also demonstrating the willingness to be able to work with the FDA and to be able to move one of our bioengineered organs into human clinical studies. And with that prioritization, we're really focused on moving this forward, Alex. So we're constantly monitoring our timelines.

Speaker 3: and ensuring that we're able to hit the second half of this year. Should something slip with that or should something happen that's unforeseen, we would certainly redo the guidance at that point, but at this point everything is well in hand.

Speaker 7: Okay, understood. If I remember correctly, there was to be a plan for, I think it's a type D meeting with the FDA during this process. Has that taken place or is that in the next couple of weeks or months or so? Yeah, we've been working on multiple fronts, I mean throughout this.

Speaker 7: Okay, got it. The ATC presentations you mentioned two were going to be on kidney, one on myriolipid elap. Can you expand on those presentations? Is this a little bit of a review of the clinical data, or excuse me, the preclinical data that you've put out so far? Or what are the nature of the ATC presentations?

Speaker 3: Yes, it's really on that front. You know, it's just providing additional clarity on some of the functionality on the resellerization of the kidney where we really more for the scientific and medical side as well where we we've really solved some of those key components like the resellerization of the glomerulus and demonstrated that you know we're able to get that.

Speaker 3: podocyte differentiation, maturation, and then functionality on the backside of that, including some of the protein retention that we talked about. And then on the Mural Liver ELAP, it's going to be some of the preclinical data that we discussed as well.

Speaker 7: Okay, and then a two-parter first for you, Jeff, with regard to the kind of depersonization of kidney. I guess, how should we think about that? Is that much more on…

Speaker 7: I guess what was specifically your deprioritizing? It sounds like you're going to still keep the bench warm with kidneys and continue to develop some of the work there. Is it much more around kind of the regulatory and the paperwork side of getting this through doing the pre-IND meetings with the FDA? Is that where the deprioritization comes from? And then Jim, same topic, just how to think about expense reductions because of focusing on liver versus kidney.

Speaker 3: Yeah, Alex, when we look at the prioritization that I talked about, it's just really putting a key focus on MuralELAP comes first. The old adage, you can do many things, but if you do a lot of things, you're not able to do them well. And we just took a step back knowing the importance of Muraliver ELAP and getting the IND cleared and set that internally to say that that's our number one priority.

Speaker 3: and then made sure that we assembled the teams and other things to really have that focus. And then with the extra time, we still have activity that's going on on Miro Kidney. It's just not necessarily at the same pace that we were before because we're ensuring that we're able to move forward as quickly as possible on MiroLiver ELAP.

Speaker 3: to be able to hit the milestones that we talked about previously, because we really don't want those to slip. And then ginger's on the expense side.

Speaker 4: Yeah, you'll see a reduction in expenses driven predominantly by the reduction in the need for manufacturing organs on the fully implantable kidney and liver side. So we'll see a reduction.

Speaker 4: on that front. And then we will essentially you'll see that it's historically through 2022, ran about a 2 to 2 1?2 monthly cash burn. We're going to do our best to get that below 2 million and continue to really streamline the business. So you'll see that

Speaker 4: There'll just be impacts driven by this focus on your liver e-lab that will flow through on various aspects of our cost structure.

Speaker 7: Okay, got it. That makes sense. Appreciate the update. Thank you. Thanks, Alex.

Speaker 5: There are no further questions at this time.

Speaker 5: This concludes today's teleconference. You may disconnect your lines at this time.

Speaker 1: Thank you for your participation.

Speaker 1: And.