Miromatrix Medical Inc. (NASDAQ:MIRO) Q2 2023 Earnings Conference Call August 14, 2023 4:30 PM ET
Max Forgan – Gilmartin Investor Relations
Jeff Ross – Chief Executive Officer
Jim Douglas – Chief Financial Officer
Conference Call Participants
Alex Nowak – Craig-Hallum
Phillip Dantoin – Piper Sandler
Good day, and welcome to the Miromatrix Medical, Inc. Second Quarter 2023 Earnings Conference Call. All participants’ will be in listen-only mode. [Operator Instructions] Please note this event is being recorded.
I would now like to turn the conference over to Max Forgan with Gilmartin Investor Relations. Please go ahead.
Good afternoon and thank you for joining us. Earlier today, Miromatrix released financial results for the quarter ended June 30, 2023. The release is currently available on the company’s website at www.miromatrix.com. Jeff Ross, Chief Executive Officer; and Jim Douglas, Chief Financial Officer, will host this afternoon’s call.
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. 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 and needs for additional financing should be deemed to be forward-looking statements. All forward-looking statements are based upon current estimates and various assumptions. 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.
Accordingly, you should not place undue reliance on these statements. For a list and descriptions of the material risks and uncertainties associated with our business, please see our filings with Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, August 14, 2023. Miromatrix 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.
With that, I will now turn the call over to Jeff.
Thanks, Max. Good afternoon, and thank you, everyone, who has joined us for today’s earnings call. We continue to make significant progress on addressing the items identified within the FDA clinical hold letter, relating to our miroliverELAP IND submission. Our goal remains to submit a full response to the FDA in the second-half of 2023, and we envision gaining authorization to treat patients with acute liver failure shortly thereafter.
As a reminder, we are prioritizing miroliverELAP in the near-term, because we believe it provides us with the fastest path to treating organ failure patients with our bioengineered organs. And that program provides us with valuable insight to our fully implantable bioengineered organ programs.
As I consistently mentioned, we may decide to invest more heavily into any of our fully implantable organ programs, if a partnership arises or circumstances change. Specific to miroliverELAP, you may recall a couple of longer lead items that we are addressing as part of the clinical hold related to a preclinical animal study and biocompatibility study.
I am happy to report that we commenced both studies during the second quarter and are nearing completion for the in-life portion of the animal study and the biocompatibility study. As a reminder, the animal safety study has two arms consisting of eight animals in each, four treats and four controls. This safety study is smaller than our original safety study that was submitted as part of the IND package.
In our original animal safety study, there was no evidence of systemic toxicity in the miroliverELAP group or the control group. However, there was substantial mortality in all groups due to the immobilization techniques and the anesthesia required to provide therapy in a pig model, which makes longer therapies in a mobilized animal model challenging. The current safety study utilized and improved the mobilization techniques and anesthesia to reduce mortality in all animals. We are currently gathering all the data relating to this study to incorporate into our response to the FDA.
Regarding the biocompatibility study, the FDA requested that we do additional testing regarding the final finished fluid path comprised of third-party components. The biocompatibility testing we submitted on our liver graft as part of the IND was not part of the FDA’s questions, only the third-party components. We envisioned about compatibility study will be wrapped up by the end of the month.
In addition to the clinical hold work, we continue to progress with our manufacturing and clinical readiness plans to ensure that once we obtain IND clearance, we can quickly initiate our Phase 1 clinical trial. This involves ensuring our manufacturing process meets GMP standards and the preclinical sites are identified as part of the clinical trial, each site will be contained a Baxter prismatic system running software developed specifically for miroliverELAP.
In summary, we believe we are taking all the necessary steps to submit a thorough response to the FDA’s clinical hold better in the second-half of this year, and we look forward to being able to treat patients with acute liver failure in a Phase 1 clinical trial as soon as the FDA authorization is obtained.
Moving beyond, miroliverELAP to our fully implantable bioengineered programs, we continue to make progress and gain industry recognition for the promise of our fully implantable bioengineered programs. During the second quarter, we represented the cell and gene therapy sector to Capitol Hill policymakers at the Alliance for Regenerative Medicine’s Congressional Fly-In. We presented at the American Transplant Congress, and we were awarded Best in Congress for our mirokidney poster.
The National Kidney Foundation invited us to participate in their Innovation Day, highlighting innovative solutions for patients with renal failure and the Association of Organ Procurement Organizations invited us to participate in their annual meeting to discuss how bioengineered organs may someday benefit transplant patients and how Miromatrix is aligned with AOO.
We also had a manuscript published in Frontiers and Bioengineering and Biotechnology titled, sustained in vivo perfusion of a re-endothelialized tissue engineered kidney graft in a human-scale animal model that demonstrated how a bioengineered kidney graft could maintain patency with consistent blood flow. Those results established a foundational platform for our ongoing research and to add to our growing body of evidence on the potential of using bioengineered kidneys as an alternative to human allograft kidneys.
Amidst all of this activity, our Medical Director, Dr. Jack Lake was presented a lifetime achievement award by the American Transplant Congress, which really capped off a busy and rewarding second quarter. So I’d like to extend my congratulations to Dr. Lake for being acknowledged by the transplant community and a key thought leader in the industry. Looking forward to the rest of the year, we will be presenting at ARM’s tissue engineering and therapeutic workshop and ASN’s Kidney Week and finally, AASLD’s Liver Meeting. These upcoming high-profile events should sequence well with our responses to the FDA from miroliverELAP.
Now I will turn the call over to Jim Douglas, our Chief Financial Officer, to discuss our financial results.
Thank you, Jeff. We finished the second quarter of 2023 with unrestricted cash and investments totaling $20.4 million, which we believe is sufficient to operate our business through the second quarter of 2024. Additionally, we received cash payments for $457,000 of the $527,000 employee retention credit receivable subsequent to the second quarter, and the remaining amount has been confirmed for upcoming receipt by the IRS.
Moving to the income statement, operating loss was $6.7 million and $14.8 million for the three and six month periods ended June 30, 2023, respectively, as compared to $8.2 million and $15.4 million for the three and six month periods ended June 30, 2022, respectively. The decrease in operating loss for comparable periods was primarily attributable to decreased research and development lab supply costs.
Net loss was $6.5 million or $0.24 per share and $14 million or $0.56 per share for the three and six months ended June 30, 2023, respectively, as compared to $8.2 million or $0.40 per share and $15.4 million or $0.75 per share for the three and six months ended June 30, 2022, respectively. The decrease in net loss for comparable periods was primarily attributable to decreased research and development lab supply costs in addition to one-time employee retention credits totaling $527,000 that was recorded as other income in the first quarter of 2023.
With that, I will turn the call back over to the operator to open the line for questions.
We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Alex Nowak with Craig-Hallum. Please go ahead.
Okay, great. Good afternoon, everyone. Sounds like the biocomp study is wrapping up here at the end of the month, the animal study potentially maybe ends in September. Those are my own words. So maybe — could you resubmit to the FDA by the end of September, early October? What are your thoughts there?
Yes, Alex. As we highlighted in the call, really happy with the progress that we made on the two kind of lead long poles of the tent that we’ve been working on. And as you highlighted, really excited that the biocomp will wrap up by the end of this month, happy to report that everything that we’ve tested so far has passed. There weren’t many surprises there, but it’s good to get that passing grades on those as well. So we’re just remaining on two additional tests that are scheduled to come in at the end of the month.
On the preclinical safety side, as we highlighted, there’s eight animals that make up that total cohort, excited to report that seven of those are completed. We have one test animal to complete, and then that’s ready to go off to the pathologist and get the final report to be able to submit that. So if you look at the timing associated with that, certainly aren’t going to provide additional guidance on that. I think our guidance is still the second-half of this year. But I think the reassuring thing is that those tests are going well and looking forward to that data coming in, so we can submit a very strong response to the FDA.
That is very helpful, Jeff. Appreciate it. You know, with regards to the preclinical animal study, the problem in the past was the pig mile that you had to rely upon, and I think you had to engineer a unique pig model for the new preclinical study. Can you maybe speak to how that new animal model ultimately — how did it fare with the seven out of the eight pig so far? Were you pretty happy with those results?
Yes, as you highlighted, and we’ve highlighted in the past, I mean, our biggest complication was really coming up with a model where you could deliver this life-saving new type of technology, but to be able to do that, you got to mobilize the pig for a duration of time. And that was really the challenge in our initial study where we saw high levels of mortality associated with it. So even inside the control, which is just being anesthetized, we saw a fallout in the study of that. Happy to report that preclinical team here has done a phenomenal job of really redesigning that study and working with veterinaries, working with thought leaders to be able to come up with a solution.
And we really tested that at various pilot studies and proved that out. So we were able to roll that out. And as part of our ongoing, we have not lost any animals prior to the termination of the study itself when everything is up and running. We’ve still had some minor complications associated with things that you normally see in a preclinical study like a catheter come in boost or something like that, that is easily excluded as part of your cohorts. But when the therapy is actually being delivered in the new model, it’s been incredibly stable, which gives us a lot of confidence to be able to round out this last test subject and move forward with the data set.
Okay, excellent. Good to hear. Maybe speak to the activities that you’re doing underway on the clinical trial sites and getting transplant centers interested and ready to perform the first-in-human study. Have you picked the first site yet?
We have — as we talked about on our last earnings call, the list of activity associated with that, we see a high level of interest within the clinical community to be part of our clinical study. So we’ve now whittled that list down to eight, and we’ve prequalified at least five clinical sites that would be ready to go once we receive our IND clearance. And prioritizing those out of the gate, we have eight that are — an additional three that are lined up, ready to go as well. But we’re really trying to evaluate is what are the clinical sites where we can be activated as soon as possible because we know there’s going to be a lot of excitement and demand for this therapy once our IND is cleared.
Excellent. Maybe just last question. The Lancet last month had a full write-up on the cardiac transplant patient that happened about a year ago or so. As you’ve reviewed the case study there, how does that influence your view around Miromatrix approach to organ development versus the Xenotransplant approach? And what are you hearing in the industry?
I think it still highlights the importance of the process that we’re undertaking and going forward with. And I think it highlights two things with the bioengineered organ approach that we’ve highlighted before. And one is because we’ve already commercialized the matrix itself and is part of our decellularization process, we get viral clearance. So the side and the safety side from the porcine virus standpoint, we feel we’ve already addressed that.
And the other big unknown and Lancet article looks at that as well as immunosuppression. As we look at our therapy in the bioengineered approach, we’re recellularizing with allogeneic human cells. So we believe that our immunosuppression protocol will be similar to the gold standard that’s used today as part of cadaveric an organ donation today. So I think it was helpful to see highlight how that case had gone forward, but some of the challenges associated with that, that I see more on the technology side that needs to be sold in the xeno side.
And I think our bioengineered organ approach has really addressed those risks well as we move forward. So again, that’s why the focus that we talked about before, the importance of ELAP as our first product and then the read-through to the fully transplantable organ platform is really our first opportunity to start to demonstrate that with a bioengineered organ, which we believe then opens up the opportunity for our fully transplantable programs to continue forward.
Absolutely. Alright, well appreciate the update. Thank you.
Absolutely. Thanks, Alex.
The next question comes from Matthew O’Brien with Piper Sandler. Please go ahead.
Hey, this is Phil on for Matt. Thanks for taking our questions. Just one or two for us. The first one being just new role, I guess, old role just kind of doubled up here. Can you give us your puts and takes on kind of stepping back into this role and how you’re going to kind of double up the CEOs Head of Research there, R&D? Thank you.
Yes, I appreciate the question, Phil. That was partially a natural transition. As you have highlighted before, my background is strong in the technical side and came from the R&D side. So as we really started focusing on where we needed to go forward as we focus on ELAP, it really was a natural transition to be able to bring that role back in and really be able to focus that, that allows us a lot of focus at the company. With that said, things continue to go very well from that standpoint.
And my final one just being, you’ve presented three posters at ATC, Association of Organ Procurement Organizations, et cetera, et cetera. Just how is interest building over time? And what are docs saying?
Yes. I mean it’s exciting to go to those conferences and see the excitement around the technology and start to open up the opportunity to think about what the future could look like with these types of organs going forward. I think as we look at ATC, I think the community was certainly, I say, surprised or impressed with the level and the quality of data that was put forth on the renal side, not only showing the revascularization sustained ability to perfuse the organ, but also some of the stuff that we’re starting to show on the protein retention and the filtration effect of the recellularized kidney that we’ve started to release that data out. So I think from that standpoint, the community continues to be impressed and surprised with the progress that we continue to make.
Glad to hear. Thanks, congrats again on all the process made on the quarter.
Thanks a lot.
This concludes our question-and-answer session. The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.