Miromatrix Medical Inc. (MIRO) Q1 2023 Earnings Call Transcript
Greetings and welcome to the Miromatrix Medical, Inc. First Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Hannah Jeffrey Gilmartin, Investor Relations. Thank you. You may begin.
Good afternoon and thank you for joining us. Earlier today, Miromatrix released financial results for the quarter ended March 31, 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 materials, risks and uncertainties associated with our business, please see our filings with the Securities and Exchange Commission. The information provided in this conference call speaks only to the live broadcast today, May 11, 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.
I will now turn the call over to Jeff.
Thanks, Hannah. Good afternoon, and thank you to everyone who has joined us today for our first quarter 2023. During our full year 2022 earnings call I communicated that we are focusing the majority of our resources on miroliverELAP in the near term to address the items identified within the clinical hold letter we received from the FDA regarding our IND submission. Our goal is to submit a full response to the FDA clinical hold butter in the second half of 2023. We envision gain clearance to treat patients with acute liver failure shortly thereafter.
It’s our yearend earnings call. We have made significant progress on addressing the items identified within the clinical hold letter, and I’ll share some of those updates with you today. As you recall, a couple of the longer lead items that we are addressing relate to a biocompatibility study and a preclinical animal study regarding biocompatibility. 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 FTD’s question, only the third party components. We believe this is low risk, however it takes time. The other item that has contributed to our extended timelines was the request for an additional animal safety study consisting of six animals, three to be treated with miroliverELAP and three controls. This is smaller than our original safety study. In the original animal safety study, there was no evidence of systemic toxicity in the miroliverELAP group or the control group.
However, there was substantial morbidity in all groups due to the immobilization and anesthesia required to provide therapeutic pick model which makes longer therapies and immobilize animal model challenging. The new protocol will use improved anesthesia and immobilization techniques in an attempt to reduce morbidity in all animals. The revised protocol may also allow us to extend treatment duration in the safety study.
We plan to begin treating animals this quarter with the goal to complete the safety study in the coming months. In addition to the clinical hold work, we are progressing with our manufacturing and clinical readiness plans to ensure that once we obtain IND clearance, we can quickly initiate our phase one clinical trial. This involves ensuring our manufacturing process meet GMP standards, and the clinical trial sites are identified. Currently, we are engaged with 15 potential clinical sites that are highly interested in being part of our clinical trial, and we will ultimately move forward with eight of them. Each site will be consigned to a Baxter prismatic system running the software developed specifically for miroliverELAP. The positive response from the potential clinical sites continues to highlight both the need for an effective therapy and our potential to deliver it.
In summary of the status update from miroliverELAP we believe that we are taking all of the necessary steps to permit us to submit a thorough response to the FDA clinical hold better in the second half of this year. We believe prioritization of miroliverELAP at this time provides us with the fastest path to treating organ failure patients with our bio engineered organs.
And we believe this could also provide important validation to our entire bioengineered organ platform. After this in depth discussion around miroliverELAP it’s important for me to reiterate that we remain very enthusiastic about our fully implantable bioengineered Oregon programs. While we are progressing these programs at a slower pace until miroliverELAP gains IND clearance.
We could reinvigorate any of them if the appropriate partnership arises or circumstances otherwise change. A recent example highlighting or fully implantable bioengineer origin programs is our partnership with CareDx to develop novel testing solutions to assess organ rejection via a simple blood test. We are honored to be working with CareDx the leader in the existing transplant industry for such testing. We are grateful that they comprehend the magnitude of the unmet medical need that we’re trying to address with our bioengineered organs.
In closing, I’d like to share some valuable interactions that I had earlier this month at the annual cell and gene meeting on the med in Barcelona, Spain. As I was asked to moderate a panel titled The Pioneer tax challenges and opportunities have been at the forefront of innovation, consisting of executives from four leading cell and gene therapy companies in addition to myself. All of the executives shared stories about developing novel cellular and gene therapies. And similar to neuro matrix, their paths weren’t always easy. All of the companies dealt with challenging setbacks, and notably four of them were placed on clinical holds prior to treating their first patient. Their credit, they all stayed the course and delivered medical advancements and stakeholder value. We look forward to delivering similar advancements to the transplant community, as well as our stakeholders.
I will now turn the call over to Jim Douglas, our chief financial officer to discuss our financial results. And I hope to see many of you at the upcoming American transplant Congress where we will be presenting.
Thank you, Jeff. We finished the first quarter with unrestricted cash and investments totaling $25.6 million. With the prioritization of miroliverELAP occurring at the end of the first quarter are spending will be reduced going forward, and we believe we will have sufficient cash to operate our business through the second quarter of 2024. Moving to the income statement. Operating loss for the first quarter of 2023 was $8.1 million, compared to $7.2 million in the first quarter of 2022. The increase in operating loss for comparable periods was primarily attributable to increased payroll costs and the write off of previously capitalized deferred operating costs.
Net loss for the first quarter of 2023 was $7.5 million, or $0.33 per share, compared to $7.2 million, or $0.35 per share in the first quarter of 2022. The increase in net loss for comparable periods was primarily attributable to increased payroll costs and a write off of deferred offering costs offset by a one time employee retention credit totaling $0.5 million. In closing, we look forward to presenting at the Craig Hallum investor conference later this month.
With that I will turn the call back over to the operator to open up the line for questions.
Thank you. We will now be conducting a question and answer session. [Operator Instructions] Our first question comes from Alex Nowak with Craig-Hallum Capital Group. Please proceed with your question.
Okay, great. Good afternoon, everyone. The preclinical safety study with the six pigs I just wanted some clarity around that. Did you say that you already ran this study on the six pigs and ran into the morbidity issues with the anesthesia? And then you need to rerun it again. Just clarity around what was happening there.
Sure, Alex, this, Jeff. Thanks for the question on that. That was clarity around our regional submitted safety study that we had previously submitted. So it’s reported that there was no systemic toxicity that was reported in that study. However, as we’ve described before, we saw morbidity associated with the longer anesthesia time associated with that. So we’ve addressed those concerns and looking at those improvements in the safety study that I talked about that we’ll be kicking off shortly.
Okay, got it. That is helpful. The morbidity that you saw in original studies? And was that something that was specifically called out by the FDA, and wanted one of the company to essentially address that? Or is it something you’re doing on more of an ad hoc basis?
No, I mean, it was. It’s kind of all encompassing, in the fact that when you see the morbidity in some of the control animals, right, animals that are only seeing anesthesia, still continue to see no systemic toxicity in that or the treated group. With that, sometimes you can have that challenge to beat endpoints or other confounding things that may go on inside of that model, due to that longer anesthesia time. So just clearing up that model to reduce any of that morbidity to further reinforce our dataset.
Okay, all right, I understood. As you’re preparing to run this test, but you’re also running the biocompatibility studies, we all know those take time to get those set up and scheduled. But as you’re going through there, is there anything that’s jumping out that’s making you maybe say, okay, maybe this is going to take another month longer than we were originally thinking? Or, hey, we might need to run an additional study that we didn’t originally plan for just any thoughts as you’re going real time through this process?
Yes, I’d say with that. I mean, we’ve worked really close with, with our strategic partner on this with Baxter as well to be able to look through what that final comp plan looks like. Because, again, the vast majority of these are third party component. It’s more of just having that complete system as a third party component, not that there’s any issue with any individual component. So I think we got a really good plan. And now it’s on execution of that and ensuring that we can keep all those timelines. I think what you pointed out there and that we’re staying very close to is that once these things are shipped off to third parties for the Biocom, we’re really dependent on them upholding their timelines throughout that process. But these are professional agencies that do this all the time. So we’re seeing very close to this. We’re monitoring this closely, and looking forward to have the data so we can submit on it.
And once you do get the data back from the third parties, how quickly can you turn around a response to the FDA?
Very quick. In a matter of weeks, once you get those, because once those reports come back in, I mean, these are reports that the FDA and agencies and other CLI because they’re from trusted testing facilities that have the summary of the tasks, and then it has the results on the bottom stating that it passes and the other requirements associated with it. So it’s really putting that and uploading that into the package. And then it’s describing what tests were done and what those results mean. So that doesn’t take a long time. The longest time is getting the certified results, because these are GLP studies that require a lot of oversight and documentation on the testing facility side.
And then just last question activities to prepare these trials sites that you’ve identified, you’ve reached out to and talk to, to get them ready for once the clearance is given here by the FDA to move forward with the clinical study. Just what kind of work you’re doing right now with whether it’s regards to training or maybe even more paperwork, I know they’re limited to what they can sign off on until it does reach the IND stage, but just kind of speak to the pre-trial activities.
Sure. I mean, a lot of it’s the protocol sign off, getting the site to understand the logistics associated with it. The clinical trial contract a lot of that stuff gets baked in and we’re looking at that today the placement of the equipment. A lot of those aspects go into this. So then once we get the clearance, we’d be able to then quickly do the submission for the IRB and then once we’re cleared on the IRB, we’d be able to move forward with enrolling the first patients. So a lot of good activity that we’re front loading Alex that normally may take place in parallel or after we’re looking at any of those activities that we can do up front. And those are the activities we’re doing.
Okay, excellent. That sounds good. I appreciate the update. Thank you.
We have reached the end of our question and answer session. I would now like to this concludes today’s conference. Thank you for your participation. You may disconnect your lines at this time.