Hi, good morning everyone. Welcome to day two of the 22nd Annual Morgan Stanley Healthcare Conference. I'm Judah Frommer, one of the mid-cap biotech analysts here. We're very pleased to have Bruce Culleton from ProKidney with us this morning. Bruce, before we jump in, I'm just gonna read a couple disclosures. For important disclosures, please see the Morgan Stanley Research Disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. So with that, maybe we can start off for those who may be less familiar, with just a brief introduction of ProKidney and your REACT technology.
Thanks, Judah. Thanks for having us as well. So ProKidney went public in July of 2022. We are a cell therapy-based company, headquarters out of Winston-Salem in Boston. And REACT is an autologous cell product. So we take patients' cells from a kidney biopsy, primarily focused on patients with advanced kidney disease. We take that biopsy back to our manufacturing site in Winston-Salem. The cells are digested, goes through a series of steps, where we end up with a cryopreserved product, mainly tubular epithelial cells, which we can talk about in more detail. And then eventually, that cryopreserved product gets back to the clinic. The cells are injected back into the kidney cortex by an interventional radiologist.
Got it. Okay, so you mentioned a couple of the cell types that are in your lead product, rilparencel. Can you give us a little bit more on why you chose to leverage those cells and how they contribute to kidney function?
Sure. So that's a history lesson-
Mm-hmm.
-That's before my time, since I started ProKidney, but I, I'll tell you the story. So early on, the early scientists involved in a different version of ProKidney actually took cells from kidneys and tried to determine if those unfractionated cells, when reinjected, when grown and reinjected, if they were unfractionated, did anything different compared to different layers of cells that would come out during a suspension, part of the manufacturing process. And they tested different layers of cells. Eventually, what they found was there was one specific layer, which turns out to be our product today, that had more bioactivity, that led to, at least in rodent models, less inflammation, less fibrosis, and an improvement in survival in those animals. And so that was how we ended up with that selection of cells, which turns out to be primarily, not completely, but primarily tubular epithelial cells.
Got it. Okay. And can you walk us through how rilparencel is manufactured and administered?
Once we get the cells back into our manufacturing facility, we do digest the cells. It's not really proprietary in what we do from a way of digesting the cells. Those cells are then undergo a series of steps where they're exposed to different stimuli, different cultures. The cells are expanded. Eventually, it goes through another step where we choose out that layer of cells that's specific to our product, that same layer of cells that proved activity within the animal models, and we take those cells, purify those cells and turn it into our cryopreserved product. That product can sit, you know, for a long time. Eventually, we choose a certain part, a certain number of doses to go back to the clinic.
We have a capability of making, you know, not just two doses, but three, four, five in some patients. One dose goes back to the clinic. It's typically injected back into the same kidney that was biopsied in that same patient, and then three months later, the second dose is injected back into the other kidney, into the other kidney, into the contralateral kidney.
Got it. Okay. And you're focused on diabetic chronic kidney disease. Can you talk about standard of care there, and unmet need in the indication, and how rilparencel can fit into that?
Yeah. So diabetic kidney disease is obviously a big problem. But there's also coming with big problems, there's a lot of people interested in the diabetic kidney disease space, too, which we've seen real advances in treating patients over the last, you know, five years, maybe longer. You know, early on, back in the late 1990s, early 2000s , the RAS inhibitors with some good clinical data that came to the market made a big difference in the treatment of patients with diabetic kidney disease. Before that, if you had diabetic kidney disease and lots of protein in your urine, you know, patients were really on a slippery slope to dialysis. They lost about 10% of kidney function per year. The RAS inhibitors decreased that by, you know, almost half.
Mm-hmm.
And then, you know, more recently, we've got great data on SGLT2 inhibitors, non-steroidal MRAs, and more recently, the GLP-1s, all showing benefit within the diabetic kidney disease space. Some people have proposed four pillars of care for those patients. And obviously, if you're a patient today with diabetic kidney disease, this is good news. Most of the data from those trials comes from patients who have stage 3a , even some stage 2 patients, diabetic kidney disease, but they show great benefit. A small number of patients in those trials do have more advanced kidney disease, 3b and 4. That area that we're most focused in, the data there is more sparse, but still there seems to be some benefit with those four pillars across, even within that subgroup.
But even with that benefit, we do see a continued unmet need. Patients do progress despite being on these treatments. Some patients continue to have a decline in their kidney function, and today, for example, in the U.S., there's about 140,000 patients per year that start dialysis, and about half of those patients have diabetes. So there's still a big unmet need.
That makes sense. Okay, so jumping into the data a little bit, you do have a phase III trial underway, but before we get to that, I figured we could talk about some of the phase II data you've generated to date, and what gives you confidence about those studies. So maybe starting with REGEN-007, you reported some interim data back in June. Investors were fairly focused on this data set because its design is a little closer to the phase III. So can you recap the design of this study and your high-level takeaways from the data?
Yeah. So the REGEN-007 data was, as you said, the interim results we talked about in June. It's an open-label study. It's in diabetic patients. There's some type one diabetic patients in there, too, so it's not just all type two patients. This study was designed to test two different types of interventions. So there was a group one, if you like, that's really aligned with our phase III study. And those group one patients had a biopsy, got injected, and then three months later, got injected into the contralateral kidney. That's the group that we're primarily interested in because it's so similar to our phase III program. The other group was a group of patients who got a biopsy, got injected into the kidney where the biopsy was done, and then we waited.
Mm-hmm.
And we waited for more, you know, what I say, a physiological trigger. It's really a biochemical trigger. It's really a change in their GFR or a change in their UACR, their urine albumin creatinine ratio. And if any patients met those triggers, then they will get injected. And in retrospect, you know, that may have sounded like a good idea to start with, but in essence, we're waiting for patients to get worse-
Mm-hmm.
And then we inject them. And what we saw from that group two, and then I'll get back into the more interesting group one. What we saw in that group two was that's probably not the way to go, to let patients get worse and then inject them. And so that's definitely not the path that we're on for today. Now, group one, you know, we've, we focused our, our results, we focused our presentations primarily on group one. What we saw in group one, it was 24 subjects in total. Thirteen of those subjects had the follow-up that we were looking for. In both the 13 subjects and in the 24 subjects that got at least one injection, we saw out to 18 months, we saw a change in kidney function that was more similar to what you'd see with just aging.
It was around a -1 decline in kidney function over the course of eighteen months. Now, this was an uncontrolled study.
Mm-hmm.
And so we tried our best to identify an external control. And so we went to Dr. Tangri and his group at the University of Manitoba, and Dr. Tangri and his group have published a lot on kidney failure risk equations. They have their own company, they are part of labs, they're part of, you know, how a lot of clinical groups use their formulas to actually guide their clinical decision-making. So we went and worked with Dr. Tangri. He had access to some of the SGLT2 trials, and we asked him to form a synthetic control group based on data from those trials.
Mm-hmm.
He matched those 13 people with about 10 patients from those trials, so a 10-to-1 match. We compared what happened to those control group patients versus the patients in 007. Over the course of 18 months, those control group patients lost about 6 mL per minute-
Mm-hmm.
versus the -1.3 that we saw over the course of that same period of time. So, you know, admittedly, that was an external control. It was post-hoc. We really wanted to see how this, how our study could compare against some type of control group, but then also gave us, you know, even more strength, we felt, to say that we're on the right track with our phase III program.
Okay, got it. So, speaking of the phase III, I guess specifically from that group one in REGEN-007, what do you see as the read-throughs for the phase III program? You mentioned a couple, but-
Yeah. So, of those thirteen-
Mm-hmm.
Again, these are small numbers, so we acknowledge some of the limitations that I think some of the analysts have brought forward, too. But at least it's very directional. So of those 13, 10 of those people actually fit the criteria for our phase III program at that time. And when we looked at those 10 people, we saw, you know, a very flat line.
Mm-hmm.
Essentially, you know, stabilization of kidney function over that 18 months. We again think that that's helpful for a phase III program. The number, I mean, we've been asked, and I think the relevant question is, well, did you have anyone die? Did you have anyone that ended up on dialysis, et cetera? We had about 100 patient years of follow-up in that group, and we had one event. I think we had a death, and so two smaller numbers, I mean, that's less than what we'd expect, but still two smaller numbers to actually take any strength from that observation.
Okay, got it. And I think you guys will plan to provide another update in the first half of next year on this study. So what should we expect from that data set?
We're planning on finishing the study in the first half of next year, so we'll probably provide more final results towards the end of the first half of next year. What we'll have is obviously a more mature data set.
Mm-hmm.
We'll have, instead of those 13 subjects, we'll have, you know, more longer follow-up on the 24 subjects.
Mm-hmm.
Most of those subjects have gotten second injection. There's one person who didn't, of those 24. So we'll definitely have more maturity, limited to 24 subjects, and we'll be able to report out on, again, some events, but also we're primarily looking at change in eGFR over time.
Okay, that makes sense. You had another phase II study, RMCL-002, that had an interesting design where some patients were treated immediately, others had their treatment deferred. So can you just remind us of what the rationale was behind that study and, and again, a recap of the data we saw from there?
Yeah. So just, just a another history lesson.
Mm-hmm.
That study started in 2016.
Yep.
Right. The majority of the data points, I should say, were collected during the pandemic, which created its own challenge.
Mm-hmm.
In 2016, the company was private. It was a small company, and they were really just building some of their clinical operations functions, and their manufacturing facility was primarily like a, an R&D facility at that point in time. So that was 2016. There were really, in my mind, two control groups in that study. One was initially at the beginning of the study, you think of this as Group One and Group Two.
Mm-hmm.
Group One was the active treatment group. They received rilparencel, what we call REACT today. They received rilparencel as soon as the product was available.
Mm-hmm.
Group Two was the deferred group. They, if they were randomized to Group Two, then they didn't receive rilparencel till after twelve months, and during that twelve months, they continued to receive what was typical standard of care at that point in time. Now, the other control group that I just mentioned was not just that randomized control group at the beginning of the study, but it was also almost like an embedded control group of a pre-group and a post group.
Mm-hmm.
And so the pre-group was the standard of care, who then, after 12 months, got injected with rilparencel, and then we were able to follow that group over the period of time. Now, the point that you just made, the patients who were treated initially with rilparencel in Group One, compared to those patients who got treated in the delay group, they had very different responses from an eGFR perspective. And arguably, the first group, the active group, had a minimal, I'd say, a minimal, positive impact, positive effect of rilparencel. But what we saw with the Group Two, after they got treated, they went from a decline of, you know, of - 2 to - 4, to really a flattening out, and very similar to what we saw in the other phase II study.
So the question obviously is, well, what happened to those patients when they were, you know, initially treated?
Yep.
And I don't have a smoking gun that I could point to, but I do have some things that, you know, as we look into the data, which provides some insight. The first is that if we look at the data, we recognize that patients who have more than five grams of protein in their urine, we measured UACR in this study, too But more than five thousand milligrams per gram per day of albuminuria, those patients just like went like that.
Mm-hmm.
And just by chance, there were more patients in those active treated group than in the other group. So that was just by chance. But there really was no benefit seen. Those patients just continued to bottom out, and that's typically what you see clinically. I mean, I've treated a lot of patients with diabetic kidney disease, and unfortunately, you see those patients who have lots of protein in your urine, and there's very little that you can do. You know, you can throw everything at them, and they just seem to be on that slippery slope to dialysis. So that was one, there was an imbalance in the albuminuria in the groups.
Mm-hmm.
The other thing was, just the way the study was designed, was that for the first twelve months, first eighteen months, more patients in the active group obviously got injected first.
Yep.
That's just the design of the study. Just to make it clear, you know, if you were patient one in the study, and you were randomized to the deferred group, you didn't get rilparencel until twelve months later. Whereas if you were in the active group, you got rilparencel right away.
Mm-hmm.
That applied for study, patient number two, and patient number three, and patient number four. It wasn't a randomization error. It was really just the design of the study. Now, you know, my hypothesis here, and, I mean, there's lots of, you know, parts of medicine where we could say that this applies, but this was. There was a lot of learning that happened early in this study.
Mm-hmm.
Learning in how you inject the cells in the patients... learning at the interventional radiology side, small company, didn't have all the same sort of capabilities, resources that bigger companies have. So I think there was all, you know, a learning curve at that point, too, that probably impacted the results.
That makes sense. And correct me if I'm wrong, but I think based on the subgroup data, you did make a protocol amendment for your phase 3 PROACT 1. So can you walk us through that?
We did. So we looked at the most severe patients in that study, and so those most severe patients were stage 4 CKD, meaning their GFR was less than thirty, and Class A3 albuminuria, meaning they had over three hundred milligrams per gram. Less than five thousand, so in between three hundred and five thousand. So really high-risk patients typically progress, still progress pretty fast. Typically, you're talking to these patients about, "You know, you need to start thinking about dialysis, and what type of dialysis do you want? Do you have any relatives who can give you a kidney?" Those are the types of discussions you start having with those patients. What we saw in those patients, those that treated with rilparencel, seemed to stabilize.
Mm-hmm.
Those that didn't get rilparencel continued to have that decline of about -6 per twelve months. So we used that data to inform our phase III PROACT 1 trial, amended that trial, and then started to activate sites under that amended protocol in May of this past year.
Got it. Okay, speaking of your hypotheses, do you have any thoughts as to why the later stage patients might respond better than earlier stage?
So I actually think that the patients across all different stages probably respond-
Mm-hmm.
But I think it's easier for us to detect it in stage 4 patients, just because of where their kidney function is. And theoretically, I mean, I guess it's not theoretically, but also they have lower nephron mass.
Mm-hmm.
And so if we're actually providing some, you know, some cells that decrease inflammation, repair other cells, for example, then we may be able to detect that difference a little bit easier in patients who have an eGFR less than 30.
Okay. Okay, and just to round out the phase II conversation, can you just speak to safety and tolerability, the profile that's been generated from PROACT and what you've seen across the clinical programs, and how have clinicians and patients anecdotally responded to this?
So we've had, we've done well over a hundred injections at this point in time. What we've seen from a safety and tolerability perspective is the biopsy. We do see occasional hematoma from the kidney biopsy. Some patients end up having some blood in the urine. What we're seeing based on historical biopsy reports and also some more recent biopsy reports, through a large registry that's being conducted by the NIH, is that, our tolerability, our safety is very much in line with what you'd expect to see with a kidney biopsy. Now we're also injecting kidneys with a smaller needle, but what we've had one or two hematomas from that, too, but again, lower than the biopsy rate. And from a tolerability perspective, patients tolerate it well and no long-term side effects from that.
We've had no serious adverse events from repair cell itself, so we feel pretty comfortable with the safety and tolerability. How patients and nephrologists are responding, well, from a patient perspective, a lot of patients that the site investigators have talked to have been very happy around, you know, what's happened. Some patients have been very happy around what's happened from their kidney function perspective. I think from a discussion point perspective, what some PIs feel works well from a, you know, "Can you join? Are you willing to join the study? The study is available," you know, "This is the way the study is designed," et cetera.
What seems to work well with some investigators is that they say, "Would you..." You know, "You're already on therapy, you've already progressed, you know, there's no other options for you other than dialysis. And, you know, getting an injection in each of your kidneys sounds like a lot, but that's very different than getting a needle in your arm three times per week.
Right.
And so in some ways, it really just gives some patients an option when they see that they're really headed towards dialysis.
Okay, great, so let's jump into kind of phase III, and you did have two phase III studies planned as of a couple of weeks ago, but you announced earlier this week the discontinuation of the ex-U.S. study, so can you elaborate on that decision, and if you're thinking about the development path for rilparencel changed?
So yeah, I mean, that was big news for us this week.
Mm-hmm.
So we announced this on Tuesday, just in time for this.
Uh, exactly.
We announced it on Tuesday that we were stopping one of our phase III programs, one of our phase III studies, and we're continuing PROACT 1 in the U.S., and I'll just give you the background to that, and I think for the listeners, too, just so that everyone gets a better understanding of why we did that and also why it's really important. In November of last year, we had a change in our leadership. I came in as CEO. We hired some great people over the next few months to be part of the leadership team as well. But in November of last year, we decided to stop our manufacturing.
We put it on pause, and as a result of putting that on pause, we put our clinical studies on pause, and the reason why we put the manufacturing on pause was we had an audit report from a qualified person in the EU that said, "You need to fix some of the manufacturing deficiencies in order for you to ship product to Europe." Now, this was, you know, probably some people within the company saw this coming. We were already working on a lot of things to improve our quality management systems. That was one big thing. That was one big component of it.
There's nothing wrong with the actual processing of cells per se, and at no point in time did we release any product where we said, "Well, we shouldn't have released that product," under any standards that exist today. This was more around the systems that we had in place to ensure compliance with good manufacturing process. We said, "Look, the only way to really fix this is to put everything on pause. Let's just clean it up. Let's just get all our systems in place. Let's validate all our computer systems, and let's get our quality systems compliant to what the standards are today." It also helps us for commercialization to have this done, so we don't have to rush at some point in the future as well.
So we sort of looked at what we had to do, and it was a daunting task, to be honest. It was very daunting. But the teams did a great job. They delivered months ahead of time, and we ended up self-certifying, if you like, our ability to manufacture cells in May. We had a report back from our EU auditor in June, and a signed report in July saying that we're ready to go. So we're actually really happy with the progress that we made. But because we had, you know, bigger things, if you like, in mind, you know, we had to fix our manufacturing, we had our systems in place, and we were amending one of our protocols. We... There was this nagging question I think some of us had, and it was around like, why are we doing two studies? We've got an RMAT.
Mm-hmm.
We received an RMAT from the FDA in October 2121 , and so the question that we had was, well, why aren't we using that RMAT to the best of our... Why aren't we leveraging that to the best of our capabilities? So we did an internal review of all the engagements we've had with the FDA, and we have some leaders on the team who were part of that FDA discussion in March 2022 , when we aligned on the regulatory pathway with the FDA, and there was a meeting in March 2022 , and there was something else that was going on that was critical for the company at that time, and the company was getting just set to go public.
Mm.
The company went public in July of 2022. All the work being required to go public, finalizing the investors, finalizing the pipe, going through a de-SPAC, all that was going on around that time in March of 2022. The team that went to the FDA felt it was most important to leave that meeting with a agreed-upon regulatory pathway-
Mm-hmm.
which I understand where they were coming from.
Right.
They didn't push any buttons. They left that meeting with a more traditional agreement on what that regulatory pathway looks like. Certainly not something that you'd expect if you have an RMAT, and they left the meeting with essentially an agreement on two randomized controlled trials. The other thing that's happened since then was there was a leadership change in that review group at the FDA.
Mm-hmm.
The new leader is also more aligned with the overall head of CBER.
Mm-hmm
Peter Marks. And I don't need to get into any details, but I think anyone that follows Peter and a lot of the products that they approve in CBER, they're more open, they're more flexible in how they look at study design and how they look at data. And I'd say when we went through this internal review, asked the question, "Why are we doing two studies?" We not only did this internal review, but we reached out to experts-
Mm-hmm
and people that have been through this process at the FDA, people that have worked at the FDA, other connections that were very important for us, and we eventually ended up concluding that there's no good reason for us to be doing that second study.
Got it.
So we're continuing down the path of PROACT 1. We're stopping PROACT 2. In doing so, we save about $150 million-$275 million. We extend our runway significantly-
Mm-hmm
... which gets us closer, much closer to a top-line readout from PROACT 1.
Got it. Okay, that's, that's a good update. So what has been your latest communication with FDA? Do you expect more formal feedback near term? And how does the RMAT designation factor into those conversations?
So, the RMAT certainly allows us to have more engagements with the FDA on a regular basis. Like, quite frankly, I don't think we've been doing enough of that.
Mm-hmm.
So we do have some engagements planned this year and next year. Not only do we have to engage around questions, "Well, do we need confirmatory evidence? Do we need to start planning around what the confirmatory evidence might be, depending upon what the data looks like from PROACT 1?" And like any cell and gene therapy manufacturer, 'cause that's... You know, we're manufacturing our own product-
Mm-hmm
we also have to work with the FDA on CMC.
Mm-hmm.
We think we're actually in a really good spot, but we need to formalize where we are and what we need to do with the FDA as well.
Okay, got it. And maybe we could spend a minute just on the endpoint in PROACT 1, specifically the composite nature of it and how your phase II eGFR results influence your thinking on the phase III endpoint. So maybe I could just, you know, bunch a couple of questions together. How do you think this will affect readout? But also, how do you think payers, clinicians, patients are going to think about the trial?
Thanks, Judah. Our endpoints are the standard endpoints for, you know, what other companies have done in the diabetic kidney disease space. Our trial is designed as a time to event study. The endpoint is an eGFR less than 15, time to an eGFR less than 15, time to dialysis, or time to renal or cardiovascular death. We should add time to transplant, too.
Mm-hmm.
So it's more that typical approach from an endpoint perspective. We think we're in a better shape to achieve more of those endpoints with the reduced, more targeted patient population now that we have in our amended protocol. We definitely have confidence around what our endpoint rate is expected to be.
Mm-hmm.
Although, I will say there's some variability in the literature. Even more recent data would suggest that we're being more on the conservative side with regards to event rate. But we'll know, obviously, once we start, you know, getting a lot more patients in the study, and we'll see what the exact event rate is. We think our phase II data... You know, our phase II data didn't have a lot of events-
Mm-hmm.
Because of the small numbers that we had. But if we look at the event rate in our phase II data, and we look at some of the treatments that we've done in our phase II data. We haven't published this. We don't have any intent to publish this, but we do see some signs that we're definitely on track.
Mm-hmm
... for what our projections are in our phase III program. So we feel confident where we are in not just the event rate, but also the effect size that we're estimating, and we're assuming a hazard ratio of .6 .
Okay. Okay, great. So what would, in your mind, I guess, given what you know currently, seem like a good outcome in PROACT 1 for you guys? And how are you thinking about disease stabilization and durability in the trial?
A good outcome for PROACT 1 would obviously be statistical significance in the top-line readout, right? So, and it has to be safe, right? Even if we have a product that works and it's not safe, then that creates some challenges for us, too. But all indications are that it's safe and tolerable, at least at this point in time. So, you know, top line, we'd expect a statistically significant readout. We would like to see a directional improvement on time to dialysis in particular. I think that plays an important role in how payers look at data, specifically in this population.
Right.
I was saying to you earlier before we got on stage, that I had worked at CVS-
Mm-hmm
... and was there during the Aetna acquisition and worked closely with the payers after the acquisition. So I sort of had that inside look into how their medical economics group looks at kidney disease, and some of it's surprising. Some of it was really surprising to me, and some of it wasn't. But obviously, dialysis is a big issue for them, but they've managed to curb that issue by, you know, agreements that they have with large dialysis providers. But stage 4 chronic kidney disease is the issue.
Right.
Right. That's their pain point. They, their costs are higher than the premiums and across, especially within the commercial space, but across all their lines of business. That's a pain point for them. And so, you know, if we could demonstrate that we, you know, not just our primary composite endpoint, but also a signal that we're seeing a prevention of patients or delay of patients going on dialysis, that's going to be meaningful.
Okay. Well, I think we are out of time, but that's a good place to wrap up, so thank you again for joining us.
Okay. Thanks, Judah.