Rain Oncology Q2 2023 Earnings Call Transcript

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Provided by Quartr
August 10, 2023

There are 10 speakers on the call.

Operator

Afternoon, ladies and gentlemen, and welcome to the RAIN Oncology, Inc. 2nd Quarter 2023 Earnings Conference Call. At this time, all lines are in listen only mode. And following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, August 10, 2023.

Operator

I would now like to turn the conference call over to Mr. Dan Ferry of LifeSci Advisors. Please go ahead.

Speaker 1

Thank you, operator, and good afternoon, everyone. With me today on the phone is Avinish Valanghi, Chief Executive Officer of RadOncology and Nelson Cabochuan, acting as VP of Finance. Following the call, Doctor. Robert Doble, Chief Scientific Officer and Chief Medical Officer We'll be joining Avanesh and Nelson for a short Q and A. Earlier today, RAIN issued a news release announcing the company's results for the Q2 of 2023.

Speaker 1

Copies of this news release and SEC filings can be found in the Investors section of our website. Full details on updates from the quarter can be found in our news release and 10 Q issued today. Before we begin, I would like to remind you that statements made during this conference call That are not historical facts are forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward looking statements are based upon Reign's current expectations and involve assumptions that may never materialize or may prove to be incorrect. Actual results could differ materially from those anticipated in such forward looking statements as a result of various risks and uncertainties as described In Reign's most recent quarterly reports on Form 10 Q and the annual report on Form 10 ks filed with the Securities and Exchange Commission and other SEC filings.

Speaker 1

All forward looking statements made during this conference call are based on management's assumptions and estimates As of today, August 10, 2023, RAIN undertakes no obligation to update such statements to reflect events that occur or circumstances that exist after today, except as required by law. With that, I'd like to turn the call over to Avinish Falunki, CEO of RAIN Oncology. Avinish?

Speaker 2

Thank you, Dan, and thanks to everyone for joining us for our Q2 2023 Earnings call. The 2nd quarter was an important time at Wayne Oncology as we provided the top line data readout on our Phase 3 global Registration trial for melodetan, our oral small molecule inhibitor of the MDM-two fifty three complex in dedifferentiated liposarcoma or DD LPS. We reported that the Phase 3 trial for mildematin did not meet its primary endpoint. We also announced that we would suspend the enrollment of our 2nd clinical study, the Mantra II study. We have begun the process of closing down Mantra II.

Speaker 2

Despite what we feel is very clear activity from the MATCHRA 2 study, we do not feel its monotherapy activity rises to a level sufficient For registrational purposes, enclosure of this study will ensure we remain judicious with our use of capital. We hope to present final data from the Mantra Phase 3 study and updated data from the Mantra II Phase 2 study of Milademetam In MDM2 amplified solid tumor patients in the Q4 of this year, we note the Mantra 2 presentation will reflect A significant number of additional patients beyond what was presented last year. We continue to believe that reactivating p53 It's an important therapeutic strategy to add to the armamentarium of anti cancer therapies. At RAIN, we're proud that we were able to move as quickly as we did Given these top line data for melodematin, we determined that Reign will be best positioned to achieve its business objectives by taking action to streamline operations, We prioritize its activities and implement certain cost saving measures, including a reduction in force. We will implement those actions very quickly, resulting in substantial moderation of cash burn that will be apparent in the Q3 and beyond.

Speaker 2

Looking forward, we believe there are exciting opportunities ahead. It is no surprise that the challenging climate in biotech over the last few years Has resulted in a number of interesting programs, companies and technologies being under financed and often Without strong cross departmental leadership, our corporate development team has been rapidly reviewing an extraordinary number of actionable opportunities to license or acquire clinical stage programs and technologies that may allow RAIN to continue to try to make a difference for cancer patients. Although we won't comment on programs under diligence, there are a number of opportunities that could be a great fit For RAIN, with fascinating technology and novel therapeutic strategies for patients, we will update investors when appropriate and how we intend to push forward to add value for our shareholders. Let me now hand it over to Nelson Tabatouan to discuss our financials. Nelson?

Speaker 3

Thank you, Evanish. Before I proceed in providing updates for the financial results for the 3 months ended June 30, 2023, I would like to invite you to review our quarterly report and Form 10 Q filed today for more details.

Speaker 4

For the

Speaker 3

3 months ended June 30, 2023, RAIN reported a net loss of $22,100,000 as compared to a net loss of $17,600,000 for the same period in 2022. The increase was primarily related to clinical trial costs for Phase 3 MANTRA trial and Phase 2 tumor agnostic basket trial MANTRA to as well as personal costs. General and administrative expenses were $5,400,000 for the 3 months ended June 30, 23, as compared to $3,500,000 for the same period in 2022. The increase was primarily due to higher costs associated with launch preparation In anticipation, commercial launch melodematin liposarcoma, personnel, legal, outside consulting and accounting and audit fees. In May 2023, we announced a reduction in our workforce in connection with the reprioritization of the company's clinical strategy designed to optimize company resources.

Speaker 3

We recorded restructuring charges of $2,800,000 in the statements of operations for the 3 months ended June 30, 2023, comprised of $2,800,000 cash severance, bonus and related employee benefits and taxes to affected employees as well as $37,000 of stock based compensation expense related to option notification. Total non cash stock based compensation expense were approximately $800,000 for the 3 months ended June 30, 2023, as compared to $1,400,000 for the same period in 2022. As of June 30, 2023, RAIN had $86,300,000 in cash, cash equivalents and short term investments. RAIN anticipates Space at its quarter end cash position will provide runway into year end 2026 in the absence of a corporate transaction and further financing. As of June 30, 2023, Reign had approximately 36,400,000 shares of Comstock outstanding.

Speaker 3

Let me now turn it back to Evan.

Speaker 2

Thanks, Nelson. With that, we'll turn it over to the operator to take any questions. Operator?

Operator

Thank you. Ladies and gentlemen, we'll now begin the question and answer session. One moment please for your first question. And your first question comes from Michael Schmidt from Guggenheim. Please go ahead.

Speaker 5

Hey, good afternoon. It's Yigai on for Michael. Thanks for taking our questions. Maybe a quick one on the potential new opportunities you guys are reviewing. Amanish, I know you can't talk much on it, but maybe on a high level, can you talk about what modality are you more Interested at this moment.

Speaker 2

Hi, Yigay. Thanks for the question. So everything at a very high level, we're trying to be opportunistic Across a multitude of opportunities, I think we have certainly been approached with Variety of precision oncology strategies, but across both small molecule and large molecule approaches. So that's what we have certainly been reviewing so far, but I won't comment more broadly than that.

Speaker 5

Okay. That's very helpful. Thank you.

Operator

Thank you. Your next question comes from Yajal from Citi. Please go ahead.

Speaker 6

Hi, guys. This is Ashok Mubar, Configl. Thanks for taking my questions. I guess I wanted to ask about the future of melodenatin at this point. Is it more or less on the shelf at this point for the foreseeable future or are there plans in the background that you're thinking And then my second question was, I recall in the past you had a RAD52 asset, which you had in development.

Speaker 6

I'm just wondering if you have any thoughts on that asset and if maybe there's world in which you reactivate that program. Thanks.

Speaker 2

Hi, Ashwin. Thanks. We can be brief here. So there are no plans at the current time for melodematin And there's certainly no intention for deploying capital to support melodematin today. And same for the RAD52 program, we are not moving that forward And we stopped all investment over a year ago.

Speaker 6

Okay, understood. Last question for me. I guess what's embedded in your cash runway guidance at this point? It doesn't sound like it includes any considerations for any potential deal you might do. Just curious what's in there right now?

Speaker 2

Sure. I'll start that and then I'll ask Nelson to follow-up with any additional detail. So in the cash runway guidance, we are certainly reflecting the closure of the existing studies that we had alluded to And maintenance of a lean organization that we think is sufficient for developing multiple earlier stage clinical programs. Nelson, do you have any additional comments?

Speaker 3

Yes. I just want to highlight that when you speak about cash runway through the end of 2026, It does not incorporate additional corporate transaction as well as additional financing. I just want to highlight that in the second half of this year, twenty twenty three, We will see significant reduction in cash runway.

Speaker 6

Got it. Thanks very much.

Operator

Thank you. And your next question comes from Joe Catanzaro from Piper Sandler. Please go ahead.

Speaker 6

Hey, guys. I just had one quick question actually on melodeventan, though I appreciate that you won't be moving forward with that program at all. I'm wondering if Since you've had more time to digest the MANTA trial, whether you've been able to sort of hone in on any potential reasons as to why melodematin Underperformed the previous data you had generated in DD LPS? Thanks.

Speaker 7

Hi, Joe. Thanks for the question. This is Bob Doble. So I think for that question, we'll refer you to our upcoming planned presentations in the 4th quarter Not a medical conference.

Speaker 6

Okay, got it. Thank you.

Operator

Thank you. And your next question comes from Sam Slutsky from LifeSci Capital. Please go ahead.

Speaker 4

Hey, everyone. This is Anshul on for Sam. Thanks for taking our question. One question I had is Basically, as you're looking into these licensing and bringing other assets, is there sort of a sweet spot of deals you're looking for in terms of stage of development or deal structure and so forth?

Speaker 2

So, we shared first of all, thanks for the question, Sam or Anshul. I think what we would comment there is, We want to be able to leverage our clinical organization. And again, I think the expertise that the team demonstrated through the MANTA, MANTA Two studies, we think is exemplary. And so clinical stage is an important attribute of where we're looking. And I'll leave the comments there.

Speaker 4

Great. Thank you. That makes sense.

Operator

Thank you. And your next question comes from Greg Savannah from Mizuho Securities, please go ahead.

Speaker 8

On for Greg, just a question for me. How do you weigh the pluses and minuses between starting essentially a new almost like a new type of RAIN oncology with a new asset versus other corporate options like a potential reverse merger or with some public or private company?

Speaker 2

Hi, I want to go. Thanks for the question. It's a great question. So the way that we approach that is So take a look at the attractiveness of the options that we're presented, the options that we find and the actionability of those opportunities. And if we can find An avenue that we think we can add value to, that certainly becomes more attractive than one of the other alternatives.

Speaker 2

So we are certainly looking at all of those avenues In the absence of an investable option with our existing cash resources and even our personnel, And other options become available. But at the current time, I think with my comments on the call, this is a unique time in biotech where There's a multitude of opportunities that are available to companies in our current position.

Speaker 8

Got it. Thank you.

Operator

Thank you. And your next question comes from Mitchell Kapoor from HCW. Please go ahead.

Speaker 9

Hi, team. Hope you're doing well and thanks for taking the questions. First of all, I just wanted to ask about the just broadly the options on the table. Obviously, you mentioned A new precision oncology therapy, a new technology platform. I wanted to learn a little bit more about what you're thinking about Technology platform, what could that look like?

Speaker 9

What broadly does that mean? And then how many assets might you in license? Is there kind of a limit there? And then is there a hope for how long this could take?

Speaker 2

All great questions, Mitchell. Thanks for your question. We are not going to respond in any meaningful depth to any of Those questions, we want to leave it sufficiently broad at this point until they reach a point where it warrants further articulation the public. And we'll provide those commentaries when we can, but now is not the appropriate time to provide that color.

Speaker 9

Okay, understood. And maybe this is a question for Nelson. I just wanted to ask a finance question. So as expenses have changed to kind of moderate the cash burn, what kind of broadly could we see for the next few quarters in terms of SG and A and

Speaker 3

Thanks, Mitchell. So in terms of the cash burn expense in Q3 Onwards is going to be significantly lower compared to what you've seen in the first 2 quarters of this year and the prior year. I don't want to go through the details of this, but you'd expect a runaway of really low compared The runway in the $20,000,000 in the 1st 2 quarters of this year.

Speaker 9

Okay, great. Thank you, guys.

Speaker 2

Thank you.

Operator

Thank you. And there are no further questions at this time. Evanish, you may continue your conference.

Speaker 2

Thank you, operator. We look forward to keeping everyone abreast of our plans once a forward plan has been solidified. Thank you.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you very much for participating and ask that you please disconnect your lines. Have a great day. Goodbye.

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Key Takeaways

  • The Phase 3 MANTA trial of milademetan in dedifferentiated liposarcoma failed to meet its primary endpoint, leading to suspension and closure of the ongoing Mantra II study.
  • RAIN has discontinued further development of milademetan and its RAD52 asset, choosing to reallocate capital and resources to earlier-stage clinical opportunities.
  • A rapid workforce reduction and other cost-saving measures are in effect, with management expecting a significant reduction in cash burn beginning in Q3.
  • As of June 30, RAIN reported $86.3 million in cash, cash equivalents and short-term investments, supporting a runway into year-end 2026 without additional financing.
  • The corporate development team is actively reviewing a diverse pipeline of small- and large-molecule precision oncology programs for potential licensing or acquisition.
AI Generated. May Contain Errors.
Earnings Conference Call
Rain Oncology Q2 2023
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