Miromatrix Medical Inc. (NASDAQ:MIRO) Q2 2022 Earnings Conference Call August 15, 2022 4:30 PM ET
Company Participants
Hannah Jeffrey – Investor Relations
Jeff Ross – Chief Executive Officer
Jim Douglas – Chief Financial Officer
Conference Call Participants
Alex Nowak – Craig-Hallum
Operator
Greetings, and welcome to Miromatrix Medical Inc.’s Second Quarter 2022 Earnings Conference Call. At this time, all participants are in listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.
I would now like to turn the conference over to your host, Hannah Jeffrey. Please, go ahead.
Hannah Jeffrey
Good afternoon and thank you for joining us. Earlier today, Miromatrix released financial results for the quarter and six months ended June 30, 2022. 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 facts, including statements regarding the potential timing of pre-IND and INDs filings and the initiation of related clinical trial, 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 material 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 August, 15, 2022. 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.
Jeff Ross
Thanks, Hannah. Good afternoon, and thank you to everyone who has joined us today for our second quarter 2022 earnings call. Today’s call will cover a business update from the second quarter, followed by a financial review given by our CFO, Jim Douglas.
First, we remain on track to file our IND application for MiroliverELAP, our external liver assist product before year-end. Following IND clearance from the FDA, we plan to initiate a Phase 1 clinical trial.
I have an exciting update to share with you coming out of our fully implantable kidney program this quarter. We have successfully bioengineered kidneys that demonstrated urine production and protein retention in our preclinical bench testing model. We believe this is the first time a bioengineered kidney has produced urine, and it represents an important milestone in the development pathway.
The progress we have made in our liver and kidney programs is a result of our extremely talented and dedicated team of scientists. Our scientific team has bioengineered more than 400 organs this year at our new fully integrated headquarters. This astounding number of bioengineered organ speaks to the talent of our scientists, as well as the scalability and the capacity of our manufacturing capabilities as we move towards clinical trials.
Transitioning from those updates and highlights, I’d like to level set everyone on this call to make sure our positioning and differentiation is fully appreciated. Miromatrix is a life science company, pioneering a novel technology for bioengineering fully transplantable organs to help save and improve patient lives.
We are one of a small group of companies at the forefront of developing alternatives to human donor organ transplant. We are meaningfully differentiated from other technologies in this category such as xenotransplantation, which include gene editing, by our proprietary technology platform that consists of a two-step decellularization and recellularization process. The decellularization step creates an acellular organ matrix and the recellularization step seeds the matrix with unmodified human cells. While our initial focus is on bioengineering livers and kidneys, which accounts for nearly 95% of the organ waiting list, our proprietary platform is applicable to bioengineered organs.
This quarter, the FDA hosted a public advisory committee meeting to discuss scientific and regulatory topics relating to the organ transplant field, specifically xenotransplantation, Miromatrix and the medical community are excited about the potential of xenotransplantation to some day save and improve the lives of patients suffering from any stage organ failure.
Before that potential can be realized, xenotransplantation technologies are working to solve key challenges, including pig virus transmission and organ rejection. During the FDA meeting and FDA representative commented on the topic of decellularization, explaining that decellularized products and xenotransplantation products are viewed separately from a regulatory perspective because the risk for a decellerized product are less than the risk of a product with cells. Miromatrix has consistently communicated that we believe our bioengineered organs will not be classified as xenotransplantation products, because our decellularization step creates an acellular matrix.
The explanation provided by the FDA representative is consistent with our viewpoint. We believe this provides our technology with a significant point of differentiation versus xenotransplantation technologies as it relates to the risk of pig virus transmission. The FDA did not specifically addresses recellularization during the public advisory committee meeting, but I want to remind everyone of the differentiation of this step provides us compared to other technologies.
During recellularization, we received the decellularized organ matrix with unmodified human cells, which we believe could provide our bioengineered organs with a rejection profile similar to a donated human organ.
In summary, we continue to believe our decellularization and recellularization technologies provide us with significant points of differentiation versus some of the key challenges faced facing xenotransplantation technologies.
Now, I would like to provide updates on our three lead product candidates, MiroliverELAP, Miroliver and Mirokidney. MiroliverELAP, our external liver assist product is designed to treat acute liver failure patients. MiroliverELAP consists of an external perfusion system and our bioengineered liver that will reside outside the human body to provide temporary liver support in an ICU setting. As I mentioned at the beginning of this call, we remain on track to file an IND application for MiroliverELAP before year-end.
Following IND clearance from the FDA, we plan to initiate a Phase 1 clinical trial. We are extremely excited about the upcoming milestone and are eager to begin treating patients. Miroliver and Mirokidney are fully implantable bioengineered organs intended to treat end-stage liver and kidney failure patients.
In collaboration with the Mayo Clinic, we published a 2021 study in Nature Communications Biology, announcing the heterotopic implant of our bioengineered livers in large animals. The study provided excellent proof-of-concept for implantable product candidates as we progress towards human clinical trials for both our fully implantable programs. We remain on track to submit our pre-IND request in 2023. Similar to MiroliverELAP after the FDA responds to our pre-IND submission, we’ll have a better sense of timing regarding our path to the clinic for our fully transplantable bioengineered organs.
As I mentioned, to start this call, our Mirokidney team has successfully bioengineered kidneys that demonstrated urine production and protein retention in our preclinical bench testing model under the leadership of John Barry, VP of R&D; and Emily Beck, Senior Manager of the Kidney Program. We believe this is the first time a bioengineered kidney has produced urine and marks an important milestone in our development pathway.
We are planning to publish these findings in the near future. I would like to thank John, Emily and our entire scientific team for this wonderful achievement. Thank you for your continued support.
And I will now turn the call over to Jim Douglas, our Chief Financial Officer, to discuss our financial results in the second quarter of 2022.
Jim Douglas
Thank you, Jeff. I’ll start off with the balance sheet, where cash and investments totaled $38.6 million, as of June 30, 2022, as compared to $44.7 million as of March 31, 2022. We continue to believe this is sufficient to fund the company through 2023. Additionally, during the second quarter, we celebrated our one-year anniversary as a public company, which allowed us to file a shelf and an ATM, which we have not accessed.
Moving to the income statement. Operating loss was $8.2 million and $15.4 million for the three and six-month periods ended June 30, 2022, as compared to $3.6 million and $6.3 million for the three and six-month periods ended June 30, 2021. The increase in operating loss for comparable periods was primarily attributable to increased research and development costs and general and administrative costs, notably cost increases relating to payroll, pre-clinical lab supplies and services as well as increased costs associated with being a public company.
Our net loss was $8.2 million or $0.40 per share and $15.4 million or $0.75 a share for the three and six -month periods ended June 30, 2022, respectively as compared to $3.7 million or $1.27 a share and $4.1 million or $1.60 a share for the three and six -months ended June 30, 2021. The increase in net loss for comparable periods was primarily attributable to the same cost increases described within operating loss above plus one-time gains recognized in the first quarter of 2021 that impacts six-month period comparisons.
The reduction in net loss per share for comparable periods was largely attributable to the significant increase in weighted average shares outstanding resulting from the company’s IPO in June 2021.
With that, I will turn the call back over to the operator to open the line for questions. Thank you.
Question-and-Answer Session
Operator
Thank you. Ladies and gentlemen, at this time we will be conducting a question-and-answer session [Operator Instructions] Our first question is from Alex Nowak from Craig-Hallum.
Alex Nowak
Good afternoon, everyone. I was hoping if we could just start on the porcine organ that have process to the new lab, that’s a really nice achievement. Can you maybe speak to what sort of insights you’ve learned now going through the resell experience a couple of times here. Have you gotten the process pretty well documented on the liver side, maybe speak to how well you’re going to do in the reselling on the kidney side. And maybe speak to what sort of variability still exist as you’re going through the resell process with the organs?
Jeff Ross
Hi Alex, thanks for the question. I think you picked up a good point in that is just the magnitude of organs that we’ve been able to resell arise in this facility as we highlighted in the call, was not only our ability to do that, but it also gives you a good sense on what our scale and manufacturing capabilities are inside of our new facility.
A lot of those organs are utilized both from the standpoint of what we’re putting together for the data package for the FDA to demonstrate consistency process controls and those various other aspects as we look at that overall development process. So, we continue to execute well on the resell side, certainly moving into the IND submission. That process is getting well documented and well refined from that standpoint. And then moving on to the kidney, you saw some of that exciting stuff that we released on the kidney as well, just shows that level and that reproducibility that we’re starting to see on that side as well.
Alex Nowak
Understood. Maybe on the bench [ph] study, that you’re doing for the IND here. Has any study, in particular kind of been a roadblock for the team or would you say that the requirements to get the IND package analyzed here generally within reach at this current stage?
Jeff Ross
Yes, I’d say it’s well within reach at the current stage. As part of our IPO and what we’re really is one of the key features that we’ve always honed in on, especially for liver function, but also for the need of that in acute liver failure. What we subsequently done and have been creating that data package as well is, is really looking at those other functionalities that the liver can do. Many of those are the really high energy-intensive functionalities and then demonstrating that our liver grafts also be those functions. So from that standpoint, no big surprises. I think the premise that we’ve always had is bioengineering the liver should have that level of liver function, and that’s the data that we continue to see.
Alex Nowak
Maybe speak to the activities to prepare for the liver versus trial launch once you do get the ID clearance. Just how was this conversation with those potential sites going, or do you have any sites signed up yet or is that kind of a TBD once we get the IND accepted here?
Jeff Ross
No. If you look at our clinical team, they’re very active both in conversations with potential sites starting to move those sites forward. And then the last thing that we want to do is get the clearance and then not have initiated the process. So, we’re well underway at different stages with multiple sites, being able to get them qualified through the due-diligence and really ready to be able to accelerate that once we get the IND clearance.
Alex Nowak
And maybe on that topic, we’ve seen in the field of artificial organs. I would say, it’s probably reached a peak recently. We’ve seen a number of studies, progress in living patients, a number in branded patients. Do you think there’s willingness by the FDA with regard to specifically transplantation, but broader artificial organs. Is that helping the conversations with KOLs in the space and getting them willing to it roll in a pretty landmark study?
Jeff Ross
Yes, I think that’s a great question. I mean as we look at some of that, right, I mean, I think what this speaks to Alex, is just — yes, is on some of that stuff. I think we saw that with our recent advisory board committee on kind of xenotransplantation in general. But some of the takeaways from that was really then leaning in. I felt towards trying to move organs forward. And I think that’s really just speaks to the need of the tremendous need that’s out there for patients. And I think that even goes further with the KOLs in the various centers. I can say we have yet to have a center that we’ve approached or talked to that isn’t really interested in moving the stuff forward.
Alex Nowak
Got it. And then maybe just two more questions this time for Jim. Regarding future investments, we’ve seen the company increase the type count a little bit here. Any additional hires or investments that you want to make as you get ready for the IND acceptance and then following and then after that trial launch?
Jim Douglas
No, I think we’re going to operate within burn that we’ve kind of seen here historically up through submission. And I would say just consistent with any growth company as we get on the other side of IND clearance and into the trial, we’ll start thinking about what additions need to be made with the corporation to help build our growth profile. But as we go into year-end here, there’s no significant additions that need to be made.
Alex Nowak
Okay. Perfect. And then the $5.9 million investment on the balance sheet for long-term assets. Just to confirm, that is cash put into a long-term investment, but we should consider that cash at the end of the day?
Jim Douglas
Exactly. We’ve put some different investments that mature every couple of months out through next year just to take advantage of the new interest rate environment. So you’ll see that we earned a reasonable amount of interest income this quarter, and that’s how we’re doing is putting our cash to work.
Alex Nowak
Okay. Understood. Makes sense. Thanks for the update. Appreciate it.
Jeff Ross
Thanks, Alex.
Jim Douglas
Thanks, Alex.
Operator
Thank you. Ladies and gentlemen, we have reached the end of our question-and-answer session. And I would like to turn the call back to Jeff Ross for closing remarks.
Jeff Ross
Great. Thank you. Thank you, everyone, for listening in today. Excited about our update on the quarter and look forward to executing and filing our IND before the end of the year. Thank you.
Operator
Thank you, sir. Ladies and gentlemen, that then concludes today’s conference. Thank you for joining us. You may now disconnect your lines.
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