Good morning, everyone. We're just on 11:00 A.M. We'll get going with the briefing just while a couple of people are still joining. My name is Samantha Freight, and I'm from Principal Investor Relations, and I'll be hosting today's Pharmaxis Investor Briefing. We're joined today, as always, by Pharmaxis CEO, Gary Phillips, who will give us a general business update following the release of Pharmaxis's quarterly results. After that, we'll open the floor to questions from both investors and analysts. Throughout the presentation, if you do have any questions, please type them into the Q&A box on the left-hand side of your screen. That's on the bottom if you're on a smart device. We'll read them out after the presentation.
There's been lots of news out of Pharmaxis recently with a very productive few months, so I will hand over to Gary to talk us through it all now. Gary, over to you.
Sam. Welcome everybody. I realize today with the issuing of a lot of companies' quarterlies is a big morning. I really appreciate those of you joining us this morning to listen to our update. As Sam said, I'll give a short presentation on the things that have happened in the last quarter. A bit of a look forward, and then very happy to take any questions after that. The quarter, just in outline, it was a big quarter for Pharmaxis. A lot of moving parts, but a lot of progress during the last three months of the year.
Our cancer drug, 5505, started its recruitment in its phase II study, which is due to finish recruitment mid-year and produce data by the end of the year. We got a second IND for 5505, when the University of Rochester filed an IND for the use of 5505, as first-line therapy in hepatocellular carcinoma. That was approved by the FDA in the last quarter. I think news even from this morning, 6302, our topical pan-LOX inhibitor dosed its first patients in a phase 1c study at the University of Western Australia over in Perth.
Finally, not to mention, you know, in the last quarter that we did a placement, an SPP, and that raised AUD 9.6 million dollars. Just before I dive into the clinical trials that we're running, just a reflection on, I guess, what we're learning and understanding as we go into these studies, and that is that, you know, our research program into lysyl oxidase is a multi-year program. It's been leveraged right the way through with extensive scientific collaborations worldwide. We've been able to do that because we are leaders in lysyl oxidase chemistry and biology. When anybody wants to investigate the role of lysyl oxidase in disease, and they want compounds to test, they more or less have to come to us.
We've generated a bank of compounds, which has been very useful for researchers worldwide. In turn, we're learning a lot from what they're doing in their studies. You know, on the left-hand side of this chart here, I've just given the, you know, just an overview of the fibrotic process because it underpins all the studies that we're doing at the moment. That is that while fibrosis has a lot of instigators, chemicals, mechanical injury, metabolism, genetics can all lead to fibrosis. There are lots of pathways that companies are trying to attack in order to reduce fibrosis. Lysyl oxidase is the final stage in fibrosis. It's where the collagen, which is secreted by the fibroblasts in organs and skin, is cross-linked.
That cross-linking of the collagen via the enzyme lysyl oxidase causes that scar tissue fibrosis, increased stiffness in the tissue. That, in turn, is a feedback loop which causes the fibroblasts to secrete more collagen and more lysyl oxidase. It's a vicious circle. What we do with our pan-LOX inhibitors, and we have two of them, 5505 and 6302. 5505 being oral and 6302 being topical, is to cut through that loop. By reducing, inhibiting the lysyl oxidase, we stop ongoing collagen cross-linking. That leads to a reduction in the stiffness of the tissues and therefore less collagen being secreted. It really is, we think, a very neat and effective and the most direct way of inhibiting fibrosis.
PXS-5505 is oral, one tablet, one capsule twice a day. It's patented in 2018, so a very new compound with lots of patent life there. Lots of preclinical evidence in models of fibrosis and cancer. INDs approved in both myelofibrosis and hepatocellular carcinoma, which is a real tick for the drug from the FDA in terms of their review of where we're up to with it and its ongoing development potential. Potentially in lots of multiple cancer indications, which we're beginning to explore. Not least, phase I data in both healthy volunteers and in myelofibrosis patients show that this is a safe and well-tolerated drug that gives more than 90% inhibition of the LOX enzyme. You know, it's a really good looking drug at this stage.
I'm very eager to see what it can do next. 6302 is different, a different compound, so it's new IP. It was patented in 2019. It's a cream, and it's given as one application per day. Lots of strong preclinical evidence in models of skin fibrosis and scarring that this will modify ongoing scarring. It's obviously got potential there in terms of both preventing scar formation and also modifying existing scars. Two ways of tackling scar tissue.
Again, phase I data, this time just in healthy volunteers, but it shows a drug which is well-tolerated, gives full inhibition of the lysyl oxidase enzymes in the skin, but with minimal systemic exposure, which is good for its safety profile. I thought I might dwell just briefly on the scarring indication, given that we announced this morning that the first patients have been dosed in this study. Scarring is a global problem. You know, the numbers are staggering. You know, 100 million patients develop scars in the developed world alone as a result of elective operations and operations after trauma. Many of them develop hypertrophic scars and keloids.
These are fibroproliferative disorders that often arise after deep cutaneous injury and where the fibrotic tissue, as that scar picture in the middle of the screen shows and on the far right as well. These hypertrophic scars and keloids are both a cosmetic problem, but they're also a problem functionally. They can often prevent free mobility of the joint or the skin area that's affected. Those two things significantly affect patients' quality of life. The work we've done with the University of Western Australia has helped us understand that actually, scars even though they may look stable and they may be many years old, they are in fact, the tissue in them is being replenished, a significant amount of that being replenished in a matter of just a few months.
When you look at your scar, it's not the same tissue that it was when the scar was formed maybe many years ago. That's being renewed all the time. If you can stop that renewal process, then you can effectively look at melting the scar away, and that's what we see in the animal models. Current standard of care here is a mixture of corticosteroid cream, which has its own side effect profile. It often makes the skin very thin. Surgical excision of the scar. You replace one scar with another one, and very often the problems come back. You can try and burn the scar off by cryotherapy or laser therapy, again, modifying the scar, but again, that often leads to the scar coming back.
There's very little at the moment which really addresses the ongoing scarring process. The preclinical evidence with 6302 from UWA has demonstrated both cosmetic and functional improvements in scarring. As I said, the, you know, phase I study's already showing this is a safe product. The market for this is enormous, so the commercial opportunity here is large. The total scar market is approaching $20 billion worldwide. If we just look at that keloid and hypertrophic scar segment, then that on its own is about $3.5 billion worldwide. A significant market there with a high unmet need and significant amount of interest in what we are doing because we're almost alone at the moment in trying to modify this process with a pharmacological approach.
Just a summary of the four trials. I think if you look around in terms of our peer group and other biotech companies, you know, we are at the top area here with four ongoing studies, all of them looking at safety and efficacy of our drugs in markets with really high- value for very high- values behind them. All of these trials due to deliver, I think, near-term value for the shareholders. 5505 in myelofibrosis and hepatocellular carcinoma. The myelofibrosis market is about $1 billion at the moment with existing care. We've got a phase II open-label study, which is currently recruiting. We're aiming to recruit 24 patients. We should have them recruited by mid-year. We're on track at the moment, and we're getting hopefully data by the year-end.
Obviously that's the key study for the company. It's the area that we've chosen to prioritize and invest in. We have sites open in Australia and South Korea. We have sites in Taiwan opening up in the very near future and in the US shortly after that. Making good progress with that study and very optimistic about the data we might see by the end of the year. As I mentioned, it is an open-label study with patients with six months on drug. The hepatocellular carcinoma is one we made a fair amount of noise about in the last quarter when we got the IND through from the FDA. This is a study where the patients will be newly diagnosed patients with unresectable hepatocellular carcinoma or liver cancer.
Our drug will be given on top of standard of care straight up. When the patients come in, they're diagnosed, only about a third of them are eligible for surgery, so the other two-thirds aren't. Those currently go on to a mixture of a PD-1 inhibitor and an anti-VEGF treatment. The hypothesis here is that adding 5505 in here will break down the fibrosis within the tumor that's there and allow these two drugs to do much better in terms of their anti-tumor effectiveness. The 1c which we're currently finalizing negotiations with the University of Rochester in New York to start is 18 patients.
We're expecting the first patients to be recruited in the next quarter, and we'd expect data in the second half of next year. This trial on its own opens up a wide number of different potential options for the drug. If it works in hepatocellular carcinoma, then the likelihood of it working in other solid tumors is really high as well. An important study. 6302, two studies here. Addressable market, as I said, AUD 3.5 billion for these two together. First one looking at modification of established scars. The 1c, which we started dosing, we announced this morning, is a 3-month placebo-controlled study. We're expecting 50 patients.
It's currently recruiting, and we should see data before the end of the year. These patients all have to have a scar which is at least one year old, and we're dosing adults with this. Once we've got the established scar study underway, and we've started to see the first effects of the drug with these patients on the drug for a month, we'll have a much clearer idea of the safety profile of the drug, and that will allow us to kick off and start a second study, which is in scar prevention post-surgery, and this is in burns patients.
The burns patients will once they've come into clinic and they've had their initial treatment, probably a short time after that, a period of three weeks when the wounds that they have healed, then our drug will be used, again, placebo-controlled, to look and see whether it can modify the development of scars in those patients. We're expecting the first patient mid-year, and again, data in the first half of next year. Four trials, which we hope will deliver near-term value. Talking about value, our cash on hand at the end of December was AUD 21 million. Obviously supported by the capital raise that we did in the last quarter.
The capital raise, I should say, was very strongly supported by our existing major shareholders, BVF, Karst Peak, and D&A Income. AUD 21 million represents more than a year's worth of cash and we expect that the enterprise value of the company, the market will be sensitive to the ongoing data coming from our clinical studies during this year, and we should see a significant increase in that if we produce positive data. With that, I'll finish my briefing and I'm happy to go on and take questions from anybody that's listening.
Thank you so much, Gary Phillips, for that detailed update across all of Pharmaxis' projects. It's great to see progress across the pipeline. We have had a couple of questions come in just through the presentation already. If anyone has any that they would like to be addressed, just pop them into that Q&A box. The first one I've got here is: Do you foresee M&A interest in 5505 by the conclusion of the phase II trials?
Yeah, that's a good question, actually. The environment here in myelofibrosis, which is the study that will produce the first data, is that you have two existing companies, major companies, with drugs that are JAK inhibitors that are the current standard of care. JAK inhibitors cause an improvement in symptoms of myelofibrosis, but they don't do anything about the underlying disease and they don't lead to disease modification. From the preclinical data, we can see that our drug is a potential disease modifying agent. These companies with very large franchises are on the lookout for the next treatment to add into myelofibrosis, so that it's very likely that standard of care here in the future will be a combination of drugs.
A JAK inhibitor plus something else which addresses the fibrosis that's ongoing or other mechanisms in myelofibrosis. They've got a choice. There are a number of companies, Kartos and Geron, which are, you know, very well- valued at the moment. They've got phase II data already. Their market caps are probably north of $0.5 billion. Now we are joining that club and the advantage that I can see that we have at the moment and our efficacy is not yet proven, so we have to wait and see the data that comes from that at the end of the year.
What we can already see is that in terms of the drugs that are available to be potential combinations with the JAK inhibitors, our safety profile looks to be pretty optimal at the moment. The other drugs in the clinic don't have clean safety profiles, so you're potentially taking a drug with a less than optimal safety profile and adding it onto a JAK inhibitor which already has safety problems in themselves. You know, not to break any secrets, but you know, we are already receiving interest and calls from those companies with JAK inhibitors to explore what we might do in the future.
The company's keeping its cards very much open at the moment that we don't need to make any decisions right now, but clearly we will have increasing interest in us as a company and 5505 in particular when we start to see data from this study in the second half of the year.
Brilliant. Next question here is data in established scars in Q4, will this be all 50 subjects?
Yes. I mean, I should add a caveat with this, right? You know, this is a study which is an independent study being run by Professor Fiona Wood's group over in Perth. It's not a Pharmaxis controlled study, it's their study. We're providing funding for them. We don't have direct control over the investigators. Well, obviously we work really closely. We have a great relationship with the people in Perth. Fiona and Mark Fear in particular, who are running the study. The advantage that I understand we have with established scars is that the clinic in Perth already has a list of all the people in WA that have problematic scars.
In terms of recruitment, one might expect that to be a faster recruitment than, say, patients with burns. Patients with burns, we have to wait until somebody has a burn injury and they present at clinic, and then they're eligible for the study. Whereas the screening process of looking at patients with established scars should be a lot quicker. We are expecting to see a relatively quick recruitment on that and hopefully data by the end of the year.
Fantastic. There's two questions here I'll combine. One was: Can we get some comments on the progress of Bronchitol sales? And someone else also asks: Why were sales in the EU down, and will they bounce back?
Very much a mixed bag. Obviously the biggest issue that we faced with Bronchitol is a delayed launch in the US We felt that we were out of the woods at the end of last year, with COVID in the US beginning to get under control and life getting back to normal. Then the Omicron variant has pushed that back further, and it's at this point difficult to know when the cystic fibrosis clinics in the US will open up again to allow our partner, Chiesi, to go in and educate people about the drug and also patients to come in so they can be prescribed the drug. I think if you look at this from a high- level, the biggest issue here is the US launch.
You know, we're still forecasting that the Mannitol business will break even this year, but clearly it won't be as profitable as we expected because we're not seeing the sales from the US market. In Europe, we see different stories between different countries. Overall, Bronchitol I think is still suffering a bit with COVID. Clearly, one of our biggest markets was in the U.K., and they probably have been leading in terms of COVID numbers in the last quarter, so it's again been difficult. One of the interesting things we're seeing actually is that patients with cystic fibrosis are protecting themselves even more than usual because of the amount of COVID, so they're staying home and staying indoors, so they're not getting sick.
Because they're not getting sick, they're taking less of their drugs. Their compliance to existing medication goes down, and obviously you're not seeing new patients go on. I think we can expect to see a fairly weak outlook for Bronchitol sales for the next six months, and then hopefully, the level of vaccination everywhere and then the people getting back to normal means that we will start to see a bounce back. It will bounce back. I mean, there's no question about them. The patients are still there, the need is still there. The markets haven't changed. The US will eventually launch, and I'm sure it'll be a success. We have to be patient.
I mean, this was one of the reasons why, you know, we went for a capital raise in the last quarter because, you know, we can't rely on the profitability of Bronchitol until we see an end to the COVID pandemic.
Of course. Another question here. It says, "Do you have any sense of the synergy and safety that PXS-5505 offers once you combine it with a JAK inhibitor? Do you see PXS-5505 as ever being used first in line with JAK-naïve patients?
That's a good question. I think that, you know, what we see in terms of can we anticipate what the tolerability would be if it was combined with a JAK inhibitor. I think we can from a mechanistic point of view. JAK inhibitors and lysyl oxidase inhibitors work on very different pathways. We've got extensive drug panels that we look at when we're developing drugs, and particularly before they go into phase II. A lot of that data is presented to the FDA as well before they give approval. We don't see any drug-drug interactions which cause us any cause for concern. We've now had patients on drug for several months, and we don't see any existing any real tolerability issues that cause us any cause for concern.
I think everybody at the moment is looking at the lysyl oxidase and thinking that that's not likely to add to the side effect burden that these patients have. Will it ever be used first line in JAK-naïve? I think from a mechanistic point of view as well, you know, a JAK inhibitor plus a lysyl oxidase makes more sense than either drug on its own. I expect it to be used first line, but I expect that to be a first-line combination therapy as opposed to first-line monotherapy.
Yeah. Great. Another one here: "Do you expect Fiona Wood to draw some mainstream media coverage around PXS given her public profile?
That's a question for Fiona. Yeah, I'd be surprised if we don't get some attention from mainstream media because of the work that we're doing with Fiona Wood. You know, we very much appreciate the scientific collaboration we have with Fiona. I think her profile does mean that, you know, has benefits to us in terms of the clinical recruitment as well, and getting support for the trial that we want to do. Yeah, we'll wait and see.
Great. One more here: "Do you see potential for this drug to be used in the treatment of lung tissue scarring and/or fibrosis resulting from conditions such as pulmonary sarcoidosis?
Yeah. I think, you know, we have a view at Pharmaxis that fibrosis in some of the soft tissue organs like the lung, the liver, the kidney will need chronic treatment ongoing for a long period of time, whereas the treatment of cancers often needs a much more effective drug acutely, and your immediate concern is saving the patient, extending life. The lysyl oxidase 2 and 3, we believe are good targets for fibrosis in those soft tissues in the lung, the liver, the kidney, and the heart.
We would prefer to go that route, and we're actually exploring that with one of our compounds at the moment in kidney fibrosis, where we've got active collaborations ongoing with a number of universities and grant bodies, and also in IPF as well, pulmonary fibrosis. In fibrosis, sarcoidosis of the lung, potentially there's an opportunity there. We need to be careful how many different indications we try with 5505. I think the ones perhaps where the medical need is greatest and we see the most commercial opportunity, if you put those two things together, then myelofibrosis and the solid tumors at the moment would be where we probably focus our energies.
That's not to say in the long- term that once 5505 has established itself as a safe and effective anti-fibrotic, that it doesn't get used in some of these other fibrotic conditions. I know lots of patients suffer greatly with some of these fibrotic conditions, and there is a real lack of effective drugs in this area. We're, you know, I think we understand. I know we're global leaders in lysyl oxidase, and we think it's the final and the most important stage in fibrosis. We've got great hope for this drugs going forward in a number of indications, and maybe that would be one of them.
Of course. It's really good to hear. That was all of our questions that have come through. If anyone else has any other ones, please feel free to email them in. Gary or someone from the Pharmaxis team can respond via email. Just a reminder as well that a recording of this webcast will be made available in the coming days. Gary, on behalf of all Pharmaxis shareholders and everyone here in attendance today, I'd just like to thank you so much for your time. Of course, we look forward to hearing again from Pharmaxis soon.
Thank you very much. Thanks for everybody for listening as well. I appreciate your time this morning.