Good day and thank you for standing by. Welcome to the top line PoC data readout of ZL11002. At this time, all participants are in a listen only mode. For participants who dialed into the teleconference, you can access the slides via webcast link posted on the company IR's site. After the speakers' presentation, there will be a question and answer session.
And for participants who joined by webcast, you can only ask Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your first speaker for today, Mr. Billy Cho. Please go ahead.
Good morning, ladies and gentlemen. I'm Billy Cho, Chief Financial Officer of DIALA. We are holding this conference call to share exciting news about our early development candidates, GL-eleven oh two and Doctor. Reinhart, Chief Medical Officer at DIALA for the autoimmune infectious diseases therapeutic areas, will make a brief presentation and then take your questions. Turn to Slide 2, please.
As a reminder, during today's call, Zai Lab will be making certain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward looking statements are not guarantees of future performance, and therefore, you should not put undue reliance upon them. These statements are subject to numerous risks and uncertainties that could cause actual results to differ materially from what we've said. I refer you to our SEC filings for a discussion of risk factors that could cause our actual results to differ materially from those discussed today. And now I'd like to introduce Doctor.
Reichardt. Carol?
Thank you, Thank you, Billy, and good morning and good evening, ladies and gentlemen. Turn to Slide 3, please. As we announced in the press release yesterday afternoon, VL-eleven oh two, our internally developed novel human body targeting the IL-17A cytokine and formulated for topical use, achieved proof of concept in a Phase Ib trial in psoriasis patients. ZL-eleven oh two was licensed as an early preclinical candidate from Crescendo Biologics. It is our 1st internally developed drug candidate to advance into full global development.
For background, here's an image of CL-eleven oh two, a human body derived from the haline chain of IgG. Tumor bodies are much smaller than full size IgGs, only 13.2 kilodalton compared to 150 to 100 and 60 kilodalton for IgG or a usual monoclonal antibody. Besides size, human bodies have other favorable features. It can latch onto rather inaccessible epitopes, it can have higher receptor affinity, that can have noticeably better chemical stability. We took advantage of these special physical chemical characteristics in the design of our proof of concept trial.
We wanted to study CL-eleven oh two as a topical treatment for chronic plaque psoriasis, hypothesizing that penetration of affected skin may be possible with a small biological when directly applied to the skin surface. Animals do not develop psoriasis, and there's consensus in the literature that animal and in vitro models do not fully reflect the disease seen in humans. However, it is known that psoriasis is associated with a lot of keratinocytes barrier function, making the epithelial and epidermal layers more penetrable. We also know about the presence of pro inflammatory IL-seventeen in psoriatic skin and the great results with IL-seventeen inhibitors like Cosentyx takinumab that have truly revolutionized the treatment of moderate to severe psoriasis. Therefore, IL-seventeen, especially IL-17A, is a validated target for therapeutics.
Our goal is, in this first in human proof of concept trial, to test whether direct application of an antibody fragment like CL1102 can achieve lesion improvement while avoiding those side effects often encountered with systemically administered IL-seventeen inhibitors. On the right side of the slide, you will find our top line results. In EPIC data in 51 evaluable patients, treatment with CL-eleven oh two showed approximately a 45% relative improvement compared to placebo in the local psoriasis area severity index or PASI score of the target lesion at 4 weeks. A trend of increasing efficacy compared to placebo was observed over time. Anti inflammatory effects were observed with clear CL-eleven oh two showed consistent clinical improvement in target lesion size, reduction in the area compared to an area increase in the placebo arm during the treatment period.
CL-eleven oh two also showed consistently higher responder rates over time compared to placebo up to 4 weeks. The responder rate in this study was defined as the percentage of patients who achieved a greater than 50% reduction in local PASI score of the target lesion measured weekly. The results for PASI score, erythema improvement and responder rates at 4 weeks were maintained after the end of the study at 6 weeks. Safety data in 53 evaluable patients showed a benign safety and tolerability profile comparable to placebo with treatment emerging adverse events that were few in number and mild. Pharmacokinetic studies confirmed lack of systemic absorption of the compounds.
To our knowledge, this is the first ever study to demonstrate penetration of a protein biological through psoriatic skin, showing clinical response. Turn to Slide 4, please. Here is an outline of our study design together with relevant entry criteria. Part A of the study enrolled a cohort of 6 patients with safety in pharmacokinetics, followed by a larger Part B, which was a randomized, double blind, placebo controlled, 2 arm study for assessing CL-eleven oh two efficacy, PK and safety. 11 centers in Australia enrolled a total of 53 patients in Part B.
Entry criteria selected patients with mild to moderate CPP with a suitable lesion by location in PASI score. The percentage change in PASI on day 29 was the key clinical criterion for efficacy. Patients self applied a 1% preparation of CL-eleven oh two twice daily for 28 days. For further details, please refer to the clinicaltrials dot gov website. Before we take a closer look at the data, let me start by saying that patient demographics and baseline characteristics were well matched across age, rate, height, sex and local entry policy, which was 8.5.
Turning to Slide 5, please. Like MODIS proof of concept trials, this study was made to provide 1st in human data on skin penetration and clinical efficacy. We were also interested in local tolerability of the drug formulation and, of course, the general safety profile. We included a fair amount of PK testing as we were unsure about the degree of transdermal absorption, if any. This study was not powered for statistical significance.
Instead, we hope to see a directional trend supporting a go no go decision. As you know, the ParsiScore is the most commonly used severity grading system for psoriasis. We use the components of erythema, scaling and induration, each one from 0 to 4 when assessing a lesion. Therefore, the total lesion score can range from 0 to 12. Our average patient had a local parity of 8.5 at M2.
Clinically, improvement over placebo vaccine by means of percent reduction in local PASI and individual PASI components, responder analysis, lesion size and histologically a reduction in epithelial thickness. Thus, these results consistently show a trend towards improvement over time by various parameters favoring CL-eleven oh two in every comparison. As this was a while at short trial, treatment was only 4 weeks, these efficacy results have likely not reached their maximum improvement, and one would expect further parties' changes with longer treatment courses. Adverse events were rare in either arm. There were no premature discontinuations, serious adverse events or deaths.
Local tolerability was excellent as well. There was no sustained absorption of over 2 50 blood samples tested, none tested positive for CL-eleven oh two, all were beneath the limit of quantitation. This may explain why the safety profile was comparable to placebo. As of today, several tests are still pending. Among others, we're still awaiting a transcriptome analysis by RNA Seq from skin biopsy samples.
Please turn to Slide 6, please. The next two slides show typical before and after photographs of psoriatic skin lesions showing CL-eleven oh two treatment effect. KZ shows a psoriatic plaque on the leg, which certainly demonstrated signs of improvement in erythema and scaling. Turn to Slide 7 now, please. Here you see a lesion in the elbow ulnar region, a frequent site for psoriasis.
4 weeks later, retinitis and amount of scaling is diminished. Even the size of the affected area has shrunk with topical CL-eleven oh two treatment. Turn to Slide 8 now, please. Here is an overview of the currently available IL-seventeen monoclonal antibodies, many of which have become blockbusters. All are injectables indicated for moderate to severe psoriasis only.
None are indicated for mild to moderate chronic plaque psoriasis. This has to do with the therapeutic index of these agents. While uniquely efficacious, they are also potent immunosuppressive drugs and carry various warnings and precautions, even black box warnings in their labels. Warnings about vaccinations, infections, TB and herpetic reactivation and other adverse events indicate that this drug class is not entirely benign. For these reasons, we believe our topical IL-seventeen directed therapy that works directly on the lesion and avoids systemic exposure has great market potential.
Turning to Slide 9, please. So to summarize, we envision a significant market opportunity for CL-eleven oh two. Psoriasis affects approximately 125,000,000 people worldwide. Plaque psoriasis is the most common type, affecting 80% to 90% of those with psoriasis. And 70% to 80% of those plaque psoriasis cases are mild to moderate, and marketed out IL-seventy inhibitors are currently not indicated for them.
Topical therapies are the standard of care for treatment of mild to moderate disease. However, current treatment options provide limited efficacy or have safety concerns with long term use. To the best of our knowledge, this Phase 1 study is the first one to demonstrate penetration of a protein biological through psoriatic skin, resulting in a clinical response. CyLab plans to advance yearly 1102 into full development, including registrational studies. We plan to present the complete data from this study at an upcoming scientific meeting and to submit them for publication.
So thank you for your attention. We would now like to turn the call over to the operator to open up the line for questions. I would like investors to limit their questions to CL-eleven oh two and its clinical program. We will discuss the competitive landscape and our commercial plans for CL-eleven oh two at a later time. Operator?
Thank first question is from the line of Michael Yee of Jefferies. Please go ahead. Your line is open.
Hi, good morning. This is Dennis on for Mike. I just have two questions. Can you please clarify on the language in the press release when you talk about relative improvement over placebo? And I think put some context around that when you look at other topicals for psoriasis and if you can sort of talk about how you think you can position yourself versus other topicals?
And can you also give some clarity around the next steps? I know you guys mentioned registrational trials, but how would those look like since you probably need to enroll patients outside China? And how confident do you think you can show the same strong execution like you have in China, outside of China? Thank you.
Yes. Thank you, Dennis. This is Harold. Good question. I do believe we need to be very clear about what we considered our primary efficacy variable, which was percent improvement over baseline.
So if you have a baseline PASI, as in our case, of 8.5, we want to see an improvement visavis the placebo arm that was run-in parallel. As you know, in those kinds of studies, you have quite a significant placebo effect, and it needs to be run-in parallel just to make sure that we don't over interpret or falsely interpret our data. In our case, we had good separation from placebo starting at week 2. And it went out to week 4 and even out to week 6 for most of the parameters that we've looked at. So percent improvement compared to baseline, that's the primary efficacy variable that we used.
And that's the PASI score, a local PASI in this case, because we restricted our results to patients, which had multiple disease, in this case, obviously, total body surface area of less than 10%. Now as far as the competition and the results, it's a bit hard to do a direct side by side comparison because most of the studies in this field actually run longer. They run for traditionally 3 months, some to 4 months. And so we can't really directly compare how our data would compare in a similar kind of setting with targeted treatments. However, when you look at data for several other recent drugs like stepiranoff and others, you will see that they also have a quite similar efficacy up to week 4, and week 4 data don't reflect full efficacy.
This is an important point because many of those drugs don't really reach full potential. They don't plateau until month 3. We were actually very positively surprised to see really responses, very early responses, because in this particular case study, it didn't allow us to go out to 3 months or 4 months. But we were very pleased to see that, not just in one parameter, but in multiple parameters, we saw a response and separation from placebo. Now the next part of your question about next steps.
As we indicated, yes, this is a global program. We are very happy to take this to the next step and develop this drug further. This will be going into full global development in multiple jurisdictions. We think we are competitive as it has indicated as far as the early efficacy lead out is concerned. And in this particular case, further studies will further delineate the efficacy and safety and the comparison that we have.
However, let me also say that when it comes to comparisons, we need to be careful to compare apples with apples, topicals with topicals. But in this case, being an IL-seventeen directed targeting therapeutic, we always look at IL-seventeen data as well that are being given by subcurope. But please do not mix up these injectables, which have despite the fact that they have the same target, they do have a different pharmacokinetic profile clearly. Is that answering your question? Or did you have any other questions about this?
That's very helpful. Thank you.
Thank you. Our next question is from the line of Anupam Rama of JPMorgan. Please go ahead. Your line is now open.
Hey, guys. Thanks so much for taking the question. Just a quick one for me and a follow-up clarification question. Is there any pre clinical work that needs to be completed before global studies can be commenced? And then as a clarification, the Phase Ib that included patients from China and Australia or Australia exclusively?
Thanks very much.
Yes. Let me answer the second part of your question first. This was a study conducted totally in Australia. No participation of Chinese patients. Again, Phase of Part A and Part B, all done in Australia at 11 Census.
As far as the preclinical work, preclinical work was mostly done at our place, in this case, at Zai in China. And if the work finished, it is almost finished. We have done and already initiated some remaining toxicology studies and safety studies in animals, but we are on our way to an IND filing and we will not have to finish any additional work from all we can see.
Thanks so much for taking our question.
Thank you. You're welcome. Thank you. Our next question is from the line of Viggo Nokomovitz of Citibank.
I had quick ones. What's the longer term strategy for 11 oh two? Are you planning to retain global rights? Or are you planning to partner potentially for late stage development? 2nd, could you just quickly remind us what the royalties and milestones are that you owe to Precendo on this asset?
And 3rd, are there any other dermatologic indications beyond psoriasis where 1102 could have application? Thank you.
Yes. Thanks, Stephen. Several things I'll take the first 2.
Yes, please go ahead.
And then I'll give you the third one. So here you go. On the first question, that's a great strategic question, I think for us and you know as well. Our plan is to continue to execute well and get tied up to a stage and scale pretty quickly, but we have all of the menu at our disposal and kind of run so we can make sure we can make the right decision to create value not only for, I think, to our shareholders, but most importantly, to the patients. So, we have we don't have a fair decision at this moment, but we want to have the full optionality.
So we can do it ourselves and have the scale low on how to do so. We can partner out or enter into a more maybe perhaps strategic deal, structured deal where multiple products are involved. So we want to have all that all those options available to us. As to your second question, in terms of the price of Crexendo, the deal terms were quite modest and therefore we actually didn't even have to disclose the terms as they were viewed immaterial and that was in 2018 and our company is a lot bigger now. So basically, there is an upfront component, there's a royalty component, but quite low.
Given that we partnered we brought in this shingle body technology so early on and had to do a lot of work led by Harold and the internal team of God. And Harold, do you want to take the third one third question?
Yes. For the third part of your question, yes, clearly, we felt that psoriasis indication was the one that one should pursue first, given the almost overwhelming data that exists for IL-seventeen as a validated target. But you're correct, there are other indications one could possibly pursue. We don't have it currently really planned out, but we could look into others at atopic dermatitis. Although here the data file 17 are just not as strong.
So, we will have to evaluate all these issues in as a topical preparation clearly lends itself to be tested in other indications as well.
Thank you.
Thank you. Our next question is from the line of Jonathan Chang of SVB Leerink. Please go ahead.
For mild moderate chronic plaque psoriasis both in China versus the U. S. EU? And what's your sense for the percent of patients that will need a novel therapy beyond the conventional option?
Okay. Billy, do you want to take the first part? I'll take the second.
Well, yes, Harold, I'm going to if you're comfortable, please.
Okay. Well, the treatment rate, it's really fairly high because the suffering that comes along with psoriatic lesions is quite significant. So the treatment is dependent on the severity of the disease. It's dependent on the success rate and it's also dependent on the availability of really potent medicines and their overall side effects. Now when we talk about the treatment rates, you have to remember that especially for mild to moderate psoriasis, these treatments are not satisfactory.
And I'm saying this despite the fact that steroids are obviously very efficient, but they cannot be really used long term given all their side effects. These are side effects both locally on the skin, which means atrophic skin as well as systemic side effects, which makes it makes it impossible to use a highly potent steroids in 7 classes for any length of time. So in this particular area, you will see that multiviral psoriasis is underserved because patients are sometimes frustrated with the available options that are not sufficiently active efficacious or have safety issues. So there is a niche for us. And we see the niche here coming in from an efficacy side and mainly also from the safety side to local tolerability being 1, but systemic tolerability much more so because most of the other topicals are absorbed and will have systemic side effects of some sort or other.
And that's been clearly borne out by all the other categories of topicals that have been studied so far.
Got it. Thank you. And second question, can you comment on any investigator reported improvement in patient symptoms, such as pain and itching in general and more specifically in treated versus untreated lesions?
Yes. Okay, good point. Thank you so much. Pain and itching is usually a symptom much more associated with atopic dermatitis. Now we didn't record this because the positive doesn't make use of those two dimensions.
So we didn't measure it in this study, maybe something to consider at a later point in time. We stuck with erythema, scaling, induration, which are the 3 components of the PASI, and that's the one that makes it the easiest to compare to other therapies out there as well. So, good point, we didn't measure pain for itching.
Got it. Thanks for taking my questions.
Sure. Thank you. Next question is from the line of Seamus Fernandez of Guggenheim Securities.
So guys, I'm a little kind of confused by this relative improvement estimate. Typically, what we see with a vehicle around topicals in plaque psoriasis is something in the range of a sort of 6% to 11% placebo response, with really no improvement from vehicle over time in any meaningful way and certainly not at 4 weeks. So I'm confused by this relative improvement metric and I was just hoping you could help us understand it a little bit better. If the comparison to the Pinnerhof is the right comparison, that's helpful. But just wanted to get a better understanding of the I just don't understand why the actual rates aren't being presented here, whether it be on the PASI score itself or the differences the two point change, which is required by FDA on the IGA.
So just wanted to get a better understanding of what's being presented here. And then separately, as we think about the opportunity for other potential biologics, it doesn't appear that the breadth of the opportunity for this product would be similar to some other potential programs in development that are also pursuing atopic dermatitis. However, it would seem like you would have the capability to develop a separate and unique biologic potentially with that could look an awful lot like Dupixent. Just wondering what other biologics you have in mind for the topical delivery and development program? Thanks.
Yes. Thank you for the question. I totally understand that you did not bring out all the data that exists currently, but follow me on this one. So the percent improvement was the primary efficacy variable at stage 29. We started out with a local positive score in both arms averaged out to 8.4 and the one arm it was 8.5.
In the one arm it was 8.4 and the other was 8.6. So at day 29%, we saw an absolute reduction in those numbers and the separation was a total of 7.9 percentage point between the two arms. Now this is, as I said earlier, a placebo related comparison because placebo activity does occur in these kinds of trials because of the attention patients do get, the treatments that are being monitored and the compliance that is being monitored. Now in the placebo arm, we saw you're referring to a placebo response of 6% to 7%. I don't think that is what you see in topical mild to moderate device.
It's 6% to 13%. Yes. Very
convenient. Yes. Usually, you see those small numbers when you go towards severe psoriasis. If you go to others, obviously, the numbers go up because the placebo effect is larger. But you're right, there is a significant number of patients that do respond to just placebo or vehicle treatment as in our Study 2.
We saw a 17% rough number. I would have to verify and we can get back to you. So there was this separation of about 45% relative between placebo and active at day 29. As far as the other indications, I'm really not at liberty to talk about those. We spoke a bit earlier about other dermatological indications.
We have the right to the compound as such, and we are looking into other potential indications in which this drug, which is a human body, a very small fragment here of VH, the IgG VH fragment could be possibly used beneficially. We are very much interested in exploring that. It might do some more PARP trial, But I think at this point in time, we don't want to speculate.
Great. Thanks. That information is super helpful though on the differences between placebo and control. Thank you.
Thank you.
Thank you. Next question is from the line of Yan Huang of Credit Suisse. Please go ahead. Your line is open.
Thank you. I have two questions. So as we know, there are 2 kind of novel kind of based small molecule topical treatment and FDA review. 1 is topirinov, another one I think is PDE4 inhibitor. So can you quickly comment on what kind of pros and the cons between biologics based topical treatment and small molecule based topical treatment?
Yes. Thank you for the question. You have to correct this tapiranal or bendlichimod in development. It's a topical treatment. And we do believe it is very good drug overall.
We have seen some data on it from the it's called SOARING studies. But let me say this, we have very similar data early on as they have as far as efficacy. The second is, you bring up what is the big difference here to ours. The biggest difference between a small molecule that penetrates the skin and has systemic side effects per se or can develop or be either give rise to systemic side effects. It's really the difference between our molecule and theirs.
So for yes, tepiranov, it's actually you have to separate the 2 versions, there is the EGMO, which is a different formulation. But for tapiranav, there is indeed a systemic side effect that's been noticed. And it's not surprising, but it's quite noticeable in that particular drug because it causes all kinds of dermatitities and follicular. But for the other one that you mentioned, which is the PDE4 inhibitor, that's I assume you're thinking of flimulast, if that's the one.
I'm sorry, Rob.
So a well known entity from its pedigree, it's a PDE4 inhibitor like a predamylast motelsma, just this kind of a cream. Think the way of applying it is great because we do believe in topical treatment, but we also need to realize that it's not efficacious and again we are talking about something that is absorbed and has systemic levels. So I think the jury is allowed. The market will determine. We will have to do more studies.
And but one thing is also clear. We are the only one in our drug class. There's no other protein that has ever shown efficacy in penetration of psoriatic skin lesions. So knowing what IL-seventeen antagonists can do, this is a logical consequence or a drug for remission phase. And I think that's one of the nice features.
And not being absorbed is another added benefit. Hospital pathology is really in the skin.
Okay, great. Thank you. So I have a quick follow-up. So now we have this drug based on IL-seventeen antibody mechanism. So is there a kind of way or kind of we can adopt this as a platform technology trying to make other biological drugs into a topical treatment.
And for example, for TNF, R5 or for other biological drug and then make for kind of potential other indications, not just IL-seventeen applying to other biologics drugs?
Yes, that's a very interesting thought and a super good question. I do believe we are just opening the door here for these kinds of approaches. Being the first one is obviously nice, but again, we don't know how much the principle holds up for other applications because a lot depends really on the nature of your molecule. So I'm not the scientist to ask these details, but I can tell you we are very happy with the results and we are very happy to see the absorption and the results coming through early on is also a very nice feature. So I think you're right.
There may be other proteins, other fragments that would from now on be more scrutinized for efficacy by transdermal application.
Okay, got it. Yes, thanks a lot.
Thank you. The next question is from the line of Mike Liu of Goldman Sachs. Please go ahead.
Hey, this is Mike calling for Ziyi. So just a quick question here. I'm sure you've looked into this. So just wondering about the PK and PD of the drug. Have you looked at the penetration and the bioavailability of this drug?
Thanks.
Yes. Thank you. This is Mike. This is what's one of our major unknowns when we started out this proof of concept trial, and that's why we did this Part A, Part B sequential treatment setup. The Part A was truly just an intense PK of systemic absorption.
We couldn't, however, measure it. And so maybe our tests are not sensitive enough, but I doubt it. But we do want to wanted to make sure that we didn't have a drug that has potentially have a high exposure. Again, none of that was known before Nunavans had any data or guidance how a protein would behave in psoriatic skin, not a protein or a human body or an antibody of that size. So this is uncharted territory, and we checked it out and we're very pleased to say there is no systemic absorption.
So as far as PD, this drug class as such has sort of a hysteresis curve in response. You don't see a response right away, But when we finally kicks in, it does stay and hangs around for a while. And we like to think that this has something to do with the intracellular mechanisms and signaling that's being affected here, which does take a bit of time. We saw efficacy starting week 2, and that was seen in the responses of patients compared to placebo. From week 2, week 3, week 4, week 6, we have clear evidence that the responder rates increases over placebo in a very consistent fashion.
So there is this effect, which in this case, starts with a slight lag, but not very long and then has an extended PD effect, which carries out beyond the last treatment. The last treatment in our case was day 29, and we see on day 42, still a good treatment effect and separation from placebo clearly.
Got it. Thanks.
Thank you. And that concludes our question and answer session. Now I'd like to hand the conference back to Mr. Billy Cho for closing remarks. Please go ahead.
Thank you, operator. I'd like to thank everyone for spending time with us today. We hope you've gained a deeper appreciation of the value potential of DL-eleven oh two as well as our global research and internal development capabilities. We look forward to giving you further updates on VL-eleven oh two as well as the rest of our broad innovative pipeline on a regular basis. This will be the end of the call.
Thank you again.
Thank you. And this concludes today's conference call. Thank you for participating. You may now all disconnect.