Earnings Call: H1 2021

Aug 12, 2021

Good day, ladies and gentlemen, and welcome to the Cylance Therapeutics Interim Results 2021 Conference Call and Webcast. At this time, all participants are in a listen only mode. Later, we will conduct a live question and answer session through the phone lines and instructions will follow at that time. Participants can also submit questions through the webinar platform, which will be answered by the company at a later date. As a reminder, listeners should join the call through either the webcast or the phone lines for the best viewing experience. I will now hand over to Jem Hopkins, Head of IR and Corporate Communications to open the webinar. Please go ahead, madam. Good morning and good afternoon, everyone. Thank you for joining us today. Joining me today on the call are Mark Rothra, our President and CEO, who will provide an update on the business Doctor. Giles Campion, our Head of R and D and Chief Medical Officer, who will provide an update on our clinical programs and Craig Coonan, our Chief Financial Officer, who will review our financials before opening the call to your questions. For those of you participating via conference call, the accompanying slides can be accessed by going to the Investors section of our corporate website at www.silence therapeutics.com. Turning to Slide 2, I'd like to remind you that during today's call, management will make projections or other forward looking statements regarding anticipated future events or the future financial performance of the company, including clinical development timing and objectives, the therapeutic potential of our product candidates, our operational plans and strategies, anticipated milestone payments, anticipated operating and capital expenditures, business prospects and projected cash runway. Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in our most recent annual report on file with the SEC. In addition, any forward looking statements represent our views only as of the date of this recording and should not be relied upon as representing our views as of any subsequent date. We specifically disclaim any obligation to update such statements. With that, I'd like to turn the call over to Mark. Mark? Thanks, Jen. Good afternoon and good morning, everyone. Thank you for joining us today. Now let's move to Slide 3. In January, I set out our path to value creation. We must maximize the substantial opportunity of our proprietary mRNAi goal platform to target disease associated genes in the liver rapidly and effectively. We are doing this through a combination of building and advancing our proprietary pipeline as well as our partnered pipeline. We call this the hybrid model. We made strong progress advancing both areas in the first half of the year and are on track to significantly expand our portfolio of gold platform programs by delivering 2 to 3 INDs per year from 2023. Moving to Slide 4. Starting with our proprietary pipeline. We achieved a historic milestone in May when we reported the first clinical data from our GOAL platform. The FLN124 healthy volunteer study demonstrated the potential of our technology and showed that we can successfully translate the results from preclinical models into humans. In addition to this, we started dosing patients in 2 wholly owned Phase I program, the SLN360 APOLLO program for cardiovascular disease due to high levels of lipoprotein A or LPa and the SLN124, GEMINI II program for thalassemia and myodysplastic syndrome or MDS. We also advanced our partnered pipeline. We started work on a second undisclosed target with AstraZeneca and are on track to initiate work on a total of 5 targets within the 1st 3 years of our collaboration for cardiovascular, renal, metabolic and respiratory diseases. Under our Mallinckrodt collaboration for complement mediated diseases, we started work on the 3rd and final target of the partnership agreement and initiated IND enabling studies for the complement pathway C2 targeting program. The first half of the year highlighted the value of leveraging a hybrid business model. In addition to completing a financing led by top U. S. Health care funds, we received a substantial amount of non dilutive capital from our collaboration partners. As a result of our hybrid model and getting money in from both sources, we ended June with a strong cash position. Craig will review our financials in more detail later on in the call. With positive clinical data from our GOL platform, we believe it has become more apparent how powerful the GalNAc approach may be to developing new precision medicines, partnership interest remains strong. We are well positioned today, both from a financial and platform perspective, to further advance our clinical pipeline and deliver on our IND goal. Moving to Slide 5. What is particularly attractive about our GOL platform and the GalNec siRNA approach is it is a well established modality with a track record of clinical success. In fact, historically, GalNec siRNA programs have had a high success rate in moving through the clinic from Phase I to Phase III compared to the pharma industry average. This means that the return on discovery investment for these programs has the potential to be much better than is typical for our industry. That's why we are committed to cranking up the engine on our discovery pipeline as well as advancing our clinical pipeline. Moving to Slide 6. I'd like to focus on upcoming events and anticipated milestones. Starting with SLN360, our lead clinical stage proprietary program for cardiovascular disease due to high Lp. This morning, we announced the good news that we have fully enrolled 4 cohorts of the SLN360 single ascending dose study despite the challenges associated with COVID-nineteen. We anticipate reporting top line data from the 4 cohorts in the Q1 of 2022. The protocol includes the option to add a 5th cohort if we want to learn more about the clinical profile of vessel M360. We remain well positioned to start the Phase II study in the second half of next year, subject to regulatory discussions. Moving to our 2nd clinical stage proprietary program, SLN124 for thalassemia and MDS. We plan to present additional results from the SLN124 healthy volunteer study at ASH in December, pending abstract acceptance. Giles will review the positive top line data we presented from the SLN124 healthy volunteer study in May in just a moment. But first, I want to update you on our time line for the SLN124 Phase I program in people living with thalassemia and MDS. While we have been successful in implementing a number of mitigation strategies to minimize the impact of COVID on our clinical programs, the SLN124 program is more complex. Thalassemia and MDS are both rare diseases prevalent in areas hardest hit by COVID-nineteen. We selected multiple sites across Asia, Middle East and Europe where thalassemia and MDS are most prevalent. However, some key sites have not been activated yet due to COVID-nineteen surges. We are uncertain today how the situation will evolve and therefore need to be more conservative with our time lines. We are now guiding that both of the SLN124 single ascending dose studies in thalassemia and MDS will read out in the summer of 2022. We will add further studies showed the potential of SLN124 to become a franchise that is much broader than these two indications through its ability to control the production of hepcidin, a key regulator of iron balance in the body. We announced this morning that we will host an R and D Day in New York on the 21st October and look forward to discussing the SLN124 and SLN360 programs as well as our broader pipeline in more detail then. With that, I'll turn the call over to Giles for a clinical update. Giles? Thanks, Mark. Moving to Slide 7. As Mark mentioned, we announced today that we have completed enrollment in 4 cohorts of the SLN360 single ascending dose study in healthy volunteers with high LP middle age. This is a global, randomized, double blind, placebo controlled study assessing individuals with high LP delay levels at or above 60 milligrams per deciliter. Remember, 50 milligrams per deciliter is the threshold at which cardiovascular experts agree that we should look to treat patients. A level above this significantly increases the risk for serious cardiovascular event. In the SLN360 single ascending dose study, we will be looking at safety, LP reduction from baseline and durability of effects over the follow-up period, which is around 5 months. I often get asked what success looks like for this study. Moving to Slide 8. We want to replicate the excellent profile shown here in the nonhuman primate model. This demonstrated robust Lp knockdown of around 90% with effects lasting for at least 2 months, which was the duration of the study. In addition, preclinical safety studies have shown an excellent safety profile, which is key, particularly when you're considering a potential preventative treatment for around 20% of the world's population. For the SLN360 single ascending dose study, clinicians generally consider around 70% to 80% reduction clinically relevant. We are optimistic based on preclinical data and the GalNAc conjugated sRNA modality that we will have a long duration of action lasting at least a few months, potentially longer. Moving to Slide 9 and the SLM124 program for thalassemia in MDS. These are both characterized by a relative deficiency of hepcidin, which is the central regulator of iron distribution in the body. SLN12 patients, this study demonstrated both the excellent safety profile of SRNA and proof of mechanism. All doses of SLN124 were safe and well tolerated with no serious or treatment emergent adverse events. Following a single dose, SLN124 increased average hepcidin up to an approximate fourfold and reduced CRM-one hundred and twenty four by around 50%. These effects were sustained. You can see on Slide 12 that SLN124 meaningfully reduced serum iron levels after a single dose, and that effect was also maintained throughout the study. Importantly, this study was conducted in healthy individuals with a normal iron metabolism, and we anticipate seeing even greater impact in patients with hepcidin deficiency. Moving to Slide 13. Here's an overview of the 2 single ascending dose studies we are running with SLN124, 1 in thalassemia and 1 in MDS patients. We are enrolling 56 patients in each study and have up to 4 cohorts per study. Given the positive data from the GEMINI study and how consistent these data are with our preclinical models, we're feeling very optimistic about the potential for FLM124 in thalassemia and MDS. And as we've mentioned, we believe that by controlling the production of hepcidin, SLN124 can address a range of hematological conditions. We presented data at the European Hematological Association Congress in June that highlighted the potential for using this approach to treat polycythemia rubiviera. This is another indication we're exploring and we look forward to discussing more at our upcoming R and D Day in October. With that, I'll turn the call over to Craig to review our financials. Thank you, Giles. Let me just provide some context around the financials we reported today, beginning on Slide 14. For the 6 month period ending June 30, 2021, the company recorded £5,800,000 in revenues versus £1,100,000 in the same period of 2020, which is largely a reflection of the partnership programs with Mallinckrodt and AstraZeneca. As you know, we record revenue based on the percentage of the program completion using the cost incurred compared to overall program costs as agreed between Cylance and our collaboration partner. All milestones and recharges are recorded in contract liabilities, also known as deferred revenue when invoiced and then the liability is released to revenue based on the percentage completed. As additional programs are initiated in advance, our revenue should build over time. You can begin to see this build as we have initiated the AstraZeneca programs in late 2020 and the first half of twenty twenty one. The cost of sales reported at £3,400,000 include direct costs associated with our partner programs as well as salary costs for the internal employees working directly on the collaboration programs. As expected, R and D costs continue to increase as we advance our proprietary programs, including SLN360 and SLN124 into clinical studies as well as the continued advancement of our research programs. For the 1st 6 months of 2021, our R and D expenses were £15,600,000 compared to £10,200,000 in the first half of twenty twenty. As Giles updated you earlier, we were pleased with the recent data from our clinical study evaluating SLN124 in humans, and we continue to be enthused with our projects and development. General and administrative costs were approximately £9,100,000 for the 6 months ending June 30, 2021 versus £5,200,000 for the same period in 2020. The increase was primarily impacting the P and L as we continue to broaden the skill sets and capabilities the company will require going forward. Turning to Slide 15. We believe we have a strong cash position at present. The company's cash, cash equivalents and deposits were £81,200,000 at the end of June 2021. This includes the previously reported net proceeds of approximately £30,700,000 and an oversubscribed financing that we closed in early February and the receipt of £30,800,000 from AstraZeneca in May of this year. We believe our cash position should allow us to fund the company through at least the end of 2022 or early 2023 without any assumptions of additional non dilutive financing. We do remain very interested in the hybrid model for financing and external parties remain very interested in partnering with us, especially after our good clinical results this May. In summary, we continue to prudently invest in the growth of the company. We will continue to expect to incur higher R and D costs as our programs advance. We will also spend an additional G and A to support a growing organization and to comply with greater regulatory requirements. Our accomplishments in the first half of the year, both clinically and financially, give us a lot of optimism for our future outlook. Thanks, Craig. I'd like to thank everyone for listening today, and I'll pass back over to the operator for your questions. Thank Your first question comes from the line of Tom Frieder of BTIG. Please ask your question. Good morning. Congrats on all the progress. I had a question about the 124 program and how we should think about hemoglobin. Do you think it's the median change that matters or some sort of responder analysis or is the key readout kind of periods off transfusion? And then a secondary second question on the second program, I understand you're treating Lp greater than 60 where things start to matter. Will the FDA allow you to go up into patients where Lp is very high or do you have to start sort of around 60? Thank you. Tom, thanks for the question. So one on hemoglobin, the other one on Lp. I think, Giles, you're probably in the best position to answer these questions. Yes. I mean, as you're aware if we start with the first one, as you're aware, the hemoglobinopathies represent a spectrum of disease from non transfusion dependent to transfusion dependent. From a regulatory perspective, the way forward has been looking in reduction in transfusion dependency. So for example, luspatercept had showed a looked at a 30% reduction in transfusion frequency. So that would likely be the registration endpoint. In terms of hemoglobin, that would be more relevant for the non transfusion dependent population. And there, typically, whether you and I think this has been shown both in beta thalassemia and also NDS, you're looking for about a 1 gram to 1 point 5 gram increase, which has been shown to be both clinically relevant and associated with increase in quality of life. So I think that would be those would be my thoughts in that regard. As far as Lp is concerned, I mean, in our trial, what we have is an entry criteria of having a level of at least 60 milligrams per deciliter. That doesn't mean that we are restricted in terms of upward values. And indeed, there are some individuals with quite high levels that have been included in that study. So it will give us an opportunity to look at the effect on both those with minimally raised and also those with quite high levels. And one quick follow-up. Do you expect an Lp a percent reduction by dose or an absolute reduction by dose? Well, I mean, we will look at both, of course. I mean, as you are as I indicated in the presentation, levels are thought to be considered elevated beyond 50 milligrams per deciliter. So if you were treating to target, then that would be the target you would aim for. In fact, the demographic data suggests that greater than 30 milligrams per deciliter is associated with increased risk. But generally, the sense is that if you can reduce Lp by around 70% to 80%, that would give you a good therapeutic effect. Thank you. Your next question comes from the line of Patrick Trucchio of H. C. Wainwright. Please ask your question. Thanks. Hi, good morning and good afternoon. I guess the first one is just a follow-up on SLN360. So I'm wondering if you can give us an idea of what the clinical development plan for 360 could look like going forward, assuming a positive outcome in the Phase 1 program and your views on eventually partnering this program? Thank you, Patrick. So let me start and I'll also ask Giles to comment. I think what we underlined today is that we're on track to initiate a Phase 2 for the SLN360 program in the second half of next year. And so that's subject, of course, to discussions with the regulators. But with a single ascending dose data now expected in Q1, we think that gives us ample opportunity to initiate that Phase II study. What we're thinking of as far as partnering is concerned is the important thing here is to do what's right for this brand, if you like. This is a blockbuster potential asset. It's going to be competing in a statin like market, which, as you know, is a massive market. It's very similar in size. And so what's important is to make sure that when it comes to scaling up and being ready to compete globally that we have a great partner in place for that journey. So we'll be mindful about that as we think about the development program and when it makes most sense to bring onboard a partner. I don't know, Giles, if you want to add anything on the development plan. Well, the comment I'll make is, 1, obviously, that's something that we're intensively looking at, at the moment, both internally and with experts. 2, I think the path, to some extent, has been indicated by a traditional path has been indicated by our competitors, namely Novartis, who are in the process of doing a cardiovascular outcome study. Obviously, the ability to show reducing Lp does correspond with a reduction of heart clinical endpoints is going to be very important for the field. Amgen, who are also developing an sRNA, are currently doing a Phase II in those in subjects with atherosclerotic cardiovascular disease. So I mean that is one way, but obviously, we are carefully looking to see what would make most sense for us. Yes. And then just on SLN124, I'm just wondering if you can discuss some of the advantages of 4 as compared to some of the other modalities in development in these indications, including the ASO that targets TEMPURATE 6 and some of the other approaches in the field, such as with antibodies or gene therapies? Well, that's a big question. You want to take that one? Do you want me to take that? Sure. I mean, my first answer is, I'm really impressed by the profile of sRNA. And as we've shown in the healthy volunteer study, that is characterized by a very strong target knockdown, a long duration of action and a very good safety profile. And I think that has shown itself amongst the approved products or about to be approved products, think of inclisiran, similar sort of profile there. So I think that's the power of this modality in terms of looking at different therapeutic classes. If you look at the other compounds that are being developed in this field, I feel that sRNA really is a technology upgrade on antisense oligonucleotides. Why do I say that? Because, 1, the duration of action is appears to be significantly longer, and you can see that again in the LP program where Novartis is dosing monthly. I think the evidence that we've seen both from Amgen and hopefully from our own programs will be that dosing will be significantly of longer duration than ASOs. And I think the other aspect is the safety aspect. The very clean safety profile so far of sRNA, I think, compares very favorably. The other approaches in this area have been through hepcidin mimetics, so the same sort of pathway. The issue with the hepcidin mimetics is they tend to have short durations of action. And when you're dealing with trying to control iron at the level of the restaurant, then you need to have very stable levels and iron overshoot is something you want to avoid. And I think that's the issue with the hepcidomimetics. Again, to get the duration of action, doses have to be increased, which are associated with an increase in adverse events. I think what they have done is that they have shown a potentially very mechanism that hepcidin gives us in terms of ion regulation, we feel that this is a very attractive area for drug development. Yes. And then just one more on Slide 5, it demonstrates the high probability of success for advanced RNAi platforms. So there's also many RNAi programs out in the field, though many of the additional liver targets remain unaddressed. So I'm wondering how you decide which targets to go after next and when you could have more to disclose on those liver targets? And when you discuss 2 to 3 INDs per year beginning in 2023, would those be primarily in liver? Or would those also include targeting other tissue? Yes. Let me tackle that one. Firstly, when we say 2 to 3 INDs per year by 2023, we're referring to the gold partnered pipeline. So that's what's going to deliver 2 to 3 INDs or more beyond 2023. We as you kind of pointed out, we see a lot of opportunity still in the liver oriented programs because there are about 14,000 genes expressed in the liver. If you look at Dicerna, Arrowhead, Alnylam ourselves, and you look at the number of programs that are either underway or potentially underway in the future, it's probably just under 1% today. And so we think that there are a lot of opportunities out there, to identify novel and also potential follow on programs that will add value. And so we've built an internal translational genomics and informatics team that is really cranking there. We have a number of data partnerships that will also help us identify novel targets. But also, there are, I think, a lot of partnership opportunities out there with organizations that bring very specific therapeutic area competency and experience that is complementary to our siRNA experience. And so when you think about all these factors, I really think there's a lot of mileage to be gotten from the gold platform and 2 to 3 INDs per year, I think, is a really good starting point for us. Terrific. Your next question comes from the line of Myles Minter of William Blair. Please ask your question. Hi. Thanks everyone for taking the questions. First one is just on 360 in the APOLLO study. What are the gating factors, I guess, that you're thinking about for initiating that 5th cohort of dosing? And you've committed to top line data in the first half of twenty twenty two for the first four cohorts. So would we find out that answer after that data? Or is this something you might be thinking about implementing before that? And then the other thing that I wanted to know was now that at least you internally know the exact dosing of what you've used in the prior 4 cohorts, where would a 5th cohort sit relative to the no adverse effect level you saw in non human primates? Thanks. Myles, thanks for the questions. I'll start and then hand over to Giles. But just to clarify, we've only made a very modest adjustment to the timing of the data. So we're talking about Q1 of 2022, just to be very clear on that front. And that's with regard to the 4 cohorts of data from the APOLLO study, the first four cohorts. So as to decision making around the 5th cohort, I don't know if you'd like to add some comment around that, John. Yes. I think the important thing about single ascending dose is that it really provides the data set that launches into further development. So what we've done in that protocol is to retain some flexibility so that if we need to, then we can do an additional cohort. At this point in time, we don't anticipate it, but until we see the data, we won't know for sure. And what you're trying to do is, 1, to maximize effect, so level of knockdown 2, duration, which is clearly going to be important, particularly when you're dealing in a preventative indication and, of course, safety. So that's what we do when we look at the results of different cohorts to make sure we've got the best combination of those factors to enable us to go forward. So hence, the flexibility in the protocol to be able to do that. Yes, makes sense and apologies on the timing correction there. The second one on 124, have you opened up additional clinical trial sites outside of the German one that is listed on clinicaltrials.gov? And then for the new additional sites that I think you may have mentioned that you may need to add to try and simulate enrollment here, What sort of the how are you ensuring that those sites are as quality as the ones you initially picked? And sort of what's the right limiting sets for getting them up and running? Thanks. So in a moment, I'll ask Giles to comment about the sites that are opened. I think the general point here is, with these being rarer conditions and obviously, as we pointed out today, given that the prevalence of this condition includes numerous countries in the Middle East, for example, and Asia, which have been more impacted by COVID-nineteen. We continue to build out our footprint for this study. So we've already identified 23 sites that we have in mind for the study, but we'll continue to add to those sites in areas that have been less impacted by COVID. We're sort of balancing between areas of higher prevalence where potentially there's higher risk, but also other areas where there's perhaps lower risk with a perhaps slightly lower prevalence. And so it's a balancing act that we're doing globally here. But just to underline, we have a large number of sites that have been selected for this study. Giles, do you want to add any commentary there? Yes. I mean, the idea is, as Mark indicated, is that we want to go to areas where the disease is pregnant. Clinicaltrial dot gov doesn't accurately represent the extent of sites we're looking at. We're looking at about 22, 23 sites around the Mediterranean, littoral and the Far East. And the reason for the delay is once we typically enter sites, once we've got regulatory approval and there's also some administrative delay. So the rate of site activation is, in fact, greater. So that's our approach. Makes sense. Final one for me is just when you can start talking more about the AstraZeneca and the tiktokater programs. I know you get that question a lot, but I just want to know in terms of like the legalities of it, like when you can comment versus like is this solely in the hands of AstraZeneca and Takeda as to when they want to disclose those sort of targets moving forward? Thanks. Yes, great questions. Look, on the AstraZeneca collaboration, we're bound to be good partners to be thoughtful about how much we communicate relative to highly competitive areas that they're very interested in. What is great is that we are progressing very well in the collaboration. We have already initiated work on 2 targets, and the goal is to have initiated on 5 targets within the 1st 3 years of this collaboration. And remember that it's up to 10 targets in total. I mean, one of the metrics you will see over time of the collaboration progression, of course, will be milestone payments. And we have been open about the areas, the therapeutic areas that we're working in with them. So to that extent, we're being open about the sort of therapeutic area categories. On the Takeda front, I think we've we had that exploratory deal in place that you are very well aware of for one particular target. We've actually completed now the work that we were responsible for by the end of June on the technology evaluation agreement for that target. Takeda are now evaluating that data. They have an option if they want to an exclusive follow on license under the agreement. And they will be evaluating this alongside multiple approaches that they're taking to address this particular target. So I guess it's a wait and see as far as that is concerned. Thank you. There are no further questions on the line. So I'll hand back to Mark for closing remarks. Well, thank you, everybody, for joining us on this call. I'm extremely proud of our half year performance and the overall results so far in 2021. We successfully delivered the 1st clinical data from our GOL platform. We advanced 2 wholly owned programs in the clinic, and we made excellent progress across both our proprietary and partnered pipeline. We also completed a successful financing with top U. S. Investors and continue to build key capabilities for the next stage of our journey. We are looking forward to the next 6 months of the year and what we can deliver from our platform, both internally and through ongoing partnering initiatives. We look forward to sharing more with you at our R and D Day in October. It's an exciting time for Cylance by all accounts. And thank you again, and have a great day. Thank you. That does conclude our conference. Thank you all for participating. You may now disconnect.