Earnings Call: Q1 2020

May 7, 2020

Good morning and welcome to the Selecta Biosciences First Quarter 2020 Financial Results Conference Call. At this time, all participants are in listen only mode. This call is being live on the webcast live on the Investors and Media section of Selecta's website at www.selectabio.com and it is being recorded. For opening remarks, I'd like to introduce Elena Cogan, General Counsel of Selecta. Please go ahead. Thank you, and good morning, everyone. Welcome to our Q1 2020 financial results and corporate update conference Call. The press release reporting our financial results is available in the Investors and Media section of our website, www.selectabio.com, and our quarterly report on Form 10Q for the quarter ended March 31, 2020 will be filed later today with the SEC. Joining me today is Carsten Brunn, our President and Chief Executive Officer and Brad Dons, our Chief Financial Officer. In addition, Kei Kishimoto, our Chief Scientific Officer, will be available for the Q and A portion of the call. As a reminder, during today's call, we will be making certain forward looking statements, including without limitation, statements about the potential, safety, efficacy and regulatory and clinical progress of our product candidates, financial projections and our future expectations, plans and prospects. These statements are subject to various risks, including those related to the COVID-nineteen outbreak that are described in our filings made with the Securities and Exchange Commission, including our most recent quarterly report on Form 10 Q, which will be filed with the SEC later today. You are cautioned not to place undue reliance on these forward looking statements, which speak only as of today, May 7, 2020, and selected disclaims any intention to update such statements even if management's views change. I would now like to turn the call over to Carsten Braun, our President and CEO. Carsten? Thank you, Lona. Good morning. I appreciate you joining us today. While the Q1 of 2020 presented challenges due to the COVID-nineteen pandemic, Select has been able to navigate these obstacles while continually prioritizing the health and safety of our patients and health care providers to ensure that any risk from COVID-nineteen is properly mitigated to the best of our ability. The ongoing head to head COMPARE clinical trial of SEL-two twelve in chronic refractory gout is still on schedule, and we plan to announce top line data in the Q3 of this year. To date, we have not seen a material impact on this study. However, we continue to recognize that there is inherent unpredictability associated with this ongoing situation. We continue to work real time with our CRO, investigators and with the clinical sites in this trial to ensure that patients are treated and measured in a safe manner. As a reminder, the COMPARE study is evaluating Selecta's lead product candidate, SEL-two twelve, which is a combination of ImmTOR and pegatricase in comparison to peglodichase. In the COMPARE study, a once monthly dose of SEL-two twelve is being compared to biweekly doses of peglodacase with the primary endpoint of the maintenance of serum uric acid levels of less than 6 milligrams per deciliter at 3 6 months. The trial completed enrollment in December 2019. And as of April 2020, half of the patients had completed the study and all patients had reached 3 months of treatment. We're also pleased to announce that our preparations for the commencement of the Phase 3 program of SEL-two twelve remain on schedule, and we plan to initiate the study in the second half of twenty twenty, barring any unforeseen impact due to COVID-nineteen. We have also taken several measures from a manufacturing perspective to ensure we have enough supply of SEL-two twelve to complete the planned Phase III clinical program. Our gene therapy program remains a key priority for Selecta. In collaboration with our partner, Asbio, we are jointly developing a broad portfolio of next generation AAV gene therapies. This partnership will leverage the unique proprietary technology platforms of both companies with a human proof of concept trial to validate this portfolio of products and their potential for redosing in patients, which could represent a significant advancement in the gene therapy field. Selecton As Bio intend to enter the clinic with this program by the end of 2020. Additionally, we plan to provide further details of the initial proof of concept study in the second half of the year. Finally, Selecta continues to advance its proprietary program in ornithine transcarbamylase deficiency. We're also excited to announce the appointment of Doctor. Joren Ando to our Board of Directors. Doctor. Ando brings a wealth of experience and is a proven pharmaceutical executive with a track record of execution in both product development and commercialization. His support will further enable the advancement of ImmTOR and we're excited for him to be part of the journey. I'd also like to thank Amir Noshat, who is Doctor. Andur is replacing, for his long term support. He was with Selecta from the beginning, and we thank him for helping put Selecta where we are today. I will now turn the call over to our Chief Financial Officer, Brad Darmes. Brad? Thank you, Carson. Our detailed financials are laid out on our earnings press release, which we filed this morning and will be further outlined in our 10 Q. So I'll just highlight a few key items here. We ended the quarter with $74,300,000 in cash, cash equivalents and restricted cash. Net cash used in operating activities was $11,700,000 as compared to $20,200,000 for the same period in 2019. Net cash used in operating activities for the quarter includes a $5,000,000 receivable from Assibio relating to the license agreement we signed with them in December 2019 for their Pompe disease program. $2,000,000 of the $7,000,000 was received in 2019 and the remainder was received in January. As a reminder, Selecta is eligible to receive up to $237,000,000 in development and commercial milestones plus royalties on net sales. We believe our current cash position will provide us runway into the Q1 of 2021, and this guidance includes the commencement of our Phase III clinical program of SEL-two twelve. R and D expenses for the Q1 were $14,700,000 which compares to $7,400,000 for the same period in 2019. The quarterly increase reflects additional costs incurred specific to our head to head COMPARE clinical trial of SEL-two twelve and for our gene therapy program in collaboration with AskBio. G and A expenses for the Q1 were $4,100,000 which compares with $4,500,000 for the same period in 2019. The reduction in cost was the result of reduced salaries, consulting and professional fees, partially offset by increased stock comp expense. For the 1st quarter, we reported a net loss of $19,600,000 or $0.21 per share, which compares with a net loss of $12,100,000 or $0.31 per share for the same period in 2019. I'll now hand the call back over to Carson for closing remarks. Carson? Thank you, Brad. As mentioned earlier, the Q1 posed unexpected and unprecedented challenges for us as it did for most companies. I'm proud of our team and I'm grateful for their flexibility, dedication and unwavering commitment to ensuring that our clinical trials and development programs continue to progress. I'm further pleased that as a result of their efforts, as of today, we are on schedule for key milestones this year. The announcement of top line data from the COMPARE trial in Q3, the initiation of the Phase III study of SAL-two twelve in the second half of the year and the entry of our gene therapy program into the clinic by Q4. Our commitment to pursuing new breakthroughs in treating diseases that can benefit from redosing of gene therapy remains strong, and we look forward to generating additional value from our ImmTOR platform. I'd like to conclude by reiterating our gratitude to the many people who have been supportive along the way, including our patients and their families, our investigators helping us with Compare and our great team at Selecta. With that, we're happy to take questions. Thank you very much. We will now begin the question and answer session. We have a first question from the line of Ellie Moly from Cantor Fitzgerald. Please go ahead. Hey guys, thanks so much for taking my question. Just in terms of the COVID impact on the COMPARE study, can you give us just a little bit more color on what proportion of doses, if any, have been missed due to any COVID related disruptions? If you could give us a little bit more color in terms of anything you saw in terms of missed doses so far, if at all? And then just in terms of contingency planning, I guess, if there were to be a disruption, can you remind us from a SaaS perspective sort of how you would treat this and potential sort of contingencies if there were to be disruption in terms of the data collection and or missed doses? And then my final question is, clinic and potentially dosing patients. Can you tell us a little bit about what would constitute a proof of concept from your perspective in terms of demonstrating the ability to do re dosing and what you'd be looking for in terms of, I guess, immunogenicity and any sort of antibody titers? Thanks. Great. Great question, Avi. Thank you. So in terms of COVID impact, I think what's important and I think we mentioned this in previous discussion we had, that it's important to note that the drugs are administered in dedicated infusion centers as part of the dermatology practices. They also administer lifesaving drugs. So all December basically remain open throughout the COVID crisis. We had a number of sites went offline for 2 weeks at a time due to either a patient, not necessarily from our trial, or a healthcare provider diagnosed with COVID. But we have not this didn't have an impact on the study. Patients got redirected to alternative sites and all the sites actually are up and running. So I think that's important to note in terms of the infusions. Overall, both the PIs and patients are extremely motivated. It obviously shows how severe the disease is. So to date, we have not seen a material impact actually. And obviously, there are safety measures that are taken by the sites, and we're closely working with the sites. A lot of the consultations are done via telemedicine. They reduce the number of patients actually come to the infusion centers after infusion, all the infusion suites are sterilized before the next patient and disinfected. So I think all those are changed from an operational perspective, but so far we did not have a material impact. So in terms of contingency plan to get to your second question, so we're pleased that we have half of the patients completed the study and all patients completed 3 months, right. So and I would kind of call that the data set pre COVID. We're obviously working on a contingency plan to make potentially changes to the SAP to account for potential dropouts and there's various approaches we could take. And I mean even in a worst case scenario what you could do is you could do a base in analysis and project out missing data for those patients between months 36 that have not completed the study. So we're working through that and we'll keep you updated around this. In terms of gene therapy, I think that's a great question as well. I think what we're really trying to do here with ImmTOR and gene therapy is to prevent the formation of neutralizing antibodies. And in terms of proof of concept, we believe that it's a fairly simple measure that we would administer the gene therapy together with INTOR and we would check for the presence of new lesion antibodies within a certain timeframe, 30 to 60 days after administration. And we would obviously look forward to prevention after formation of antibodies, which is a good indicator that we're able to retreat and give a second dose. Got it. Thanks so much for the color. Thank you. We have next question from the line of Raju Prasad from William Blair. I just was curious to know in the pivotal trial, do you likely be naive uncontrolled gout patients? And then I have a couple of follow ups. Hey, Raj. Good questions. So, yes, I mean, we would exclude patients with a kidney transplant and we would also exclude patients have been treated with KRYSTEXXA prior. So we're looking to recruit naive patients to the pivotal study. Great. And then thinking about the COVID-nineteen situation from a different angle, have you spoken with rheumatologists that have said anything regarding the benefits of obviously increased durability or increased frequency of dosing? Is there any total information you're hearing? In regards to SEL-two twelve specifically or? Yes. Yes. I think, I mean, obviously, one of the advantages of SEL-two twelve potentially is that we are only dosed once a month, which is a big convenience factor. But also, especially in light of COVID, it's only one visit basically per month. So it's definitely seen as a positive. I mean even pre COVID is seen as a positive, but also now obviously there's fewer interactions with the sites. The patient only has to come in for 1 infusion per month. I think the other important piece is that rheumatologists are still very dedicated to treat patients with chronic refractory gout. As if they would be taken off therapy, there is a risk of decompensation, which means they could have severe gout flares, which would oftentimes lead them to go to the emergency room, which is probably not the best place to be at the moment given COVID-nineteen. And the other consideration is oftentimes, Sky Flares are treated with very high doses of steroids, which are immune suppressant, which is also something that rheumatologists try to avoid at the moment as well. Great. And then on the gene therapy platform, so there's been a couple of presentations at ASGCT. Is there anything that you're kind of learning from the increased data sets as far as treatment paradigm of ImmTOR with AAV? And then it looks like from the abstract in the MMA presentation that you saw maternal neutralizing antibodies were didn't matter in treating juvenile mice. Any further color that you can provide there or will there be significant color in the poster on that? Yes. We'll provide additional color with the poster, but I'll hand those questions to Kay to give a bit more color at this point. Hi. Yes. So it was actually a very interesting observation. So we were looking at the Tufts born to mice that had pre existing antibodies to the MUT transgene. And what we observed was that when we gave ImmTOR together with the AAV vector, we had much better survival even in the presence of those maternally transferred antibodies. And this allows for re dosing and eventually we were able to rescue all of those mice. So it's a very interesting study and encourage you to kind of tune into that. Great. Thanks for all the questions and congrats on the progress. Thanks Raj. Thank you. We have next question from the line of Eun Jong from Jenny. Please go ahead. Hi. So a follow-up question on the COVID-nineteen impact. It's good to know that the top line data is still on track, no material impact. But I wonder how much flexibility do you have in terms of timing of dosing, if say a patient is not available to go to the infusion center on a specific day? Is that is it acceptable if he goes here in an alternative day and how much room do you have in terms of flexibility? Yes, that's a great question. Yes, you do have indeed some flexibilities around dosing. It's kind of plusminus5 days. So in case you do miss a dose, you are able to be rescheduled. Or we had this previously, which I mentioned, if a site was to shut down, there is obviously the opportunity to go to an alternative site to get the infusion. So yes, there is flexibility around the dosing. I think the other piece that is important are the blood draws. And I think there the protocol also allows for We've also explored potential home nursing visits for blood draws. So we're also there providing flexibility in terms of blood draws as well. Okay. And then on the gene therapy program, I wanted to confirm that the first program to enter the clinic is going to be the MMA. And will the main objective be looking at redosing or dosing patients that have pre existing antibodies or both? And for the OTC program, are we going to wait for initial proof of concept data from the MMA program to start the OTC to move the OTC program into the clinic? Yes. So I think we have the discussion in the past. So M and A was our program that we put into the partnership with AskBio. We haven't guided which program will be the first to go into the clinic. So as mentioned earlier, we'll guide throughout the year, which the first indication will be, but NMA is part of the collaboration with AskBio. In terms of OTC, we're still working through the plans, but we plan to continue with efforts around OTC. And just kind of go back to the initial question, what are we trying to demonstrate? Ultimately, we want to demonstrate that we're able to successfully re dose in MMA. But the initial early read, we believe, which will be quite impactful, if we can show after the first dose, we can prevent the formation of reticulum antibodies. I mean that would enable the second dose basically. Okay, great. Thank you very much for taking the questions. Thank you. Thank you. You. We have next question from the line of John Newman from Canaccord. Please go ahead. Hey, guys. Good morning. Thanks for taking my question and congrats on all the progress given COVID. So my question is, you gave us some interesting data at the end of 2019 regarding the initial dropout rate for the 2 different groups in the study. It appeared that the active control group dropout number was higher. Just wondering what your opinion is on what we might expect during the COVID crisis, given that the active control arm is dosed twice a week. Is it feasible to expect that there would be more patients potentially dropping out or missing infusions because they have to go into the center more often than your drug, which is given monthly? Thank you. Yes. That's a good question, John. And I don't want to speculate on the data. I think it is fair to say that the patients and the PIs are motivated in the study in both arms. But I think there's definitely a benefit with or without COVID to only have to come in once a month. But I don't expect any actual data, but we definitely feel very strongly as a key differentiator of SEL-two twelve is the monthly dosing regimen. Okay, great. If I may ask one more question. In the earlier data that have been presented for 212, the gout flares have been quite low. And I'm just curious as to how you plan to analyze the Gau flares in the COMPARE study. Just curious as to what types of analyses in general that you'll look to do between the two arms. Thanks. Yes. That's a great question. And as you know, John, gout flares is a secondary endpoint in the study. So we'll be looking at the number of gout flares. So that's built into the analysis. But I think there's also other analysis we can do as well. For example, we can look at the use of the concomitant use of steroids, for example, throughout the study, which is a good indicator as well in terms of the patients experience gout flares. And obviously, there's a clear trend in the treatment of chronic factor gout where physicians try to reduce the use of steroids. And I think it's even more acute now with the COVID crisis where rheumatologists are quite nervous around administering high doses of steroids, which are immune suppressive. Thank you. We have next question from the line of Difei Yan from Mizuho Securities. Please go ahead. Hi. Good morning and thanks for taking my question. So just a couple. Would you expect a permanent CMO to be on board before initiation of the pivotal trials for 212? Yes, that's a good question, Difei. We're very pleased to have Peter Traver as our acting CMO. Peter brings a lot of experience, both from academic medicine and big pharma and biotech. And we might potentially start a search. But for now, Peter is overseeing the COMPARE trial and also the preparation for Phase 3. And what's important to note as well, we have a very strong team below Peter. The project program manager has been on SEO-two twelve since the beginning. So we have a very experienced team below that as well. Thank you. Then turning to just the SEL-two twelve program, seems like there is a protocol announcement lately that inclusion criteria has been broadened a little going from your gas level of 8 down to 7. And would you help us to understand what's the implication of that change? And then if you could remind us on the statistical plan for the data analysis out of Compare just so we can be ready for the Q3 readout? Thank you. Yes. So we actually changed the inclusion criteria pretty early on to help with the speed of recruitment. Obviously, by definition, patients with SGA levels above 6.8 are considered chronic refractory. They have previously failed on serum urid lowering compounds like allocurinol, for example, and they had at least 1 2 of our present. So it is still a very severe patient population. So we don't think there's a key difference here. The key driver was here speed of recruitment. In terms of physical plan, I think we have discussed previously, we have not guided to that in detail. But important to note that the study is powered to show statistical superiority in terms of SCA control. Thank you. Thanks, Difei. Thank We have next question from the line of Ram Selvaraju from H. C. Wainwright. Please go ahead. Hi. This is Bhuvalan dialing in for Ram Selvaraju. Thanks for taking my question. So about SEL-two twelve, assuming that you will start the trial sometime in 2020, how long would you expect the trial to run? Is there any interim analysis planned? If so, what items will be investigated at what time point? And then, are you planning to run only 1 Phase 3 trial to get an FDA approval for 212? Thank you. Yes. Thanks. Nice to meet you and thanks for question around Phase 3. So as we have guided previously, we plan to run 2 Phase 3 studies. They are 2 6 months placebo controlled studies with 1 study having a 6 months safety extension. So that one study obviously will be the key driver in terms of timing. We plan to start the Phase III in the second half of this year and we feel we're still on track for that. We have not guided to speed off recruitment, but once we complete recruitment, it's basically we'll have a readout of the 6 month study and then we'll have another readout after 12 months. Thank you. And the next question, we see that your direct competitor Horizon is pursuing additional discovery programs in the Gulf space to maintain its leadership. So do you have any similar plans to strengthen your Gulf franchise? Yes, that's a great question. I mean, at this point, we're strongly focused on SCIO-two twelve and bring it into Phase 3 in the second half of this year. And I think that's our key focus at the So I understand that 313302 were slated to enter into the clinic this year. Maybe if you can talk about, especially about the Assam Bio collaboration, what are the remaining gating items to be completed from your end? And what are the items that AskBio has to do in order to facilitate the entry? Yes, that's a good question. So I think first of all, we have not guided to the specific indication. But what's important is that we bring both the M and A program and the collaboration and obviously ImmTOR, we are responsible for the manufacturing of ImmTOR and ASPI is responsible for the manufacturing of the AV capsid and we're currently focused on those things and we jointly decide on the indications that we're going to move forward with. Okay. Thank you so much. That's it from me. Thank you. Thank you. Thank you. This concludes the question and answer portion of the call. I would now like to turn back over to Selecta's CEO, Constan Brunn for closing remarks. Constant? Yes. Thank you, operator, and thank you to everyone who joined us this morning. We're extremely excited about the upcoming milestones in 2020 and the continued growth of our company and our platform. We look forward to sharing further updates about Thank you very much. Ladies and gentlemen, that concludes this conference call. Thank you for joining with us and you may now disconnect your lines.