Good morning, 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 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 Elona Kogan, General Counsel of Selecta. Please go ahead.
Thank you. Good morning, everyone. Welcome to our first quarter 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, selectabio.com. Our quarterly report on Form 10-Q for the quarter ended March 31st, 2020, will be filed later today with the SEC. Joining me today is Carsten Brunn, our President and Chief Executive Officer, and Brad Dahms, our Chief Financial Officer. In addition, Kei Kishimoto, our Chief Scientific Officer, will be available for the Q&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-19 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 7th, 2020, and Selecta disclaims any intention to update such statements even if management's views change. I would now like to turn the call over to Carsten Brunn, our President and CEO. Carsten?
Thank you, Elona. Good morning. I appreciate you joining us today. While the first quarter of 2020 presented challenges due to the COVID-19 pandemic, Selecta has been able to navigate these obstacles while continually prioritizing the health and safety of our patients and healthcare providers to ensure that any risk from COVID-19 is properly mitigated to the best of our ability. The ongoing head-to-head COMPARE clinical trial of SEL-212 in chronic refractory gout is still on schedule. We plan to announce top-line data in the third quarter of this year. To date, we have not seen a material impact on this study. 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-212, which is a combination of ImmTOR and pegloticase in comparison to pegloticase. In the COMPARE study, a once-monthly dose of SEL-212 is being compared to bi-weekly doses of pegloticase with a primary endpoint of the maintenance of serum uric acid levels of less than 6 mg /dL at three and six months. The trial completed enrollment in December 2019. As of April 2020, half of the patients had completed the study, and all patients had reached three months of treatment. We're also pleased to announce that our preparations for the commencement of the phase III program of SEL-212 remain on schedule, and we plan to initiate this study in the second half of 2020, barring any unforeseen impact due to COVID-19.
We have also taken several measures from a manufacturing perspective to ensure we have enough supply of SEL-212 to complete the planned phase III clinical program. Our gene therapy program remains a key priority for Selecta. In collaboration with our partner, AskBio, 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. Selecta and AskBio 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 Dr. Göran Ando to our Board of Directors. Dr. 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 Nashat, who Dr. Ando 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 Dahms. Brad?
Thank you, Carsten. Our detailed financials are laid out on our earnings press release, which we filed this morning and will be further outlined in our Form 10-Q. I'll just highlight a few key items here. We ended the quarter with $74.3 million in cash, cash equivalents, and restricted cash. Net cash used in operating activities was $11.7 million as compared to $20.2 million for the same period in 2019. Net cash used in operating activities for the quarter includes a $5 million receivable from AskBio relating to the license agreement we signed with them in December 2019 for their Pompe disease program. $2 million of the $7 million was received in 2019, and the remainder was received in January. As a reminder, Selecta is eligible to receive up to $237 million in development and commercial milestones, plus royalties on net sales.
We believe our current cash position will provide us runway into the first quarter of 2021. This guidance includes the commencement of our phase III clinical program of SEL-212. R&D expenses for the first quarter were $14.7 million, which compares with $7.4 million for the same period in 2019. The quarterly increase reflects additional costs incurred specific to our head-to-head COMPARE clinical trial of SEL-212 and for our gene therapy program in collaboration with AskBio. G&A expenses for the first quarter were $4.1 million, which compares with $4.5 million 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 first quarter, we reported a net loss of $19.6 million or $0.21 per share, which compares with a net loss of $12.1 million or $0.31 per share for the same period in 2019. I'll now hand the call back over to Carsten for closing remarks. Carsten?
Thank you, Brad. As mentioned earlier, the first quarter 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 our key milestones this year. The announcement of top-line data from the COMPARE trial in Q3, the initiation of the phase III study of SEL-212 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. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your questions, please press star then two. At this moment, we will pause momentarily to assemble our roster. We have a first question from the line of Ellie Merle 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. Just in terms of contingency planning, I guess if there were to be a disruption, can you remind us from a staff 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? My final question is just on the gene therapy front.
As you guys are moving towards the 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 redosing and what you'd be looking for in terms of, I guess, immunogenicity and any sort of antibody titers? Thanks.
Great question, Ellie. Thank you. 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 hematology practices. They also administer life-saving drugs. All these centers basically remain open throughout the COVID crisis. We had a number of sites went offline for two weeks at a time due to either a patient, not necessarily from our trial, or a healthcare provider diagnosed with COVID. This didn't have an impact on the study. Patients got redirected to alternative sites and all the sites actually are up and running. I think that's important to note in terms of the infusions. Overall, both the PIs and patients are extremely motivated, as obviously shows how severe the disease is.
To date, we have not seen a material impact, actually. 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. I think all those are changed from operational perspective, but so far we did not have a material impact. In terms of contingency plan, to get to your second question. We're pleased that we have half of the patients completed the study and all patients completed three months. I would kind of call that the data set pre-COVID.
We're obviously working on a potential contingency plan to make potentially changes to the SAP to account for potential dropouts and there's various approaches we could take. Even in a worst case scenario, what you could do is you could do a Bayesian analysis and project out missing data for those patients between months three and six that have not completed the study. 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.
In terms of proof of concept, we believe that it's a fairly simple measure that we would administer the gene therapy together with ImmTOR, and we would check for the presence of neutralizing antibodies within a certain timeframe, 30 to 60 days after administration. We would obviously look for the prevention of the formation of antibodies, which is a good indicator that we're able to re-treat and give a second dose.
Got it. Thanks so much for the color.
Thank you.
Thank you. We have next question from the line of Raju Prasad from William Blair. Please go ahead.
Thanks for taking the question. I just was curious to know, in the pivotal trial, potential pivotal trial, do you intend on or could you enroll kidney transplant patients as well as KRYSTEXXA experienced patients, or would it likely be naive uncontrolled gout patients? I have a couple follows.
Hey, Raju. Yeah, good questions. Yeah, we would exclude patients with a kidney transplant, and we would also exclude patients that have been treated with KRYSTEXXA prior. We're looking to recruit naive patients to the pivotal study.
Great. Thinking about the COVID-19 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 anecdotal information you're hearing?
In regards to SEL-212 specifically, or?
Yeah.
Yeah, I think, obviously, one of the advantages of SEL-212 potentially is that we only dose once a month, which is a big convenience factor. Also, especially in light of COVID, it's only one visit basically per month. It's definitely seen as a positive. Even pre-COVID, it's seen as a positive, but also now, obviously, there's fewer interactions with the sites. The patient only has to come in for one 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-19.
The other consideration is oftentimes gout flares are treated with very high doses of steroids, which are immunosuppressant, which is also something that rheumatologists try to avoid at the moment as well.
Great. On the gene therapy platform, there's been a couple 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? It looked like from the abstract in the MMA presentation that you saw maternal neutralizing antibodies didn't matter in pre-juvenile mice. Any further color that you can provide there, or will there be significant color in the poster on that?
Yeah. We'll provide additional color with the poster, but I'll hand this question to Kei to give a bit more color at this point.
Hi. Yes. It was actually a very interesting observation. We were looking at the pups born to mice that had preexisting antibodies to the MUT transgene. 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. This allows for redosing, and eventually we were able to rescue all of those mice. It's a very interesting study and encourage you to tune into that.
Great. Thanks for taking the questions and congrats on the progress.
Thanks, Raju.
Thank you. We have next question from the line of Yun Zhong from J anney. Please go ahead.
Hi. A follow-up question on the COVID-19 impact. It's good to know that the top-line data is still on track, no material impact. 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 it acceptable if he goes there in an alternative day, and how much room do you have in terms of the flexibility?
Yeah, that's a great question. You do have indeed some flexibilities around dosing. It's kind of plus/minus five days. In case you do miss a dose, you are able to be rescheduled. We had this previously, which I mentioned, if a site was to shut down, there's obviously the opportunity to go to an alternative site to get the infusion. Yes, there is flexibility around the dosing. I think the other piece that is important are the blood draws, and I think the protocol also allows for flexibility. The patients don't have to go back to their initial site. They can go to alternative sites or alternative labs closer to their home. We've also explored potential home nursing visits for blood draws. We're also there providing flexibility in terms of blood draws as well.
Okay. On the gene therapy program, I wanted to confirm that the first program to enter the clinic is going to be the MMA. Will the main objective be looking at redosing or dosing patients that have preexisting antibodies or both? For the OTC program, are we going to wait for initial proof of concept data from the MMA program to move the OTC program into the clinic?
Yeah. I think we had the discussion in the past. MMA 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. As mentioned earlier, we'll guide throughout the year which the first indication will be. MMA is part of the collaboration with AskBio. In terms of OTC, we're still working through the plans, we plan to continue with our efforts around OTC. Just to go back to the initial question, what are we trying to demonstrate? Obviously, ultimately, we want to demonstrate that we're able to successfully redose in MMA. 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 neutralizing antibodies. That would enable the second dose, basically.
Okay, great. Thank you very much for taking the questions.
Thanks, Yun.
Thank you. To ask a question, participants to press star followed by one on their touch-tone phone now. 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. My question is, you gave us some interesting data at the end of 2019 regarding the initial dropout rate for the two 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.
Yeah, that's a good question, John. 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. I think there's definitely a benefit with or without COVID to only have to come in once a month. I don't want to speculate the actual data, but we definitely feel very strongly as a key differentiator of SEL-212 is the monthly dosing regimen.
Okay, great. If I may ask one more question. In the earlier data that have been presented for SEL-212, the gout flares have been quite low. I'm just curious as to how you plan to analyze the gout 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.
That's a great question. 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. I think there's also other analysis we can do as well. For example, we can look at 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. Obviously, there's a clear trend in the treatment of chronic refractory gout, where physicians try to reduce the use of steroids. I think that's even more acute now, with the COVID crisis, where rheumatologists are quite nervous around administering high doses of steroids, which are immunosuppressive.
Okay, great. Thank you.
Thank you, John.
Thank you. We have next question from the line of Difei Yang from Mizuho Securities. Please go ahead.
Hi. Good morning, thanks for taking my question. Just a couple. Would you expect a permanent CMO to be on board before initiation of the pivotal trials for SEL-212?
That's a good question, Difei. We were very pleased to have Peter Traber as our acting CMO. Peter brings a lot of experience, both from academic, medicine, and Big Pharma and biotech. We might potentially start a search, but for now, Peter is overseeing the COMPARE trial and also the preparation for phase III. What's important to note as well, we have a very strong team below Peter. The project program manager has been on SEL-212 since the beginning, so we have a very experienced team below that as well.
Thank you. Turning to just the SEL-212 program, seems like there is a protocol amendment lately, that inclusion criteria has been broadened a little, going from uric acid level of 8 mg/dL down to 7 mg/dL. Would you help us to understand what's the implication of that change? 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.
We actually changed the inclusion criteria pretty early on, to help with the speed of recruitment. Obviously, by definition, patients with SUA levels above 6.8 mg/dL are considered chronic refractory. They have previously failed on serum urate-lowering compounds like allopurinol, for example, and they had at least one tophi present. 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 statistical plan, I think we had this discussed previously. We have not guided to that in detail. Important to note that the study is powered to show statistical superiority in terms of SUA control.
Thank you.
Thanks, Difei.
Thank you. Again, to ask questions, participants with star followed by one. We have next question from the line of Ram Selvaraju from H.C. Wainwright. Please go ahead.
Hi, this is Boobalan dialing in for Ram Selvaraju. Thanks for taking my question. About SEL-212. Assuming that you 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? Are you planning to run only one phase III trial to get an FDA approval for SEL-212? Thank you.
Yeah. Thanks. Nice to meet you, and thanks for question around phase III. As we have guided previously, we plan to run two phase III studies. Two six months placebo control studies with one study having a six months safety extension. 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 of recruitment, once we complete recruitment, it's basically we'll have a readout of the six month study, and then we'll have another readout after 12 months.
Thank you. The next question, we see that your direct competitor, Horizon, is pursuing additional discovery programs in the gout space to maintain its leadership. Do you have any similar plans to strengthen your gout franchise?
Yeah, that's a great question. I mean, at this point, we're strongly focused on SEL-212 and bring it into phase III in the second half of this year. I think that's our key focus at the moment.
Okay. This will be my final question. I understand that SEL-313 and SEL-302 were slated to enter into the clinic this year. Maybe if you can talk about, especially about the AskBio 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?
Yeah, that's a good question. I think first of all, we have not guided to the specific indication. It's important that we bring both the MMA program and the collaboration and obviously ImmTOR, we are responsible for the manufacturing of ImmTOR and AskBio is responsible for the manufacturing of the AAV 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 for me.
Thank you.
Thank you. To ask questions, please press star one. Thank you. This concludes the question and answer portion of the call. I would now like to turn back over to Selecta CEO, Carsten Brunn, for closing remarks. Carsten?
Yeah. 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 the broad potential of the ImmTOR platform throughout the year. That concludes today's call. Thank you.
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.