Earnings Call: Q3 2019

Nov 8, 2019

Good morning, and welcome to the Selecta Biosciences Third Quarter 2019 Financial Results Conference Call. For opening remarks, I would like to introduce Alana Kogan, General Counsel of Selecta. Please go ahead. Thank you, and good morning, everyone. Welcome to our Q3 2019 financial results and corporate update conference call. The press release reporting our financial results and the 10 Q which we filed is available in the Press Release section of our website, www.selectabios.com. Joining me for today's call is Carsten Brunn, our President and Chief Executive Officer Doctor. Alison Schechter, our Chief Medical Officer and Brad Doms, our Chief Financial Officer. As a reminder, we would like to advise that certain remarks that are made during this call, including without limitation, statements about the company's future expectations, plans and prospects, the potential of our ImmTOR platform, the anticipated timing of planned trials, related data readouts and ability of results to inform future trials, our collaboration with AppBio, the development and market potential for our products, the sufficiency of the company's cash, cash equivalents and short term investments constitute forward looking statements for purposes of the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in the Risk Factors section of Celecta's most recent quarterly report on Form 10Q filed with the SEC, which can be accessed at www.selectabio.com. In addition, any forward looking statements represent the company's views only as of today, November 8, 2019, and should not be relied upon as representing the company's views as of any subsequent date. While Celeta may elect to update these forward looking statements at some point in the future, it specifically disclaims any intention to do so even if management's views change. I would now like to turn over the call to Carsten Brunn, our President and CEO. Carsten? Thank you, Lona, and good morning, everyone. I appreciate you joining us today. This was an important quarter for Selecta as we announced several key achievements demonstrating the advancement of both our gene therapy and chronic refractory gout programs. We presented new data at the recent European Society of Gene and Cell Therapy Annual Congress, which demonstrated the ability of Vifor to address key challenges in gene therapy, specifically the potential for redosing. Currently, it is not possible to redose AAV gene therapy treatments due to the development of neutralizing antibodies against the AAV capsid. Our Chief Medical Officer, Doctor. Alison Schechter, will provide more details on this compelling data in a few minutes. In August, we announced a strategic alliance with AskBio, a proven leader in next generation gene therapies, to jointly develop, manufacture and commercialize a broad portfolio of life changing AAV gene therapies. This is a key milestone for Celecta and we are thrilled to partner with them to move this effort forward, and we anticipate entering the clinic in 2020. We'll provide further details around the initial indication and timing soon. Our development program in chronic refractory gout continues to make significant progress. We anticipate completing enrollment of Compare, the head to head trial of our lead product candidate SEL-two twelve by the end of 2019, announcing interim data during the Q1 of 2020 and announcing top line statistical superiority data by mid-twenty 20. We're also pleased that we have recently confirmed a meeting with the FDA to be held in January 2020 regarding the Phase III clinical development plan for SEL-two twelve. We're excited about the potential for SEL-two twelve to help patients because chronic refractory gout represents the most severely affected subpopulation of people with gout, impacting approximately 160,000 patients in the U. S. Based on our data and quantitative market research with 100 rheumatologists, we believe SEL-two 12 has the potential to address many significant unmet needs in this debilitating condition and represents over $1,000,000,000 market opportunity. We closed a $5,700,000 financing in the 3rd quarter that consisted primarily of the management team and Board of Directors, which was done at market price. In addition to extending our runway, this financing demonstrates the continued confidence in the broad applicability of the ImmTOR platform. We've also made important advancements as a business, strengthening the company's executive management team with the addition of Doctor. Alison Schechter as Chief Medical Officer and Brett Downes as our Chief Financial Officer. Alison is a physician scientist with unique experience in both early and late stage development and translational medicine and has led several assets through FDA and EMA approval. Brad brings deep financial and strategic expertise from his experience as an investment banker for life sciences companies. I will now turn the call over to Alison to provide some more color on our gene therapy and chronic refractory gout programs. Allison? Thank you, Carsten. As Carsten previously mentioned, in October, we presented new data from 4 preclinical studies at the ESGCT, which demonstrated the ability of mTOR to address key challenges in gene therapy, specifically the redosing limitations, which stem from adaptive immune responses against the AAV capsid. These data demonstrate that ImmTOR enables repeat dosing and enhances 1st dose up to 4 fold compared to gene therapy with AAV vector alone. We look forward to the clinical development of our lead gene therapy programs in MMA and OTC deficiency and will provide further updates as these programs move forward. In terms of our partnership with AskBio, this alliance 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. Currently, the ability to redose systemic AAV gene therapy is limited by the development of neutralizing antibodies against the AAV capsid. We believe that our platform has the potential to increase the proportion of patients who achieve and maintain therapeutic benefit. AppBio's robust pipeline of potentially curative gene therapies, their extensive capsid library and scaled manufacturing capabilities will accelerate the development of these gene therapies. As Carsten mentioned, we and Asp Bio anticipate entering the clinic in in 2020. Moving on to our chronic refractory gout program, we look forward to the presentation of 3 abstracts of additional encouraging data from our Phase II dose ranging study of SEL-two twelve at the American College of Rheumatology's Annual Meeting on November 11. A press release detailing the results of these studies will be issued following the meeting's embargo lift. Turning to the head to head COMPARE clinical trial, we continue to advance the 6 month study, which is evaluating SEL-two twelve against the glit case, the current FDA approved uricase. The trial compares the efficacy and safety of a once monthly dosing of SEL-two twelve, which is a combination of ImmTOR plus our proprietary pegylated uricase pegadricase compared to that of pegliticase. The primary endpoint of compare is maintenance of serum uric acid or SUA levels of less than 6 milligrams per deciliter at 6 months. This trial is built upon the Phase II dose ranging study, which showed that in 5 monthly dose cohorts, SEL-two twelve maintained SUA levels below 6 milligrams per deciliter in 66% of the valuable patients and that only 35% of patients in these cohorts experienced flares in the 1st month of treatment. The COMPARE trial will enroll approximately 150 patients and we expect enrollment to be completed by the end of 2019. We plan to report interim data in the Q1 of 2020 and report top line statistical superiority data in 2020 mid-twenty 20. Finally, we look forward to receiving guidance in our meeting with the FDA in January 2020 on our Phase 3 clinical development plan. I will now turn the call over to our Chief Financial Officer, Brad Domb. Thank you, Alison, and good morning, everyone. Our detailed financials are laid out in our earnings press release and will be filed in our 10 Q. So I'll just highlight a few key items here. We ended the 3rd quarter with $35,900,000 in cash, cash equivalents, restricted cash and short term investments, which compares to $42,000,000 as of June 30, 2019. We believe our cash, cash equivalents and restricted cash will be sufficient to meet our operating requirements through the Q1 of 2020. As Carson noted, we completed a private financing with participation primarily from the board and management team this quarter, which resulted in net proceeds of $5,700,000 The transaction consists of approximately 3,200,000 shares issued at a price of $1.81 the market closed price at the time of the transaction. R and D expenses for the quarter ended September 30, 2019 were $8,100,000 which compares with $11,900,000 for the same period of 2018. The decrease reflects the timing of expenses recognized for our head to head COMPARE study in addition to reduced salaries and benefits resulting from the headcount reduction in early 'nineteen and the completion of prior work programs. General and administrative expenses for the quarter ended September 30, 2019 were $3,700,000 which compares with $4,100,000 for the Q3 of 2018. The reduction in cost was primarily the result of reduced legal fees and professional fees. For the quarter ended September 30, 2019, we reported a net loss of $12,000,000 or $0.26 per share compared with a net loss of $16,000,000 or 0.71 dollars per share for the same period in 2018. I'll now hand the call back over to Karsten for closing remarks. Karsten? Thank you, Brad. As mentioned earlier, we had an important and exciting Q3. I'd like to reiterate that our team is focused on 2 priorities in the near term: executing on our head to head COMPARE study in chronic refractory gout and advancing our gene therapy pipeline. We're pleased to announce that we expect to complete enrollment in the COMPARE study by the end of this year and expect to have guidance from the FDA on the Phase III clinical development plan in January 2020. We'll provide interim data in Q1 2020 and top line statistical superiority data by mid-twenty 20. With regards to our gene therapy program, the preclinical data presented at ESGCT show that our technology potentially enables repeat dosing of therapeutic AV vectors, which currently is not feasible. Our partnership with Asp Bio will allow us to move into the clinic in 2020, and we could not have a better partner to drive this effort forward. I would 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. And our first question comes from Chad Messer of Needham and Please go ahead. Great. Thanks. Good morning and thanks for taking my questions. Just to start off regarding this updated pathology of rheumatology in a few days, is it possible to discuss just how much more data might be in there? For example, how much more follow-up time we've had? Is that something you can tell us? Thanks for the question, Chad. So as we mentioned, we will have 3 posters there, and it is more detailed data than we have shown. I think specifically, what is new is a specific analysis on the gout flares where we see that patients in 1 month had 35% of gout flares and there were no new initial flares after month 2. Okay. All right. So these are more new sort of deeper analysis. Yes, exactly. It's a deeper analysis. There's a deeper analysis on the correlation as well between SUA control and use antibodies. So that's the information we show here. So it's more detailed information on data we have presented in the past. Okay. All right. Thanks for that. And then just wondering if there's any update on your collaboration with CureCN? And have they ever released any data about how their single agent gene therapy study is proceeding? They've been dosing for a while now. Yes. To my understanding, they have not disclosed. And so you'll see in our Q that our guidance remains unchanged, waiting to get guidance from the German authorities. As there was no real update, so we kind of took it out of this earnings call, but we're still on track as we guided the last quarter. Obviously, we are very excited about the partnership with SBIO and obviously shifting towards that. Yes. No, understood. And we're eagerly awaiting to be able to say more about that. Thanks and congrats on all the progress. Thank you, Chad. Our next question comes from Derek Archila of Stifel. Please go ahead. Hi, Bill on for Derek. Thanks for taking my question. Just on the AskBio partnership, can you give us a little more insight into what you're thinking for the human proof of concept, sort of the size and length of that study might be? And then and timing and kind of what you think the phasing of your R and D expense might look like as you complete enrollment of COMPARE, think about the Phase 3 study and then obviously the study of ASC? Thanks. Yes. So thanks for the question. It's an excellent question. And we definitely will guide more details in the future. I think for now, as we guided today, we plan to be in the clinic with AskBio in 20 20. We have guided in the past that one of the programs will be one of our own programs will be MMA. And I think what we're looking at primarily is can we prevent the formation of neutralizing antibodies because we think that's a fast endpoint and that's something we can measure after 30 to 60 days of giving a dose of the AV capsid together with Intor. So that's definitely going to be one of the endpoints that we're going to look at. But as mentioned in the call, we will give more detailed guidance. We're obviously working at high speed right now and full steam ahead with AssBio to finalize both the indication and the clinical development plan. So stay tuned. So the second thing is around the Yes, go ahead. So you may not actually need to a couple of 3 doses in that study. You think just showing the NAB should be enough? So obviously, the ultimate proof will be the ability to redose and express transgene, of course. But we think from the studies we've done so far, the a good marker is actually developing or can prevent the formation of neutralizing antibodies. So we think that's where the fastest readout to have this because the retreatment will take longer. That makes sense. Thanks. Just on the RSD expense as well to follow-up. Obviously, once we complete compare those expenses will go down significantly. We have not guided on the Phase 3 expenses yet. And obviously, we have also not guided around the expenses in gene therapy. I think the one important note is these are much smaller trials. Our next question comes from John Newman of Canaccord. Please go ahead. Hi, thanks for taking my question. This is Chris for John Newman. For the last ImmTOR poster that you guys had, one thing that was mentioned was that you can overcome low levels of pre existing antibodies. I was just wondering if that also meant that if someone was dosed with an AAV and they had a low level of antibodies, let's say, you could still use this product to kind of circumvent that or if it meant something else? So I think thanks for the question, Chris. I think I would say at this point, that's speculation. I think we have shown this in animal experiments that you actually can overcome lower levels of new antibodies. We'll have to see how this translates into human studies, obviously. Yes, I mean, that's as far as we can say right now. Got it. And I just wanted to get the gene therapy programs in a row. So kind of could you talk about the timing of the gene therapy programs and when they're going to be going into the clinic from 1st to last just so I can get the timing straight and yes? Yes. So we have as you heard on the call, we do have 2 programs in MMA and OTC. We previously guided that MMA will be part of the collaboration with AskBio. We are around OTC. We're still in the preclinical phase and have not guided when we go into the clinic. So as I said, we plan to take NMH to clinic, but there's other indications in the collaboration, which we have not disclosed yet and haven't guided to. And as I mentioned earlier, once we have more clarity on which indication to move forward and what timing we'll guide to that. Got it. And just for the last question on SEL-two twelve, For the interim readout in Q1 2020, is there anything more specific you could tell us about what data we'll see? Will it be, for example, SUA gout flares and other things? Yes. That's a good question. We have not guided in detail. I think the question comes up, of course. I think what I can say is that we're going to look at numerical difference between FCL-two twelve and peglodacase at month 3 month 6. I think that's as far as we've guided. And we'll provide more of an update once we get closer to the data readout. And for now, we're happy that we're able to announce that we plan to complete enrollment by the end of this year. Our next question comes from Difei Yang of Mizuho. Please go ahead. Hey, good morning, guys. This is Alex on for Difei. I guess I was just wondering if you could comment a little bit on the COMPARE trial in terms of the timeline shift in the timeline there? Yes. Thanks for the question, Alex. So as you recall, we guided last quarter that we have a quarter delay, which is driven by the fact that we had extremely aggressive time lines to recruit 100 and patients in orphan disease with completely new sites, which always takes a bit longer to get those sites up and running. We're very pleased with the recruitment rates we're seeing right now. So we're not guiding to a different time to the readout. We're just looking out obviously to provide investors and all of you a meaningful interim readout. You need a certain number of patients for that. That's why we kind of moved this into Q1 next year. But otherwise than that, the timelines have not shifted or changed, and we're guiding that we're going to complete enrollment by the end of this year. Okay. And then on the gene therapy front, was wondering if you had an update on the collaboration with Spark and then opting into additional indications? Yes. So around the Spark collaboration, as you recall, SPARC licensed ImmTOR for the treatment in combination hemophilia A, and they have the additional right to opt into 4 additional indications by the end of this year. And we will hear and we'll guide to this towards the end of the year once we hear from them. Okay. Thank you. Thanks. Our next question comes from Yuan Zhong of Janney. Please go ahead. Hi. Thank you for taking the question. So on the meeting with the FDA in January, I guess most likely you will not be able to have interim data before the meeting when you meet with the FDA. And if I remember correctly, have you ever had a Phase 2 meeting with the FDA? And if that's the case, what would be a different information that you will be able to provide to the agency? Yes, good question. Just to remind you, we had an Endo Phase II meeting in December of last year, and we obviously are not disclosing our planned discussions with the FDA. And but I think what is important is that the COMPARE trial is independent from the Phase III. I think that is very important. And what we plan is, as Alison mentions, to get final guidance on the Phase 3. Okay. Thank you. This concludes our question and answer portion of the call. I will now turn the call back over to Selective's CEO, Carsten Brunn, for closing remarks. Thank you, operator, and thank you to everyone who joined us this morning. We've made significant progress this quarter as we have achieved critical benchmarks in advancing the Intra platform across chronic refractory gout and gene therapy. We're extremely excited about the continued growth of our company and its technology, and we look forward to continuing development to unlock the broad potential of the ImmTOR platform. That concludes today's call. Thank you.