Earnings Call: Q1 2019

May 9, 2019

Welcome to the Selecta Biosciences First Quarter Financial Results Conference Call. At this time, all participants are in a 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 would now like to turn the call over to Elana. Please go ahead. Thank you, and good morning, everyone. Earlier today, we issued a press release containing our Q1 2019 financial results and other corporate updates and we filed our 10 Q. This release and the 10 Q can be accessed by visiting our website at www.selectabio.com. I am joined today by Carsten Brunn, our CEO and Steven Smolinski, our CCO. Before we get started, 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 CureCN, the 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 Selective's most recent quarterly report on Form 10 Q 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, May 9, 2019, and should not be relied upon as representing the company's views as of any subsequent date. While Selecta may elect to update these forward looking statements at some point in the future, it specifically disclaims any obligation to do so even if management's views change. And now let me introduce Carson, who will kick things off today. Thank you, Leland, and good morning, everyone. We've made strong progress as we continue to develop our ImmTOR platform, lay the groundwork for the upcoming milestones that are anticipated later this year. In late March, we announced initiation of our 6 months head to head COMPARE trial designed to evaluate our lead product candidate SEL-two twelve compared to KRYSTEXXA in adult patients with colic refractory gout. Patient enrollment is ongoing and if successful, this trial will give us an opportunity to demonstrate the superiority of SEL-two twelve. The Underleaf program in gout, we believe that there's vast potential for Intra platform technology and are encouraged by its ability to induce tolerance. We believe ImmTOR can potentially allow for the full benefit of biologics, in particular, in the redosing of AV gene therapy. We believe that when an AAV based vector is administered in combination with ImmTOR, there's potential to induce immune tolerance to the vector enabling redosing to provide sustained therapeutic efficacy over time. We recently validated this approach with new preclinical data presented at the ASGCT 22nd Annual Meeting in April. Additionally, the ability to redose has the potential to increase the proportion of patients able to achieve their critical levels of the transgene expression and is particularly important in young patient populations, while at the same time also avoiding potential toxicities associated with large vector doses. Also for gene therapy program last year, we announced a collaboration with the European Consortium, CureCN, for the use of our INTRO technology in combination with their AAV gene therapy in Crigler Najjar Syndrome, a rare genetic disorder characterized by inability to properly convert and clear bilirubin from the body. The work on this program continues to progress. And before I hand it over to Steven to go into more detail on our GARD program, I'd like to highlight some recent corporate updates. In March, we strengthened our management and clinical teams with the appointment of Elona Kogan as General Counsel and Corporate Secretary and Horacio Plotkin as Head of Clinical Development. Both Ilona and Horacio have already made important contributions to the company and I'm thrilled to have them part of the team. With that, I'd like to hand over the call to Stephen. Thank you, Carsten. As Carsten mentioned, we believe that the SEL-two twelve has the potential to address several unmet needs in chronic refractory double patients, including sustained serum uric acid reduction, reduced painful flares and more convenient once monthly dosing. As a reminder, SEL-two twelve is a combination of ImmTOR, our novel immune tolerance technology and pegadricase, our proprietary pegylated uricase. In March, we announced the initiation of our 6 month head to head COMPARE clinical trial against the current FDA approved uricase therapy KRYSTEXXA, which is designed to compare the efficacy and safety of SEL-two twelve to KRYSTEXXA in adult patients with chronic refract freak out. Patient enrollment of trials ongoing and we expect to enroll 150 patients. The primary endpoint is the maintenance of serum uric acid levels of less than 6 milligrams per deciliter at 6 months. We anticipate providing an interim 6 month data readout in the Q4 of this year and plan to announce a full statistical security data analysis in the Q1 of 2020. The interim results of the COMPARE trial are expected to inform the design of the planned Phase 3 clinical trial, which we plan to initiate in the Q4 of this year. In terms of the market potential, there are roughly 160,000 patients in the U. S. With chronic refractory gout and only a small percentage are currently being treated by rheumatologists. As we develop SCL-two twelve, we are looking for consistent SUA control over 6 months, low flare rates and more convenient monthly dosing. Our product has the potential to address currently identified unmet needs in this patient population and represents over a $1,000,000,000 market opportunity. With that, let me turn the call over to Carsten to discuss our Q1 2019 financial results. Thank you, Steven. Revenue recognized for the Q1 of 2019 was less than $100,000 and was for shipment order under our collaboration agreement with Spark, which compares to no revenue recognized for the Q1 of 2018. Research and development expenses for the Q1 of 2019 were $7,400,000 which compares to $11,100,000 for the same period in 2018. The decrease was driven by reduced salaries and benefits as a result of our headcount reduction at the beginning of the Q1 of 2019 combined with expenses incurred for both our Phase 2 and Phase 3 clinical programs for SEL-two 212. General and administrative expenses for the Q1 of 2019 were $4,500,000 which compares with $4,700,000 for the same period in 2018. The reduction in cost was primarily the result of reduced consulting fees. For the Q1 of 2019, Selecta reported a net loss of 12,100,000 dollars or $0.31 per share compared to a net loss of $15,900,000 or 0.71 dollars per share for the same period in 2018. As of March 31, 2019, we had approximately $48,700,000 in cash, cash equivalents, short term deposits, investments and restricted cash. We continue to expect that our cash balance is sufficient to fund operations into the Q1 of 2020. In summary, we're really excited about our unique platform which has broad potential. Based on our data and feedback from physicians, we are particularly excited about our late stage asset for chronic gout and looking forward to announcing the interim COMPARE data in the Q4. And additionally, we are eager to allot the value of our technology with the potential to redose in AAV gene therapy. That concludes our formal remarks. Now we'll open the line for your questions. Operator? Thank you. We will now begin the question and answer Our first question comes from Difei Yang with Mizuho Securities. Please go ahead. Annie, good morning and thanks for taking my question. So a quick one, we just came back from ASGCT with regards to potential retreatment of gene therapy. Carsten, would you tell us a little bit of the difference between using naked rapamycin and nanoparticle encapsulated rapamycin, how they behave different in the gene? That's a great question and thanks for the question. I think the fundamental difference is actually the mode of action. So the encapsulated rapamycin is taken up through the spleen and selectively induces T vector cells, which works in our gout program. We've seen this in the clinic and we hope to see the same for our gene therapy program as well. So is it different mechanism to tolerogenic versus free bupomycin, which is immunosuppressive. Thank you. And another question related to KRYSTEXXA. I think in your earlier presentation, you talked about during the 1st month of 212 injections, there were roughly 32% of the patients see flares and do you have the apple to apple number for KRYSTEXXA? Thank you. So, I don't know the apple to apple numbers top of mind, but you can see in the KRYSTEXXA PI what the actually the overall cloud players are, which are in the high 70s. Right. And again, most players Moncrestex are seen during that 1st month and into the 2nd month of treatment. And again, when you look at our data, the fact you see the same thing, but you should see that 33% during month 1 and then it tapers off as you get further into the treatment. Thank you. Thank you, Difei. Thank you, Difei. And I think just to add, we think it's just a major differentiator to reduce scalp flares because they oftentimes lead to hospitalization actually of patients. So I think that's something that I highlight further down the road as well. So thanks for the question. Our next question comes from Derek Archila with Stifel. Please go ahead. Hey, good morning guys and congrats on the progress. Carson, just two questions for me. Maybe you can just give us a little bit of color on where we stand as from an enrollment standpoint for the COMPARE study and then just kind of thoughts on the appetite among strategics potentially partnering with you on the ImmTOR platform? Thanks. Thanks, Derek, and thanks for your questions. In terms of enrollment, we're pleased with the progress. As we mentioned, we started the trial late March and we're on track both opening sites but also recruiting patients. And I think what makes this trial unique is that we have 2 active arms. So I think there is a benefit for patients going into this trial. So we're positive and we're on track in terms of recruitment. And in terms of partnering, so I don't want to comment on ongoing discussions, but I can tell you there is continued interest from partners. And I think what makes us unique that we are a platform with applications both on the GAL program, in gene therapy. I think there's a lot of interest around the data that we presented in DC recently. But I think we'll update you at a later stage when we have something specific to talk about, but there is continued interest in our Intra platform. Great, thanks. This concludes our question and answer session. I would now like to turn the call back over to Carsten Brunn for any closing remarks. Thanks so much. Thanks again for joining us today. And I just want to reiterate our excitement around our ImmTOR platform, which we think has unique potential and we look forward to your continued interest. Thanks so much. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.