Thank you for holding. Welcome to the Selecta Biosciences second quarter 2018 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. It is being recorded. For opening remarks, I would now like to turn the call over to John Leaman, Selecta's Chief Financial Officer and Head of Corporate Strategy. Please go ahead.
Thank you, Steven. Good morning, everyone. Earlier today, we issued a press release containing our second quarter 2018 financial results and other corporate updates. We filed our 10-Q. This release and the 10-Q can be accessed by visiting our website at www.selectabio.com. I'm joined today by Werner Cautreels, our CEO. Other members of the management will be joining us for the Q&A portion of this call. Before we get started, we'd like to advise that certain remarks that are being made during this call about the company's future expectations, plans, and prospects constitute forward-looking statements for the 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 Selecta's most recent quarterly report on Form 10-Q filed with the SEC, which can be accessed at selectabio.com. In addition, any forward-looking statements represent the company's views only as of today, August 8th, 2018. Should not be relied upon as representing the company's views as of any other 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. Now let me introduce Werner, who will kick things off.
Thank you, John. Good morning, everyone. 2018 is proving to be an important year at Selecta as the data from the phase II clinical trial of our lead program, SEL-212, for the treatment of chronic severe gout patients, continue to show improvement in clinical activity, thus providing us the appropriate guidance as we make plans for our phase II program that we expect to begin in the fourth quarter of this year. I will start today by summarizing briefly the expanded treatment data we recently presented for SEL-212 at the European League Against Rheumatism, or EULAR, Annual European Congress in June. Then I will comment on our timeline of anticipated upcoming milestones, including the planned presentation of the five monthly dose data at the upcoming American College of Rheumatology, or ACR, annual meeting to be held October 19 to 24th.
As well as the start of our pivotal phase II program and planned head-to-head trial against KRYSTEXXA, which we plan to initiate in parallel with our pivotal phase II program. Just quickly and for brief background, we are currently conducting a comprehensive dose-ranging phase II trial of our lead product candidate for chronic severe gout. SEL-212 is a combination of SVP-Rapamycin, our novel immune tolerance technology, and pegsiticase, our proprietary PEGylated uricase, and was designed to be the first non-immunogenic version of uricase, which would allow for the effective and safe administration of multiple doses with concurrent mitigation of anti-drug antibodies against the enzyme. In June 2018, we presented new three-month expansion data from patients receiving SEL-212 at the EULAR Congress in Amsterdam.
The data was from patients receiving three monthly doses of SEL-212, with up to 0.15 milligrams per kilogram of SVP-Rapamycin in combination with 0.2 or 0.4 milligrams per kilogram of pegsiticase, followed by two monthly doses of pegsiticase alone. Approximately 80% of 27 evaluable patients had serum uric acid control below six milligrams per deciliter at week 12. By comparison, in a separately conducted and designed study of the only FDA-approved uricase therapy, the KRYSTEXXA TRIPLE study, 44% of evaluable patients had serum uric acid control below six milligrams per deciliter at week 16, as reported also last November at ACR. 33% of the patient population represented by our EULAR data and only 27% of all current patients in the SEL-212 phase II trial experienced gout flares during the first month after treatment, with continued reduction of gout flare rates over months two to five.
This reduced rate of gout flares appears to be substantially lower than the incidence of gout flares reported in clinical trials involving the current FDA-approved uricase and also other uric acid-lowering therapies. Now, as we push to the finish line for the phase II trial, we expect to present data from new cohorts of patients who are receiving five monthly doses of SVP-Rapamycin in combination with pegsiticase at the upcoming ACR meeting, and that will be on October 19th through 24th of this year. These patients are receiving regimens with SVP-Rapamycin doses ranging from 0.1 to 0.15 milligrams per kilogram in combination with 0.2 milligrams per kilogram of pegsiticase. We expect the data from our comprehensive phase II trial will provide appropriate guidance for the selection of the dose regimen that will be taken into the phase III program.
SEL-212's emerging product profile has indicated that SEL-212 may provide better and more sustained serum uric acid control, fewer flares, and with a convenient once-monthly dosing versus the current approved uricase, which is biweekly. We believe SEL-212 has the potential to truly change the treatment paradigm for these severe gout patients, we are working to get this product to those patients as rapidly as possible. We are actively engaged in preparations for the start of the phase II program and plan to initiate patient enrollment in the fourth quarter of this year in a couple of clinical trial sites. Preparations include planning a phase II meeting with FDA. Our plan for patients in the two pivotal placebo-controlled phase III trials will be to dose monthly with the combination therapy for the entire six-month period.
We anticipate enrolling about 150 viable patients in each of the two pivotal trials and expect that the primary clinical endpoint will be serum uric acid control below six milligrams per deciliter, and that measured at months three and six. This can be achieved rapidly upon dosing. It's easy to measure, and it remains strongly correlated with low or negative anti-uricase antibody titers. We expect to report top-line data from these two phase III trials in 2020. Beyond these two placebo-controlled pivotal phase III trials, we are also planning to initiate in parallel a head-to-head trial versus the current FDA-approved uricase, and that is KRYSTEXXA. That study will be designed to have the potential to demonstrate superiority. We plan to report data from this head-to-head trial at the 3-month and 6-month time points and expect this to happen in 2019.
Further market research based on the anticipated product profile derived from our phase II clinical data, both in terms of clinical activity and safety, continues to point to the $1 billion potential of SEL-212. With the seemingly broad applicability of our proprietary SVP-Rapamycin technology platform, which we believe has the ability to unlock the full potential of biologic therapies by mitigating unwanted immunogenicity, we have several promising pipeline programs and many more potential applications in the future. Specifically, our second product candidate, SEL-403, is a combination of SVP-Rapamycin with a clinical-stage oncology asset called LMB-100 that we in-licensed from the National Cancer Institute, or NCI, which is part of the National Institutes of Health. Patient dosing is ongoing in the phase I clinical trial for the treatment of patients with malignant pleural or peritoneal mesothelioma who have undergone at least one regimen of chemotherapy.
This open-label dose escalation phase I trial is being conducted under a collaborative research and development agreement, that's a CRADA, with the NCI. It is expected to enroll at least 18 patients. The trial is evaluating the safety and tolerability of this treatment and will provide data on pharmacokinetics, anti-drug antibody levels, as well as an objective response rate assessment. We will provide further guidance about data disclosure at a future time point. The company is also working with investigators at the NCI to potentially conduct a phase I study of SEL-403 in patients with pancreatic cancer. We are further exploring additional studies in other cancers. In the field of gene therapy, we previously presented data from the 2017 annual meetings of the American Society of Gene & Cell Therapy, ASGCT, and the European Society of Gene and Cell Therapy also.
That data provided evidence of the potential of SVP-Rapamycin to unlock the full potential of this novel modality. The company continues to engage in preclinical work focused on its proprietary product candidate for the treatment of methylmalonic acidemia, as well as in support of its collaboration with Spark Therapeutics. As you can see, there is strong momentum across our organization and pipeline. We very much look forward to our next data readout at ACR in October for SEL-212. Finally, I also wanted to let you know that the board process to replace me post my retirement later this year is progressing. We expect to update you on that in the near future. With that, let me turn the call over to John to discuss our second quarter financial results. John?
Thank you, Werner. For the second quarter of 2018, the company recognized no revenue, which compares to less than $0.1 million for the second quarter of 2017. The decline is the result of reduced revenue recognized from the company's grants and collaborations. Research and development expenses for the second quarter of 2018 were $14.4 million, which compares to $11 million for the second quarter of 2017. The increase is primarily the result of higher clinical costs related to the company's phase II trial of SEL-212, preparation for the start of the SEL-212 phase III program, and incremental headcount-related expenses. General and administrative expenses for the second quarter of 2018 were $4.4 million, which compares with $4.9 million for the second quarter of 2017. The reduction in cost is primarily the result of reduced patent-related costs and contract license fees associated with collaborations.
For the second quarter of 2018, Selecta reported a net loss of $18.8 million, or $0.84 per share, compared to the net loss of $16.0 million or $0.85 per share for the same period in 2017. Selecta had $66.2 million in cash equivalents, short-term deposits, and investments as of June 30th, 2018, which compares with a balance of $83.1 million at March 31st, 2018. Selecta expects that its cash equivalents, short-term deposits, and investments will be sufficient to fund the company's operating expenses and capital expenditure requirements through the end of the third quarter of 2019. The current operating plan accounts for funding in preparation for the planned phase III clinical trial for SEL-212, and initial patient enrollment in a couple of the phase III clinical trial sites.
The company will require an additional equity offering or other external sources of capital to expand enrollment in the phase III trial and to conduct the planned head-to-head trial against KRYSTEXXA. Tomorrow, August 9th, we will be at the Canaccord Genuity Annual Growth Conference in Boston, and at the Janney Montgomery Scott Healthcare Conference in New York City on September 17th. We hope to see many of you there. That concludes our formal remarks. We will open the line up for questions. Operator?
Thank you. 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're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. Our first question comes from Chad Messer with Needham & Company. Please go ahead.
Great. Good morning, and thanks for taking my questions. Can you just start out with the five-dose combination data that we're waiting for in October? Could you maybe give us some context on where this fits in the planning for the phase III? Is it safe to say that 0.1 and 0.15 mgs per kg are the two most likely doses under consideration for pivotals?
Thanks, Chad. This is Werner. Yes, absolutely. I think what you will see at ACR is indeed five monthly doses of the combination. The dose range that will be shown is from 0.1 to 0.15, and that with a 0.2 of the enzyme. I think it's a fair assumption that will be in the dose regimen that we will take into phase III.
Okay. Just on the phase III program, another study you've contemplated including in the future is also in KRYSTEXXA failures. Didn't hear any mention of that in your plans today. Is that off the table?
No, we maintain that idea. We have to do the appropriate pre-clinical work before we can engage in that, and that is certainly something that's still in our plans.
Okay. Great. Look forward to the data in October and hearing about your phase III plans.
All right. Thanks, Chad.
Our next question comes from Difei Yang with Mizuho. Please go ahead.
Hi. Good morning, and thanks for taking my questions. Just a couple. The first one is on KRYSTEXXA head-to-head study. Would you give us a little bit more detail on how many patients will the trial include, and other than uric acid controls, what other measurements you're hoping to help to differentiate your product versus KRYSTEXXA?
Okay. Thanks, Difei. John, will you take that?
Difei, good morning. I think as we've described previously, a lot will have to do a little bit with the efficacy difference that we continue to see between ourselves and KRYSTEXXA. I think we've guided, and again, we haven't set a number in the KRYSTEXXA trial, but right around 100 patients sounds right. Equal parts in both KRYSTEXXA and SEL-212 for the head-to-head. I think we've powered it through statisticians. We'll finally do that as we have the final phase II data and decide on what doses we'll look at in the head-to-head.
I think as we take a look at basically what measures we'd look at, obviously serum uric acid is going to be the primary endpoint. I think very similarly to what we would see in the phase III, we would also probably look at gout flares as another objective as we look between the two.
Okay. Thank you.
Yeah. We might also look at tophi as well, but I think that's, again, something that we're contemplating.
Okay. How important is it for the rate of patients who has anaphylaxis reactions to the injection or to the infusion?
It's a great question, Difei. I think as we've shown and that we've previously sort of mentioned, I think our rate, and I think we've had over 380 doses of our product and only eight sort of anaphylactic reactions. I think when you look at our rate of anaphylaxis, we feel pretty good about that, especially as you look at the comparison on the label versus our competitor. I think it's important, but I think we've obviously, and I think both now and in the phase III, we can show we feel very good about our infusion reaction and anaphylactic rate as we go forward.
Okay. Thank you.
Our next question comes from Carter Gould with UBS. Please go ahead.
Great. Thanks, guys, for taking the question. I just wanted to dig in a little bit more to the upcoming readout and maybe if you could just set a little bit of expectations in terms of the number of patients we'll see, any commentary that you'll definitely have sort of adequate follow-up
Obviously, you posted pretty good data, what we saw at EULAR. How should we think about the upcoming readouts relative to the benchmarks of that EULAR data set? I have a follow-up.
Thanks, Carter. This is Werner. By the time we will show the data, I think there would be between 30 and 40 patients that are dosed in these five monthly doses at a certain dose range. You can expect that we will present those data there. In terms of going back to EULAR, we expect that the data that we will show will be in that order of data that we have shown at EULAR.
Okay, great. As far as the end-of-phase II meeting with FDA, has that already been scheduled? Are there any other sort of inputs or other work that needs to be done besides sort of getting the upcoming data, meeting with FDA before you can move into phase III?
Mm-hmm. We are very actively preparing for all of the above. That includes, by the way, not only just internal processes, but that also has included extensive consultation with key opinion leaders that will eventually become also our investigators. Everything that you can think of that needs to be put in place to start a phase III in terms of supplies, materials, all of that is actively ongoing.
Okay, great. Just last question from me. Your competitor in this space has been very vocal on the opportunity in the nephrology segment. Can you maybe talk about how that kind of fits into your billion-dollar commercial potential that you kind of put out there for 212?
Okay. Thanks. Stephen, who is our Chief Commercial Officer, will take that question.
Yeah, thanks for the question. Right now, I think our main focus forward going to commercializing this would be focused on the rheumatologists, who currently are treating the majority of these severe gout patients. I think in nephrology, it's an interesting proposition, but probably comes with its own challenges. Again, I think making sure those patients are actually referred to the rheumatologist for appropriate treatment is, in my opinion, the best strategy to move forward with.
All right. Thanks. Congrats on all the progress.
As a reminder, if you have a question, please press star then one. Our next question comes from Yun Zhong with Janney. Please go ahead.
Hi. Thank you for taking the question. First one on the head-to-head study with KRYSTEXXA. Wanted to know your thinking behind conducting the study in parallel with your phase III program instead of waiting for the phase III program to proceed first, then to initiate that study. Do you expect the study to have any impact on patient enrollment? I assume that all studies will probably target the same patient populations.
We continue to plan to continue to conduct these trials simultaneously. Indeed, we have to be careful of how to plan for patient inclusion. As far as we know, there shouldn't be any interference in terms of the placebo studies versus the active studies. We will be careful to make sure that that doesn't happen. John, anything to add?
I would just add, I think you asked about the strategy of doing the head-to-head versus waiting for the phase III trial. I think it's twofold. One is I think we have an opportunity based on the efficacy difference that we see between KRYSTEXXA and SEL-212, I think, to do a robust study that we're very confident in. I think the fact we're doing a head-to-head shows our confidence in our drug. I think secondarily, it allows basically as we proceed through the phase III program for data points in 2019, as we're going to be showing both three-month and six-month superiority, which we feel again, very confident about.
Lastly, we have Stephen over here, our Chief Commercial Officer, by doing this study in the same way as we'll be doing the phase III, even though it's not pivotal, it will allow that for a marketing that Stephen can use with the sales force and others to show patients how good SEL-212, I think, can be for them in their treatment of chronic and severe gout. That was the rationale for doing all of that.
I see. About the end of phase II meeting with the FDA, I believe you said that the two phase III studies will have 150 patients in each. Besides the dose, anything else that you needed to finalize with the FDA regarding the design of the study?
No, we have been working with our statisticians and our clinicians to put those designs together, and the whole purpose of the end-of-phase II meeting is indeed to present those studies and those designs and obtain their endorsement.
Okay. Thank you for taking the questions.
Showing no further questions, this concludes our question and answer session. I'd like to turn the conference back over to management for any closing remarks.
Thanks, Steven. Thanks everyone again for your attendance and for your questions. We look forward to meet you maybe at one of the upcoming healthcare conferences tomorrow at Canaccord and in September at the Janney Montgomery Scott Healthcare Conference. Thanks again.
The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.