Earnings Call: Q1 2018

May 9, 2018

Thank you for holding. Welcome to the Selecta Biosciences First 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, and it is being recorded. For opening remarks, I would now like to turn the call over to John Laymon, Selecta's Chief Financial Officer and Head of Corporate Strategy. Please go ahead. Thank you, and good morning, everyone. Earlier today, we issued a press release containing our Q1 2018 financial results and other corporate updates and we filed our 10 Q. The release and 10 Q can be accessed by visiting our website at www.selectabio dot com. I am joined today by Werner Cottrells, our CEO and other members of the management who will be joining us for the Q and A portion of the call. Before we get started, we would like to advise that certain remarks that are 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 by selectabio.com. In addition, any forward looking statements represent the company's views only as of today, May 9, 2018, 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. Now let me introduce Werner, who will kick things off. Thank you, John, and good morning, everyone. I'm proud to say that 2018 is off to a strong start. We recently presented 3 month Phase 2 data at the Pan American League of Associations for Rheumatology or PANLAR and the 2018 Congress for lead product candidate SEL-two twelve for the treatment of chronic severe gout. Those data indicates that our product profile may provide better and more sustained serum uric acid control over time, fewer gout flares and convenient monthly dosing compared with recent data reported for the current FDA approved uricase therapy. We also outlined our plans for 2 additional data readouts from this ongoing trial. First, the expansion data from these PANLAR cohorts will be presented at the European Rheumatology Congress, EULAAR on June 15, 2018 and then data from patients receiving 5 doses of SEL-two twelve are expected to be reported at a medical conference in the Q3. Meanwhile, we remain on track to begin our Phase 3 trial in 2018. And our Phase 1 trial of our next clinical candidate SEL403 for the treatment of patients with mesothelioma is actively enrolling at the National Cancer Institute. While our focus is on the patients that could benefit from this treatment, I do also want to note that data from this trial will present us with a second opportunity to demonstrate translation of our SVP rapamycin technology in a clinical setting. Now starting with SEL-two twelve. As many of you know, we are conducting a comprehensive dose ranging Phase 2 trial for a lead clinical candidate for chronic severe gout, which we believe positions us well for a Phase 3 program beginning later this year. SEL-two twelve is a combination of SVP rapamycin, our novel immune tolerance technology and taxiticase or proprietary pegylated uricase. And SEL-two twelve 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 antidrug antibodies against the enzyme. So let me take a moment to highlight the data we presented at PANLAR last month in Buenos Aires. We believe these data show the potential of SEL-two twelve to meet the unmet needs of patients with chronic severe gout. The SPANLLAR data was obtained from patients that received 3 monthly doses of SEL-two twelve up to 0.15 mgs per kilogram of SVP rapamycin in combination with 0.2 mgs or 0.4 mgs per kilogram of pexiticase. That was then followed by 2 monthly doses of pexiticase alone. The data in summary showed the following. Approximately 75% of evaluable patients maintained serum uric acid level control below 6 milligrams per deciliter during the 3 months of therapy with concurrent mitigation of antidrug antibodies against the paxiticase enzyme. Furthermore, 91% of patients dosed with pexidicase alone in month 4 after the initial 3 monthly dose of SEL-two twelve, maintained serum uric acid control, providing evidence of the ability of our SVP rapamycin platform to induce immune tolerance in a clinical setting. Importantly, the overall incidence of treatment related flares of our Phase 2 trial was about 26%, significantly lower than the incidence of treatment related flares reported by the FDA approved uricase. And as I mentioned earlier, we plan to present an expanded data set of these PANELAR cohorts at the Euler Conference on June 15th and then we will host a conference call to discuss the data on that date June 15th at 8:30 Eastern Time. The strong clinical activity of SEL-two twelve after 3 monthly doses has provided us with the basis to initiate additional patient cohorts receiving 5 monthly doses of SEL-two twelve combination product. In mid February, we began enrolling these new cohorts of patients. These patients are receiving regimens with SVP rapamycin doses ranging from 0.1 to 0.15 mgs per kilogram in combination with 0.2 mgs per kilogram of paxitikase. We plan to present data from these patients at an upcoming medical meeting in the Q3 of 2018. Meanwhile, we are actively preparing for an end of Phase 2 meeting with the FDA, which will define the design of the Phase 3 program. Patients in the Phase 3 trial are expected to be dosed monthly with the combination therapy for the entire 6 month period. We anticipate that the primary clinical endpoint will be serum uric acid level control below 6 milligrams per deciliter, which can be seen rapidly upon dosing, it is easy to measure and it remains strongly correlated with low or negative antibody titers. Beyond 2 placebo controlled pivotal Phase III trials with the endpoint discussed above, we are also considering additional trials such as a head to head study versus Krystexxa and potentially a study to test the clinical activity of SEL-two twelve in patients who have failed KRYSTEXXA therapy as these patients indeed have no other approved treatment options. With that, let me now turn over to our next product candidate SEL403. We in licensed a clinical stage oncology asset called LMB-one hundred from the National Cancer Institute and combined it with our proprietary immune tolerance agents SVP rapamycin. While this recombinant immunotoxin targeting mesothelin holds great promise as an agent for various solid tumors, including mesothelioma, pancreatic cancer and breast cancer, it has historically proven in clinical Phase 1 trials to be highly immunogenic, causing antidrug antibodies in all patients, which uniformly negated the drug's clinical activity in the absence of significant immuno suppressive therapy. In March 2018, the first patient was dosed in the Phase I clinical trial of SEL403 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 1 trial is being conducted under a cooperative research and development agreement with the NCI that is expected to enroll at least 18 patients. The trial will evaluate the safety and tolerability of this treatment and provide data on pharmacokinetics, ADA levels as well as on objective response rate assessments. With that, let me turn the call over to John Lehmann to discuss our first quarter financial results. Thank you, Werner. Selecta reported no revenue for the Q1 of 2018, which is down from approximately $100,000 in the comparable quarter last year. The decline is the result of the reduced revenue recognized from the company's grants and collaborations. Research and development expenses for the Q1 of 2018 were $11,100,000 which is relatively unchanged from the $11,000,000 for the same quarter last year. General and administrative expenses for the Q1 of 2018 were 4,700,000 dollars which compares with $3,900,000 for the Q1 of 2017. The increase is primarily the result of greater headcount and related salaries needed to support a maturing clinical stage public company. For the Q1 of 2018, we reported a net loss attributable to common stockholders of $15,900,000 or $0.71 per share. This compares to a net loss of $15,100,000 or 0.82 dollars per share for the same period in 2017. As of March 31, 2018, we had approximately $83,500,000 in cash, cash equivalents, short term deposits, investments and restricted cash. This is down from approximately $97,000,000 at December 31, 2017. We expect that our cash balance is sufficient to fund operations into mid-twenty 19. Note that the guideline excludes any additional payments that we might receive from Spark or other potential collaborations. That concludes our formal remarks. Now we will open up the line for questions. Operator? We will now begin the question and answer Our first question comes from Carter Gould of UBS. Please go ahead. Thanks for taking the questions. This is Jeff in for Carter. From your point of view, what are the key points of discussion for the end of Phase 2 meeting? Good morning. This is Werner. It will be the conventional questions about the design of the trials, of course, for the pivotal trials. It's pretty clear, I believe, what the endpoints are. And then, of course, we have to think about the power of the trial, not just only for efficacy, but also for exposure in terms of safety. And then in terms of the design, placebo controlled and all of that. So the critical items will be the ones that you normally address in an End of Phase 2 meeting. Great. And then how and when will takeaways from that meeting be communicated? We haven't provided guidance when we do that. As soon as we have that information, of course, we will then come back with the guidance to The Street. Great. Thanks. And then KRYSTEXXA is looking to be a roughly $260,000,000 product right now. I guess just curious on your latest thoughts on the size of the commercial opportunity in GOUT? John, would you take that? Sure. Well, again, we think KRYSTEXXAN, we fully support their efforts to continue to help patients with chronic severe gout. And as you may look and know, we feel like they've penetrated a very small amount of the marketplace. So we think there is a great potential for a therapy that is more efficacious and can be given for a longer treatment period. Also expanded their guidance to peak year sales of something like $750,000,000 And we believe based upon our market research that the market is at least that if not much greater. Great. Thank you. The next question is from Difei Yang of Mizuho Securities. Please go ahead. Hi, good morning and thanks for taking my question. So just a couple. For the 5 combo dose, could you talk to us why you picked the 0.2 mg per kilo on dose, not the 0 point 4? Good morning, Difei. From the data from the ongoing Phase 2 data, we had to make a decision on that dose and it looks like 0.2 would be sufficient to cover a 30 day window. And so we went therefore with that dose in these cohorts. Okay. Okay. Thank you for the color. And then maybe a very generic question that, let's say for KRYSTEXXA, KRYSTEXXA is the competitor. What if KRYSTEXXA add on to immunosuppressant in their dosing regimen? Would that be how would SEL-two twelve be differentiated in that case? John, do you want to take that question? Sure. So Difei, I think we've spoken about it and we often get the question, are we immunosuppressive and we would argue we are not. We're immunotolerant and we believe that our SVP rapamycin platform basically produces T regulatory cells, which allows for the tolerance for highly immunogenic drugs. So I think I would differentiate ourselves that way that we're immune tolerance not immunosuppressive. I think the other question that will come up and obviously we'll have to look at the data as it goes forward is that they're talking about some pretty the drugs themselves in immunosuppressants are not without significant side effects. And so I think to be giving 2 weeks of an immunosuppressive therapy, then 3 months of it in correlation with KRYSTEXXA with the idea that you might be able to lengthen the treatment period, we think will be an interesting proposition as we take a look at side effect profile and efficacy going forward. Thank you. Thank you for the explanation. The next question is from Alex Schwartz of Stifel. Please go ahead. Hi, team. Thanks for taking my question. First off, in your full 5 month sup rapamycin plus pegcitacase combo trial data release, How many patients are you testing? And then a slightly different question, can you give us a sense of how many patients will have completed the full 5 months of the regimen at that time when you release the data? Do you have good visibility into that right now? Or is it too early? John, will you take that? Sure. So Alex, I think guiding on how many patients that we'll be displaying in that Q3 sort of medical meeting, I think is difficult because I think it's obviously an open label trial, but we'll have to find the appropriate meeting and we certainly want to bring enough data so that it's meaty for you all to take a look at. So I think that's number 1. I think when we're talking about the number of patients within the various cohorts, I think what we've guided to is that we're looking at cohorts and potentially multiple cohorts between 0.15 and 0.1 milligrams per kilogram of SVP raphymycin. Within those cohorts, we have the ability to enroll up to 20 patients. And so as we think about it, I think there'll be at least as large as the cohorts that you've been seeing previously in Phase II, but several of the cohorts specifically potentially around cohorts that we think maybe our dose might have larger numbers of patients just to give statistically a better chance for you to evaluate. So I think that's what we've guided and we'll give more guidance as we get closer to when we're going to actually present the data. Okay, that's great. Thank you for taking my questions and The next question is from John Newman of Canaccord. Please go ahead. Hi, good morning, guys. Congrats on the continued progress and thanks for taking my question. So I'm curious, you in your press release this morning, you talk about some additional data that you'll be presenting in terms of the expansion cohorts. I'm just wondering if you can talk a little bit more about what that might look like, the data that you referred to at EULAR? Thanks. Okay. Good morning, John. Sure. So at the PANLAR conference only a few weeks ago, which we also I think webcasted, And a number of patients have not reached month 3, 4, 5 in those cohorts. And so we expect that we will present those data at the EULA conference, so that you will have a much more complete picture of these different patients in those cohorts. Great. And then one additional question, if I may. In your prepared comments, you mentioned that you are still considering at this point head to head study with KRYSTEXXA. I'm just curious, conceptually what that study might look like if it would need to be a large study, if it could be a small study, if that's something that you could run-in conjunction with your Phase III program, if you would wait until after that's completed? Thanks. Sure. No, absolutely, we plan to do that in parallel with the Phase III pivotal trials and those will be most likely placebo controlled. That will be important. Then head to head study will not need to be that large because of the clinical endpoints measured and the significance of that. And so that will be a smaller study. We haven't completed the design of that. But clearly, that will be conducted in parallel and maybe even a bit faster than the pivotal program. Okay, great. Thank you. There are no other questions at this time. This concludes our question and answer session. I would like to turn the conference back over to Werner Cottrells for closing remarks. Thanks, Kate. And again, thanks everybody for your interest this morning. We select that we will be attending and presenting at 2 upcoming conferences that will be the UBS Conference and the again, in the next month, as we will give an update at Euler about the SEL-two twelve, you will have the opportunity to listen in again. So thanks again and maybe we see each other at one of these conferences soon in New York. Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.