Connect Biopharma Holdings Ltd (CNTB) 2021 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Connect Biopharma First Half 2021 Financial Results Conference Call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your host today, Matt Steinberg of FINN Partners. Please go ahead.

Thank you, operator. And welcome to Connect Biopharma's First Half 2021 Financial Results Call. Joining me today is Dr. Zheng Wei, Co-Founder and CEO; Selwyn Ho, Chief Business Officer; and Eric Hall, Interim CFO.

Today's call is being webcast and will be posted on the company's website for playback. During today's call, management will provide an update across our pipeline programs and review our first half 2021 financial results. Following our prepared remarks, we will open the call to Q&A.

Before we begin, let me briefly review our forward-looking statements. During today's call, we will make various forward-looking statements. Investors are cautioned that our forward-looking statements are based on current expectations and are subject to risks and uncertainties that could cause actual results or outcomes to differ materially from those indicated by our forward-looking statements. Please read the safe harbor statement contained in our press release that we issued yesterday afternoon as well as risk factors contained in Connect Biopharma's registration statement on Form F-1 for a more complete discussion of these risks and uncertainties.

Now I'd like to turn the call over to Wei.

Thank you, Matt, and good day to everyone. I'd like to welcome everyone to our first financial results conference call. Before providing an update to each of our exciting clinical trials and recent progress, let me first provide a brief overview of our company and the team.

Connect Biopharma is a global clinical stage biopharmaceutical company focused on improving the lives of patients by developing therapies for the treatment of T cell-driven inflammatory diseases. Connect has a growing team of more than 80 full-time employees comprised of seasoned industry leaders with significant global experience in immunology, drug discovery and development.

Headquartered in China, we have ongoing clinical development and operations in the U.S., China, Australia and Europe. We specialize in designing and developing product candidates that modulate the immune system, with a particular focus on T cells. By leveraging our internal expertise and unique insights in therapeutics targeting of the immune system, our goal is to identify highly differentiated, potentially best-in-class product candidates against validated targets, as well as potential first-in-class molecules against novel targets.

We focus on targeting inflammatory diseases with significant unmet medical need, affecting millions of patients worldwide. Since our founding, we have advanced 2 internally-discovered molecules into Phase II clinical development. The first being our lead product candidate that is designed to treat atopic dermatitis or AD, severe persistent asthma, chronic rhinosinusitis with nasal polyps and other type 2 inflammatory diseases.

Our second clinical candidate is an immune modulator for the treatment of inflammatory bowel disease, including ulcerative colitis and Crohn's disease. We also have a third molecule that recently entered in a Phase I trial in healthy volunteers for the potential treatment of chronic inflammatory pruritus. Our innovative approach to drug discovery is designed to speed up the identification of potentially highly differentiated immune modulators.

Now let me turn to an update on our recent milestones and pipeline updates. In March, we completed an IPO listing of American Depository Shares on the NASDAQ Global Select Market. The offering raised net proceeds of approximately $204.5 million. We significantly enhanced our cash balance, enabling us to invest in and advance our pipeline. Our strong investor support is further underscored by the $440 million raised today from top-tier investors, which includes $135 million from a Series C financing that we completed in December 2020.

In addition to this successful listing, we have expanded our executive leadership team, the hirings of Dr. Selwyn Ho, as Chief Business Officer; Mr. Yau Wing Yiu, Felix, as our Vice President, Finance; and Mr. Jiang Bian, as General Counsel and Chief Compliance Officer, are important steps in advancing our organizational growth strategy. Each of our new team members have extensive experience in their respective fields, and we look forward to their many contributions to our growing team.

In January, we established a Scientific Advisory Board, which is comprised of clinical development and program mitigation experts with deep experience in dermatology, inflammatory bowel disease, asthma and other diseases that have resulted in many successful drug approvals. These 7 world-class experts have already provided invaluable insights, driving our efforts in building a highly efficient discovery and development organization. We thank them for their support as we continue to advance our clinical pipeline, which I will now discuss in greater detail.

We have a pipeline of potentially highly differentiated product candidates against validated targets. And for all these, Connect has full global development and commercialization rights. Starting with our lead product candidate, CBP-201 is currently in a Phase IIb trial for the treatment of adult patients with moderate-to-severe atopic dermatitis. The global market size for atopic dermatitis is large and growing.

At the end of 2020, we estimate there was approximately $10.4 billion and is expected to grow to $19.3 billion by 2025. CBP-201 is a novel human monoclonal IgG4 antibody directed against IL-4R alpha. A common subunit for IL-4 and IL-13 receptors, which is a validated target for the only currently FDA-approved Biologic therapy.

In a randomized placebo-controlled Phase Ia trial in healthy volunteers, administration of a single dose of CBP-201 was well tolerated and led to suppression of a serum biomarker of inflammation. In a randomized placebo-controlled Phase Ib trial in 80 patients, we observed meaningful results with demonstrated rapid improvements in signs and symptoms of itching or pruritus, AD disease severity and patient quality of life.

Although no head-to-head trials have been conducted, we believe that CBP-201 may have 3 potential advantages over the current standard of care. First, it binds to a reason of IL-4R alpha that is distinct from that bound by dupilumab and associated with high binding affinity and potency for IL-4R alpha, which we believe may lead to improved clinical response.

Second, it may have a faster onset of action as demonstrated by data in a Phase Ib trial. And finally, it may provide a longer duration of drug exposure after subcutaneous injections as evidenced by data from our Phase Ia trial and unpublished data from a Phase Ib trial.

In April, we announced that we completed full enrollment of our Phase IIb trial. This global, randomized, double-blind placebo-controlled trial to assess the efficacy, safety, PK and PD profile of CBP-201, was designed to enroll 220 patients and is being conducted at 60 sites across the U.S., China, Australia and New Zealand.

In this trial, CBP-201 or placebo was administered to eligible adults with moderate-to-severe AD for 16 weeks with 8 weeks of follow-up. We remain on track to report top line results from this trial in the fourth quarter of 2021. We also plan to initiate a China stand-alone pivotal trial for CBP-201 in 80 patients in the third quarter of 2021 as part of our country's specific development strategy.

In addition to atopic dermatitis, we are conducting clinical trials to assess the potential of CBP-201 in other diseases driven by the dysregulation of the TS2 immune response where dupilumab has already demonstrated efficacy. These include Phase II trials of CBP-201 in asthma and chronic rhinosinusitis with nasal polyps.

In May, we dosed the first patient from the Phase II clinical trial evaluating CBP-201 in adult patients with moderate-to-severe persistent asthma. We believe that the global market opportunity for asthma biologic is growing rapidly with a total market size projected to grow to $6.1 billion by 2024.

This asthma trial is a global, randomized, double-blind, placebo-controlled trial to assess the efficacy and safety of 2 doses of CBP-201 administered subcutaneously to eligible patients. It's expected to enroll approximately 300 patients across 80 study sites and is divided into a treatment period of 24 weeks and a follow-up period of 8 weeks. With regard to our global Phase II nasal polyps trial, we remain on track to dose the first patient in the second half of 2021.

Now turning to our second molecule that is in Phase IIb, CBP-307 is a potentially differentiated, orally-administered immune modulator for the treatment of inflammatory bowel disease. It's a small molecule modulator of S1P1, a regulator of T cell mobilization out of lymph nodes into the periphery. Blocking S1P1 leads to reductions in the levels of these T cells in circulation and a reduction at the site of inflammation. S1P1 is a validated therapeutic target with 3 drugs approved to treat multiple sclerosis, and the FDA approved one of these drugs for UC in May 2021.

The estimated global market for UC was approximately $5.4 billion in 2020. And the estimated global market for CB was approximately $7.4 billion in 2019. We believe that CBP-307 as an oral therapy has the potential to address these diseases due to its potency, specificity, PK and PD properties observed in our preclinical studies, and early clinical trials.

We are conducting a global Phase IIb trial in UC and anticipate reporting top line results in the first quarter of 2022. In addition, we intend to initiate a global clinical trial in CD based on the preliminary clinical responses observed in a limited number of patients in an earlier CD clinical trial.

Finally, we initiated a Phase I trial in healthy volunteers to explore the potential of CBP-174, a peripherally-restricted histamine 3 receptor antagonist for oral administration to treat chronic itch associated with skin inflammation. We believe that the ability to quickly alleviate itch in the setting of AD has the potential to complement the antipruritic effect of disease-modified IL-4 alpha blockers, such as CBP-201 or dupilumab.

Our preclinical model have indicated that CBP-174 led to reductions in scratching within the first 30 minutes of dosing, which could potentially translate to rapid reduction in pruritus in the clinic. This randomized, double-blind, placebo-controlled, single ascending dose trial in healthy volunteers aims to evaluate the safety, tolerability and PK of CBP-174 given orally. Following dosing, each volunteer will be followed for up to 7 days. We expect to report top line results in the second half of 2021.

To summarize, the first half of 2021 has been a period of significant progress for Connect. Highlights include our initial public offering in March, and execution against our objectives and strategy despite the uncertainties stemming from the global pandemic. We now have several important upcoming data readouts expected in the second half of 2021 and into the beginning of 2022. We believe our growing body of evidence will validate our approach in developing differentiated therapies for T cell-driven inflammatory diseases with significant unmet medical need.

Now I would like to turn the call over to Eric Hall for an overview of our first half 2021 financial results.

Thank you, Wei, and good morning, everyone. Yesterday, we filed our Form 6-K for the 6 months ended June 30, 2021, which contains detailed financial results and is available on the SEC and Connect websites. Although I'm not going to review our detailed results during today's call, I will briefly discuss our cash position and the strengthening of the balance sheet.

With the successful listing of our American Depository of Shares, or ADSs on NASDAQ in March 2021, we raised net proceeds of approximately USD 204.5 million or RMB 1,320 million. Supported mainly by these proceeds, we had cash and cash equivalents of RMB 2,025 million or USD 313.5 million as of June 30, 2021, compared to RMB 1,010.1 million as of December 31, 2020.

During the period ended June 30, 2021, net cash used in operating activities was RMB 252.8 million or USD 39.1 million, compared to RMB 53 million in the prior year period. The increase in the use of cash was due primarily to increased R&D and administrative expenses as well as the expansion of our clinical trials and development of additional pipeline therapies. We believe based on our current operating plan and the expected expenditures that our existing cash, cash equivalents and short-term investments in wealth management products will be sufficient to meet our anticipated cash and capital expenditure requirements for at least the next 12 months.

That concludes our prepared remarks. Operator, you may now open the call for questions.

(Operator Instructions) Our first question comes from the line of Kelly Shi with Jefferies.

This is Hao calling in for Kelly Shi. Congrats on the progress. So maybe 2 questions from my side. First is for the Phase IIb CBP-201 trials. What -- based on maybe your feedback on the KOLs, what efficacy and safety profile would make CBP-201 stand out versus DUPIXENT and what's the efficacy premium that CBP-201 needs to demonstrate to sort of stand out?

And the second question is given a stand-alone CBP-201 trial initiated in China, could you help us to understand the development plan of CBP-201 in China? And what may be required for the potential BLA submission in the future?

Thank you so much for those questions. The CBP-201 Phase II trial, as we mentioned earlier today, that it's already -- we have completed the enrollment. So we are expecting data readout for -- in the fourth quarter of this year, and we're looking forward to the very exciting time to share our data.

Now as we mentioned earlier that CBP-201 does have a number of characteristics that gives the confidence to expect they will produce positive data going forward. And I'm going to turn this to Selwyn to address the question and also the question on the China stand-alone study. Selwyn?

Thank you, Wei. And thank you, Hao, for the question. So 3 parts of that. So the first question you had was regarding what do KOLs think with regards to the degree of differentiation required to be successful, which was, I think, related to your second question about how we've held that, is that correct?

Yes, that's correct.

Okay. So as you're aware, the trial design for the Phase IIb study has really 3 objectives. The first one is we are doing dose ranging and therefore, want to establish between the 3 doses that we have, which is a 600-milligram loading dose followed by a Q2 300-milligram dose every 2 weeks. The 600-milligram loading dose followed by a 150 milligrams every 2 weeks, and then the 600-milligram loading dose followed by a 300 milligrams every 4 weeks.

So with those doses, we hope to be able to replicate, obviously, what we've seen in Phase I and as we mentioned, we believe that we have a signal for potential superiority when you look at it side by side or greater efficacy at least. We also hope that we're able to replicate the demonstration of rapid onset of action as we've seen in our Phase Ib study.

And finally, this is the first time that we'll be dosing the Q4W dosing regimen. So as Wei mentioned, we hope that we'll be able to show an extension of the dosing interval, with a similar type of efficacy profile, but using less frequent injections.

When we've spoken to KOLs regarding this type of study design and what would appear to be different, it does really depend on the measures that you're looking at and the outcomes. But generally speaking, a 7%-plus difference on something like the EC75 or the IGA 01 would start to convince people that there may be some differences if you had put these properly in a head-to-head study. Clearly, we'll be doing on a side-by-side basis. And I think that's our philosophy as well. We know we're very much in line with what the KOLs are saying. So a 7% plus would be something that we would hope to be able to demonstrate.

Now of course, there's multiple scenarios, and we're obviously looking at not just efficacy superiority, but as we said, demonstrating that rapid onset of action and also demonstrating potential greater convenience by using Q4W. So that's kind of the way we're thinking about the study. Clearly, we'll have the results we have in quarter 4 this year, and we'll be able to talk about that more.

Your other question around the China study, as Wei has mentioned, we have planned to initiate that study in the second half of this year. You may have seen that the study has now been posted on clinicaltrials.gov. And so the study design has been demonstrated there. It's basically a multi-center, randomized controlled, clinical study. Again, looking at adult patients with moderate-to-severe atopic dermatitis.

We estimate that the potential enrollment required will be around about 250 patients. In the initial 16-week phase, we'll be looking at a dose of CBP-201 versus placebo. The idea of this study, as we've described before, is that we believe that this, combined with the evidence that we generated from the global Phase IIb study in atopic dermatitis, which does have Chinese patients recruited, will deliver a package of evidence that we believe may help to advance and accelerate the submission and then ultimately, hopefully, the approval in China.

Our next question comes from the line of Thomas Smith with SVB Leerink.

Congrats on all the progress. A couple of questions on our end. On the upcoming Phase IIb atopic derm data for 201, you have trial sites in the U.S., China, New Zealand and Australia. At this point, do you have visibility into the regional makeup of patients who are in the study? Are most of the patients coming from the U.S. or from Asia? Or if you don't have visibility, can you talk about your expectations for the regional makeup of patients in the study?

Thank you, Thomas. Yes, and I think we can share a little bit about what we know so far. This is a -- first of all, a global study enrolling patients in these 4 countries. And the study, as we said earlier, has been going well, and we have completed enrollment. Our expectation is that the majority of the patients in this study will come from the U.S. As you probably know that we started the study from the U.S. side and then some other countries that followed the initiation.

So in the end, we expect to have a majority of patients from the U.S., but each of this country will have some contribution. Selwyn, do you have anything to add too?

No. That's exactly right, Wei.

Okay. Got it. And then on the pathway for 201 in China in atopic derm, can you just give us an update on your recent regulatory interactions? And do you think is it possible to seek breakthrough therapy designation with your current data set? Or is that perhaps something that you'd look to do once you have the Phase IIb dataset?

So let me quickly kind of address this first, and then Selwyn can expand if need to. So again, this is a trial -- we call it a pivotal trial, because we -- so the model, the started design with what we understand in previous examples of trial sites and design that would allow products to be approved in China.

And so we will be able to get our top line data from our IIb trial, the global trial, that has all the different dosing arrangements. And as you know that, that study also includes a significant number of patients from China. And so the China stand-alone study will then expand on those observations as well. So that is sort of the idea going into this.

With respect to the breakthrough therapy status, certainly, we do not have to wait until the completion of the China stand-alone study to apply. I think if we see significant signals that point to a direction of excellent efficacy or onset or some other parameters. Yes, we do have the ability to apply for breakthrough status. As you said that -- as you understand that dupilumab, right now, is the only IL-4 receptor alpha antibody available in China. Selwyn, do you have additional comments?

Thanks, Wei. And Tom, thanks for the question. I think the only thing I'd add is the regulatory pathway for accelerated trial and approval in China, as you mentioned, the obvious route that could be considered would be breakthrough therapy. And in terms of qualification criteria, yes, we would probably have to demonstrate evidence of some clinical superiority.

And therefore, looking at the data time lines and the cadence, as Wei said, we don't need to wait to start the study. But once we do have the Phase IIb data from the global study, given that there are numbers of China patients within that study, we can review the data and if applicable, apply for that based on that criteria.

(Operator Instructions) Our next question comes from the line of Joe Catanzaro with Piper Sandler.

Congrats on all the progress. Just want to follow up on the expected Phase IIb AD data later this year. Could you maybe help set expectations around what we should expect to see in the top line release? Should we expect to see details on absolute number of IGA responders, the EC75 responders, insight into other secondary endpoints, week 4 time points. Just want to get a sense of what we should expect to see? And I have a follow-up.

Thank you, Joe. Thank you for the question, and I'll have Selwyn address this question.

Thanks, Joe, for the question. So expectation-wise, at the moment, we're still clarifying the exact readout time lines for the study and working with our partner, CRO, to determine what will be available at which point. The expectations that we'd like to set is that at the bare minimum, we will obviously say whether or not we've hit the top line or not. And as you're aware, the primary endpoint is based on baseline change from EC at week 16.

We hope to be able to demonstrate and reveal other secondary end points pretty much similar in the way that we discussed the Phase Ib readout in January last year. But at this point in time, I can't absolutely confirm that because we're still in discussions with CRO.

Okay. Got it. Fair enough. And that's helpful. And then my follow-up, as we think about China, I think Sanofi had commented earlier this year that the early AD launch for DUPIXENT within China was exceeding its early expectations. Wondering if you heard anything or learned anything around that launch that you could speak to as we think about a potential future launch for CBP-201?

Thank you. And Selwyn will also answer this question.

So Joe, obviously, we believe that the entry of the biologic in China is great for patients there. Certainly, with dipulimab being in the same class as ourselves. We feel that a lot of work has been done now by Sanofi to develop the marketplace to get access for dipulimab to patients.

We recognize and reflect on the same information that you've probably seen and heard, which is that the launch has met or even exceeded their expectations. We're hearing that the patient access is gradually improving, given the recent NRDL. And we hope to be able to leverage that, because they will be doing some great working -- providing that access and getting the product out to patients through the hospital systems and through their various channels.

In terms of additional information, I'd say that we're monitoring this closely. We expect them to announce the results over time and call out the China performance, because it's an expanding market. And we hope that our success is clear, basically, for the benefit of patients, but also it allows us to confirm the potential for 201 in China, should we be able to demonstrate our hoped for efficacy in our Phase II trial.

Okay. Got it. That's helpful. Oh, go ahead.

And just one thing to add too is that the Sanofi news is obviously also a very good news, I think, for something like Connect that's developing IL-4R alpha blockers for Chinese patients. And I think that from what we see on the ground, we do have a sense that there are a lot of patients there that really are looking for efficacious therapy like IL-4R alpha blockers and we can see that from the enthusiasm of patients coming to participate in clinical trials. And so I think the signal that we're seeing here is fairly positive.

The other thing we are pleased to see is that unlike some other therapies, where it already has been a crowded space in terms of the same category of products competing there in China, the IL-4R alpha blocker is still, right now, there's only one approved drug there available. And given the number of patients in China, we are really optimistic about what we can do with a product like CBP-201 in China.

That concludes our question-and-answer session. I would now like to turn the call back to Wei for closing remarks.

Thank you. It has been an exciting first half of 2021 for Connect Biopharma. We transitioned to being a public company and strengthened our financial position with our IPO, completed enrollment of our Phase IIb trial in AD, initiated 2 clinical trials and expanded the talent of our executive leadership team.

Looking ahead, we have multiple clinical milestones anticipated in 2021 and 2022, including data readout for CBP-201, CBP-307 and CBP-174. Our patient-centric focus gives our team the motivation to develop potentially best-in-class and first-in-class product candidates targeting inflammatory diseases with significant unmet medical need. We look forward to updating you on these important readouts in the coming months.

Thank you for joining us today, and thank you for your continued support.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.