Entera Bio Ltd (ENTX) 2021 Q2 法說會逐字稿

Good morning, and welcome to Entera Bio's conference call to discuss the financial and operating results for the 6 months ended June 30, 2021. (Operator Instructions)

I would now like to hand the conference over to Ramesh Ratan, the U.S.-based CFO of Entera. Please go ahead.

Good morning, and welcome to the call. Joining me on today's call are Spiros Jamas, our CEO; Arthur Santora, our CMO; and Phillip Schwartz, our President of R&D. A press release announcing Entera's financial and operating results for the first 6 months ended June 30, 2021, was issued earlier today. For those of you who have not seen it, it's available on the Investors section of our website, www.enterabio.com. On our call this morning, we will share with you a business update and review of our financial results, which will be followed by a question-and-answer session.

Before we begin our prepared remarks, I would like to remind you that various statements we make during the call about the company's future results of operations; financial position; our interpretation of data from the recently completed Phase II clinical trials of EB613, including the biomarker data released in the first quarter of 2021; our business strategy and plans and objectives for our future operations, are considered forward-looking statements within the meaning of the federal securities law.

Our forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions and uncertainties. Specifically, developments related to COVID-19 pandemic continue to evolve, and the extent to which the pandemic will impact us in the future will depend on the duration and magnitude of such impact, and on numerous factors that we may not be able to accurately predict. These risks are described more fully in our SEC filings and are available on the SEC's EDGAR system and on our website. We encourage all investors to read our SEC filings.

All the information we provide on this conference call is provided only as of today, and we undertake no obligation to update any forward-looking statements we may make on this call on account of new information, future events or otherwise. Finally, please be advised that today's call is being recorded and webcast.

I'll now turn the call over to Spiros Jamas.

Thank you, Ramesh, and thanks to everyone for joining the call this morning. I joined Entera in January 2021 based on the company's validated technology platform that enables the oral delivery of protein therapeutics and the talented and dedicated team. We have hit several key milestones that have generated value for our shareholders and confirmed my confidence in our team and technology, and believe we're on a path to creating more value.

We are working diligently to protect the intellectual property around Entera's platform. In the second quarter, we announced that the European Patent Office granted a foundational patent, addressing our all-PTH formulations that are currently in clinical development for osteoporosis and HypoPT. Also, in the second quarter we reported the ultimate and scientific validation that our Phase II clinical study of EB613, our oral PTH product for the treatment of osteoporosis, met its primary and key secondary endpoints. There is a linear and statistically significant dose response for PTH dose and the key anabolic biochemical markers, P1NP and osteocalcin; and bone mineral density, the clinical measure of bone density and strength.

The abstract on the 3-month biomarker results was accepted for presentation at the leading clinical bone disease conference, the ASBMR in 2021. I believe these data are supporting business development efforts and will generate future value through strategic collaborations and partnerships. In addition, we have significantly strengthened our balance sheet, and I'm pleased to report a current cash balance of $28.1 million.

The significant potential of Entera's technology platform to give patients a much-needed oral alternative to treatments currently delivered via injection, is supported by data from multiple clinical trials, including the recently announced positive 3-month bone biomarker data and 6-month bone marrow density data from the completed Phase II clinical trial of EB613 in osteoporosis patients; and the data from a Phase IIa study of EB612 in hypoparathyroidism patients that was recently published in the Journal of Bone and Marrow Research.

I'd like to now give you a snapshot of why we think EB613 is a tremendous opportunity in the osteoporosis market. EB613 is an oral formulation of human parathyroid hormone (1-34) or PTH, and is positioned to be the first oral, once-a-day bone-building anabolic product to treat osteoporosis patients. The successful Phase II study has brought EB613 one step closer to potentially becoming available to the estimated 200 million people affected by osteoporosis worldwide.

In the U.S. alone, 54 million Americans have osteoporosis or low bone mass, which places them at an increased risk of developing osteoporosis. 1 in 2 women and 1 in 4 men over 50 years of age will break a bone due to osteoporosis. The therapeutic market is large, estimated at $4 billion annually today. Surprisingly, there are only 3 effective bone building treatments available: Forteo, teriparatide; Tymlos, abaloparatide; and Evenity, romosozumab; and all 3 are injectables. This may be one reason why only 5% of patients living with osteoporosis are treated. These injectables are also quite pricey at a cost of $20,000 to $30,000 per year in the U.S.

We believe that a safe and effective oral bone-building drug like EB613 may significantly increase the treatment market. This assumption was borne out in a research study we commissioned with an independent market research firm, which found patients, physicians, payers and providers are seeking more cost-effective solutions. Aside from a more patient-friendly oral delivery, as an oral drug, EB613 can be far more cost-effective than injectables.

We believe Entera has a multibillion-dollar opportunity here by treating new patients who currently are not on either of the injectables. We estimate that there is a realizable opportunity for 10% market penetration with patients currently untreated and at a cost that is 25% of today's injectable price, which translates to an over $20 billion-plus potential to take share from the 50,000 patients treated with injectables today.

Our Phase II clinical trial of EB613 was a 6-month double-blind, dose-ranging, placebo-controlled study in 161 post-menopausal female subjects with osteoporosis or with low bone mineral density or BMD. This study was conducted at 4 leading medical centers in Israel to evaluate the safety and efficacy of varying doses of EB613.

The most important BMD endpoint, change in lumbar spine BMD after 6 months, was met. Subjects receiving the 2.5-milligram dose of EB613 showed a significant dose-related increase in BMD at the lumbar spine, total hip and femoral neck. At 6 months, the lumbar spine BMD increased by 3.78% as compared to placebo, with a p-value of less than 0.008. The study's primary efficacy endpoint, a statistically significant increase in P1NP at 3 months, was also achieved. EB613 exhibited an excellent safety profile with no drug-related serious adverse events.

I want to highlight 2 pieces of data that point to the performance of Entera's platform to deliver a peptide orally and achieving a controlled biologic effect. There was a significant dose response for the PTH dose in EB613 and the increase in lumbar spine BMD, with a p-value of less than 0.0001. There was a significant dose response for the PTH dose in EB613 and the increase in month 1 P1NP, with a p-value of less than 0.001.

We look forward to an end of Phase II meeting with FDA to review these data and to discuss EB613's development program. With the FDA's agreement, we plan to conduct a single pivotal 1-year Phase III study comparing changes in lumbar spine BMD in patients treated with oral EB613 versus treatment with Forteo injections as per a 505(b)(2) pathway. In this noninferiority study, we would evaluate EB613's effect on spine BMD to be within 25% that of Forteo's or greater. Furthermore, EB613 had a significant impact on both femoral neck and total hip BMD at 6 months. In contrast, significant increases in BMD of the femoral neck and total hip are usually not observed with Forteo treatment at 6 months.

We have also continued to support preclinical work in our collaboration with Amgen and are pleased with the progress made to date, and look forward to continuing to support the collaboration in accordance with Amgen's project plan and objectives. From a business development perspective, we are focused on leveraging our platform technology to create additional value, either through proprietary products such as EB613 and EB612 that can be developed by Entera alone or in collaboration with a partner, or applying our technology to another company's compound such as that that we are doing in our collaboration with Amgen.

As part of our BD efforts, we have signed material transfer agreements with 3 companies to demonstrate the feasibility of Entera's platform for oral delivery of various proprietary target molecules. These options potentially enable multiple partnering opportunities that can generate funding, news flow and allow the company to share in the future value of multiple derisked assets. Operationally, we have continued to monitor our expenses judiciously, raised cash for the use of our ATM program. I am pleased to say that our current cash on hand is sufficient to support our planned operations into the fourth quarter of 2022.

I'll now turn the call to Ramesh Ratan, our U.S.-based CFO, to cover the financial results.

Thank you, Spiros. The revenues for the 6 months ended June 30, 2021, were $266,000 as compared to $94,000 for the 6 months ended June 30, 2020, with revenues in both quarters attributable to the R&D services provided to Amgen. The cost of revenues for the 6 months ended June 30, 2021 and June 30, 2020, were $121,000 and $73,000, respectively, and were comprised of salaries and related expenses in connection with the R&D services provided to Amgen.

Total operating expenses for the 6 months ended June 30, 2021, were $5.2 million and included $2.4 million in research and development expenses, and $2.8 million in general and administrative expenses. Research and development expenses for the 6 months ended June 30, 2021, consisted primarily of headcount-related costs and external costs related to the conduct of the recently completed EB613 Phase II clinical trial.

General and administrative expenses for the 6 months ended June 30, 2021, was primarily made up of salary and related expenses, including share-based compensation, professional fees, D&O insurance expense and legal fees.

Financial expenses net for 6 months ended June 30, 2021 and 2020 are mainly resulting from the remeasurement of warrants issued in connection with our 2018 initial public offering and our private placement in December 2019, which include a second closing in February 2020. The increase of $9.9 million in the 6 months ended June 30, 2021, is attributed to the increase in the fair value of the warrants, mainly due to an increase in our market share price.

As of June 30, 2021, Entera had cash and cash equivalents of $26.9 million. And in our 6-K that we filed today, we report approximately $28.1 million in cash and cash equivalents as of August 8, 2021. Based on our current operating plans, we expect our 2021 operating loss to be approximately $13 million. This is subject to the expected timing of product development programs, including EB613 and subject to any continuing impact of COVID-19 on our operations. As a result, we believe our cash position will be sufficient to fund our operations into the fourth quarter of 2022.

I'll now turn the call back to Spiros for concluding remarks before we go to Q&A.

Thanks, Ramesh. We are excited about the recently reported Phase II clinical results for EB613. We believe that the market opportunity in osteoporosis is substantial, because the majority of patients that could benefit from an anabolic treatment remain untreated. Our Phase II results demonstrate a clear dose response using our platform to deliver PTH orally and to achieve significant clinical improvement. This is excellent clinical validation.

Further, we have strengthened our balance sheet, now at $28.1 million, enabling us to generate data, ensuring that our proprietary platform works on molecules of broad characteristics and size. To fuel our business development efforts, we have signed material transfer agreements with a number of companies to demonstrate feasibility of the entire platform for their proprietary molecules. I believe these data will support business development discussions and generate future value through strategic collaborations and partnerships.

(Operator Instructions) Our first question comes from Kalpit Patel with B. Riley.

Yes. And congrats on the recent progress. Just a couple for me. First, for the planned Phase III trial, can you share the noninferiority bar in terms of the BMD increase that you expect at 12 months that you think could be sufficient to meet that 25% noninferiority level?

And then I think you mentioned the 10% market penetration rate on the call. Just curious if you can provide more color on how you derive that estimate, and perhaps what gives you the confidence in achieving that goal.

Yes, Kalpit, thanks very much for your questions. So on the noninferiority margin, we are obviously reviewing our Phase II results, which obviously were very strong in terms of what we showed at the high -- the 2.5-milligram dose for the lumbar spine BMD, but also -- we also showed increases in femoral neck and total hip, and we're still evaluating how to incorporate that into our primary endpoints and in the statistical assumptions that we would use for noninferiority. We're also evaluating all of that. We'll update the market once we have clear, sort of -- new updated plan based on our new sort of Phase II results.

And then Spiros, maybe if I could just add to that in terms of the endpoint. So most of the Forteo studies had between 6% and 8% increase in spine BMD at 12 months. And so in order to be plus or minus 25%, we would have to achieve something like somewhere between 5% to 10% approximately, in order to have a noninferiority. But it depends a lot on the statistics, though -- just to give you a general range of what was achieved in various trials.

Okay. And then the 10% market penetration, if you can provide more color there?

Sure, yes. Yes, Phillip, could you sort of provide more -- yes, that was based on that in the market survey that was done. And I mean we're seeing in the market, the injectable anabolics are not achieving sort of -- are achieving very low penetration, sort of single digit across the board, when you look at romosozumab and Tymlos. And so that leaves us -- understand, there's a much higher number of patients that are eligible anabolic agents and are receiving these injectables. So that's -- from a high level, that's where the big gap is.

So I'll just add to that, that in general, at our survey when we've spoken to physicians and others, it's quite clear that less than 5% of the overall treated patients are treated with injectable medication. And the primary driver for physician choice and for patient choice, in terms of which medication they use to treat osteoporosis, which is a silent disease, something that people can't feel and especially for the elderly, that population is very sensitive to taking injections, especially for a silent disease which they can't feel. They don't want to be bothered with it.

Therefore, in -- with the introduction of a new oral agent, typically, you see a very, very large increase, especially when they have novel mechanisms of action, which PTH does as compared to the other oral agents. We would anticipate that given the fact that it's an oral, we would lower significantly the resistance that patients and physicians have to utilizing an agent which is anabolic, which is capable of building bone and reversing some of the damage and symptoms that are attributable to osteoporosis.

On a payer level, we'd also imagine that payers would also be enthusiastic about this, because the cost of fractures that result from osteoporosis is incredibly high. And if they could get a larger proportion of their population to be treated with an oral as well as to be treated with an oral that's an anabolic, that would have very, very significant benefits. And therefore, there would be multiple parties driving the market share of our drug, assuming that we're successful.

(Operator Instructions) Our next question comes from [Vic Khaitan] with [Khaitan Advisory].

Good progress being made. I've got two questions. First, on the FDA meetings coming up, what are the timing of that meetings in terms of when you meet? When do you expect some kind of a comment back, feedback from them?

And my second question is regarding this transfer of technology. You are working with 3 different outfit, so what kind of timing again on those expectations for the transfer of proprietary technology?

Yes. Thanks, Vic, and nice to hear you. And yes, so your first question on the timing of the FDA meetings we're requesting and what's called an end of Phase II meeting with FDA, which is a -- it's a standard meeting at the development that we're at. And the timing of that, I mean we said it's the second quarter -- I mean, sorry, the second half of this year that we will have our end of Phase II meeting, and that's still what we're holding to. And once we have a confirmed date, we'll probably update the market on that.

And typically, for that we will provide our full Phase II results as well as our proposed Phase III protocol. And then FDA will review that, and we'll have, if we can, the physical meeting with FDA to get FDA's feedback. And the key thing for the end of Phase II meeting is to get full agreement from FDA on the Phase III design and what will be required to support approval for EB613, for the treatment of osteoporosis. So that -- and we still expect there will be a 1 pivotal study, 1 Phase III study will be required under this sort of 505(b)(2) pathway that we're taking with FDA. So that -- so it's within the -- within this -- before the end of the year, in the second half, that all of that will happen.

With regards to the material transfer agreements and the evaluation of our platform with other companies, our molecules, that is ongoing right now. We're conducting experiments right now, evaluating a number of other companies' products with our platform. That generally involves some animal studies and to demonstrate that our platform is working and we have sort of validated models to do that. And we'll -- we have a lot of momentum going with the interest in the platform and with a number of companies. And I mean I expect we should be able to announce some updates on potential partnerships by the end of the year.

Yes. And just a quick follow-up. With the EB613, as you are working or waiting for the FDA meetings, are you also in process of meeting with other people, other companies too, to see if there is any potential for JV with EB613?

Yes, right. Yes, absolutely. We're in a number of discussions, both with regional companies, companies that have focus in osteoporosis markets in China, for example, as well as European companies and companies with global osteoporosis marketing. And those are progressing well. I mean we're -- obviously, the final -- the BMD data has been very helpful, in proving that our platform is working and we're getting a -- the right BMD increase that you would expect for the syndication. And so yes, we'll -- those are progressing well. As soon as we have something, obviously, we will let the market know on a potential collaboration.

(Operator Instructions) I'm showing no further questions. I'd like to turn the call back to Spiros for closing remarks.

Thank you, everybody, for calling in, for your very good questions. And I already made my closing remarks in the previous setting. Obviously, we're very happy with the cash position, the improved cash position of the company, with $28.1 million in cash right now, positioning us in a very strong growth position moving forward and with our path forward, with the end of Phase II meeting with the FDA. And also we'll be having a number of presentations at the ASBMR, of our -- the details of our Phase II results will be presented at the Annual Bone Meeting. So we'll be -- we'll have a number of very good events to discuss our results. So thank you very much for your interest. Goodbye.

This concludes today's conference call. Thank you for participating. You may now disconnect.