Entera Bio Ltd (ENTX) 2020 Q4 法說會逐字稿

Good morning, and welcome to Entera Bio's conference call to discuss the financial and operating results from the year ended December 31, 2020. (Operator Instructions)

I would now like to turn the call over to Jon Lieber, the U.S.-based CFO of Entera. Please go ahead.

Thank you, and welcome to the call. Joining me on today's call are Spiros Jamas, our CEO; Art Santora, our CMO; and Phillip Schwartz, our President of R&D.

A press release announcing Entera's financial and operating results for the year ended December 31, 2020, was issued earlier today. For those of you who have not yet seen it, it is 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 this call about the company's future results of operations and financial position, our interpretation of the interim data from the ongoing Phase II clinical trial of EB613, including the biomarker data released in the first quarter of 2021, the expected timing of data readouts from the ongoing Phase II clinical trial of EB613, our business strategy and plans and objectives for our future operations are considered forward-looking statements within the meaning of the federal securities laws. Our forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions and uncertainties. Specifically, developments related to the 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 of the information we provide in this conference call is provided only as of today, and we undertake no obligation to update any forward-looking statements we 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 will now turn the call over to Spiros Jamas.

Thank you, Jon, and thanks, 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.

In the short time since I joined, we've hit several key milestones that have generated value for our shareholders and further confirmed my confidence in both our team, technology and believe we have the ability to create more value.

We have data showing that our platform works on 8 molecules of broad characteristics and size. I believe these data will support business development discussions and generate future value through strategic collaborations and partnerships.

In addition, the recent rise in our share price has enabled us to strengthen our balance sheet. And I'm pleased to say that we believe our current cash resources will fund the company into the second quarter of 2022.

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 from the ongoing Phase II clinical trial of EB613 in osteoporosis patients and the data from our Phase IIa study of EB612 in hypoparathyroidism patients that was recently published in the Journal of Bone and Mineral Research.

With significant momentum coming out of 2020, we are focused on leveraging the platform technology to create additional value, either through proprietary products such as EB613 and EB612 that can be developed either by Entera alone or in collaboration with a partner or applying our technology to another company's compound, such as what we are doing in our collaboration with Amgen.

Each of these options potentially enables multiple partnering opportunities that can generate funding, news flow and allow the company to share in the future value of multiple derisked assets.

While Art and Phillip will go into greater detail on the clinical programs and platform, I would like to take a few minutes to provide an overview of the programs and some of our recent accomplishments. First, on EB613, our orally delivered human parathyroid hormone 1-34, or PTH, positioned to be the first oral bone building or osteoanabolic treatment for osteoporosis patients. We recently announced that the Phase II trial in women with osteoporosis, or low bone mass, met its primary endpoint.

The complete 3-month results from the trial showed a significant increase in the P1NP biomarker in the 2.5 milligram dose group after 3 months of treatment with a p-value of less than 0.04 compared to placebo. P1NP is a biomarker that indicates the rate of new bone formation. As a reminder, this Phase II clinical trial is a double-blind, dose-ranging, placebo-controlled study in postmenopausal female subjects with osteoporosis or low bone mineral density, or BMD. This trial is being conducted at 4 leading medical centers in Israel and has completed the enrollment of 161 subjects.

The data comes on the heels of a number of other important milestones in 2020 for the EB613 development program. In August 2020, we announced the 6-month interim bone mineral density data from the first 50% of patients in this trial. The data indicated EB613 has a meaningful and positive impact on lumbar spine BMD in a dose-dependent manner over a 0.5 to 1.5 milligram dose range and supported the earlier decision to add a 2.5 milligram dose.

These data were important because increases in lumbar spine BMD have been associated with fracture reduction in patients treated with subcutaneous PTH, and a change in lumbar spine BMD is now an accepted endpoint for regulatory approval of novel formulations of drugs like human PTH 1-34 that have been shown to reduce the risk of fracture.

Importantly, the BMD data reported to date do not include data from any subjects in the 2.5 milligram treatment arm. We expect to report the final results from this trial, including the 6-month BMD data in the second quarter of 2021.

In addition, in the fourth quarter of 2020, we announced the completion of the enrollment in the trial and the acceptance by the FDA of the U.S. IND for EB613. The completion of enrollment was a major milestone, given the extraordinary challenges related to the COVID pandemic and along with the IND acceptance, an important step forward to moving the program towards a pivotal Phase III clinical trial.

Assuming we continue to see positive BMD data from the EB613 Phase II trial and subject to a successful post end of Phase II meeting with the U.S. Food and Drug Administration, or FDA, we believe the Phase III trial could begin in 2022.

We believe the value proposition of EB613 is very strong due to the fact that only a small percentage of patients with osteoporosis are actually treated with subcutaneous PTH or other injected bone-building drugs due to cost, convenience and compliance challenges. The market research we conducted and reported last year points to a significant unmet need for an oral therapy that builds bone in a multibillion-dollar osteoporosis market.

Turning to EB612 for hypoparathyroidism. Data from a 2015 study were recently published in the Journal of Bone and Mineral Research, or JBMR. Phillip will provide additional details, but in summary, EB612, when added to standard of care, led to a statistically significant decline in supplemental calcium usage, the key endpoint in the hypoparathyroidism trials. We are focused on optimizing the formulation that we would intend to move forward.

We have also continued to support preclinical work in our collaboration with Amgen, 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 have increased our efforts to leverage our technology platform and have an ongoing dialogue with several companies that are interested in exploring the use of our oral delivery platform with their injectable product candidates. We are focused on moving these conversations into formal agreements.

Operationally, we have continued to carefully monitor our expenses judiciously, raised cash through the use of our ATM program with Canaccord. I am pleased to say that our current cash on hand is sufficient to support our planned operations into the second quarter of 2022.

I would like to now turn the call over to Dr. Art Santora, our Chief Medical Officer, to discuss the Phase II trial of EB613.

Thanks, Spiros. As a reminder, the Phase II trial was designed to evaluate the impact of different doses of EB613 on serum biomarkers of bone activity after 3 and 6 months of treatment and on BMD after 6 months of treatment.

Bone biomarkers evaluated included P1NP, osteocalcin and CTX. P1NP is a biomarker that indicates the rate of new bone formation. Similar to P1NP, osteocalcin is a biomarker for bone formation by osteoblasts, the cells that build new bone. CTX is a biomarker that indicates the rate of bone resorption by osteoclasts, the cells that remove old bone. And osteoanabolic, or bone-building effect, is based on the difference in bone formation and bone resorption. An increase in P1NP or osteocalcin, for example, associated with a smaller increase or even a decrease in CTX, usually indicates an increase in bone mass.

In the Phase II trial, subjects were initially randomized to receive either a placebo or 1 of 3 doses of EB613, 0.5, 1.0 and 1.5 milligrams. After the evaluation of the interim 3-month biomarker data in the first 80 subjects randomized, we amended the protocol to discontinue additional enrollment in the 0.5 and 1 milligram dose groups and add a new higher 2.5 milligram dose group with the final 60 subjects randomized to receive either placebo, 1.5 or 2.5 milligram of EB613. Subject follow-up in the Phase II trial has remained strong with approximately 115 subjects having already completed their 6-month visits.

Based on our recent analysis of the complete 3-month bone biomarker data, study medication EB613 or placebo was generally well tolerated through the treatment period. Common adverse events resemble those known to be associated with teriparatide by subcutaneous injection. There were no adverse events that were severe in intensity in any treatment group and no serious drug-related adverse events. A complete safety evaluation of the full unblinded data will be conducted with the full 6-month data analysis expected in the second quarter of 2021.

Finally, demographics of subjects in this trial are generally consistent with other previously reported osteoporosis trials in postmenopausal women. As Spiros mentioned earlier, the trial met its primary endpoint with the 2.5 milligram dose group showing significant increase in the P1NP biomarker after 3 months of treatment, that p-value was less than 0.04 as compared to placebo. Similar to the increase in P1NP, a significant increase in osteocalcin, another bone formation marker was also observed in the 2.5 milligram group after 3 months. That p-value is less than 0.01. In addition, a significant decrease in CTx was observed after 3 months of treatment. That P-value was less than 0.015. The decrease in CTx to come together with the increase in P1NP osteocalcin would indicate a potential positive impact on BMD.

We look forward to sharing the final BMD data from the trial in the second quarter of 2021. As a reminder, we reported interim BMD data limited to the first 80 subjects randomized in the study in the third quarter of 2020.

Based on the interim 6-month BMD data, EB613 generated a mean placebo-adjusted increase in lumbar spine BMD of 2.15% and p-value was 0.08 for the 14 subjects in the 1.5 milligram treatment arm as compared to the 16 subjects in the placebo arm. The placebo-adjusted increase was comprised of a mean BMD increase of 1.44% in the 1.5 milligram treatment arm compared to a mean decrease of 0.71% in the placebo arm. An additional analysis of BMD changes in all EB613 treatment groups showed a significant dose-dependent trend and the percentage increase in lumbar spine BMD.

Increases in maintenance of BMD are widely accepted by clinicians throughout the world as indicators of an overall improvement of osteoporosis during parathyroid hormone treatment. Importantly, the previously reported BMD data did not include any subjects from the 2.5 milligram dose group, which was more recently added.

The change in lumbar spine BMD is the recommended Phase III study efficacy endpoint for a novel oral human PTH 1-34 formulation intended to treat osteoporosis and developed using the FDA's 505(b)(2) regulatory pathway. A fracture endpoint trial is not required because subcutaneous PTH 1-34, generically named teriparatide for injection, has been shown to reduce the risk of fracture. As expected, a consistently published data from studies of subcutaneous teriparatide, an analysis of BMD data of the total femur and femoral neck did not show a significant effect of treatment with EB613.

I will now turn over the call to Dr. Phillip Schwartz, our President of R&D, to share some updates with you on EB612 and our Amgen program.

Thanks very much, Art. Good morning, everyone. I would like to provide you with a brief update on EB612, our orally delivered PTH, for the treatment of the orphan disease hypoparathyroidism or HypoPT.

We are developing EB612 to be used as a first-line hormone therapy that would be applicable to patients with different levels of disease severity and are excited by the recent publication of our Phase II data in JBMR, a leading peer review journal.

There is significant unmet need in the treatment of hypoparathyroidism, and we believe that an oral PTH would improve compliance as well as therapeutic impact and may offer patients with hypoparathyroidism a much-needed alternative to the currently approved PTH replacement therapy options, which are administered via daily injections.

As a reminder, our goal is to treat patient's acute symptoms, while normalizing serum and urine calcium levels to minimize the adverse effects of long-term calcium supplementation and active vitamin D use. The recently published data demonstrated the safety and tolerability of EB612 administered 4 times daily for 16 weeks in patients with hypoparathyroidism in the Phase IIa trial.

Importantly, the study achieved its primary and secondary endpoints, including a reduction in calcium supplements, reductions in serum phosphate, maintenance of albumin-adjusted serum calcium within the reference range and an improvement in quality of life.

Specific results from the trial included a significant reduction of 42% with a p-value of 0.0001 from baseline in median calcium supplement use. It also included maintenance of median calcium levels in the bloodstream above the lower target for hypoparathyroidism patients, which is approximately 7.5 milligrams per deciliter throughout the study. And there was also a rapid decline of 23% with a p-value of 0.0003 in median serum phosphate levels 2 hours following the first dose that was maintained within the normal range for the duration of the study. And a notable median decrease of 21% or -- to a p-value of 0.07 in 24-hour urinary calcium excretion between the first and last treatment date.

In this study, patients were titrated up to a maximum of 12 EB612 0.75 milligram tablets a day for a total use of 9 milligrams by the investigator according to each subject's calcium levels and supplement treatment regimen. Of the 19 enrolled patients, 17 completed the trial, of which 15 were per protocol. There were no drug-related serious adverse events, and most of the adverse events were not considered study drug related at all. We are continuing to conduct additional formulation work on EB612, including the identification of enhancements that we are evaluating in preclinical models. In addition, we are also working in the design of the next clinical trial for EB612, which we expect to initiate in 2022.

Our collaboration with Amgen for the development of an oral anti-inflammatory agent has continued, and we are pleased with the progress we have made to date. We are continuing to support the collaboration and Amgen has completed several preclinical studies that have included the evaluation of different formulations of their drug with our platform.

We also continue to focus on the development of our platform as it relates to the evaluation of new APIs, active pharmaceutical ingredients, and believe that these efforts have the potential to generate value through either additional validation of our technology platform and/or through potential business development activities.

As an example, we recently announced a new research program for an oral glucagon-like peptide-2 or oral GLP-2. This is an analog. And based on our technology platform, we have been able to develop an oral formulation for it. GLP-2, a peptide produced in the intestine and the central nervous system via the brainstem and hypothalamus is known to enhance intestinal absorption, specifically the increased absorption of nutrients. The only GLP-2 analog currently on the market, teduglutide, was approved in 2012 as a once-daily injection for the treatment of short bowel syndrome in U.S. and Europe, registering global sales of $574 million in 2019.

In preclinical models, Entera's oral formulation of GLP-2 analog has shown a comparable pharmacokinetic profile to the subcutaneous injection. We look forward to sharing additional data on our GLP-2 analog over the coming months.

I'll now turn the call over to Jon Lieber, our U.S. CFO, to cover the financial results.

Thank you, Phillip. Revenues for the year ended December 31, 2020, were $365,000 as compared to $236,000 in 2019, with revenues in both years attributable to the R&D services provided to Amgen. The cost of revenues for the year ended December 31, 2020 and 2019 were $209,000 and $210,000, respectively, and were comprised of salaries and related expenses in connection with the R&D services provided to Amgen.

Total operating expenses for the year ended December 31, 2020, were $11.3 million and included $6.4 million in research and development expenses and $4.9 million in general and administrative expenses. Research and development expense for the year ended December 31, 2020, consisted primarily of headcount-related costs, external costs related to the conduct of the EB613 Phase II clinical trial and consulting expenses and fees related to the preparation of the EB613 IND application.

General and administrative expense for the year ended December 31, 2020, was primarily made up of salary and related expenses including share-based compensation, professional fees, D&O insurance expense and legal fees.

Net comprehensive loss was $10 million or $0.55 per ordinary share diluted for the year ended December 31, 2020, compared to $10.8 million or $0.89 per ordinary share of basic and diluted for the year ended December 31, 2019. As a reference point, we currently have approximately 24 million primary shares outstanding and 32 million fully diluted shares outstanding.

At December 31, 2020, Entera had cash and cash equivalents of $8.6 million. And in our 20-F that we intend to file today, we will report approximately $15.4 million in cash and cash equivalents as of March 16, 2020. Based on current operating plans, we expect our 2021 operating loss to be between $11 million and $12 million. This is, of course, 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 currently believe our cash position will fund our operations into the second quarter of 2022.

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

Thanks, Jon. We're excited about the recently reported data for EB613 and EB612. We continue to believe that the market opportunity in each of these areas is substantial. The recently released 3-month bone biomarker results demonstrate a clear dose response using our platform to deliver PTH orally. This is great clinical validation.

In addition, the strength of the platform and our balance sheet have enabled us to generate data for several additional molecules such as GLP-2. We have data showing that our proprietary platform works on molecules of broad characteristics and size. 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 Jason McCarthy with Maxim Group.

Can you talk just a little bit about the importance of the ratio of P1NP and CTX, and how that changes? And more specifically, how that compares to what happens with FORTEO, Prolia or any other -- or Tymlos, any other fracture-preventing osteo drug that's out there? Because those ratios are critical, insightful, too.

Thanks, Jason. Yes, I'll just give a very high level, and then I'll direct Phillip and then Art to give more color, respectively.

Yes, so just from a very high level, P1NP increase correlates with increase in bone mineral density relates to the anabolic effect, whereas CTX translates -- increase in CTX to resorption of bone. So you really want to be -- to have an anabolic effect, you want to have higher P1NP and lower -- or actually reducing CTX.

And so the fact that we saw -- at a high dose group of 2.5 milligram dose, we saw significant increases in P1NP, but actually significant reduction in CTX is kind of the ideal profile that you would like to get for sort of osteoanabolic effect and then that would translate to increases in bone mineral density. And -- but let me have Phillip provide some additional color on this. That's a very important question.

Yes. And Phillip, before -- I want to cut you off. Before you -- as part of that question, can you also comment on -- I believe FORTEO brand, CTX actually goes up. Maybe you could talk a little bit of that as well after.

Sure. Sure. Thanks, Jason. Yes. You're correct. Actually, with FORTEO or subcutaneous injected PTH 1-34, CTX goes up very, very significantly, far more than any of the other drugs you mentioned, like abaloparatide or Prolia or some of the other anabolic agents that are out there, specifically Evenity.

And it's interesting that although we're using the same active pharmaceutical ingredient, API, as FORTEO, because our PK profile is somewhat different, it behaves more similar to abaloparatide and also to the PTH patch. Specifically, those drugs, which have a stronger impact on BMD as can be seen in many of the papers that have been published. So their increase in BMD was actually greater than that was -- what was observed with FORTEO. They both have a much smaller increase in P1NP, which is the bone building marker as compared to FORTEO. Yet because they have a much smaller increase in CTX, they have more of an impact on bone mineral density and bone building.

In our case, we're almost more similar even to romosozumab, Evenity, in the sense that not only do we have a much lower increase in, CTX, but we actually have a decrease in CTX as well as a rise in P1NP. So both of those factors combined make us believe that we'll have -- we could have very promising results in terms of bone mineral density. And we're very excited about that.

And then Phil or Spiros, maybe you can remind everybody of the clinical pathway to get to potential approval, 505(b)(2) kind of one and done trial and you don't need fracture, which is a huge differentiator for Entera. You can just use 6-month bold mineral density.

And as part of that question or your comments to that point, can you talk a little bit about what the expectations on BMD at 6 months you think would be clinically meaningful enough to get 612 approved?

From our pre-IND meeting -- so go ahead, Spiros, please.

Yes. Thanks, Jason. Yes. So just -- first, high level on the -- the 505(b)(2) regulatory pathway because, yes, that's an important aspect of our development program, where under the 505(b)(2), we don't have to run 2 Phase III pivotal studies, which is typical in the clinical development program.

We can conduct a single pivotal study and show a comparison study to FORTEO. So via single pivotal study, and the FDA has accepted bone marrow density as the clinical endpoint. So we don't -- absolutely, we do not need fracture reduction as an end point. So those studies obviously require fewer -- a lot fewer patients, and the time of those studies is significantly lower. And so -- yes can -- Phillip and then Art can provide you color on the regulatory path and the BMD -- our expectation for the BMD endpoint.

Just to add to what Spiros said -- I'll just add Jason before you go -- no, that's okay. We have in our pre-IND meeting that the FDA gave us some very explicit guidance in writing that doing 1 pivotal Phase III study with a BMD endpoint -- a noninferiority study with FORTEO would be sufficient for approval. And they gave us a very generous margin of noninferiority, which was very helpful.

And just to give you an idea of what that study will likely look like, that study is likely to be a 12-month study with somewhere between 600 and 800 patients in 2 arms. Each arm would have about 400 patients or so, one FORTEO arm and one arm for EB613. You know what, I think Art, who has a tremendous amount of experience with clinical trials in osteoporosis, could add a little bit more clarity perhaps to what that type of trial might look like and what our expectations are for the endpoint that would be necessary in order for us to achieve approval.

Okay. Last question, just briefly, if you fellows can just kind of compare and contrast from a high level the GLP-1 versus GLP-2 market. I know on the GLP-2 (inaudible) is what, almost 600 million, and that was in 2019. I haven't checked through this year. And then we look at on the GLP-1 side, which has been a little bit more challenging in 9 Meters is their -- with an injection for GLP-1, but that market cap has gone up to near 400 million I think just based on that one program in particular. So can you compare and contrast the opportunities here and maybe where that valuation gap between Entera and these other places is and may need to close as you kind of move forward?

Okay. Yes. No. They're good questions. Yes. So we -- in terms of our -- the data that we've generated and why we picked sort of GLP-2, we picked GLP-2 because we -- when looking at the physical and chemical characteristics of GLP-2 and knowledge of how our platform works, it was sort of -- we had a very high -- had a high likelihood of success. We would see very good PK in animal models, and we conducted the PK models and showed that we can deliver GLP-2 orally with a very nice PK profile and also very high -- achieving high blood levels that was -- again, somebody is showing that with an oral GLP-2.

And so while -- and the orphan -- the currently approved GLP-2 is an orphan drug. It's orphan indication. As you said, its current annual sales, I think, are expected to be around $600 million for short bowel syndrome. And -- but so the GLP-2 is also -- to also play roles in other potential diseases. So we see potential opportunity, actually (inaudible) indications beyond short bowel syndrome. So this -- we see a lot of really strong partnering interest in our GLP-2 program. We've entered into discussions with potential companies that have expressed an interest. And we expect to be, again, updating the market on our progress there.

I mean, with regard to GLP-1, that is a different peptide, but also, we've actually scored high on our -- it fits very well with our platform, and we see a lot of opportunity to deliver an oral -- GLP-1 orally for indications such as obesity with chronic indications with a huge sort of potential. And I think you'll be hearing more news from us on additional programs, as I said, beyond GLP-2 and potentially GLP-1.

Yes. Jason, this is Art Santora. I just wanted to add one thing to the comments of Spiros and Phillip about the regulatory pathway. Once we have our bone mineral density and full safety data from the ongoing Phase II study in Israel, we plan to summarize those data and request an end of Phase II meeting with the Food and Drug Administration. Given a favorable outcome of the trial, that would generally occur later in 2021.

That's the point in time where FDA would tell us what they would find acceptable as an end of -- I'm sorry, as a comparison of the bone density changes with our oral PTH and the approved drug product, Lilly's FORTEO.

(Operator Instructions) Our next question comes from Calvin Hori with Hori Capital.

How many shares did you issue from the ATM?

So we currently have -- current fully diluted share count, it's about -- a little less than 24 million -- sorry, primary share count, a little less than 24 million and fully diluted share count a little less than -- around 32 million. So I can tell you specifically on terms of -- I don't have the number right on the top of my head of how many shares we sold in the ATM, but that's what our current share count.

You raised 13 million. So what price was...

Various prices.

What?

Various prices. So I'm happy to follow-up with you. I don't have that number off the top of my head exactly how many we sold. I can just tell you exactly what we have out right now.

Okay. So 32 million fully diluted?

That's correct.

And I'm not showing any further questions at this time. I'd like to turn the call back to Spiros for closing remarks.

Yes. So we entered 2021 with significant momentum. We've continued to execute on our plans during the first quarter of this year. This is just the beginning of some very exciting times for Entera. Thanks to everybody for taking the time this morning to join our call, and we look forward to providing you with regular updates on our progress. Have a good day.

Ladies and gentlemen, this does conclude today's presentation. You may now disconnect, and have a wonderful day.