Entera Bio Ltd (ENTX) 2021 Q4 法說會逐字稿

Greetings, and welcome to the Entera Bio Fourth Quarter and Year-End 2021 Earnings Call. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the call over to Ramesh Ratan, Chief Financial Officer. Thank you. You may begin.

Good morning, and welcome to the call. Joining me on today's call are Spiros Jamas, our CEO; Arthur Santora, our Chief Medical Officer; and Phillip Schwartz, our Founder and President of R&D. Our press release announcing Entera's financial and operating results for the full year ended December 31, 2021, was issued this morning. For those of you who have not yet 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'd like to remind you that various statements we make during this call about the company's future results of operation and financial position, our imputation of data from the recently completed 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 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 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 Spiro Jamas.

Thank you, Ramesh, and thanks to everyone for joining the call this morning. I joined Entera because of the promise of the company's validated technology platform that enables the oral delivery of protein therapeutics and the talented, dedicated and hard-working team. We have hit several key milestones that have generated value for our shareholders and confirm my confidence in our team and technology and believe we are on the path to creating a very valuable business.

In the second quarter 2021, 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 end points. There is a linear and statistically significant dose response for PTH dose and the key anabolic biochemical markers, P1NP and osteocalcin, with a p value of less than 0.001 and bone mineral density, the clinical marker of bone mass and strength.

The 3-month biomarker results were accepted and presented at the leading Clinical Bone Disease Conference, the ASBMR, last October 2021. Our 6-month bone mineral density results were accepted and presented by our Chief Medical Officer, Art Santora, as a prestigious late-breaker oral presentation also at ASBMR. This is important peer-reviewed presentation of our studies. I believe these data will support business development efforts and will generate future value through strategic collaborations and partnerships.

Separately, the data from our Phase IIa study of EB613 in hypoparathyroidism patients was published in the Journal of Bone Mineral Research. 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 as what we are doing in our collaboration with Amgen.

In addition to our expanding internal pipeline, as part of our business development efforts, we have signed material transfer agreements with multiple biopharma companies to demonstrate the feasibility of Entera's platform for oral delivery of various proprietary target compounds. These options potentially enable multiple partnering opportunities that can generate nondilutive funding, news flow and allow the company to share in the future value of multiple derisked assets.

2021 was definitely a year of execution. We ended 2021 with a successful end of Phase II meeting with the FDA where we reviewed the Phase II osteoporosis data, proposed Phase III protocol and other requirements for an NDA submission. The meeting was positive and confirmed the use of bone mineral density as the primary Phase III endpoint. We are incorporating input from the FDA into the Phase III study design, and we are projecting a second half of 2022 start of the Phase III study. We strengthened our balance sheet, and I'm pleased to report $24.9 million at year-end 2021.

I'd like to 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 osteoanabolic 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 for developing osteoporosis. 1 in 2 women and 1 in 4 men over 50 years of age will break a bone due to osteoporosis.

In a therapeutic market this large, estimated at over $7 billion annually today, surprisingly, there are only 3 effective bone-building treatments available. They are Forteo Teriparatide, Tymlos Abaloparatide and Evenity Romosozumab. All 3 are injectables. This may be one reason why less than 5% of people living with osteoporosis are treated with anabolic drugs. These injectables are also quite pricey at a cost of between $20,000 and $35,000 per year in the U.S.

We believe that a safe and effective oral bone-building drug like EB613 may significantly expand the number of patients being treated. More than 90% of all osteoporosis patients who are taking any form of pharmaceutical are being treated with an oral agent. An oral bone-building agent may not only get conversions from current injectable drugs but may also attract many new patients currently not receiving any treatment. This assumption was borne out in a research study we commissioned with an independent market research firm, which found that patients, physicians, payers and providers are seeking more cost-effective oral solutions. Aside for the more patient-friendly oral delivery -- in the oral drug, EB613 can be far more cost-effective than injectables.

We believe Entera has a multibillion-dollar opportunity here by treating new patients at high risk of fracture. We estimate there is a realizable opportunity for a 10% or greater market penetration for both treated and currently untreated patients. Even at a discounts to current injectable therapies, this should translate to a potential multibillion-dollar market opportunity. I will now turn it over to Phillip to review EB612, additional progress with our platform and various business development activities.

Thank you, Spiros, and good morning, everyone. First of all, we are announcing today that Entera has engaged a highly accomplished and experienced investment bank, Torreya, to support our strategic partnering efforts for our lead asset, EB613, in osteoporosis. Since its founding in 2007, Torreya has closed on over $100 billion in strategic transactions. Needless to say, we are thrilled to be partnering with such a superb team for our lead asset in osteoporosis, a multibillion-dollar market with immense growth potential.

I would now like to provide you with a brief update on EB612, our orally delivered PTH for the treatment of the orphan disease, hypoparathyroidism. Hypoparathyroid patients are plagued with low serum calcium and numerous other acute and long-term sequelae. 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 IIa data in the Journal of Bone Mineral Research, a leading peer review journal.

EB612, when added to the standard of care, led to a statistically significant decline in supplemental calcium usage, a lowering of excess serum phosphate and a significantly improved quality of life. All of these are key end points in past hypoparathyroid studies.

There is significant unmet need in the treatment of hypoparathyroidism, and we believe that an oral PTH will have an improved efficacy, improved compliance and treatment, which will be far more customizable for this very heterogeneous disease population, especially as compared to the currently available daily injectable alternative. We now have an improved formulation of EB612 that offers a PK profile better tailored for this indication. We have tested this formulation in preclinical studies, and we'll be evaluating this formulation in healthy volunteers in a study in 2022.

And if the improved profile is as expected, we intend to discuss and finalize our design for a single Phase IIb/III pivotal study with the FDA. Natpara, injectable PTH 1-84, was originally approved for the orphan indication of hypoparathyroidism with just one 124-patient Phase IIb/III study of 6-month duration. We currently have strong interest from a number of potential partners to co-develop EB612, and we anticipate financing EB612's development through such collaborations.

We continue to make progress in our partnering our oral delivery platform to assist other companies in developing their internal pipeline of biologic and large molecule therapeutics. 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 currently in its third year. Amgen has completed several preclinical studies that have included the evaluation of different formulations of their drug with our platform, and Amgen is pleased with the results.

As reported in our financials, Entera receives annual research funding from Amgen that covers all expenses, including employee costs. Additionally, we have now demonstrated that our platform works to orally deliver another peptide with a significant potential, GLP-2. 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. Gattex, the GLP-2 analog, registered global sales of over $600 million in 2020.

In preclinical models, Entera's oral formulation of a GLP-2 analog has shown a comparable pharmacokinetic profile to the subcutaneous injection, and we strongly believe in the viability of this oral formulation. In addition to GLP-2, Entera has tested more than 12 undisclosed large molecule biologic therapies, both generic and proprietary ones, from other pharmaceutical companies in preclinical animal models. These data have improved our understanding of its technology as well as validated our ability to work with a variety of different large molecule therapies.

As a leader in the oral delivery of large molecules and peptides, Entera further advanced its platform technology in 2021 by identifying potential new treatment indication, filing new patents and receiving a foundational patent in the European Union, representing new intellectual property with an extended patent life.

Entera's platform technology continues to gain recognition for its application in transforming injectable biologics into oral pills. A study in collaboration with researchers at the University of East Anglia in the United Kingdom, describing the platform's dual mechanism of action was published in the peer-reviewed International Journal of Pharmaceutics in October 2021. Additionally, new data were announced suggesting Entera's platform orally delivers human growth hormone shared in a poster presentation at the 31st Annual European Pharma Congress in London in 2021. From a business development perspective, we have increased our efforts to leverage our technology platform and have ongoing dialogues with several companies that are exploring the use of our old delivery platform with their injectable product candidates.

We also continue to focus on the development of our platform as it relates to the evaluation of new APIs 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. Given the significant increase in active material transfer agreement that we have executed, we believe that some of these will result in more extensive long-term collaboration and licensing transactions. I now turn it over to Ramesh, our Chief Financial Officer for the United States.

Thank you, Phillip. Revenues for the year ended December 31, 2021, were $571,000 as compared to $365,000 for the year ended December 31, 2020. For 2021 and 2020, a majority of our revenues were attributable to research and development, or R&D services provided to Amgen under the Amgen agreement and other MTA agreements. The cost of revenues for the year ended December 31, 2021 and December 31, 2020, were $373,000 and $300,000, respectively, and were comprised of salaries and related expenses in connection with R&D successes provided to Amgen and the MTA agreements.

Total operating expenses for the year ended December 31, 2021, were $12.4 million and included $6.7 million in research and development expenses and $5.7 million in general and administrative expenses. Total operating expenses for the year ended December 31, 2020, were $11.2 million and included $6.4 million in research and development and $4.8 million in general and administrative expenses. Research and development expense for the year ended December 31, 2021, consisted primarily of headcount-related costs and external costs related to the conduct of recently completed EB613 Phase II clinical trial.

General and administrative expenses for the year ended December 31, 2021, were primarily made up of salary and related expenses, including share-based compensation, professional fees, D&O insurance and legal fees. Net loss for the year ended December 31, 2021, was $12.2 million or $0.47 per ordinary share. For the year ended December 31, 2020, the net loss was $11.2 million or $0.67 per ordinary share diluted. As of December 31, 2021, Entera had cash and cash equivalents of $24.9 million. And in our 10-K that we filed today, we will report approximately $21.7 million in cash and cash equivalents as of March 2022. Based on current operating plans, we expect 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. The successful completion of the Phase II osteoporosis study was a major milestone given the extraordinary challenges related to the COVID-19 pandemic. And I want to thank the patients, investigators, consultants and the entire Entera team for their hard work and persistence in rigorously executing this clinical study. I also want to thank our shareholders and directors and consultants for their support of Entera's mission.

2021 was an extraordinary execution year. With our lead program progressing to Phase III for this multibillion dollar market, we expect 2022 will also be a year of execution and meaningful deals. We are off to a good start this year with the key patent filing and numerous business development and strategic partnering discussions. Entera is entering very exciting times with many big catalysts in the coming year.

Thanks to everyone for taking the time this morning listening to our review of operations. We look forward to providing you with regular updates on our progress in the coming months. Have a good day. We will now take questions.

(Operator Instructions)

Our first questions come from the line of Kalpit Patel with B. Riley.

Spiros, first, can you confirm that you will be titrating to the 2.5 milligram dose of EB613 in the upcoming Phase III? And then if you are titrating, can you give us additional color on perhaps how you're designing this trial to mitigate any risk for not showing noninferiority against Forteo? I know there were some differences in efficacy between the titrated and non-titrated dosing groups in the Phase II. So are there any certain steps that you might be taking to offset these efficacy differences potentially in the Phase III?

Yes. Hi, Kalpit. Thanks for your question. Yes, so in terms of the titration regimen, yes, we've really tried to learn as much as we can from the Phase II and apply that to the Phase III study to sort of derisk the impact of the titration. So the Phase II study, as you know, titrated over a very prolonged period, over 2 months to go from the 0.5 milligram -- 1.5 milligram dose up to the 2.5 milligram dose, and it took us 2 months to get to the 2.5 milligram dose.

And then it was only for the 4 months out of the 6, the patients were on the maximum of 2.5 milligram dose. And so what we're instituting in the Phase III study, we're still doing the same titration going from 1.5 to the 2.5 milligram dose, but we're going to institute a more accelerated titration just over 2 weeks versus the 2 months of the -- in the Phase II study.

And so based on our sort of review of the PK data and the Phase II, our Phase II results, we feel that, that titration will achieve sort of what we need. The other good thing about the titration as we saw in our Phase II study that, in the titrated group, only 1 patient dropped out. So there was a very high retention. About -- over 90% of patients that were titrated up to 2.5 milligrams remained in the study, which was a very good sign of the tolerability for those patients, even though they were at the 2.5 milligram dose for the full course of the study.

And so -- and then one other element is that the Phase III study is a 12-month study, and so patients will be on the 4 2.5-milligram dose but for essentially the entire 12-month period and having this very rapid titration up to the 2.5 milligram dose. Does that...

Okay. Sorry, go ahead.

Yes. Go ahead.

I think that's very helpful. I just -- I was going to ask what's the status of the Phase III? Are there any additional gating factors before you actually commence the trial I think previously you guided to initiate in third quarter of this year. Is it still fair to assume that those time lines remain on track?

Yes, sure. Yes, the time lines that we were guiding to sort of second half of this year. So it could be a third quarter or fourth quarter and definitely for second half of this year. And some of the activities are going on. I mean we've signed up the CRO that is going to be working with us on the study. We're very busy in sort of identifying sites and on your operational side and getting that aspect of the study operations are going up and running.

Then we are also -- there are some refinements to the protocol that, based on our end of [issuing] with FDA, FDA has made some very useful suggestions for the study design, which I think would improve the Phase III study. And so we're going through the process of updating the Phase III protocol. And once that we have the final Phase III protocol, obviously, we'll be doing with that. And we'll -- we will update the market when we have the final Phase III protocol. And we're still assuming between 600 to 800 patients is still the current assumption and for the Phase III study.

Okay. Fair enough. And how should we think about business development opportunities for 613? I think you mentioned some interest for 612. But what about the lead program? There was some regional interest that you mentioned in the past for 613. Are those conversations still ongoing?

Yes -- no, very much ongoing. There's significant regional especially sort of Asian interest for -- osteoporosis is a very large market, and those discussions are progressing extremely well. And we've also though -- as we announced today, we've recruited Torreya Capital to work with us on the partnering -- global partnering for our (inaudible) assets. Do you think that will put us in the best position to get to already have the best partnership for our program, and that will really ultimately help us get to the finish line of an approved product so globally. And so we're really excited about Torreya coming on board, and they are obviously helping a lot in the strategic alliance and partnering efforts.

There's also substantial interest, as Phillip mentioned, on our hypoparathyroidism asset. There's a lot of companies with sort of a presence in the orphan disease space, a lot of interest. And we also -- there's a high possibility of the collaboration in that space as well.

Okay. And one final question, Spiros. Is the GLP-2 program the next program that we should expect you to enter into the clinic? How should we think about time lines for advancement on this one?

Yes. Yes, we will be sort of announcing or having another sort of Investor Day to discuss our platform and our next -- what next API we will select. We're going though -- we put together a very seasoned Scientific Advisory Committee that is helping us select our next sort of API that offers the best potential between our platform and the properties of the API.

So it may be GLP-2, but there are some other also very exciting possibilities. The other GLPs that also offer maybe even bigger potential and a much bigger commercial opportunity. And so we're going through that process of prioritizing which one, which next sort of API we will select for our next program. So expect of an update probably in the first half of this year, where we will update our investors and the market.

(Operator Instructions)

Our next questions come from the line of Nathan Weinstein with Aegis Capital.

Spiros and to the entire team, congrats on the progress with the business in so many different areas. I guess just a couple of questions for me. Firstly, the revenue line continues to tick higher. Do you think you could make any directional comments on where that could go? And then does that include both the Amgen and new partnerships as well?

Yes, great, Nathan. Great question. Yes, good catch there on -- our revenue line is ticking in the right direction. And that is the bulk of the revenues are from Amgen's payments to Entera on Amgen covers all Entera costs related to the Amgen collaboration. So there's no sort of funding that Entera contributes towards that partnership resolve covered by Amgen.

But we have also been getting a number of new material transfer agreements, which are funded by the companies that we negotiated in. So those companies are paying us to do these initial feasibility studies. And so there is that uptick in revenue is also related to the higher number of MTAs that we've signed, and we're getting that initial MTA funding. And so that is a good kind of -- it's a good market. I would say that we expect to be entering into next large collaboration this year on a new program, so very similar to Amgen, that's very derisked, but that will provide significant funding to Entera.

Great. Spiros, and just one question here on EB613. And the studies to date, could you just remind us what, if any, background therapies patients were on? And then what might be allowed or not in the Phase III study?

Yes, there were no -- I believe that patients could not be on any anabolic drugs for a number of years before -- for quite a long period before they were enrolled in the study and the same is the case for the Phase III. I'll ask Art Santora, our Chief Medical Officer, to just add a little more information on the -- what background therapies patients were on or not on the Phase II and then also, how we're handling that for the Phase III, if you could provide that.

Yes, sure. All the patients had nutritional support in terms of supplemental dietary calcium, if they needed it and the standard dose of vitamin D3. That's the nutrient vitamin, D3, not an activated analog. And as Spiros pointed out, patients couldn't have been on active therapy at the time they started the study. However, use of, say, bisphosphonates as long as it was a number of years in the past, was allowed. And it's a very common situation that we run into clinically.

No immediate transitions from bisphosphonates to [EBP05] would be allowed. The same would be in Phase III. These would be a very similar population who would be candidates for an osteoanabolic. It's currently approved and they wouldn't be transitioning directly from a prior therapy like bisphosphonate or denosumab to the intervention in the trial. There'll be a gap of probably in the order of 2 to 3 years depending on the drug.

(Operator Instructions)

There are no further questions at this time. I would now like to turn the call back over to Spiros Jamas for any closing comments.

Good morning, everyone. Thank you so much for calling in for our earnings call. Yes, as you can see, we're really on the verge of some big catalysts for Entera, for expanding Entera's business and using our platform has a huge sort of value driver that always really believe it can become. We have some very solid clinical milestones this year with progression to Phase III. And we'll be keeping you updated on both our lead program but also our expanding opportunities with our platform. So thank you very much. Have a good day.

This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.