F-Star Therapeutics Inc (FSTX) 2017 Q4 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the February 21, 2018, conference call. (Operator Instructions) As a reminder, this call will be recorded.

I would now like to introduce your host for the conference call, Jon Freve, Chief Financial Officer. Please go ahead, sir.

Good morning, everyone. Welcome to the Spring Bank Pharmaceuticals Fourth Quarter and Full Year 2017 Financial Results and Corporate Update Conference Call. Joining me on this call from the Spring Bank management team is Marty Driscoll, our President and Chief Executive Officer. The prepared remarks will be followed by a question-and-answer session.

Before I turn the call over to Marty, let me remind you that today's call will contain statements about the company's future expectations, plans and prospects that constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. The words believe, anticipate, plan, potential, expect, will and other words denoting future events identify statements as forward-looking statements. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those disclosed in our press release yesterday, February 20, 2018, as well as those disclosed in the Risk Factors section of our Form 10-K filed with the SEC on February 20, 2018, and other SEC reports. In addition, any forward-looking statements represent our views only as of today, February 21, 2018, and should not be relied upon as representing our views as of any subsequent date.

And now I would like to turn the call over to Marty.

Thank you, Jon, and good morning, everybody, and as Jon said, thank you for joining us this morning. I believe all of you know that we had a very active and a highly productive 2017, and we're looking forward to a similar milestone-filled 2018.

Our efforts here at Spring Bank in 2017 were highlighted by the continued advancement of our global inarigivir clinical development program for the treatment of chronic hepatitis B. The evidence is building from our global Phase II ACHIEVE trial demonstrating the potential of inarigivir as a simple and selective and safe oral treatment to elevate functional cure rates for patients with chronic hepatitis B.

With our announcement of positive top line data from the first 2 low dose cohorts of Part A in our ACHIEVE trial back in '17, we are excited to position inarigivir as the leading clinical candidate in development for chronic hepatitis B. If we continue to meet our development milestones, inarigivir will potentially be the next new treatment modality for chronic HBV to enter Phase III clinical trials.

To remind you, we are developing inarigivir, an orally available compound, with the unique dual mechanisms of selective immunomodulation and encapsidation inhibition as a potential backbone in a combinatorial treatment for chronic HBV. We are very encouraged by the promising results from both the first and second low dose cohorts in our ongoing Phase II trial, and we look forward to releasing data from the additional higher dose cohorts of Part A of the study throughout the remainder of 2018 and early 2019.

The data from the first cohorts of Part A of the ACHIEVE trial demonstrate that inarigivir at the low, monotherapy doses of 25 milligrams and 50 milligrams generated an impressive response in chronic HBV e antigen negative patients. This effect was amplified in some patients when dosed with the nuke, Viread, in a subsequent 12-week dosing period. Complete presentations of the compelling data from the first 2 cohorts of ACHIEVE, including new insights from the virology and the 12-week sequential dosing period with tenofovir, will be presented at 2 major liver diseases conferences here in the first half of this year.

Dr. Nezam Afdhal, our Chief Medical Officer, will be presenting an expansion of the combined results from the first 2 cohorts of Part A of the ACHIEVE trial, including the sequential Viread 12-week dosing period, at the annual conference of the Asia Pacific Association for the Study of the Liver, or commonly known as APASL, next month. This oral presentation at the international APASL conference will focus on the compelling insights from the monotherapy dosing of the low doses of inarigivir when the first 2 cohort datasets are combined. Then at the European Association for the Study of Liver Diseases, or EASL, conference in April, 2 major presentations of data from the ACHIEVE trial will be provided by the principal investigators for the study.

Dr. M.F. Yuen, the Principal Investigator for the clinical aspects of the ACHIEVE trial, will deliver a poster presentation on the combined full 24 weeks of treatment for the first 2 cohorts of ACHIEVE, including of course the 12-week sequential dosing period involving Viread. In addition, Professor Stephen Locarnini, the Principal Investigator of the Virology Core for the ACHIEVE trial will deliver an oral presentation describing the combined virology results from the first 2 cohorts of Part A of the ACHIEVE trial and will highlight the clearance response of hepatitis B surface antigen by development of hepatitis B surface antibody antigen complexes, which are a core feature necessary for functional cure with loss of surface antigen. This oral presentation by Dr. Locarnini will also expand on the virology findings from the first 2 low dose cohorts of ACHIEVE, evidencing the novel mechanism of action for inarigivir as an inhibitor of encapsidation.

Owing to the effectiveness of our clinical operations team and the excitement for inarigivir with our study investigators, we quickly enrolled the third cohort of our ACHIEVE trial, the 100 milligram monotherapy dose of inarigivir and completed this randomization in late 2017. As a result, we are on track to announce top line data from the third cohort, the 100 milligram monotherapy dosing of inarigivir dosing in mid-2018. Many experts in the field of viral hepatic infectious diseases believe, as we do, that in order for functional cure rates to substantially elevate for patients suffering from chronic HBV, the hepatic immune system, downregulated by the virus, must be reactivated. This premise was clearly articulated by a recent consensus panel, including academics, industry and regulatory authorities, as published in the Journal of Hepatology in September of '17.

We believe that inarigivir, the orally available selective immunomodulator in Phase II testing in chronic HBV, has the potential to become a backbone in the combinatorial treatment of chronic HBV. Since the chronic HBV patient population is quite heterogeneous, we don't believe a one size fits all strategy will be appropriate in the effort to substantially elevate the functional cure rates for a broad swath of chronic HBV patients. Rather, we believe combinatorial treatment modalities will be tailored for certain differing patient demographics and individual clinical needs. However, we do believe that an effective immunomodulatory agent will be required at the core of most, if not all, of these combinatorial treatment modalities. As a result, we believe inarigivir could be a backbone treatment included in most combinatorial HBV treatment modalities. Hence, our clinical development strategy for inarigivir seeks to demonstrate this potential in this backbone concept.

The first part of our ACHIEVE trial, Part A, we call it, is focused on establishing the dose range and the dose optimization for the monotherapy use of inarigivir as well as delivering new insights into the novel mechanisms of action of this compound. The next phase of our clinical development strategy is establishing the concept that inarigivir could be this backbone to the varying combinatorial strategies in the future treatment of chronic HBV. We have now initiated this effort by focusing on the coadministration of inarigivir with the current standard of care, the nukes. As many of you know, we engaged in a productive HBV clinical trial collaboration with Gilead to examine the coadministration of inarigivir with the nucleoside analog tenofovir disoproxil fumarate, or more commonly known as the brand name Viread.

Once we have examined the safety data for the 100 milligram monotherapy in the ongoing third cohort of the ACHIEVE trial in the next few months, and with authorization from the Data Safety Monitoring Board of the trial, we will quickly embark on Part B of our ACHIEVE study, where inarigivir will be coadministered with Viread. It is our current plan to initiate the first cohort, a Part B of ACHIEVE, the 100 milligram coadministered with Viread, in the first half of this year. If we randomize this cohort in our projected time period, we could be in a position to reveal top line results from the 100 milligram Viread plus -- excuse me, 100 milligram inarigivir plus Viread cohort by the end of this year. However, our collaborators at Gilead are accelerating our Phase II program by moving forward with a trial to examine the coadministration of Vemlidy, tenofovir alafenamide, and the 50 milligram dose of inarigivir in chronic HBV patients. As many of you know, last year we announced that we expanded our HBV clinical trial collaboration with Gilead to include a Phase II study involving the coadministration of inarigivir and Vemlidy that is fully funded and being executed by Gilead. The Gilead team has already initiated the study in Korea, and we are optimistic that preliminary data from this trial will be available in the second half of this year. It's also important to note that this protocol is -- for the study is adaptive. So Gilead may determine to conduct additional cohorts with 100 milligrams of inarigivir or 200 milligrams combined with Vemlidy.

We are now also actively exploring triple drug combination strategies with complementary mechanisms of action for optimizing functional cure rates. For this effort, we have engaged in a preclinical collaboration with another HBV development firm to examine the potential combinatorial use of inarigivir plus a nuke along with an investigational compound with a differing mechanism of action. If the preclinical development work is successful, we hope to move into a clinical trial for this triplet therapy in early 2019. Subject to the results of our ACHIEVE trial and the coadministration clinical trials that we are now conducting, it is our objective for inarigivir to be the next new clinical candidate in development for hepatitis B to enter global Phase III trials, which we now anticipate could be in mid-2019.

In the third part of our comprehensive development plan, we are developing a potential fixed dose co-formulation product combining inarigivir with tenofovir disoproxil fumarate, which is the generic form of Viread. We have called this new compound SB 9225. We are currently conducting additional formulation development work for SB 9225, with the objective to be in the position to potentially include this product candidate in Phase III clinical trials next year. While the inarigivir developments are quite exciting for our company, we have also been busy progressing our lead immuno-oncology development candidate from our next-generation STING agonist platform. This product candidate we call SB 11285. Preclinically, we have demonstrated SB 11285 to be highly potent with durable antitumor responses in multiple tumor models via multiple modes of administration, including the intravenous route. We are in the midst of our IND and CTA-enabling toxicology program, which includes the administration of SB 11285 via the intravenous route. If our SB 11285 toxicology program continues to progress well, we plan to submit a clinical trial application for the examination of this product candidate in the treatment of hepatocellular carcinoma, or HCC, in the latter half of this year. If approved, we could initiate a Phase Ib/II clinical trial in HCC in the second half of this year. We are also, right now, exploring additional delivery methods for SB 11285 and the other analogs or compounds from our STING agonist platform, including nanoparticle formulations and the potential to conjugate with other compounds, our STING agonist product candidates.

Before I turn the call over to Jon for a review of our financials, I want to emphasize that we are working hard to deliver on multiple important milestones in '18. From our expansive inarigivir development program, we will report combined data from the first 2 low dose cohorts of the dose-finding Part A segment of our ACHIEVE trial, including the experience from the sequential Viread 12-week dosing period, at 2 major liver diseases conferences in the next couple of months. We remain on track to release top line data from the third monotherapy cohort of the ACHIEVE trial in the middle of this year and results from the fourth monotherapy cohort by the end of the year. Additionally, we anticipate that we will initiate Part B of the ACHIEVE trial, the coadministration of inarigivir 100 milligram with Viread, in the middle of this year and report the top line results from this study by the end of 2018. Since Gilead has already initiated their study, examining the coadministration of inarigivir 50 milligram with Vemlidy in HBV patients, we currently anticipate top line results from this trial could be available here in the second half of 2018.

Finally, we continue to prepare for the inarigivir Phase III program by advancing our commercial scale manufacturing development effort for inarigivir and the required nonclinical work for the chronic dosing expected in our anticipated pivotal trial development plan. As we stated earlier, it is our goal to be in a position to potentially enter the Phase III development stage for inarigivir in the middle of 2019. Additionally, after our planned clinical trial application for SB 11285 is submitted in the second half of 2018, we plan to commence a Phase Ib/II trial in hepatocellular carcinoma late this year or early 2019. If these milestones are achieved, Spring Bank will have 2 major clinical trial programs underway in 2019, including the potential to be in Phase III with inarigivir in the middle of 2019.

With that, let me turn it over to Jon, who'll go through the financials. Jon?

Thank you, Marty. And now I'd like to review our financials as of December 31, 2017. Our cash, cash equivalents and marketable securities were $50.6 million as of December 31, 2017, compared to $25.5 million as of December 31, 2016. Net cash used in operating activities for the 12 months ended December 31, 2017, was $17.7 million compared to $15.8 million for the same period in 2016. We anticipate that our existing cash, cash equivalents and marketable securities will enable us to fund our operating expenses and capital expenditure requirements into the fourth quarter of 2019, but will not be sufficient to fund the initiation of any Phase III trial for inarigivir which could occur earlier than the fourth quarter of 2019.

Total operating expenses for the 3 months ended December 31, 2017, were $6.3 million which consisted of $3.9 million of R&D expenses and $2.4 million of G&A expenses. Total operating expenses for the 3 months ended December 31, 2016, were $4.4 million consisting of $2.8 million of R&D and $1.6 million of G&A. The company's net loss for the 3 months ended December 31, 2017, was $1.5 million or $0.11 per share compared to $2.4 million for the 3 months ended December 31, 2016, or $0.28 per share.

And now I would like to turn the call back to Marty.

Thank you, everyone, again for your attention this morning and taking part in our conference call. I would also like to thank our entire Spring Bank team for their great work in 2017 and their efforts in moving our programs forward.

With that, we'll now open up the call to a brief Q&A session. Operator?

(Operator Instructions) And our first question today will come from Katherine Xu with William Blair.

I'm wondering where you said about the HBV curing strategy needs to develop tailored approaches for different populations, can you elaborate a little bit on that. And also looking to advancing to a Phase III for inarigivir puts probably an income ratio with a nuke mid-2019. What kind of hurdle do you need to achieve with the Phase II study to be able to advance into the Phase III?

Sure. Let me take that question first and then I'll go to the second. So the hurdles we believe at this point we need to achieve is, of course, is identifying our dose range, which is the key to our Part A of the ACHIEVE trial, the dose range as monotherapy. And then, frankly, a dose range, more importantly, when inarigivir is dosed with tenofovir. And that's the purpose of Part B of the study, of our study, and the purpose of what Gilead is doing with Vemlidy. So we'll be in a position by likely the first quarter of '19 to know -- we will know the dose range as monotherapy. We should know a good sense of the dose range when used in combination with a nuke. We have already begun and are doing our chronic dosing work in 2 species. That is already underway going well. We'll have those data. We should be in a position to know the commercial scale final drug product process. So I would say those are the key elements. In addition to that, we're doing other work looking at drug-drug interactions, renal excretion, other data that will just make our submission or our discussions with the agencies even more fulsome. So we believe, all taken together, near the latter part of the first quarter of next year we should have all the datasets we need to have a deep discussion with the FDA, the EMA and other regulatory authorities about our pivotal program. To your other question, Katherine, about differing (inaudible) strategies, quite frankly, as you know, the data in HBV is still developing. We have this belief today, as I said in my comments, certainly (inaudible) believes this, that this population is heterogeneous, and we're still having discussions with our key opinion leaders, other advisory boards on this. But we want to be in a position to try and demonstrate that immunomodulation needs to be at the center of any combinatorial treatment, hence the reason we're looking at all these multiple combinatorial development strategies.

Next, we'll move on to Madhu Kumar with B. Riley FBR.

Thinking about immune stimulation in hepatitis B, what do you think is the most relevant signal for [demonstrating that a] drugs (inaudible) hepatitis B?

Well, certainly, as you know, more and more is developing in the field. We believe that an important emerging biomarker is the effect on HBV RNA, and as a result as that data develops we're paying close attention to that. I think I would probably punt to Dr. Stephen Locarnini, who's going to give a deep discussion on this at EASL, but I think it's clear that there's an emerging view in the field of chronic HBV, the treatment, that HBV RNA could be a critical biomarker that is pivotal for understanding the potential for loss of surface antigen and ultimately for clearance of the virus.

Okay. And thinking about SB 11285 and the idea of conjugating this to an antibody, I mean, the natural assumption would be you would conjugate it to a checkpoint, but is there any other type of therapy which would kind of make good intuitive sense to chemically conjugate a STING agonist to, presented from an antibody perspective?

We're looking at -- the simple answer is we don't know the answer. We're doing work with different compounds. We have an arrangement, as we've disclosed before, with a major ADC firm that's looking at different proprietary antibodies. We don't know the answer yet. As we do this work, we do know that it appears that our compounds are capable of being conjugated, linked, if you will, with other compounds. But we have much work to do yet, Madhu, and we simply don't know whether one compound would be better suited for conjugation with our STING agonist than another. We simply don't know to this point.

But the mid-'18 or the second half '18 IND/CTA filing will be that 11285 (inaudible).

Oh, yes. Yes, that's 11285. Right, we're going to go into the clinic -- yes, the IND and/or CTA that we submit will be for the administration of SB 11285 alone in hepatocellular carcinoma. We'll first examine the intratumoral delivery and then expand that study to include the intravenous delivery. And as I said in my prepared comments, our current CTA and IND-enabling toxicology is examining the use of the intravenous route and thus far has gone very well.

And at this time, I would like to turn the call back over to the speakers for any additional or closing remarks. That will conclude the Q&A session.

Great. Again, thank you everyone for listening today. We have a very busy 2018 ahead of us. We'll certainly keep you apprised of our developments, particularly here in the first half of the year. As we pointed out, there are a number of milestones that we're working towards and data readouts throughout the balance of the year and early 2019. Thank you for your support, and we'll continue to communicate with you as we develop our data and build our business. Have a good rest of the week.

And that will conclude today's call. We thank you for your participation.