Inventiva SA (IVA) 2023 Q2 法說會逐字稿

Good morning, good afternoon, everybody, and thank you for joining us on our 2023 half year financial results webcast. So I know you're familiar with that, but before we begin, so please read the disclaimer on slide 2 to remind everybody that various statements that we may make during today's conference call, during Q&A session, we'll include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

So with this message, let me just present you what we will be doing today. So as usual today with me are Pierre Broqua, our CSO and Co-Founder; Jean Volatier, our Chief Financial Officer; and Michael Cooreman, our CMO. And we have a bit of a different format this year. We will provide some corporate highlights, then Jean will go through the financial highlights. We'll have the Q&A, and then we'll have some closing remarks.

So let me turn to the highlights. It's been a very busy first half, and I would say very exciting for Inventiva. And I'll start by going over some of the key highlights regarding our key program, lanifibranor, including an update on the global Phase III, NATiV3; our Phase II combo study with lani and empagliflozin; and of course, come back on the investigator-initiated study in patients with Type 2 Diabetes and NASH.

If we will look at the NATiV3, we continue enrollment, of course, in the Phase III, which evaluates lani in other patient with non-cirrhotic NASH and F2/F3 stage of liver fibrosis. In January '23, after FDA meetings, we have announced some key changes to the design for our Phase III, which make the study more attractive for the site, but especially more patient friendly due to some key changes. For example, we have reduced the number of biopsy from three to two. From a patient standpoint, it does not have to sign a content for a duration of up to seven years but only to 120 weeks.

We have added an active extension study providing an option for all patient, especially those on placebo, to access with treatment arm when they completed their 72-weeks treatment. In addition, we are running an exploratory cohort, which randomized patients who are screened failed on histology from the main cohort.

On this trial, I'm very happy to share that Professor Steve Harrison has accepted to be the Principal Investigator of the exploratory cohort. Given the large number of biomarker that will be measured in a non-invasive test that will be performed, we valuable information. On the large patient population, which include patient with a fibrosis stage, which will range from F1 to F4. So extremely happy to benefit from the support of Steve for this trial.

This new design has been implemented since the beginning of the year. And now we have over 80% of our sites that are adopted this new protocol, and we start to see major improvements. For example, the enrollment rate has doubled in size under PF4 that have adopted this protocol for more than three months.

And then also we're very happy to see that screen failure continues to decline month on month, and this was a trend that started in September '23. We have not changed our target. We'll enroll the last patient to meet these three for the end of this year. In parallel, it's also important to highlight that two Data Safety Monitoring Board have taken place, with our recommendation to continue the trial without modification to the study protocol.

Concerning baseline characteristics, we have analyzed the characteristic of the patient randomized in the Phase III compared to the Phase IIb. It's not a surprise, even we apply very similar screening criteria, the characteristic between the two population is similar, except for a higher percentage of patients that have Type 2 Diabetes enrolled in the Phase III.

This is not foreign to the contrary, given that in the Phase IIb, the responder rates of the primary endpoint of the Phase III, which measures patient with both NASH resolution and fibrosis reduction. While in the Phase IIb, the general population versus patients with diabetes, we saw similar responder rate. But the placebo effect was lower in the patient with Type 2 Diabetes versus the general population, 3% versus 7%.

Under the new design, we will have an outcome study, which we'll evaluate the separate Phase III clinical trial patient with NASH and compensated cirrhosis, an approach that we discussed last year with the FDA following the public communication that the agency made in '23. The strategy allowed to conduct a confirmatory trial that is easier to implement versus the one contemplated in the original design. It will allow us potentially to expand the addressable population beyond patients with F2 and F3 fibrosis to patient with NASH and compensated cirrhosis.

So that's for the NATiV3. Let's now turn to licensing.

You know that we have been -- we have embarked in the licensing strategy. And we're very pleased on the progress made by our partner in China, Sino Biopharm, CTTQ. In May, the Sino Biopharm, to whom we have licensed lani for the development and commercialization in Mainland China, has received IND approval from the Chinese NMPA that allow us to initiate lani clinical development program in China.

Sino Biopharma has elected to join our global pivotal trial. And we are pleased to report that the first sites have been activated this week, and that the first patient has already been screened. We are in the process of activating a total of 61 sites in China, who we've screened and randomized into our Phase III NATiV3 clinical trial.

With the activation of the first site in China, we can now expect soon a milestone payment upon enrollment of the first Chinese patient in NATiV3. So that's the update for NATiV3.

Let's now turn to the other study that we're conducting. The first, as you know, we reported during the first half positive top-line results for the investigator-initiated study conducted by Professor Ken Cusi, evaluating lani in patient with NAFLD and Type 2 Diabetes. The study achieved the primary efficacy endpoint, demonstrating a 44% reduction in hepatic fat measured by photo magnetic resonance, following 24 weeks of treatment in patient with NAFLD.

Beyond that, the study demonstrated that a significantly higher proportion of patients achieved a greater than 30% liver triglyceride reduction as well as NAFLD resolution with lani compared to placebo. And then their report on the study demonstrated a significant effect on a series of secondary endpoints. Lani treatment significantly improved both hepatic and peripheral insulin sensitivity, which translated into better glycemic control.

And also, we improved the adipose tissue dysfunction with a robust increase in plasma adiponectin. We really have now -- we've seen product data from two separate trial showing the efficacy and the benefits this compound could provide to patient with NASH. Of course, in the study with Professor Cusi, the treatment with lani, it's 100 milligram once daily for three months, was well-tolerated with no safety concerns reported.

We have submitted this good result, this promising results to the upcoming AASLD Congress. And we plan to have them published in the peer-reviewed journal. Concerning our Phase IIb combo study with lani an SGLT2 inhibitor empagliflozin, we expect to have the first result of this study called LEGEND for the end of Q1 '24.

Before I turn to Jean, let me give you two key financial milestones that were met recently. In August, we conducted a capital increase of approximately EUR35.7 million, consisting of two transactions. A capital increase of approximately EUR30 million, and then there was the issue of Royalty Certificate for an additional EUR5 million. Of course, the vast majority of this capital increase will be primarily focused to finance the future (inaudible)

And then very recently, we announced a deal concerning Japan and Korea, with a licensing agreement with Hepalys Pharma to develop and commercialize lani in Japan and South Korea. Hepalys Pharma is a new company created by Catalys Pacific, and Inventiva (inaudible) exercised its right to acquire 30% of this company.

Why we chose Catalys Pacific? It's because they are an investment firm with a large experience in creating and financing venture capital-backed biopharmaceutical companies to develop a product.

Especially in Asia, they have an experienced management team, which is easy to discuss with. We're exactly in the same level. And on top of that, they are backed by, I would say, top-class investor. On top of Catalys Pacific, you have Mitsubishi, DBJ Capital, MEDIPAL.

We are eligible to receive $10 million upfront payment. And on top of that, we have an additional $231 million clinical regulatory commercial milestones in addition to tiered royalties that start from mid-double digits to low 20s based, of course, on the net sales of lani in these territories. We're also interested in this partnership because Hepalys will conduct the two Phase 1 in Japanese healthy volunteers and patients to prepare and fund the Phase III to get approval in NASH in this territory.

I would also like to point out that on top of the 30% of shares that we own in Hepalys Pharma, we have the option to acquire all outstanding shares at a pre-agreed multiple of post-money valuation. And on top of that, if Hepalys receive an offer to sell the license or rights related to lani, we have a right of first [refusal].

If we take a step back, I think we have announced a couple of years ago that we wanted to license lani in China and Japan because you need local development in these territories. We have achieved that and (inaudible) path to generate already $22 million of non-dilutive funding. When we look at the global level of milestone payments we're eligible to, we are eligible to more than $500 million.

Now let me turn to Jean to provide you with an overview of our H1 '23 financial report.

Thank you, Frédéric. Good morning, good afternoon, everyone.

So you just heard that the activities have been intense in these first six months and even the last quarter. And of course, the financials are just reflecting the intense activities. First of all, the capital raise that Frédéric talked about give us the opportunity to have new shareholder on the Board on top of existing shareholders who also participated, so in particular, the new Qatar [reasons], Qatar Holding LLC who took a stake of close to 10%. This operation also gave us the opportunity to identify other fund that could be interested to be on Board after the full enrollment of the Phase III patients.

In terms of analyst coverage, we amplified the existing analyst, in particular, with the Stifel and ROTH who have initiated, and we're working on more. These two new analysts have recommended target price ranging from $11 to $27. These days, the average consensus is around EUR14 to EUR15. We fully recognize that with more than EUR200 million market cap, if -- we believe it's definitely disconnected from what we think the potential of lanifibranor asset has and compared to the competition.

So let's go through the key figures of the profit and loss accounts. So revenues close to EUR2 million this semester due to the milestones received from CTTQ after the attention of the IND in May. Other income increasing at EUR4.7 million. This reflects the increase in R&D expense, but also the first amounts we start re-invoicing to our Chinese partner.

Of course, the major financial information is the plus 81% increase in R&D expenses at EUR54 million. R&D expenses represent, to give an idea, 88% of our overall operation expense, of which more than 80% is concentrated on the lanifibranor asset and action plan and development plan.

G&A is stable at EUR6.8 million, which shows that these non-direct operational expenses are under control. And the net financial income is close to 0. We have not benefited from the foreign exchange between euro and dollars as last year because the dollar has weakened during the semester. And bottom line, we have a net loss -- we reached a net loss of EUR55.3 million compared to EUR29.5 million, and this is as expected in our projections.

Let's talk quickly about cash position, what we call our extensive cash position, meaning cash and cash equivalents and also all the term, deposit terms that are liquids, at EUR40.6 million overall. EUR40.6 million at the end of June '23 compared to EUR88.4 at the end of December last year.

So we have used EUR48 million, an average EUR8 million burn rate per month. And of this EUR48 million, differential comes from the net cash used in operating activities, obviously, EUR45 million negative. As I mentioned, you have seen that the operational activities under different studies has been very strong, and it's derived from this activity.

To conclude, the key financial highlights, when you consider all the financial and operational events, the first milestone from CTTQ, the raising of end of August, the upcoming upfront from Hepalys for the Japanese collaboration, and the next short-term milestones related to the first patient enrolled in Greater China, this should allow us to trigger at the end of the year, as planned in the contract, the second tranche of EUR25 million from the European Investment Bank. And we believe that at that point that this will allow us to operate until the beginning of the third quarter of 2024.

I think that is for the financial highlights. I will be more than happy to answer more questions at the end of the presentation, and I turn over to Frédéric for conclusion and before the Q&A session.

Thanks, Jean. I'll actually turn immediately to Q&A. So maybe Sandra, if you can give the instructions on how to ask question, and then we'll go to the conclusion.

(Operator Instructions) Ed Arce, H.C. Wainwright.

Great. Good morning. Thanks for taking our questions and congrats on the progress.

I just wanted to ask about some of the upcoming conferences. Can you hear me, okay?

Okay.

Okay. Great. I know you mentioned, for AASLD, there will be some additional data from the Phase II in NAFLD and Type 2 Diabetes conducted by Ken Cusi. I'm just wondering if you could elaborate specifically what data we can expect there?

And then just wondering as well the Renal Impairment study that you have listed in your press release, what's required for regulatory submission? Is there any other ancillary studies or data of it as necessary for regulatory submission? And I'll get back in the queue. Thank you.

Thank you, Ed. So maybe for AASLD program, maybe I turn to Michael. And then for the Renal Impairment, I don't know if Michael or Pierre want to cover that question. Let them decide.

Yeah. Sure. So at AASLD, we have two posters that are further analysis of NATIVE -- of the Phase II study. The data from the study in patients with Type 2 Diabetes and in this abstract, we call it metabolic dysfunction-associated steatotic liver disease. So we have adopted the new nomenclature.

Based on the work that we did with Ken Cusi, it is submitted as a late-breaker abstract, and that submission was this week. So we'll know soon when it's accepted. And the content is based on, largely, the data that were also presented in the press release on the top-line data. In other words, the demonstration that lanifibranor has a very potent effect on insulin resistance, not only in the liver, but also in skeletal muscles, so in adipose tissue.

And related to that, the improvement of the metabolic markers, specifically with regard to adipose tissue or steatosis in the liver. So liver fat measured with imaging, with MRI, spectroscopy-based imaging. And an improvement of lipids and glucose metabolism markers, which correspond together to the upstream data pathogenetic mechanisms genetic mechanisms of the disease of NASH.

And since all these patients had Type 2 Diabetes, we can implement the new nomenclature for this presentation. The Renal Impairment study is complete indeed with very good results. As you know, our clinical pharmacology package is otherwise complete. We have also -- we have done a hepatic impairment study, which is also complete from the enrollment perspective. (multiple speakers)

Lucy Codrington, Jefferies.

Hi, there. Thank you for taking my questions. Just a couple.

Just with regards to recruitment into NATIVE, and just reading the report, it looks like at the end of July, you had about 50% recruited. So I guess, it's just confirmation that you expect you could recruit 50% of the study or the remaining 50% of the study now by the end of the year to ensure the readout as expected in 2025.

And then secondly, just on the R&D spend, I'm just slightly struggling even with the milestones, EIB loan, and recent upfronts and raise to get my cash runway to match. And I just wonder, is there anything in the R&D from this half that won't be repeated, or whether you can disclose what proportion of the R&D spend relate to the LEGEND study, and therefore, won't be incurred next year? Just something to give an idea, or should I be expecting R&D to increase again next year? And therefore, is there anything else I should be considered to help when I'm planning -- looking at my cash runway?

And then finally, just on the plan to acquire 30% of Hepalys, does that come with any financial outlay on your part? Thank you.

Yeah. Thank you, Lucy. So I'll cover the update on recruitment.

In the last question, on Hepalys for recruitment, yes, you're right. Our target is to target the end of recruitment for the end of the year. We believe that the recent progress seen with implementation with PF4 should bring us there.

Of course, we need that old site, that have implemented the P4, show an increase like the one that have already implemented. We also rely on the new site that we're opening. We have approximately 400 sites, and we're still counting on opening new sites.

So this new site needs to also provide what they have suggest that they can provide. And I would say that also our partner, Sino Biopharm, with 61 sites in China. We also hope that they will manage to recruit as they have committed to.

On your question about the Hepalys, as we bought 300 -- not 300, 30% of the company. Yes, we have to pay for that. But it was a symbolic sum that has no impact on cash runway or absolutely not material, very low.

And concerning cash runway, I will let Jean explain and confirm that with EIB and the EUR10 million of Hepalys, we have a cash runway until early Q3 of next year.

Yes, sure. Yes. So we confirm that with all this cash in, the cash flow is okay until July, August. This is based on the fact that, of course, this year we have a very important increase in our R&D. But it's to reach -- it's definitely to reach a kind of plateau. We believe at the best of our knowledge that we would be stable overall in terms of OpEx and R&D expenses for '24 and '25. And the cash runway guidance is based on this assumption.

I think you have also asked for what next after July, of course, and I think it's a consensus. It's also why there is a negative, unfavorable pressure, I would say, on our target price. There is an overhang on which we are working. As you have seen, we are working progressively on that.

The strategic goal this year was to trigger this second tranche of the EIB. So we are working on the future financing, which could be -- using the ATM, we have noticed that we have totally reactivated the ATM program. So that is operational anytime.

We would also financial raised somewhere in the first semester because to bridge with the expenses, we need to have until the H2 '25, which is the target and objective for the HLR for lanifibranor. And we count also on some potential, additional business development activity.

You know that odiparcil, which is our other well-advanced assets, there may be some opportunities to license the product because, again, we prioritize on lanifibranor. But we do not want to leave this interesting assets in mucopolysaccharidosis. And of course, we will -- since we have met all our milestones with the EIB financing, we may also re-discuss additional possibilities.

To work with the EIB, we're going to have shortly a business update. And these are all the possibilities to continue reinforcing our cash position, short and middle term -- medium term.

Thank you.

Evan Wang, Guggenheim Securities.

Hey, guys. Thanks for taking the question. Congrats to the progress.

I know you, guys, touched on some of the baseline characteristics relative to the Phase IIb. Any more details you can share in terms of (technical difficulty) in different regions you're enrolling? And then as a follow-up, I guess, can we -- I guess, are there plans to kind of share (technical difficulty) upon completion of enrollment And as a third question, with any partnerships, can you help us think about the potential dollar amount of near-term milestones, say, in the next 12 months? Thanks.

Okay. So you were a bit cut. So I understood that your first question concerned the region we are recruiting from for NATiV3. The last question was about near-term milestone for our partnership. I could not understand the second question. If you could repeat.

Yeah. First question was more on background medicines in the trial and geographical differences and baseline characteristics. Second is, I guess, are there plans to share complete baseline characteristics upon completion of enrollment? And yeah, the third question was potential upcoming milestones.

Okay. Yeah. So I'll address the second and third and maybe Michael can discuss the patient characteristic of the Phase III arm until now.

On disclosing the baseline characteristic upon completion of enrollment, we have not discussed that internally, but it seems a good suggestion. I wouldn't see why we shouldn't do it. In terms of partnerships and milestone, we expect a short-term milestone coming from our partner in China, CTTQ, upon enrollment of the first patient in the global trial.

And Michael, do you want to discuss the patient characteristic of NATiV3?

Yeah, sure. NATiV3 is a Phase III study. So it is designed to enroll a similar patient population as in the Phase II study, which is indeed the case. The geographic reach of NATiV3 is larger than NATIVE, which was mainly conducted in Europe, which is a plus an advantage because we have data from more representative patient populations globally, which is also relevant for the United States and for the FDA.

The regions where we have -- the majority of the sites are in the United States, and the majority of patients enrolled are in the US as well. In addition, we have sites in several European countries, in the European Union and UK, in Mexico, and South America, Argentina and Chile, specifically, and in Australia, and now also in China, and also a few sites in South Africa. So we do have a geographic region that I think also addresses the requirement to have a diversity in the patient population, which is good.

Other than that would be the patient population is very similar. We see some minor differences, which I think is what you expect. For example, we have, percentage wise, a bit more patients with over Type 2 Diabetes in NATiV3 than in NATIVE, which is good I think because these two conditions, Type 2 Diabetes and NASH, have essentially the same underlying disease biology. And even patients who have NASH who do not have over Type 2 Diabetes, do have insulin resistance. So I think overall, the Phase III study, NATiV3 study is really targeting the same patient population with regard to their disease profile.

Thank you.

Jacob Mekhael, KBC Securities.

Hi, there, and thanks for taking my question. I have a few, if I may. My first question is, what outcomes would you like to see from the readout of the Phase II LEGEND trial? And could we see maybe study with other combinations in the future?

And my second question is, perhaps looking further ahead to the outcomes of the NATiV3 trial, do you expect to replicate the delta seen in the Phase II? Or should we take into account some attrition moving from Phase II to Phase III? Thank you.

Yeah, interesting question. Michael, do you want to try to give it the first stab to the three good questions?

Sure. I think with regard to what we expect from LEGEND, LEGEND is a study that includes combination with empagliflozin, a SGLT2 inhibitor, which is approved and first-line treatment for Type 2 Diabetes. The lanifibranor itself as a pan-PPAR agonist covers the entire spectrum of disease biology. And that's important aspect and strength for the compound.

So in clinical practice, treatment of patient is looked at individually for each patient. And so there may be patients who would benefit from an additional compound that involves metabolism or the disease, such as -- or very similar to the way Type 2 Diabetes is treated today, I think, would ultimately find its way in the treatment of NASH.

So we will get information on the beneficial effect of adding an SGLT2 inhibitors to lanifibranor with regard to the different disease markets. And that's one aspect.

The second aspect is you don't see an effect on the weight with lanifibranor, which is, as we have shown and has also been shown in many publications for pioglitazone, which is quintessentially different from weight gain resulting from poor nutrition or lack of physical activity. It has to do with maturation of insulin sensitive, mostly subcutaneous adipose tissue. That's been shown very clearly for pioglitazone; it's a deeper trauma effect. And our data from NATIVE are in alignment with those data [four] that have been shown from pioglitazone.

The weight gain is not a safety concern or medical concern, but it is something that some patients prefer not to see. And it is also modest. It's on the average 2.5, 2.4, 2.7 kilogram for the low and high dose, respectively. It's not seen in all patients. If you take 5% through baseline as cut off, it's one-third of the patient population.

But the combination with an SGLT2 inhibitor will actually enable us to show. Listen, you can actually take care of that if you combine the compound lanifibranor with an SGLT2 inhibitor. And the fact that this effect on weight gain can be balanced out has also been shown for a combination of pioglitazone and SGLT2 inhibitors. So that's an additional message that we will have from -- we expect to have from LEGEND when we have the interim analysis data.

Do we plan other combinations? Obviously, today, in addition to SGLT2 inhibitors in this field, the GLP-1 receptor agonists have seen in a quite explosive growth in their use for weight reduction, also, for the treatment of Type 2 Diabetes, specifically semaglutide. So while at this -- today, we don't have a planned study to actively study the combination. We do have -- we will have data from the combination of lanifibranor with GLP-1 receptor agonist.

One, we allow patients who are on a stable dose with the GLP-1 receptor agonist to enter NATiV3. So the percentage of patients who have the combination of lanifibranor and semaglutide mostly, but also other GLP-1 receptor agonists.

And then in addition to that, we have implemented an amendment that actually accommodates the fact that patients can start -- it's not recommended, but if they start the semaglutide during the 72 weeks of placebo-controlled treatment, they will be able to take the study. They are not required to be taken out of the study for the analysis or as non-responders. So patients can actually -- if they start semaglutide during the 72 weeks remained in the study, then we'll have specific subgroup analysis for that patient population.

And third, once the patients have completed the 72 weeks of placebo-controlled part of the study, they will enter the extension phase where they receive only. They will be randomized to one of the two doses of lanifibranor. And during that period, patients can also add a GLP-1 receptor agonist to the treatment. So there will be a number of sources from which we will have information on the combination of lanifibranor with the GLP-1 [metric].

Was there another question that currently --?

Yeah. But to take the last question, which is, I wouldn't say looking to a crystal ball, do expect a higher delta or higher responder rates with the longer-treatment period?

Well, that would be speculative. Of course, yes, but that's speculation. Hopefully, yes, but we cannot say that. And I think it should be based on the data when we have them.

And anyway, our statistical analysis plan, and I notice that that has led to power study at 90%. And the target recruitment of approximately 150 patients is based on the responder rates and placebo rates that we have seen in the Phase IIb. Given the mechanism of action, we could expect a higher responder rate over the -- for the patients are treated for longer period of time. But as Michael said, that would be speculative. So very prudent approach.

Yeah.

Okay. Thank you very much.

Thank you. There are no further questions at this time. I would like to hand back over to the speakers for final remarks.

Yeah. Thank you. So very briefly (technical difficulty) this moment are quite important because we can look back at what we have achieved. And I think we can be proud of what we achieved or the milestones that have been met over the last month, both for lani, and of course, for our finances.

We aim to continue this positive trend by targeting the end of recruitment for the end of the year, probably the first result of the combo trial with empag at the end of first quarter. And of course, we plan to drill the second tranche of the EUR25 million.

But more importantly, what gives us confidence in the future is our lani asset. Our lani is very well placed to make it to the finish line in NASH. We have a very competitive profile. It's an oral drug, oral compound.

And it is efficacious both on NASH resolution and has a direct anti-fibrotic activity. And on top of that, it's active on many metabolic markers. And also, we've shown recently to have a strong insulin synthesizer effect. So on top of that, given the competitive landscape and where we stand with our Phase III compared to competition, we are convinced that lani will play a key role in treating patients with NASH.

So thank you very much for attending this call. And I would say that all the IVA team and Inventiva team, look forward to seeing you all in, hopefully, in Boston for AASLD. We'll have our booth, and all our team will be there, and hopefully, meet with all of you. Thank you very much and have a great day.