Lyra Therapeutics Inc (LYRA) 2020 Q4 法說會逐字稿

Welcome to the Lyra Therapeutics fourth-quarter and year-end 2020 financial results and corporate update conference call. (Operator Instructions) As a reminder, this call is being recorded today, March 9, 2021.

I would now like to turn the conference call over to Laurence Watts, Managing Director of Gilmartin Group. Please go ahead.

Thank you, Carrie. Joining us on the call today from Lyra Therapeutics are President and Chief Executive Officer, Maria Palasis; Chief Financial Officer, Don Elsey; Chief Medical Officer, Rob Kern; and Senior Vice President of Commercial Strategy and Market Development, Corinne Noyes. Earlier today, Lyra released financial results for the fourth quarter ended December 31, 2020. If you have not received this news release or you [would like to] be added to the company's distribution list to receive future releases, please go to the Investor Relations [section of our] website, which can be found at www.lyratherapeutics.com.

During this conference call, management will make forward-looking statements, including statements related to Lyra's financial results and guidance for 2021, and the clinical development of the company's product candidates, business strategy, and planned operations. These forward-looking statements are based on the company's current expectations and inherently involve significant risks and uncertainties.

Lyra's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of these risks and uncertainties. Factors that could cause results to be different from these statements include factors the company describes in the section titled Risk Factors in the company's annual report on Form 10-K filed today, March 9, 2021.

Lyra cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events, or changes in its expectations.

With that, I will now turn the call over to Maria Palasis, CEO [of Lyra] Therapeutics. Maria?

Thank you, Laurence, and welcome, everyone, to Lyra Therapeutics' fourth-quarter and full-year 2020 financial results conference call. 2020 was an exciting and successful year at Lyra, culminating in the release of our LANTERN Phase 2 trial results in December and the completion of enrollment in our 24-patient pharmacokinetic clinical study, both despite the ongoing global COVID-19 pandemic. We believe this bodes well for future enrollment in our pivotal Phase 3 programs.

Before I turn to the LANTERN results, let me remind you of some recent key appointments that Lyra has made. Recently we were joined by Dr. Robert Kern, who has been appointed as our Chief Medical Officer. Rob is a renowned otolaryngologist and a world-leading expert in chronic rhinosinusitis. He is the Chair of otolaryngology at Northwestern University and the immediate past president of the American Rhinologic Society.

As a practicing otolaryngologist, he knows firsthand the enormous need for new treatment options for patients with chronic rhinosinusitis or CRS, and we are delighted he will be overseeing the next phase of clinical development for LYR-210 and LYR-220.

In the fourth quarter, we also expanded our Board of Directors through the appointment of Dr. Nancy Snyderman. We were pleased to have Nancy join our team and look forward to leaning on her extensive E&P experience as a Board-certified otolaryngologist and head and neck surgeon.

As you know, Lyra's first area of focus as a company is in the treatment of chronic rhinosinusitis, for which there are an estimated 8 million patients treated each year in the United States with roughly half of them failing current medical therapy. The market for these failed patients is estimated to be $6 billion annually just in the United States. The problem and opportunity is even greater when the ex-US markets are considered.

Lyra has designed LYR-210 and LYR-220 to be disease-modifying and best-in-class for CRS patients who are currently underserved by medical management. Having now demonstrated effectiveness in our Phase 2 for underlying XTreo platforms, Lyra intends to use LYR-210 and LYR-220 as the foundation on which we build a leading ear, nose, and throat company.

Turning now to our LANTERN study results, let me just say that we were very pleased with the data and the patient experience that resulted from this trial. Our LANTERN Phase 2 trial showed that CRS patients treated with 7,500 micrograms achieved a statistically significant improvement in their symptoms at several time points compared to the control including 24 weeks, the intended treatment duration for our product candidate.

As such, Lyra believes that the results of this randomized, controlled, blinded clinical trial support a clear path to regulatory submission for LYR-210 and also provides sufficient insight and data to enable us to move the program forward to a pivotal trial, subject to an end-of-Phase 2 meeting with the FDA. This meeting is planned to take place before the end of the first half of this year.

Following agreement on the design of the single Phase 3 pivotal trial that we believe will be sufficient to complete our registration package under a 505(b)(2) new drug application, we anticipate initiating the pivotal study for LYR-210 at the end of 2021. As a reminder, the LANTERN trial was completed with 67 patients. This was reduced from the planned enrollment due to the COVID-19 pandemic.

The 67 patients were split into three treatment arms of 7,500 micrograms, 2,500 micrograms of mometasone furoate and a control, and were evaluated for improvement in the four cardinal symptoms of chronic rhinosinusitis at four weeks and up to 24 weeks in addition to other secondary endpoints.

We were excited to see a statistically significant treatment effect at 24 weeks for the 7,500 microgram dose in both the four cardinal symptoms and SNOT-22 scores. This gives us confidence that LYR-210 can be an effective therapy for up to six months. Additionally, we saw improvement relative to control at earlier time points in both the four cardinal symptoms and the SNOT-22 symptom scores.

Another key takeaway from the LANTERN trial was demonstrating the safety of the 7,500 microgram dose of mometasone furoate, 3 times the dose we used in our Phase 1 trial. At this dose, 70% of patients achieved the minimal clinically important difference at four weeks as measured by the SNOT-22 score, and 100% by week 24. On the back of this data, we plan to move forward with the 7,500 microgram dose for our Phase 3 program.

Based on the observed rapid and durable symptom relief over 24 weeks, we believe LYR-210, if approved, would deliver a major step forward in care for CRS patients who are facing surgery as their next treatment option. We intend to present the full dataset from the LANTERN study at COSM, the Combined Otolaryngology Spring Meetings, which is being held from April 7 to April 11.

We believe the results of the trial support a clear pathway to pursue a larger pivotal Phase 3 trial for LYR-210, and a proposed 24-week primary endpoint based on the cardinal symptoms of CRS, the FDA's preferred measure of efficacy.

Importantly, the LANTERN results also support Lyra's proprietary XTreo platform, which is designed to deliver a drug directly, continuously, and consistently to diseased tissue over a sustained period of time via a single administration. Because of this, the LANTERN study gives us confidence to advance LYR-220, our second program that will utilize the XTreo platform for chronic rhinosinusitis patients who have previously undergone surgery and require ongoing medical management.

Approximately 40% of patients who see an ENT have had a prior nasal surgery or even multiple surgeries. LYR-220 utilizes a larger matrix than LYR-210 and is designed to adapt to the anatomy of these patients. Given the positive results from our LANTERN study, we now plan to initiate a Phase 2 study for LYR-220 using the 7,500-microgram dose in the second half of 2021.

Furthermore, we are continuing to see versatility in the XTreo platform, which we believe has potential applications and many additional indications beyond CRS where long-term delivery to treat chronic diseases with improved local drug bioavailability and enhanced efficacy and safety.

The LANTERN study showed that XTreo can successfully deliver continuous therapy for up to six months. We believe XTreo to be tunable with regard to the drug being delivered and the period of delivery, which provides us with multiple expansion opportunities, either as additional internal development programs or as partnerships.

Before I turn the call over to Don to discuss our financials, let me allow Dr. Kern, our newly appointed Chief Medical Officer, to share his own perspective on the LANTERN study.

Thank you, Maria. I'm very pleased to join Lyra Therapeutics as CMO, an appointment I accepted after the company released data from its Phase 2 study of LYR-210. As you can see, I have quite clearly voted with my feet. As a practicing otolaryngologist with many years of experience working with companies to develop new products to treat CRS, I believe the LANTERN study has demonstrated that LYR-210 is the first nasal implant to achieve a benefit of up to six months in CRS patients after only a single administration in a simple clinical outpatient office set.

The prolonged treatment effective of LYR-210 is impressive. Currently no therapy can deliver 7,500 micrograms of mometasone for extended symptom relief. Patients often forget to use daily medications. And we believe this product candidate provides the potential to eliminate the need for patient compliance for a full six months with a single office visit.

There is no doubt that mometasone is an effective anti-inflammatory treatment for CRS. The limitations relate to compliance and drug delivery. What LYR-210 has the potential to do, unlike any currently available therapy, is to eliminate both these limitations by delivering mometasone continuously and directly to the affected tissue for a prolonged period of time, thus exerting maximum therapeutic effect and maximum symptom relief for patients.

Together, LYR-210 and LYR-220 have the potential to offer ENT physicians a full range of CRS treatments, regardless of whether or not patients have had prior sinus surgery and whether or not they have had polyps. I believe that such a comprehensive offering will be very appealing to ENT physicians worldwide. In my experience, CRS patients would much prefer to avoid surgery if at all possible. It can be painful and it's often not curative as most patients continue to require medical management even after surgery.

I believe the data and the experience generated from the LANTERN study position us quite well to design a successful Phase 3 pivotal trial. Subject to eventual FDA approval, I believe LYR-210 has the opportunity to change the current treatment paradigm for CRS patients.

With that, I will now hand the call over to Don to summarize Lyra's financial results for the fourth quarter. Don?

Thank you, Rob. Starting with our cash and cash equivalents balance, we ended the fourth quarter and the year with $74.6 million compared with $81.6 million as of September 30, 2020. Total operating expenses for the fourth quarter were $7.1 million compared to $4.4 million for the same period in 2019. Net loss for the fourth quarter and the year were $7 million and $22.1 million, respectively.

The earnings release we issued today outlines our financial results in full. So I will not go through the details on this call. In terms of financial guidance, we believe that Lyra has sufficient cash to fund the company through planned operations into 2023. Finally, Lyra's shares outstanding as of December 31, 2020, were approximately 12.9 million shares.

And with that, I'll turn the call back to Maria.

Thank you, Don. In the coming months, we have several milestones that will prove pivotal for the company. These include an end-of-Phase 2 meeting with the FDA for LYR-210 and the initiation of our Phase 2 study for LYR-220. Before that, however, we will have two additional data announcements to share with you, which will be the results from our 56-day US-based PK study of LYR-210 in the second quarter, and the presentation of our full LANTERN dataset at COSM in April.

In January, we announced a PK study, the first involving US patients, had completed enrollment at 24 subjects, an achievement in and of itself considering the ongoing COVID pandemic. The lead enroller in the PK study recently commented on LYR-210's ease of application and deployment during an analyst call. Some of the comments regarding his experience include that LYR-210 was satisfying, quick, and painless to administer, and the learning curve for administration was fast, and would likely be so for other ENTs.

In summary, Lyra remains dedicated to providing solutions across the continuum of care for millions of sinus sufferers. Our product pipeline is well aligned with the needs in CRS, and we're pleased with the clinical results to date. I think physicians share our enthusiasm for the impact our technology will have for their patients. I'm also incredibly proud of the extraordinary team we've built at Lyra. We have accomplished so much since we went public just under a year ago, and we continue to believe we have all the ingredients for success.

That concludes our prepared remarks for today, and we'd like to now take some questions. As always, thanks for your continued interest and support. Carrie, we can go ahead and open up the line for questions.

(Operator Instructions) Chris Howerton, Jefferies.

Excellent. Thank you so much for taking the questions, and congratulations on the progress.

Thank you, Chris.

Great. Yeah, of course. So maybe just a couple questions for me. First on, maybe just a housekeeping question. With respect to the presentation at COSM, can you highlight what new information we will be able to receive at that time relative to the topline results from December? So that's one question.

And another question that we have is thinking about the eventual reimbursement strategy that you've discussed in the past, I think, has primarily been focused on buy-and-bill, but I believe you've said that you're willing to see how things shape in the market. So I guess the question is, do you have any evolved view in terms of whether or not you like buy-and-bill still or if you're considering exploring the specialty pharmacy route?

And then the third question is one of the things -- we had some KOL discussions recently, and one of the things that the physician we spoke to found very interesting was the idea of halting the disease progression. So starting earlier in terms of the treatment paradigm and the disease progression. So I guess I'd be curious to hear Dr. Kern's comments on that, and how LYR-210 could potentially be changing the eventual treatment landscape. Thanks.

Thank you, Chris. I can start with the question related to COSM and then on I'll turn it over to Corinne to provide her thoughts on reimbursement and then Dr. Kern on the comments by Dr. [Oh] . So we look forward to presenting our results at COSM, and that will take place, as I mentioned, the first week of April; it will be April 11. We will be presenting data on each cardinal symptom of chronic rhinosinusitis.

As a reminder, the symptoms are nasal obstruction, nasal discharge, facial pain, and smell. Those are the four symptoms. And we'll have results on from -- as it pertains to each of those symptoms individually in addition to the composite scores. We've already shown the composite of four cardinal symptoms and the SNOT-22 score. We'll also show the composite of three cardinal symptoms.

In addition to that, we will also be showing our objective results by MRI. So we assessed inflammation using MRI. We'll be sharing those results. And then finally, we will also be showing results for patients that both have polyps and patients that don't have polyps. And this will all be new information.

The second part of your question (multiple speakers) reimburse -- yeah. Go ahead, Corinne.

Hi, Chris. This is Corinne Noyes. To answer your question about our reimburse and distribution model. Of course, we're going to continue to evaluate the most appropriate strategy as we progress through development. But our plan right now is to have a hybrid approach that incorporates both a buy-and-bill model as well as specialty pharmacy.

There are some physicians who will enjoy the benefits of a buy-and-bill model. But there are others who will prefer the ease of a specialty pharmacy, and some payers that will require going through a specialty pharmacy network. So we envision having a hybrid distribution and reimbursement model that incorporates both buy-and-bill and specialties pharmacy.

Okay. Very clear. Thank you.

Hi, this is Rob. Corrinne, I'll interject now. You asked about whether -- if I understood your question correctly, whether this device might more or less arrest disease progression. Is that what you're asking?

Yeah, I mean the nature of the question is essentially, yeah, that you could arrest disease progression and alter what the sequelae are from a treatment perspective. Like do they even have to have a surgery, for example?

Well, I think that's -- yes. The short answer is yes, I think that will almost assuredly be the case. Again, assuming that we get FDA approval and all the other. But that would be one role for the product that -- if you look at what limited epidemiological studies have been performed, there's usually about a six-month period beforehand where patients start to get really symptomatic and then they get diagnosed with chronic sinusitis. So there's at least six months, maybe a year or so, when they're suffering and maybe they haven't fully been diagnosed yet.

I think the awareness of a product like this -- again, assuming we come to market and get FDA approval -- that intervention early might very well prevent the progression of disease because the physicians and eventually the patients become aware that products like this are out there. So the short answer is yes. And hopefully that long answer provided a little more clarity.

Yeah, maybe if you don't mind a quick follow-up there, I guess. Is that something that you think would be interesting to collect data for in terms of long-term follow-up? Like whether or not patients that received LYR-210 are progressing to surgical procedures. Is that something that you think collect in a clinical trial setting?

You're talking like a -- go ahead.

Yeah, maybe -- Chris, I can mention that in our Phase 2 study, we followed our patients that had LYR-210 for six months and then after the six months the implants were removed. We continue to follow those patients, and this is ongoing, for an additional six months. So it's an excellent question, and we are tracking those patient symptoms.

So we will have a sense for when their symptoms returns, when the Phase 2 study is fully completed. And maybe -- one thing that I think Dr. Kern can probably speak to is that with oral steroids, I believe when patients do come off those oral steroids, their symptoms do tend to recur pretty quickly.

Yes, that's correct. We're speculating here, but I would imagine that if we bring the product to market that patients who do well on it will get it every six months. That's certainly the way Intersect, the -- the Sinuva product is used, and this would just offer a longer duration and hopefully prevent the progression to surgical level of morbidity.

And from a measurement standpoint, Chris, we're going to be in the Phase 3 assessing the percent of patients that no longer require surgery. So we'll have an outcome measure which maybe is partly what you're asking for as well.

Yeah.

And so we will have an assessment of does this patient still require surgery if they required surgery at time of entry. So we know that will be important for payers and that will be a proxy for our benefit in terms of preventing surgery.

Understood. Okay. All right, great. Thank you very much.

Thank you, Chris.

Robert Hazlett, BTIG.

Hi, thanks. It is Bert from BTIG. Hope you're well. Just hit a quick question or two on the upcoming pivotal study. First off, with the arrival of Dr. Kern, are there any elements of the study that might be either tweaked or considered or added in terms of either the primary endpoints, in terms of timing, or three cardinal symptom score, or any secondaries that you might want to include with the study? I've got one or two more after that.

Sure. So Bert, thanks for the question. We had a -- what we would consider a very successful Phase 2 study. So we are certainly going to keep our inclusion/ exclusion very similar to what we did in Phase 2. With respect to the endpoints, we are -- as we mentioned, we will be using the cardinal symptoms. We have not yet determined or announced whether we'll be using the four cardinal symptoms or the three cardinal symptoms. It is our understanding that the FDA would prefer two or more cardinal symptoms.

So we will let the data guide us. And after our end-of-Phase 2 meeting, we will be able to announce which composite we will use. But the primary endpoint will be cardinal symptoms. And as I mentioned, we are planning that the time point will be at 24 weeks as our product is a six-month product. And so six months duration is most appropriate for it.

Given the recent approval of antibodies now, there's also precedence for that, which there wasn't when we initiated the trial. So that's kind of how we're thinking about it. And the other area that is also we have previously stated, we are expecting the trial size again to be about 300, 350 patients.

Terrific. Thank you for that color. And just with regard to potential enrollment timing, you just mentioned the US-based PK study enrolled well, rapidly, and great to hear that. Any sense of what that might portend with regard to enrollment timing for the pivotal study?

It really is too early for us to provide a perspective on how long it will take to enroll the study. We certainly will do that after we have our end-of-Phase 2 meeting. But at this point, it really is too early to state.

Okay, thanks. And then just a question on LYR-220. Could you give a little bit more detail on the Phase 2 that's upcoming? Will this mimic LANTERN in terms of size, scope, and opportunities? Or will it have a slightly larger or smaller or different focus? Just any additional color with regard to the design, size, and maybe timing of that study.

Sure. So the study for LYR-220, we anticipate it being approximately 40 patients. This is a study that will also include the 7,500-microgram dose prior to the end of the LANTERN study. We were uncertain which dose but we've now clearly made the decision, and we're going to be moving forward with that dose. And another interesting aspect is that we have actually two designs for that 220 matrix that we are considering. So that'll be different from LYR-210.

So LYR-210 had the two doses, one designed in this situation. We actually have two candidates designed and both of which deliver 7,500 micrograms and both of them from our XTreo platform. We see it as very derisked. So we're going right into the Phase 2. And we're on target to start that study in the second half of 2021.

Terrific. I appreciate the additional color. And with regards to the -- just the one more for me. With regard to the XTreo platform more broadly, you've clearly got your hands full with LYR-210 and LYR-220, and the development going on there. But should we expect anything in the near- to mid-term with regard to XTreo additional opportunities?

We do agree that the XTreo platform definitely lends itself to the treatment of many other areas. We can make the platform very small to fit into the tight spaces within the ear or other places in the sinus. We are, as you said, very focused right now on LYR-210 and LYR-220 and getting those trials started. However, the work that we do in other areas at this point is really around the market research and meeting with physicians. We're still a ways away from clinical work in those programs.

Okay. Terrific. Thank you so much. Appreciate it. Congratulations on all the progress.

Thank you, Bert.

Ash Verma, Bank of America.

Hi, there. This is Ash. Thanks for taking our questions. Congrats on the progress. So I had a couple of questions. The first one was just on the pharmacokinetic study. Can you remind us the design of this trial, and what are the expectations for the reserves? What would you consider to be a win in this situation?

Second question pertains to just on the financial guidance, I think last year, you mentioned [I think] specific guidance for the financial year 2020 around $60 million, $70 million, finishing around that. You certainly did not spend that much. Curious why you choose not to have a similar cash burn guide for this year?

And then the third question that I had was just around the FDA meeting. Is that scheduled, or do you need to still schedule it? And what are some of the discussion points that you have in the agenda for this meeting?

Thank you, Ash. So I will start with the PK study design. We started the PK study in the fall. And it was while the pandemic was going on. The goal was to enroll 24 patients. 12 of those patients were enrolled at the 2,500 micrograms and 12 at the 7,500 micrograms. And we were able to enroll all the patients, and we did it all within the fall. So we were thrilled that we were able to execute that study.

The design of the study are -- we're taking blood draws from these patients and determining the level of mometasone furoate in the blood. The characterization that we're going to -- that we need to do is a 505(b)(2) product and would be required for the NDA.

And what it allowed us to do is get some experience in the US, and that experience that we have with the US sites is going to serve us well in the Phase 3 trial. We will be announcing results from that study in the second quarter of 2021. And that study is still ongoing.

Yeah.

Let me maybe take your third question and then Don can take your second question. So the FDA meeting, what I can tell you is that we have been in contact with them. Again, we will be having that meeting. It's planned for before the end of the second quarter.

And so that's planned at this point with the FDA, and our goal at that meeting is to review the LANTERN study results, and then to propose our plan for the Phase 3, and to get FDA's feedback. Again, we've had extensive conversations with the FDA in the past. So we'll be continuing those at this end-of-Phase 2 meeting. Don?

Great. Ash, this is Don. Glad you could join us today. If I understood your question correctly, you were asking why we weren't giving guidance for 2021 specifically. Is that correct?

Yes, that's right.

Okay. Yeah, when we took a look at giving guidance, Ash, it really was -- we're starting a Phase 2 for LYR-220; a Phase 3 for LYR-210. We're doing tech transfer, and we really felt it was probably a little less meaningful externally as to whether it fell on this side of 12/31 or it fell on the other side of 12/31.

So we thought it was more meaningful to give a total cash guidance and saying that our resources would take us into 2023 on all of those programs that span a year-end yardstick, if you will. It was that simple.

Okay. Got it. Great. Thank you so much.

Thank you, Ash.

(Operator Instructions) Tim Lugo, William Blair.

Thanks for taking the question. It sounds like this will be covered in the upcoming data release, but maybe broadly, can you just discuss around efficacy of the cardinal symptoms as individual symptoms? Were there any that deviate from the others? Or were the results consistent across the cardinal symptoms in LANTERN?

And then also Dr. Kern, I appreciate that you know much more about ENT field than any of the financial analysts on the call. But I'd just love to hear your thoughts around really how a six-month treatment will change this area of the field, and what really brought you to joining the Lyra team?

(multiple speakers) Go ahead.

Yeah, why don't I go first with the cardinal symptoms and then Rob, you can take the next one. So we have shared the four cardinal symptoms and that composite. And so because we see such a dramatic effect in the four cardinal symptoms -- we see over -- that the high dose of -- a change of about 2.8 points at four weeks and nearly 5 points at 20 weeks, and it's comprised of those four symptoms.

So what you would expect is that each of those symptoms is having a significant effect here. So we will be showing each of those when we do our full data release. I can't share that with you now. But certainly since the disease is defined as a cardinal symptom, as you would expect, we are seeing an improvement in those.

And then as we had also mentioned earlier, our patients are both polyp and non-polyp patients. Non-polyp patients sometimes have less of an effect on smell. And so we'll be sharing those results also with you. The effect on smell in addition to nasal congestion, nasal discharge, and facial pain and pressure.

Interesting. Thank you. And Dr. Kern, maybe what brought you to join the team, and your thoughts around LANTERN?

Well, I mean, I think that this really is a product that has the potential to change the way I practice on an everyday basis. I am maybe boring to take care of people with runny noses and sinus problems, but that's my lot in life and it's been that way for 30 years. I've been involved with many companies, as we've talked about.

From the biologics, [the] usually expensive things to -- I was the national PI in the Resolve trial that got -- brought Sinuva to market. But this is a product that has a much longer duration of action. Six months really is a game-changer. It's not every two months, it's six months. And so getting involved here -- and plus, I knew the team here for a while now, and they were very pleasant to work with.

And I thought this was an opportunity for me to move out of the clinical space and the laboratory space. I work with 30 basic scientists. We have at Northwestern more NIH research money than the entire country combined for sinusitis. And this was an opportunity to take that practical laboratory experience and actually bring it to patient care in a product that I thought really could make a difference. So that's why I'm here.

Well, Dr. Kern, as a CRS sufferer, I appreciate your dedication to those of us with runny noses and facial pain and all of that that comes along with CRS. Thank you.

Thank you.

I am showing no further questions at this time. I would now like to turn the conference back to Maria Palasis.

Thank you, Carrie. In May we plan to attend virtually the Bank of America Healthcare Conference, and we welcome requests for meeting then and in the interim. With that, I would like to thank you all for participating in today's call. Have a great rest of your day.

Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you all for your participation, and have a wonderful day. You may all disconnect.