Biomx Inc (PHGE) 2021 Q3 法說會逐字稿

Greetings and welcome to the BiomX Inc. third quarter 2021 financial results. At this time, all participants are in a listen-only mode. (Operator Instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Ms. Marina Wolfson, Senior Vice President of Finance for BiomX. Thank you. You may begin.

Thank you, and welcome to the BiomX third quarter 2021 financial results and corporate update conference call. The news release became available just after 6:00 AM Eastern Time today and can be found on our website at biomx.com. A replay of this call will be available on the Investors section of our website.

Before we begin, I'd like to review the safe harbor provisions. All statements on this call that are not factual, historic statements may be deemed forward-looking statements. For instance, we're using forward-looking statements when we discuss on the conference call the design, aim, expected timing, and interim, and final results of our preclinical, clinical trials and studies, including resumption of certain development programs; implications of changes in senior management; the sufficiency of our existing cash, cash equivalents, and short term deposits to fund our operations until the end of 2023; the potential to receive up to $15 million in additional loan tranches, if certain milestones are met; our pipeline and momentum; future shareholder returns and the potential of our products candidates.

Except as required by law, we do not undertake to update forward-looking statements. The full safe harbor provision, including risks that could cause actual results to differ from these forward-looking statements are outlined in today's press release, which, as noted earlier, is on our website.

Joining me on the call this morning are Jonathan Solomon, our Chief Executive Officer, and Dr. Sailaja Puttagunta, our Chief Medical Officer. With that, I will turn the call over to Jonathan.

Thank you, Marina, and good morning, everyone. In planning for the years ahead, BiomX has made the decision to prioritize the development of our cystic fibrosis and atopic dermatitis product candidates, as each has the potential to generate proof-of-concept clinical data readouts in 2022. BiomX will discontinue development of its acne program. We believe that by focusing on the efficient use of BiomX capital on selected programs that can generate clinically meaningful proof-of-concept data, we will best position our company to drive value creation for shareholders.

With this decision, we will postpone our development efforts temporarily in inflammatory bowel disease and colorectal cancer, and currently intend to resume development activities for IBD and CRC programs in 2023, assuming supportive platform data. Importantly, our new strategic focus will have a positive impact on our balance sheet. This may allow us to extend our cash runway by up to six months until at least the end of 2023.

In addition, tranches that may become available to us under our venture debt facility upon satisfaction of certain specified milestones can further extend our runway through the first half of 2024. We therefore believe that we remain well-positioned financially through our expected clinical data readouts in cystic fibrosis and atopic dermatitis.

Let me now briefly review our cystic fibrosis or CF and atopic dermatitis or AD programs. Cystic fibrosis, BX004 is our phage cocktail candidate for the treatment of lung infections in cystic fibrosis patients. It is designed to target Pseudomonas aeruginosa or P. aeruginosa, a bacteria that causes chronic respiratory infection, and is a main contributor to morbidity and mortality in patients with CF. CF patients suffer from chronic infections and typically require prolonged and repeated courses of various antibiotics. Over time, the effectiveness of these therapies begin to diminish as multidrug-resistant bacteria strains appear.

To address this significant unmet need, we have designed our product candidate, BX004 to not only be active against antibiotic-resistant strains of P. aeruginosa, but to also penetrate biofilm, an assemblage of surface associated microbial cells enclosing extracellular polymeric substance that is known to cause antibiotic resistance. In consultation with the Cystic Fibrosis Therapeutic Development Network, BiomX plans to conduct a Phase 1b/2a trial comprised of two parts.

Part 1 of the Phase 1b/2a trial will evaluate the safety, pharmacokinetics, microbiology, and clinical activity at BX004 with single ascending dose, followed by multiple doses in eight CF patients that are confirmed to have chronic P. aeruginosa respiratory infections. We now anticipate results on the Part 1 of this trial in Q2 of 2022. Part 2 of this trial will evaluate the safety and efficacy of BX004 treatment over 10 days in 24 CF subjects with chronic P. aeruginosa respiratory infections, the same population as Part 1. Results in Part 2 of this trial are currently expected in Q3 2022.

Now let me turn to our program in atopic dermatitis. In October, we were pleased to announce an agreement with Maruho for our atopic dermatitis candidate, BX005. As the leading dermatology-focused pharmaceutical company in Japan, Maruho is an ideal partner to help us maximize the potential value of BX005 in Japan.

The agreement provides Maruho with a right of first offer to license BX005 in Japan, and this offer will commence following the availability of results from a proof of concept Phase 1/2 study, which is currently enrolling patients to evaluate the safety and efficacy of BX005. We are also pleased to announce that Maruho made an equity investment in BiomX of $3 million at a premium to the market share price intended primarily to support the ongoing Phase 1/2 study. Given the depth of Maruho expertise in dermatology product development, we are pleased to enter this agreement, which provides external validation for a phage-directed approach in treating AD.

As a reminder, BiomX's phage cocktail, BX005, targets Staphylococcus aureus or S. aureus, a bacterium implicated in the development and exacerbation of inflammation in atopic dermatitis. Staph aureus is known to be more abundant over the lesional skin of atopic dermatitis patients compared to the skin of healthy individuals or non-lesional skin of atopic dermatitis patients. The target bacteria also increases in abundance and becomes dominant when the patient experiences flares.

With respect to the timing of the Phase 1/2 readout, due to a scheduling backlog from ongoing pandemic, we experienced a minor delay in meeting with the FDA to review this program. As a result, we now anticipate data third quarter of 2022.

I'd like now to turn the call over to Marina Wolfson, our Senior Vice President of Finance and Operations, to cover our financial results for the third quarter of 2021.

Thank you, Jonathan. As a reminder, the financial information is available in the press release we issued earlier today and also in more detail in our Form 10-Q, which we plan to file later today. I will walk you through some of our brief highlights. As of September 30, 2021, our cash balance and short-term deposits were $68.3 million compared to $57.1 million as of December 31, 2020. The increase was primarily due to net cash provided by financing activities, partially offset by net cash used in operating activities.

During the third quarter, BiomX raised $15 million in a registered direct offering, and entered into a debt financing agreement of up to $30 million, of which $15 million has been received. As mentioned earlier in the call, based upon the company's new strategic focus on the cystic fibrosis and atopic dermatitis programs, we now expect existing cash, cash equivalents, and short term deposits to be sufficient to fund the company's current operating plan until the end of 2023. Additional tranches that may become available to the company under its venture debt facility upon satisfaction of certain specified milestones, could further extend the company's cash runway to the first half of 2024.

Research and development expenses were $6.6 million for the three months ended September 30, 2021, compared to $6.1 million for the same period in 2020. The increase was primarily due to increased expenses related to conducting preclinical and clinical trials of the company's product candidates and an increase in stock-based compensation and salaries and related expenses, mainly due to the growth in the number of employees in R&D and clinical activities.

General and administrative expenses were $2.8 million for the three months ended September 30, 2021, compared to $2.4 million for the same period in 2020. The increase was primarily due to an increase in stock-based compensation and salaries, and related expenses, mainly due to the growth in the number of employees due to an increase in expenses associated with operating as a public company such as directors and officers insurance, and due to expenses resulting from moving into new premises.

Net loss for the third quarter of 2021 was $10 million compared to $8.8 million for the same period in 2020. Net cash used in operating activities for the nine months ended September 30, 2021, was $18.5 million compared to $17.3 million for the same period in 2020. And now I'll turn the call back over to Jonathan for his closing remarks. Jonathan?

Thank you, Marina. We are also announcing today that our Chief Medical Officer, Sailaja Puttagunta will be stepping down as CMO and transitioning into a consulting role starting at the beginning of 2022. Since joining BiomX, Sailaja has made significant contributions in helping advance our product candidates into clinical development.

We thank Sailaja for her dedication and numerous accomplishments, and we look forward to working with her in this new capacity. The steps we've taken to focus on the CF and AV programs are intended to strengthen our company, preserve our strong financial position and are expected to ultimately drive shareholder returns.

As we near 2022, BiomX remains well positioned. With our new strategic focus, we have significant opportunity to demonstrate proof of concept data that with success could produce important value inflection points. We'd now like to open the call for questions. Operator?

Thank you. (Operator Instructions) Joe Pantginis, H.C. Wainwright

Hey, good morning, everybody. Thanks for taking the questions, and thank you for the details and very efficient update. I guess two questions, Jonathan. First, with regard to the sort of postponed plans, as you described it for IBD and CRC, I guess I would ask it this way. Do you have any optionality where these programs can percolate in some fashion, either through, ISTs or potential business development activities?

Hi, Joe, and good morning. Thank you for the warm words. Definitely, you know, it's something we're looking into. I think a lot of the strategic focus is being aware of the external environment in the microbiome. So I think we want to focus on what can generate data in patients. But there's obviously continuous BD activity and sort of exploring potential partnership that can support it with additional external support.

I think we're getting interest in these programs; [there] are interested. They are interesting, but we really want to focus at least in the existing resources that we have on CF and atopic derm.

Of course, thanks. And then I guess more general question as well. We live in interesting times right now with the global supply chain constraints, et cetera. I was just curious if you've had to plan ahead or experiencing any difficulties with regard to manufacturing readiness for your existing studies and planned studies.

So I think one of the big advantages is that we have in-house manufacturing. So a lot of it we can control. But you're totally right. I think not all of it is in our control, and we do have -- we did have some supplier issues which are causing a slight delay in the CF program. So we're constantly monitoring and trying to get as much redundancy in supply chains that we can, but obviously not everything is in our hands.

Great. Thanks for the details.

Pleasure, as always.

(Operator Instructions) Michael Higgins, Ladenburg Thalmann.

Thanks, operator. Good afternoon, guys. Thanks for taking the questions. Just a follow-up here, I guess on 003, was there anything in the Phase 1a data that you didn't like? Or is it more market opportunity, cost to get to the data? Any additional help there would be helpful.

Right. So morning, Michael. I think we really like the BX003 data. I think this is a PK, you know, a PK profile as good as we could have hoped for. So I think giving phage orally does look very promising. I think to your point, we just want to be cognizant because with the data that we can generate within 2022 with BX003 is a proof of mechanism, meaning can we reduce the bacterial load in healthy volunteers.

I think that we just de-prioritize over getting data in patients, right, in CF and atopic derm. So with all the resources and a favorable environment, we'd definitely pursue all of those. I think just being cognizant of what's going on, we're putting CF and atopic derm first because they have data in patients, and can indicate not only target engagement, meaning, you know, reduction of target bacteria, but also hopefully some signals of the clinical effect.

Makes sense. Appreciate that. And then one on 004, in the trial design in the Phase 2a portion, are patients allowed to enter the trial on antibiotics? Is it basically a standard of care, plus or minus 004? Thanks.

Excellent question. I'll let Sailaja address it.

Yes, thanks, Jonathan. Yes, you're correct. It's -- the standard of care, inhaled antibiotics will be continued, and then some of them will have phage added on to them. So it's phage plus antibiotics versus antibiotics alone.

Okay. Appreciate it. I'll jump back in the queue. Thanks, guys.

Thank you. (Operator Instructions) Kristen Kluska, Cantor Fitzgerald.

Hi, good morning and good afternoon. Thanks for taking my questions. The first one I have is, could you discuss how much of this pipeline prioritization was based on understanding of the target bacteria, the potential market size, unmet need. and the early effects you've observed? And then could you please remind us of how you're thinking about the potential market opportunities each for atopic dermatitis and cystic fibrosis respiratory infections?

Sure. Good morning, Kristen. Good question. So I'll try to address. I think in terms of pipeline, I think all the programs were exciting, right? I think that's what we pursued them to begin with. Obviously, by the way, the market potential of IBD is the largest, but I think as we look at market conditions and, you know, the general market sentiment in the microbiome, we said probably the things we should prioritize are those that will generate not only reduction of target bacteria, right, but actually indication of clinical effect. I think where the investor community is, they want to see an effect with the phage intervention, which is beyond the effect on target bacteria.

So I think that's kind of the way we looked into it. Again, pending that, the opportunity to kind of make the cut have an interesting market potential, right? So that's why in CF and atopic derm, we hope to generate data in patients in 2022, right, versus the inflammatory bowel disease program, which we can generate data in healthy volunteers, mechanistic data. And, obviously, cancer is an earlier program.

So there's just additional in vivo studies. So I think that's kind of how we made the cut of what goes in into 2022. In terms of market potential, right, so atopic derm is a very large market.

We're talking about a $5 billion opportunity, it's expected to almost triple in the next five years or so based on some of the analyst reports, right, so a very large unmet need. The majority of the market is with biological, which are mostly injectable and have some safety concerns.

So there's really an appetite for something safe, especially when a third of the patient population is pediatric. So something that would potentially be topical and safe can take a large chunk of that market. So that's quite an exciting opportunity.

And we see that with incomings from potential partners, and I think the partnership we just announced with Maruho, right? In the field of cystic fibrosis, you do have the leading antibiotic that CF patients are using is selling worth of $600 million per year, right? So that's quite an opportunity. And if you can have something that could potentially be better, this could even be a larger opportunity, right?

The whole -- I think if we look at what's happening in CF, we've seen Vertex build a very large franchise with CFTR modulators, right, taking $6 billion annually. Of course, I don't think this is going to be of that extent, but it should be if it has the profile that we want, somewhere between the tobramycin, and, you know, ongoing it toward the, you know, the market's sales that Vertex has generated.

Thank you for that. And as it relates to BX001 and acne, I know in the past you discussed that you were looking at different gel and topical compositions. So given that atopic dermatitis is also intended to deliver phage topically, wondering if there are any important read-throughs to consider from these acne data specifically related to this delivery route?

Right. So, Kristen, I think we're all kind of thinking and analyzing the additional acne data. And I think we are thinking of what ways do we want to improve and gather more insights into the atopic derm study. I think one thing we do know, one of the key challenges with acne is that the bacteria is deep inside the sebaceous gland, right? So it's deeper in the hair follicle, there are no other bacteria there, that's for the C. acne bacteria. So that's an extra challenge.

In atopic derm, the Staph aureus is a much more mobile bacteria. This is a deep inside the layers that can sort of move back and forth. So I think there's a lot of support that the bacteria will be a lot more accessible. Having said that, I think we're still analyzing all the data and sort of compiling all the data to think about whether there's any takeaways that we want to implement in the atopic derm study.

Okay, thanks. And then I just wanted to clarify for BX003 that PSC still intends to remain an indication you intend to focus on in the future here along with IBD?

Yes, indeed. You know, as we talk to -- some people think the PSC is even more interesting than IBD, right? It's an indication that there is no approved treatment. It's a huge unmet need. So apologies if I weren't -- if we weren't clear, but definitely the program is relevant for both indications.

Okay. Thanks for taking my questions, Jonathan.

Pleasure as always.

Thank you. (Operator Instructions) Keay Nakae, Chardan Capital.

Hey, Jonathan. So now that CF and AD are even more important, can you just walk us through the type of data we'll see from each of those programs in 2022? Now starting with CF and the Part 1, you know, obviously single and multiple ascending -- single ascending dose and multiple dose, but in that first tranche what will we get, and obviously these are CF patients. What will we -- what will you guys report beyond safety?

Right. So good morning, Keay. I think as you look into it, in the CF study, as you noted, there are two parts as guided by the CF Foundation and their valuable support. Part 1 follows a bit of a SAD-MAD study, right?

So we have eight patients, six are getting treatment, two are getting placebo. Those who are getting treated are getting first a low dose, then a high dose, then a few days with the high dose, right? So they're not getting a lot of exposure. I think obviously, this is a safety readout, but we are looking for some initial signal, whether there could be a reduction of the target bacteria.

So I think there's a good chance that we see some reduction compared to baseline. So I think that's what we're looking for, right? Obviously, nothing of statistical significance, this is a very small study, and definitely not expecting to see any clinical improvement in such a short duration. So that's in terms of Part 1. Part 2 is -- it's a 10-day dosing. We have 24 patients, 16 are in treatment, 8 are getting placebo.

And this follows some of the observation from the compassionate use that were given with [phage] in the States. And here I think we're basing it on what was seen on compassionate use. There was a more robust signal on reduction of target bacteria, and there was an initial signal on improvement of lung capacity, right? So we're -- in a Part 2, we want to see a clear signal of reduction of the Pseudomonas aeruginosa in sputum, and we're hoping to see some of these initial signals that we're also seeing in the compassionate use study.

Okay. And then, how about for atopic derm? What will we see in the second half of this year in terms of any type of efficacy signal?

So in the atopic derm study, it's obviously a 48-patient study that would go from -- for eight weeks. Here, we want to see that we can pick up a reduction of the target bacteria. That's where, you know, we want see a robust signal. And we're also looking for, at least trends or any indication that there's improvement in clinical outcomes, such as the EASI or SCORAD scores, right?

So we're not necessarily expecting here a statistical significant robust signal, but we're looking for some separation as we've seen, you know, in earlier studies as well with other compounds that went after Staph, or other.

Okay. All right. Thank you.

Pleasure.

Thank you. (Operator Instructions) Michael Higgins, Ladenburg Thalmann.

Thanks again, operator. Thanks, Jonathan, for the follow-up. You discussed the out-licensing of some rights in Japan. Just wanted to take a bigger broader look, I guess, across the portfolio. Are you looking to out-license [any/all] assets in Europe, others in Japan, et cetera? Just trying to get a sense for your BD efforts and the timing for such things?

So great question. I think we're actively -- being a platform player, we're actively thinking about potential partnerships. I think some programs we'd like to partner and some programs we'd like to keep [internal]. That was also to the discussion, the point, I think, Joe brought up earlier. So for example, IBD would be a program to partner, not necessarily right now, but we all are aware of the cost and complexities of the later clinical studies.

So that's a program that I think we'll be actively looking for potential partnership. CF is something we want to keep internal. It's, you know, it's an orphan designation. I think we're getting a lot of support and advice from the CF Foundation.

And there's ways that we can go and make more progress so we'd like to keep it ourselves. And atopic derm is a program which is somewhere in the middle, right? I think we're quite excited to find a partner in Japan and that still gives us the rights in the rest of the world. We get their input, we get external validation. So that made sense. So I think it's every program, you know, per the market side and the amount of investment and risk that is needed on our side, right?

Like colorectal cancer is an interesting program that could generate, you know, partnerships early on, as we can expand it to multiple different types of cancer. There's really room to grow even if we partner, you know, one specific bacteria and one specific tumor.

That really makes sense. Thanks. And then last one, your cash guidance through 2023. Is this with or without any programs besides 004 and 005?

So I think the guidance assumes that we don't -- I mean, we're not going into 2023, right, we're not going to go full steam on all three programs simultaneously, but it does support the pipeline as [is].

Appreciate it. Thanks, guys.

You bet.

Thank you. Ladies and gentlemen, this concludes our question-and-answer session. I'll turn the floor back to Jonathan for any final comments.

So I wanted to thank all of you again for joining us this morning. We look forward to providing you future updates on our CF and atopic derm clinical program throughout 2022. Have a wonderful day, and please reach out to us if you have any questions. Thank you.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.