Phaxiam Therapeutics SA (PHXM) 2021 Q1 法說會逐字稿

Good day, and thank you for standing by. Welcome to the ERYTECH Business Update and Financial Highlights for the First Quarter of 2021. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions)

I would now like to hand the conference over to your speaker today, Mr. Gil Beyen, Chief Executive Officer. You may go ahead, sir.

Thank you, Dexter. Good afternoon. Good morning. (foreign language). Thank you for joining us for our first quarter 2021 earnings call. I hope everyone is well and safe wherever you may be.

We announced our business and financial update yesterday evening. The press release and the Q1 earnings presentation can be found on the Investor Relations page of our website.

And joining me on this call today from 3 different locations are Dr. Iman El-Hariry, our Chief Medical Officer; and Eric Soyer, our Chief Financial and Chief Operating Officer. We are on 3 different locations, and there's some technical issues, but I hope that we all -- that Iman can join us in the meantime.

In the meantime, before starting the update, draw your attention to Slide 2 to remind you that today's call includes forward-looking statements such as relating to the company's operations, time lines and financials. And as you know, they all involve risks and uncertainties that could cause actual timings and results to differ materially.

Then switching to Slide 3, the agenda. So as usual, I will start with a short introduction and indicating the key business highlights for the quarter. Iman, if he's able to join in time, will then provide an update on the status and the progress of our 4 clinical programs. After which, Eric will present the financial results for the quarter and highlight our most recent financing from last week. We will all -- he will also summarize the expected milestones for the coming year before we open up the lines for Q&A. All 3 of us will be available for your questions afterwards.

So now moving to Slide 4. And as a quick reminder for anyone new to the company, ERYTECH, the name tells it, erythrocyte technology, is the leader in red blood cell-based cancer therapeutics. Our focus is on targeting cancer cells' altered amino acid metabolism, an increasingly important and exciting area of cancer therapy. In this area, we have late-stage clinical programs in pancreatic cancer, triple-negative breast cancer and acute lymphoblastic leukemia, ALL, as you can see from the pipeline chart on the right-hand side of the slide.

I mentioned it at our call in March, 2021 is truly a key year for ERYTECH. All 4 of our clinical programs are expected to report defining events before the end of the year, 2 of which potentially supporting the application for regulatory approvals within the next 12 months. More on that in a minute.

We produce our -- we do the encapsulation of our -- the APIs, the asparaginase in the case of the lead product, in our manufacturing sites, fully operational facilities, one in Leon for Europe; and the second in Princeton, New Jersey for the U.S. And last point also on our really U.S.-Europe company, not only are we present both in Europe and the U.S., we also are listed both on Euronext and Nasdaq, and we have a shareholder base, which is approximately half Europe and half U.S. So this as a short introduction, then going to Slide 5 and the highlights of the quarter.

Indeed, it is -- it's continuing the progress that we made in 2020. 2020 was really a year with a lot of achievements on the different clinical programs. Also, this first quarter has been an important one with important steps forward towards bringing eryaspase, our lead product candidate, to patients, and this both in Europe and the United States.

These 4 highlights I'd like to mention briefly, Iman and Eric will zoom in more in detail. And the first one, obviously, on TRYbeCA-1, our pivotal Phase III trial in second-line advanced pancreatic cancer. We completed enrollment actually in January. We had almost completed in December, but there was 2 more patients coming in January, now 512 patients randomized.

And then in February, we had our interim analysis, interim analysis performed by the trial's independent data monitoring committee, the IDMC. This one, there had already been 3 safety-only reviews, all 3 with safety profile and recommendations to continue the trial without modification. This one was safety and efficacy combined. And also here, the recommendation was to continue the trial without modification.

So now the eyes are really on the final analysis, which we continue to expect in the fourth quarter of this year. And with this, indeed, the eye is really on this trial. TRYbeCA-1 is, to our knowledge, the largest clinical trial ongoing in second-line metastatic pancreatic cancer and obviously has the potential, if successful, to lead to a treatment paradigm shift in this horrific disease. TRYbeCA-1, that was first.

Second highlight. Staying in pancreatic cancer train from the IST, the investigator-sponsored Phase I trial in first-line pancreatic cancer, a trial we're doing in view of bringing this -- our lead product also to first-line pancreatic after having seen them confirming the result in the second-line. This trial, it's in 18-patient standard dose-escalating trial, started enrolling in January and completed the first dose cohort of 3 patients, in fact, in March.

And then in April, there was a review by the trial steering committee. No dose-limiting toxicities were identified. And on top of this, very encouraging, a nice signal of clinical activity was observed. 2 of the 3 patients showed a partial response, and the third patient a stable disease. So the investigator, Dr. Marcus Noel, very motivated about this trial. Already, we moved it now to the second dose. And Iman will explain a bit more about this.

And then third clinical highlight is on ALL the fact that we took a next step in our path to seeking approval in ALL patients who developed allergies, hypersensitivities to pegylated asparaginase based on the Phase II data of the NOPHO-sponsored trial that we -- that was communicated at the end of last year.

Following further interactions with the FDA, we now requested a pre-BLA meeting, and this was last month, mid-last month, to discuss a potential submission of a BLA of a biologics license application. And subject to the feedback from that meeting, we plan to submit such BLA in the second half of this year.

So that's on the highlights on the clinical.

And then, clearly, there was also last week, the fact that we raised $30 million in a registered direct financing. Eric will provide more detail in a few minutes.

So then moving to Slide 6. The summary here is that all of this sets us up -- sets the stage for a catalyst-rich remainder of the year, as you can see from this slide. I will not repeat what I said earlier, but you see the green check marks that -- marking the achievements over the past 6 to 9 months, and then the 4 clinical products that will now have -- are well positioned for significant and defining milestones in the coming 8 to 12 months, with 2 of them holding the potential for regulatory approval submissions in that time horizon.

So I will stop here with the introduction and hand over to Iman, if Iman was able to join in the meantime, to provide more color on the 4 clinical programs and their expected milestones. Iman, can you...

I'm here. Can you hear me okay?

Yes.

Okay. Fantastic. Thank you. Good morning, good afternoon, everyone. So really quickly on the highlights from the clinical program and just to add a little bit of color to what Gil kind of detailed. So starting with TRYbeCA-1, and as a reminder, this is our Phase III trial or a trial in second-line pancreatic cancer, led by 2 PIs, Pascal Hammel in France and Manuel Hidalgo in the United States. The study is an overall survival study that's intended to enroll about 500 patients above (inaudible) with a chronic status in a second-line setting and will be randomized to receive chemotherapy with/without eryaspase. The chemotherapy [will span] in this 2. Either irinotecan with chemotherapy, the generic irinotecan, or Onivyde plus 5-FU/leucovorin; or the second choice with a gemcitabine/Abraxene.

We had the primary endpoint of overall survival and the second endpoints included actually progression-free survival, objectives response, disease control rate. We are also looking for quality of life. And we have been connecting to include as well as tissue materials for plan for extensive biomarker and translational research after the study is reported, especially with the global trial in Europe as well as in the United States.

So moving to Slide #9. As Gil mentioned, we enrolled 512 patients end of last year. We had 4 IDMC meetings, and the fourth one, which was conducted in February of this year, where the IDMC recommended that we continue the study without modification. As a reminder, that interim analysis is interim analysis for superiority only. We don't (inaudible). At this stage, the team, our operational team, in conjunction with the CRO are working literally round the clock to (inaudible). We have to (inaudible) review. So all of this operational work is currently ongoing to be able to report the study as planned in the fourth quarter of this year.

Staying with pancreatic cancer and moving to Slide #10. This is the (inaudible) initiated trial from (inaudible), made by (inaudible) in Georgetown. So the study is a Phase I dose escalation study. And we had minimal number, of course, in the trial. We started at 75 units per kilogram of in combination with (inaudible). And Gil mentioned that (inaudible) completed without issues (inaudible) recommended the study to escalate to the next phase, and (inaudible) at 100 kilogram. (inaudible) completeness of first-line, we would expect that they will be able to at least identify the (inaudible) at some time in their next -- in the second half of 2021.

Once the maximum tolerated dose is filed, then the study will extend. (inaudible) product line is to do an expansion cohort up to 18 patients. But at this course, we are in continuous discussions with our -- with the (inaudible) whether that expansion cohort should be modified slightly.

Then moving to (inaudible) to a different indication (inaudible). This study was actually originally planned in first-line in (inaudible) triple-negative. And that study is made (inaudible) per patient. (inaudible) 100 units per kilogram. And so with actually recommendations from our investigators, we decided to include second-line setting and to discuss now for both first-line and second-line. And that will reflect the change in the standard of care, particularly, of course, (inaudible) with the introduction (inaudible), of course, as a reminder of the productization (inaudible) and actually of continuing to (inaudible).

We did have a (inaudible) impact at (inaudible) of the first 19 patients enrolled in the trial. Those are issues where (inaudible) our modification. We are expecting to report the first results in the first quarter of this year.

I think it's really important to highlight a couple of points here. Number one, as we have seen in our (inaudible) ALL program as well as in the IST pancreatic cancer trial, eryaspase continue to show that is a very well tolerated agent to combine with any (inaudible) combination. And so that's a little bit (inaudible) and that is to extend this to different indications and different segments. So that's the first point I would like to highlight.

The second point I'd like to highlight is that by including (inaudible) a line for the patient's (inaudible) is important for ERYTECH. And as you know, first-line and second-line, there are no clinical (inaudible) in price, but also agents we stated a second-line continues to -- actually, meanwhile, it's open for us. So it's for us, that would also move to a second-line setting.

Then switching gears to Slide #12, and this is our (inaudible)-initiated trial in acute lymphoblastic leukemia that was led by the NOPHO network. And this trial actually clinically assess the (inaudible) as well as the activity of [ASI] in combinations with chemotherapy in patients who have developed hypersensitivity actions to prior pegylated asparaginase (inaudible). The investigator reported the final results at ASH last year, where we have shown that really having eryaspase (inaudible) of asparaginase, not only show that the asparaginase activity was maintained in almost all patients, but also the (inaudible) in this patient population. And actually patients (inaudible) were able to receive (inaudible) asparaginase. This is very important. As you know, people (inaudible) asparaginase in ALL has repeatedly and consistently showed to meet (inaudible) survive in this (inaudible).

The encouraging bit that we have seen in this time, we actually had a continuous (inaudible). As you have seen Dr. Klug Albertsen, over a week ago, are now being advised to meet with FDA in a pre-BLA meeting to discuss the potential of a BLA submission. If all goes well, our plans to file the (inaudible) in this particular (inaudible) in the second half of this year. And so that's (inaudible) additional discussion with the FDA. (inaudible) to meet with the (inaudible) is indicated in patients who have developed the hypersensitivities reactions to prior asparaginase.

So with this -- and as you know, of course, the (inaudible) indication, again, it's important to highlight a couple of critical points. With continuous shortage worldwide, certainly, there is an unmet medical need for an option for patients to receive an additional asparaginase treatment in (inaudible) or any other asparaginase in the (inaudible) for this disease. That's the first point to highlight.

The thesis that we have in this trial (inaudible), in fact, compares very favorably to the (inaudible) approval back in 2011 in the United States.

Number three, we believe also not only the data on this trial, but also we have a business (inaudible) with a large (inaudible) deal. We have consistent (inaudible) of asparaginase activity in our program. So all in all, we believe actually that we have additional data package to support this trial. And again, that would be part of the discussion in our upcoming meetings with the FDA.

And to this end, I will stop here, and I will hand over to Eric to walk us through the financial results of the first quarter and the news flow. Eric, over to you.

Thank you. Thank you, Iman. Good morning, everyone. (foreign language). So we're now reviewing the financial highlights for the first quarter of this year on Slide #14 of the slide deck, and we're starting with the P&L information.

The net loss for the first quarter of 2021 was EUR 11.9 million. We show the decrease in net loss of EUR 5.6 million, it's minus 32% year-over-year; with a EUR 5.8 million decrease, minus 31% in operating loss; and a EUR 0.2 million decrease in financial income. The EUR 5.8 million decrease in operating loss was attributable to the EUR 4.8 million decrease in preclinical and clinical development expenses, and that was concurrent with the end of patient enrollment in the company's Phase III clinical trial in pancreatic cancer. Also, a EUR 0.3 million decrease in G&A and a EUR 0.7 million increase in other income, which was mostly related to R&D tax credits. In the meantime, the EUR 0.2 million decrease in financial income was mostly related to the IFRS accounting of the convertible notes.

We're now moving to Slide 15 for comments on cash. As of March 31 this year, ERYTECH had cash and cash equivalents totaling EUR 37.4 million, which is approximately $43.9 million, and that's compared with EUR 44.4 million on December 31, 2020. So this was a EUR 7 million decrease in cash position during the first quarter of this year, and that was the result of a EUR 7.6 million net cash utilization, which was mostly comprised of a EUR 16.4 million utilization in operating and investing activities and EUR 8.8 million generated in financing activities, while the valuation of the U.S. dollar against the euro led to a EUR 0.6 million positive currency exchange impact.

The financing activities in the first quarter of this year included EUR 6.4 million through the company's at-the-market, or ATM, equity financing program. It was a placement with the top-tier U.S. investors specialized in biotech, and a EUR 2.9 million net proceeds from the drawdown of 1 tranche under the convertible note financing agreements, which is also called OCABSA, signed with Alpha Blue Ocean last year.

And now a word on our most recent financing initiatives. We're now on Slide #16 of the presentation. As you've seen and already mentioned by Gil, we've announced last week a new round of financing and more specifically, a registered direct offering of $30 million placed with specialized health care investors, mostly in the U.S., but also partially in Europe. This financing involves the placement of new ordinary shares that are in the form of American Depository Shares, ADS, and each ADS was subscribed at $7.25, which is EUR 6.01. The ADS were also associated with a 75% warrant coverage. The warrants have a 2-year maturity and an excise price of EUR 7.50, which is $9.05.

We're, of course, extremely pleased with this important financing milestone for ERYTECH and the mark of confidence in the company's developments. The net proceeds from this financing round will further strengthen the company's financial position, with a cash horizon beyond our anticipated key catalysts. At this stage, we believe that the company's current cash position, including the net proceeds from the last week's offering, consents or plants, operating expenses and current programs into the first quarter of 2022. And this cash runway could be extended into the third quarter of next year if the company further utilizes the OCABSA agreement, of course, subject to the usual regulatory dilution limit of 20%.

Finally, and moving to the next slide, that's #17, I wanted to quickly summarize the upcoming key milestones before starting the Q&A session, and all this was already covered extensively by Gil and Iman. Starting, of course, with the final results from TRYbeCA-1, that's the Phase III trial in second-line pancreatic cancer. And as explained, those final results are expected in the last quarter of this year, Q4 '21. Obviously, a key milestone to the company.

Before that, potentially -- a potential BLA filing with eryaspase for ALL. Iman has explained and Gil has explained the regulatory work on that front, and that could be expected in the second half of this year. We also expect the first results from TRYbeCA-2, the randomized Phase II trial of eryaspase in TNBC, triple-negative breast cancer. And that is expected by the end of the year, so Q4 of this year. And finally, there is the determination of the maximum tolerated dose in rESPECT. That's the Phase I in first-line pancreatic cancer that's an IST, and this is expected in the second half of this year.

So again, a rest of the year, which is full of potential, and quite exciting catalysts. With that, I would like to thank you already for your attention. I will now open the call for any questions you may have. As always, we'll also welcome the questions in French, if any. (foreign language). Operator, Dexter, it's over to you. Dexter?

(Operator Instructions) Your first question comes from the line of Ren Benjamin from JMP Securities.

I might have missed this in Iman's comments, and so I apologize if you guys have to repeat it. But what was the initial clinical activity that was observed in the IST frontline study? And is there any way to kind of tell why that response might be more or less due to the addition of eryaspase versus not?

Ren, I'll start. Iman, you go. Okay, go ahead. Your line is...

I can hear you...

Maybe Iman, I'll -- sorry, Iman, maybe I'll start because your line is really weak, and then you can add if I forget something. So basically, Ren, the initial clinical activity was 2 partial responses -- nice partial responses and a stable disease. So 100% disease control, which it's only 3 patients, obviously, but still, it's encouraging. It's pancreatic cancer, and so that was really the message. And maybe Iman, you want to add to this?

Yes. Can you hear me?

Yes. It's a really tough connection.

No, really not well. No.

Yes. What about duration, Gil? So that is pretty promising, but anything regarding the duration of these partial responses?

This was the partial response, obviously, soon after the treatment. So it's the first. So I don't think there is much view on duration yet. Iman, is there a view on duration of these partial responses?

Not yet. We have -- so the initial assessment was (inaudible) after the first dose of eryaspase. So at least, the minimum we have different views. But we don't have -- the duration will continue until you have the disease progression. So at that, we have the steering committee, we don't have really the full details around the duration of eryaspase. We have, though, one patient who have the second (inaudible) as well. So that would be (inaudible). (inaudible) to talk about the generation of response.

In terms of why this is encouraging? Of course, first-line setting chemotherapy response rate is about 30%. We are absolutely trying in a single-arm trial. It is hard to discern the effect of trials added to chemotherapy. But with that discussion -- based on that discussion recently, this seems to be in terms of that you have (inaudible) which is responding to treatment.

Got it. And then maybe just switching gears real quick to the manufacturing. Gil, you mentioned Leon and Princeton. And just kind of given what's been happening in our industry with the number of CRLs being handed out by the FDA, I was wondering if you could kind of talk through, I guess, how prepared you are. If everything works out the way that we all hope in the fourth quarter with the TRYbeCA-1 study, how prepared you are regarding these manufacturing facilities? Have inspections -- do inspections take place prior to filing? Or do you have some sort of data or confidence you might be able to give us regarding the preparedness of the manufacturing facility?

Yes. Thank you, Ren. Good question. So basically, we have to make a distinction between Leon and Princeton. In Leon, we're doing this since 2009, so we have totally produced, I think, 5,000 batches and we have been inspected on a regular basis. So GMP inspections happen in -- every 2 years.

This site is -- consist of 12 clean rooms. And so with this site, we have done our clinical programs, but also we anticipate to be able to do the early commercial, so the first year, 1.5 years of commercial. So yes, with Leon, we should be able to handle that. Obviously, as soon as we see the green lights, we will work on an additional site. We, anyhow, need a backup site also for manufacturing. So that will be triggered as soon as we see the positive data in the cards.

For ALL on its own, Leon is large enough. So the indication of hypersensitive ALL, so it's really the pancreatic data that will trigger the extension manufacture of capacity in France.

In Princeton, the site is newer. We started only -- we initiated or inaugurated the site in 2019, and we started producing, really, in clinical in '19. But the site has done really well. It's a larger site. It's more expansion of facility there. Has not been inspected yet. So the FDA inspections happen after filing, but we've obviously done mock inspections, and we have already had 2 interactions with the FDA on CMC topics.

So also here, we believe and think that this site, indeed, can cover the initial commercial activity, probably 1.5 years. And same thing, it can cover ALL on its own fully, the full potential of ALL. Based on positive data pancreatic, the second U.S. site will be in the -- we're already preparing the ground for that sort of anticipating locations, looking for potential sites, but we're not spending money on it yet. We'll wait until the data come out.

Your next question comes from the line of Ingrid Gafanhão from Kempen.

I have a pretty brief one. So I was wondering for the BLA in ALL, I just wanted to confirm, is this going to be -- do you intend it to be under sort of the accelerated approval pathway with the FDA? Or as the regular approval pathway?

Yes. Good question. We have not filed yet for fast track, but we anticipate to do that. It's soon now that things have sort of evolved. And so yes, we anticipate that this will be an expedited review of the BLA, meaning roughly 8 months of review.

Clear. And Gil, then, you would expect this would be enough for more approval, right? You wouldn't expect to have to do any other confirmatory trials after you file or after you get this post approval?

I think this will be the discussion also of the pre-BLA meeting. So we're, indeed -- the base plan is a regular approval. It could be an accelerated approval, as it's called in the U.S., which means that then there is a post-approval commitment for additional work. But for the time being, based on the unmet need based on everything we know so far, the regular approval is the base case.

We have a question from Boris Peaker with Colin.

This is Cynthia on for Boris. I think a quick one for me. In TRYbeCA-1, what was the final breakdown of patients from the U.S. versus Europe? And how does that impact the choice of chemotherapy?

Iman, can you take this?

Okay. I can. So in -- for the after the conclusion of enrollment, we have about approximately 40 patients enrolled from the United States. This is still a decent number. I mean what is -- if you would like to see is that we have contribution from a U.S. population, so we are we are comfortable with that.

In terms of the breakdown of the chemotherapy, the backbone chemotherapy, it's almost 60-40, 60% Abraxane and 40% irinotecan-based therapy.

Our next question is from Lucy Codrington from Jefferies.

Sorry. Again, this was just something that I missed in terms of the line quality. Just -- you were talking about potentially modifying the expansion cohort for the first-line pancreatic cancer trial. I just wanted to get a bit more detail on that.

Okay. I think what I tried to say is that right now, the expansion cohort, which is a typical in a Phase I trial, once we achieve that NTD, with the first 3 or 6 patients, then we'll double that number. Would -- probably would be up to 18 patients in that expansion cohort.

It is not surprising, it is not unusual that as the trial goes on that the investigator -- it is an investigator-initiated trial, so it really is up to the investigator whether this would be their continued interest to do expansion cohorts or whether they would like to do maybe many or randomized expansion to compare with backbone chemotherapy.

So I think that what I'm trying to say here is that right now, it is an expansion cohort, that's the plan. But we don't have -- I think thanks to the open-minded in terms of there are any additional feedback interest from the PI to modify that expansion cohort. That could actually give us a better readout. So that's, I think, the point I was trying to make.

But right now, there are no -- actually, no plans to change.

(Operator Instructions) There are no further question at this time. I would like to turn the conference over back to Mr. Gil Beyen.

Okay. Thank you. Thank you all for your participation and attention and for -- obviously, for your continued support for ERYTECH. It is a key year, and we will, as always, we'll keep you posted on the progress. Further, wish you a great day. Thank you all.

This concludes today's conference call. Thank you for joining. You may now disconnect.