Phaxiam Therapeutics SA (PHXM) 2021 Q3 法說會逐字稿

Good day, and thank you for standing by. Welcome to the ERYTECH Pharma third-quarter 2021 business update conference call. (Operator Instructions) Please be advised, today's conference may be recorded. (Operator Instructions)

I'd now like to hand the conference over to your host today, Gil Beyen, Chief Executive Officer. Please go ahead.

Thank you. Good afternoon. Good morning. (Spoken in French) Thank you for joining us for our update call to discuss the key highlights and financials for the first nine months of this year.

We issued our Q3 business and financial press release yesterday evening. You should be able to find it together with the webcast presentation on the Investors section of our website.

Joining me on this call here today are Dr. Iman El-Hariry, our Chief Medical Officer; and Eric Soyer, our Chief Financial and Chief Operating Officer.

Before starting, I would like to draw your attention to the disclaimer on Slide 2 to remind you that today's call includes forward-looking statements such as relating to the company's operations, anticipated timelines, and financials. As you know, they all involve risks and uncertainties that could cause actual timings and results differ materially.

Now in Slide 3, the agenda. As usual, I will start with a short introduction and present the key business highlights of the year to date, in fact, focusing on the key developments since our last call in September.

Iman will then provide an update on the status and the progress of our clinical and regulatory programs to date, after which Eric will present an update on our key financials [in terms of] cash. He will also summarize the strategic priorities forward and the expected milestones for the coming year before we open [that] up for a Q&A. All three of us will be available to answer your questions.

And on Slide 4, for people new to this -- to the company, a brief overview. ERYTECH is all about red blood cells, focused on the development of red blood cell-based cancer therapeutics using its -- our ERYCAPS technology that allows to encapsulate therapeutic compounds in adult cells to improve therapeutic effect.

Our lead product, eryaspase, which is asparaginase loaded in red cells, is targeting cancer cells by depriving them of asparagine and glutamine, two amino acids they need for their growth and survival.

With eryaspase, we have now a very solid clinical experience base with more than 10 trials, six of them in ALL. And in ALL, we are indeed now coming closer to the commercial stage, more in a couple of minutes.

Also, for a reminder, we are producing our product candidates in two fully operational GMP facilities, one in Lyon for Europe, and one in Princeton, New Jersey for the US. We're also US, Europe in terms of shareholder base with a listing -- both listed on Euronext and NASDAQ with roughly half of the shareholders on both sides of the ocean.

So now, coming to Slide 5, the key business highlights of the last months. It has been -- quite a lot has happened since our last call in September. The first one, obviously, TRYbeCA-1, disappointing. Our long-awaited Phase 3 results in second-line pancreatic cancer in which we have put so much time, energy, even blood, sweat, and tears did not live up to what we had seen in the Phase 2 trial.

And then, we'll come back again to the key findings in a minute. We are nevertheless encouraged by the signal we saw in a subgroup of patients in the TRYbeCA-1 trial, a subgroup of patients treated with FOLFIRI, which is 5-FU and irinotecan, where we saw a survival benefit that is roughly of the order of magnitude of the we would wanted to have seen in the entire trial: 2.3 months survival -- median survival benefit.

So it's an interesting signal, especially since we saw a similar -- we saw an initial sign of this subgroup having a better response. This was in the Phase 2 trial with FOLFOX.

And also, Iman will show it, the encouraging signal that we're seeing in the ongoing Phase 1 trial where we are combining our eryaspase with FOLFIRINOX. It's all different variations on the same team.

The Phase 1 trial at the Georgetown Lombardi center was able to -- we were able to determine the recommended Phase 2 dose, the MTD, in the last months at the dose at which the TRYbeCA-1 trial was run.

And it's mentioned already, but interesting to see that in the first [evaluated] patients, we saw an encouraging activity of clinical activity. We're also very -- obviously, the focus is now -- at least now on our progress in ALL, thanks to the NOPHO trial that read out in December, positive data in ALL patients who developed hypersensitivities to pegylated asparaginase.

This is a smaller indication than the pancreatic, but it's an high unmet medical need. It's an indication where the eryaspase product clearly has advantages and where we are now at a couple of months to submitting our BLA in the US, our Biologics License Application, targeting and intending this to run at year end. And we were very encouraged by the fact that we've got this Fast Track designation that was granted in July.

Now note that the ALL is a smaller indication. And so, clearly, we were planning for success but also planning for the Plan B. And the Plan B includes that in order to get the maximum value of our ALL activity and ALL market opportunity that we are looking for partners -- to advance partnering options to advance this, both on the development and the commercial side.

So we launched a process with a strategic adviser to evaluate strategic options and really to put all the options in a row and see how we can create and generate most value from the ALL and from our platform and manufacturing capability. Eric will also tell more about this.

And at this stage, I think best to go to the next slides to pass the mic to Iman to give an update on the clinical programs.

So, Iman, the floor is yours.

Okay. Thank you, Gil. Good morning. Good afternoon. So I'll start with Slide 7, a very quick recap about TRYbeCA-1. This was our pivotal Phase 3 trial in second-line pancreatic cancer, which was conducted in a total of 512 patients in second-line setting, randomizing to either chemo with or without eryaspase.

And again, as you may recall, is that the chemo was a menu of two, gem/abraxane or [fluoropyrimidine], which contain 5-FU with either the generic irinotecan or Onivyde. The primary endpoint for that study was overall survival, looking at hazard ratio of 0.725 or approximately 2.3 months from a median survival of six months.

So two weeks ago, we have reported the unfortunate outcome of the study, in which is Slide 8, the primary endpoint of overall survival was not met. You can see the two graphs showed just a slight nominal increase in the median survival from 7.5 as compared to 6.7 months from the control arm. But the hazard ratio is not what we were looking for.

So we're looking for 0.725 as a minimum, and this is what we have seen, 0.92 [months]. What we have not shown so far but that will be presented in in a medical conference that we looked at the baseline characteristics.

We looked at subsequent therapy. We looked at [forest plot] in terms of robustness of the treatment across the different known prognosis subgroups, and we have not found any confounding factors that could have affected the outcome, the primary outcome of the trial.

Moving to Slide 9, as part of our pre-planned analysis, we wanted to check the overall survival in the two treatment subgroups, i.e., the gem-based subgroup and the irinotecan/fluoropyrimidine-based subgroup. And so here, what we have seen, and you look at the Kaplan-Meier, there is an interesting nominal, again, improvement in patients who received irinotecan/5-FU with eryaspase compared to the 5-FU/irinotecan control arm.

Again, you can see that the median survival was eight months, which is almost unprecedented in a second-line setting. And the hazard ratio for that was 0.77. That means also that the effect -- there was no effect seen in terms of any improvement or nominal improvement with the addition of eryaspase in the gem/abraxane subgroup.

So going to Slide 10, what we have clearly communicated, again previously, that we did not -- the study did not meet the primary endpoint. We saw a nominal improvement in the efficacy indicators with the addition of eryaspase but not enough to make any subgroup statistically significant.

We also have looked at the baseline characteristics, which were well balanced as well as the subsequent anti-cancer therapy, which clearly can actually bias outcomes in terms of survival. So importantly also, the treatment was generally well tolerated, and we did not see that eryaspase enhanced the toxicity of the backbone chemotherapy. So we would be presenting full data in a medical conference.

So going to Slide 11, we have -- in addition to publicly communicating the results for TRYbeCA-1, we have had a series of communications with key opinion leaders, with investigators on the trial.

And so far, it's been -- the feedback's been very encouraging in the sense that the consistent feedback, essentially, the nominal improvement and the trend in the survival in the irinotecan/fluoropyrimidine-based subgroup, it seems to be really piquing the attention of the GI oncologists and certainly the appetite to look at subsequent options for those patients.

And again, just looking overall in the study, this would become a critical trial in terms of setting, really, the benchmark of what would be expected in second-line setting. So there would be certainly additional works that we need to look into maybe in the future, for instance, biomarkers, understand the lack of activity.

And of course, we are currently looking at the full output, which could potentially give us an additional insight on the results of the trial. So this is all about the TRYbeCA-1.

And switching gears to rESPECT study, Slide 12. Again, just a recap here, we've communicated this before. This is an investigator-initiated trial in first-line setting. The investigator already identified the maximum tolerated dose, which is the same dose as we are using our eryaspase-sponsored program. So that was some good news for us.

And the study is currently enrolling patients to expand [the 6 cohort] to up to 18 patients in total in the study. So we -- the abstract has been accepted for the conference at the ASCO GI in January 2022, and that could be a poster presentation. So this pancreatic cancer.

Switching gears again to another disease, triple-negative breast cancer, Slide 13. As you know, this study has been also ongoing, recruiting patients in the background.

Given what Gil mentioned just a few minutes ago about our own strategic option, we are now in the process of hosting, recruiting additional patients in the trial. We will still -- this is outlined to be able to report the outcome of the patients enrolled in the study so far sometime in the first half of 2022.

So then, last but not least, switching gears to an important program, which is the ALL program, the hypersensitive patient population. And again, just further to what Gil just stated, this is the basis for us, the NOPHO-sponsored trial.

This is an investigator-initiated trial in patients who have developed hypersensitivity reactions to prior exposure to pegylated asparaginase, Oncaspar. So we're looking at this patient population, which continue to be unmet medical need. And so, we would hope to have this study as a basis for our upcoming BLA in United States.

You know already that there are two drugs approved, the Erwinaze, as well as -- which is always going through a supply shortage; and of course, the newly approved Rylaze, which was approved some time in -- a few months ago.

So the study, the NOPHO trial was presented, you may recall, at ASH 2020 last year, which showed really sustained asparaginase activity and good tolerability. And that's why we also got very excited about this trial and its potential for our BLA.

So that brings me to my final slide, 15. Given where we are, so we're working basically around the clock to get our submission planned for the BLA. It will be based, as I mentioned, on the NOPHO study, supported by our sponsored programs. We have several trials already at ALL as well as other trials that the agency would like to see.

We have started our communication with the agency since last year. And we continue to have that communication, including our pre-BLA meeting, which took place in June of this year. Then subsequently, we had the Fast Track designation.

So if everything goes well, hopefully, we can get -- we would hope to have our approval sometime in 2022 for this indication. Our proposed label would be in patients who -- eryaspase in combination with chemotherapy in patients who have developed hypersensitivity reactions to prior asparaginase.

Of course, this is our proposed label, so it is always up to the agency to decide when we'll reach that stage. We are still having several communications with the agencies. So once we got the clearance from the FDA for additional information that they have, hopefully, we'll be able to press the button for that BLA.

So I'll stop here, and I will transfer now to our Chief Financial and Operating Officer. Eric?

Thank you. Thank you, Iman. Good morning. Good afternoon, everyone. (Spoken in French) I'm starting this update on financial results for the third quarter of '21 by explaining that we will not be presenting a simplified P&L for Q3 this year. The reason is that the release a few weeks ago of the TRYbeCA-1 Phase 3 trial in pancreatic cancer.

Because it did not meet its primary endpoint, it's considered a triggering event for what is called an impairment analysis. That means that the company will need to test tangible and intangible assets for possible impairments in light of the new business prospects.

And until current uncertainties on business assumptions are clarified, particularly on partnership initiatives, we will not be in a position to announce full financial results for the third quarter of this year.

In the next few months, we will, of course, conduct an impairment analysis in light of the new business situation and definitely for the year in closing. And that may potentially lead to an impairment of some of the company's assets. But again, too soon to tell, and we'll see in the light of the company's upcoming strategic developments.

Therefore, we're focusing today on the financial comments for this quarter, specifically on cash, which is, anyway, the most relevant financial information at this stage.

On Slide 17 of the presentation, as of September this year, ERYTECH had cash and cash equivalents totaling EUR38 million or approximately USD43.9 million compared with EUR44.4 million as of December 31 last year and EUR46.3 million as of June 30 this year.

The EUR6.5 million decrease in cash position during the first nine months of '21 was the result of a EUR46.5 million net cash utilization in operating and investing activities and EUR38.8 million generated in financing activities, while the variation of the US dollar against the euro led to a EUR1.3 million positive currency exchange impact.

Note that financing activities in the first nine months of this year included an $8 million placement in the US through the company's at the market, which called the ATM, equity financing program for net proceeds of EUR6.4 million, a USD30 million registered direct offering for net proceeds of EUR22.4 million, and a drawdown in '21 to date of four tranches under the convertible notes, the OCABSA financing agreements for net proceeds of EUR11.4 million.

We believe that the company's current cash position can fund its planned operating expenses and current programs into the second quarter of 2022.

Further, we have already engaged in cash-preservation measures, which together with the potential further utilization of the OCABSA agreements, of course, subject to the regulatory limit of 20% dilution, could extend the company's cash horizon into the third quarter of 2022.

And finally, we are currently exploring financing and/or partnering options with the goal to possibly further extend the cash horizon in 2022 beyond key development milestones.

Now before reminding these key upcoming milestones, I would like to take a minute to summarize our key strategic priorities going forward. And we're on Slide 18. Number-one priority, and Gil has already commented on this, the new situation since the disappointing results of TRYbeCA-1, is leading us now to focus our efforts on the ALL business opportunity.

This is where we take a value opportunity in the short term. The teams are indeed working around the clock to prepare and finalize our BLA dossier, and we expect to file our first BLA with the FDA around year end. And we need, of course, to be a bit prudent on the timeline here. As always, it is subject to our interactions with the FDA and the completion of the remaining work to finalize the dossier.

This is a short-term value opportunity as we have been granted Fast Track designation in this indication. And we, therefore, could potentially get approval in the second half of next year. There is a high unmet medical need here, and we believe eryaspase, with the safety and efficacy profile, can have an important role to play in this indication.

As explained already, this is first in the US, where we are most advanced and where a major part of the business opportunity is at this moment. And we will also take initiatives to consider the business opportunity in Europe, which, however, will be subject to the success of at least the first next steps in the US.

Second priority is to advance our partnering initiative. Given the new situation with our platform now focused on ALL as our main short-term business opportunity, given also our cash resources, we believe it makes better sense to join forces with a partner from the industry, especially to advance a potential commercial launch in ALL.

The process has already started to review strategic options. Gil is already leading initial discussions with first contacts, and a specialized adviser has been appointed already to assist and boost the process. We expect these discussions will develop in the next few weeks and months, and we will provide a progress update in due course.

And third, preserving and possibly extending a bit our cash runway. Immediately after the top-line results of TRYbeCA-1, we've taken first cost-reduction and cash-preservation measures by focusing our resources on immediate and key priorities only.

Strict budget discipline is key here, and all precautionary measures have been taken. We will explore also options for additional yet limited financing, could also be with a partner, to bridge our cash runway to expected key milestones in 2022 and more particularly, again, a potential BLA approval in ALL in the second half of next year.

Now finally, and before we move to Q&A, a quick summary of our upcoming key milestones -- this is Slide 19 of the presentation -- starting, of course, with the BLA submission of eryaspase in hypersensitive ALL, again, around year-end '21 this year. And this submission could then lead to a potential approval of eryaspase in hypersensitive ALL in the second half of next year.

Then the presentation of the full benefits of TRYbeCA-1 at a medical meeting not decided yet. That should be in the first half of next year. Top-line results have been released a couple of weeks ago. And as explained by Iman, we are now working on the detailed analysis of the full results.

Also, the results of the Phase 1 trial in IST -- it's called rESPECT -- in first-line pancreatic cancer, also expected in the first half of next year. The MTD has already been determined in this dose-escalating study. And as explained, this Phase 1 trial is in a similar subgroup of patients as the one we had an interesting signal with in the TRYbeCA-1 study, so certainly worth exploring further at marginal cost.

Also, data from the randomized Phase 2 trial, TRYbaCA-2, in TNBC, Iman explain that we have stopped patient enrollment in this trial as part of cash-preservation measures, but we should be able to report data from the first patients in the first half of next year.

And finally, the update on partnering process: Again, it's an ongoing process, and we will provide an update as soon as appropriate.

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, questions in French are welcome. (Spoken in French)

Operator, please, over to you.

(Operator Instructions) Boris Peaker, Cowen.

I just want to focus on the ALL market, and I just want to get a sense of what do you see as the commercial opportunity for eryaspase in US and in Europe? And how do you think your pricing would compare to some of the other asparaginases out there?

Hi, Boris, I'll take that question. So the opportunity we see in hypersensitive ALL to the patients who develop hypersensitivities to E. coli asparaginase, it's roughly 1,000 patients' incidences as new patients per year in the US and equivalent in Europe, a little bit higher in number of patients in Europe just linked to the population.

In terms of opportunity -- so in fact, in this indication, until very recently, there was one product approved, Erwinaze. And Erwinaze, at its peak sales before shortages started to come in, it was roughly EUR200 million, which was, I would think, 80%, 85%, maybe even more in the US and the rest of the world.

Now the market clearly could have been larger if there not have been these supply constraints. So Erwinaze now is no longer licensed in the US, but there is now Rylaze product that will have a similar market opportunity.

It will be more expensive, mainly because it needs more injections than the Erwinaze. So basically, we're seeing here markets, yes, EUR200 million sort of a basis, but we think it can grow, thanks to the new -- the release and shortage of supply; maybe thanks to us also because our product profile may allow to broaden the indication to patients that, for example, like the adults, where it's been very difficult to go for the non-encapsulated products.

And also, we have -- by the way, at ASH, we'll have a poster on this on the double-allergy patients. So patients that are allergic to both the E. coli and the Erwinia-derived asparaginase, which could further -- it's a small indication, but still, it could further increase that market opportunity.

Our eryaspase has clearly shown in the different trials that we have this good safety profile, good activity profile. We don't have it presented here, but in the deck on the website, you'll find an [intra-trial] comparison where we show that yes, we have clearly very comparable, if not better, results there.

We also have the advantage of needing only one injection every two weeks, where the Erwinaze and Rylaze are every two or three days.

So we think a market share -- obviously, it we believe that Erwinaze and the Rylaze will probably maintain the dominant asparaginase in that segment. But still, a market share of 25%, 30% would lead to an opportunity [ending in] $70 million to $100 million, maybe more.

And what is important here is that the pricing is relatively well established for the Erwinaze and Rylaze with a high price point in the market. In fact, a month of treatment with Rylaze we estimate to be able to cost easily over $100,000.

It could be much more for larger patients, but for a child, about $100,000 per month. Si since we need two injections per month, you can see what could be a potential pricing for us in that indication.

Okay. Thank you very much for taking my question.

Thank you, Boris.

(Operator Instructions) I'm not showing any further questions in queue at this time. I'd like to turn the call back to Gil Beyen for closing remarks.

Thank you. That was easy with one question. But thank you all. Thanks for your participation, for your attention today, and obviously, for your continued support of ERYTECH.

And as always, we'll keep you posted on the progress. And we showed the milestones and important catalysts to come, so we'll keep you posted on the progress on all of these catalysts.

With this, I wish you a great rest of the day and look forward to speaking soon.

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