Phaxiam Therapeutics SA (PHXM) 2022 Q1 法說會逐字稿

Good day and thank you for standing by. Welcome to Erytech business update and financial highlights for the first quarter of 2022 conference call. (Operator Instructions) Please be advised that today's conference is being recorded. (Operator Instructions) I would now like to hand the conference over to Gil Beyen, Chief Executive Officer. Mr. Beyen, please go ahead.

Thank you, Norma. Good afternoon, good morning, bonjour à tous. Thank you for joining this conference call to discuss the key business highlights year to date and the financials for the first three months of this year.

We announced our business and financial update yesterday evening and the press release, also the webcast presentation, can be found on the Investor Relations page of our website. Joining me on the call today are Dr. Iman El-Hariry, our Chief Medical Officer; and Eric Soyer, our Chief Financial and Chief Operating Officer.

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

Switching to slide 3, the agenda of the call. I will, as usual, start with a short introduction, present the key business highlights of the year to date, focusing on the more recent ones, the ones that occurred after our last call in March, which was not that long ago. Iman will then provide an update on the status and the progress of our clinical programs, after which Eric will present an update on the key financials, cash balance, and he will also summarize the strategic priorities and expected milestones for the year to come. After that, all three of us will be available for Q&A.

Moving on to slide 4, and this is really for anyone new to the company and for completeness, a brief overview. So you know that Erytech is focused on the development of red-blood-cell-based cancer therapeutics with a lead product, GRASPA, or eryaspase, which is asparaginase loaded in red cells, targeting the cancer cells and altered asparagine and glutamine metabolism. With GRASPA, we are now and for some time now, in pre-regulatory phase in ALL, acute lymphoblastic leukemia. We're in the process of working towards the filing of our BLA in this indication.

In parallel, we have a Phase 1 ongoing in first-line pancreatic and a Phase 2 in triple-negative breast cancer. Iman will provide an update shortly there. Our product candidates are manufactured at two fully operational sites, one in the [EU for] Europe and since [very shortly,] I'll explain more. You will have seen the news a few weeks ago that we sold our Princeton facility. The second is now through a supply agreement with Catalent at our former manufacturing facility in Princeton, New Jersey for supply to the US -- North America, I should say. And that's all indeed the highlight of the quarter or the year to date.

Slide five. You saw probably the announcement. It was on April 25, the sale of our Princeton facility to Catalent. We sold the site for a consideration of $44.5 million. In the meantime, already, our entire team, 40 people in total, transferred to Catalent and are working at the site for Catalent. And also for us because we entered in a long-term supply agreement with Catalent for the manufacturing and the supply of our lead product.

So on the one hand, it was with pain in heart to see our beautiful site and our great team go to Catalent, but overall, we were very pleased to have been able to secure this deal, long-term supply agreement with one of the leading CDMOs in the field, and obviously significantly reducing the cash burn of the facility. The facility was way too big for us now after the setback in the pancreatic cancer. So I think we found a very good solution here to secure supply, all in, reducing the cash burn. And so, no cash, obviously, entering the company.

And I want to take the occasion to thank our team for great efforts and contributions to Erytech. They made this site a real landmark site, and that is also what Catalent saw. And obviously, we wish them all the best for their new future at -- in their new context and clearly will remain in close contact as they will continue to produce our GRASPA product for our ongoing trials and hopefully also for the commercial supply in the not-too-far-away future.

The sale of the facility has increased our cash position to approximately EUR55 million, approximately $60 million. Although the dollar is changing rapidly these days, which -- So I know Erik [explain more], but indeed it has, in a combination with the reduction of the cost basis, extended our cash horizon until approximately mid-2024. So a bit more than two years.

And then the next question -- and then to slide 5. The question is, clearly, what will we do with this money? The answer is relatively [simply], we will continue to focus on the key priorities we are working on. And the first one, obviously, is our attempt to get the BLA submitted for GRASPA, to get the approval for GRASPA in hypersensitive ALL patients in US first. Iman will provide an update.

The second is to continue what we've been doing, develop innovative medicines for difficult-to-treat diseases and this, leveraging our red blood cell encapsulation program or more technology. We have, as I mentioned already, two clinical programs ongoing. Both of them expect to have results in the second half of this year. And we continue to work on a number of preclinical opportunities because our ERYCAPS technology is very versatile.

Many types of molecules can be encapsulated in many ways to use the red cells. And a new program that we are increasingly enthusiastic about, and we recently presented results at the conference on the red blood cell society, it was in Italy, is to use the encapsulated red cells to develop extracellular vesicles and [exosome like]. We have seen some very interesting first results, ex vivo results. We're continuing to work there, and we hope that this indeed will build a next pillar to the pipeline of Erytech.

And then the third priority is to continue the search for strategic options for Erytech to complete the story. The Catalent deal; you followed it after the Phase 3 results in pancreatic cancer. We retained a specialized advisor, Torreya, to help us in looking for strategic options for the company. Catalent deal was the first step, I would say. We are now continuing to look at a series of valuable options. They range from looking for commercial partner for GRASPA, extending the pipeline by leveraging our development and manufacturing capability to potentially broader strategic options.

Not much more we can say at this stage, obviously, but stay tuned. We'll keep you posted on our on our progress. And I will stop here and hand over to Iman, who will provide additional details on our clinical programs and their milestones, after which Eric will come to present the financials and the further milestones of the year. So, Iman, the floor is yours.

Thank you, Gil. Good morning, good afternoon, bonjour à tous. So I have a few slides to give regarding the clinical update. So I'll start with slide number 8. I'm here to focus on the key project, the acute lymphoblastic leukemia. And so, here, I'm going to provide a quick update in terms of our progress towards the filing for approval in the hypersensitive patients.

So as you know, we have a study, [which was, in this case, ranged into] (inaudible) and also a study which was reported back during ASH 2020, where eryaspase or GRASPA was given in patients who have developed hypersensitivity reactions to prior asparaginase therapy. And in that study, there was a sustained prolongation of asparaginase activity, and patients were able to receive the intended courses of treatment.

And with that, we actually made the decision to move forward in seeking an approval for this indication in patients with hypersensitive disease. It's important to note that there is already an approved product in United States, Rylaze, which was approved mid of last year.

So moving to next slide, number nine, and where we are today on the BLA front, we'll continue to have the discussion and the dialogue with the agency. And, really, since mid-2020, you may recall that we had also our pre-BLA meeting last June, and we have -- it was very collegial meeting, and we had very constructive feedback on our plan and the structure for the BLA this year. Following that pre-BLA meeting, we were granted fast-track designation, which we continue to increasingly like because it enables our continuous interaction and dialogue with the agency.

Where we are today, we have -- it's still an ongoing discussion with the agency. They are continuing to review information as the request's on ongoing basis. And recently, we -- particularly, part of the submission as you may know, [what is similar] in Europe is we have to have a pediatric plan or pediatric waiver. And so, this pediatric plan is currently in review. We have received the initial feedback from the agency. And so, we will be providing our revised application for the pediatric to be reviewed by the potential committee of the FDA front.

With that, once we have a green light from the agency, we will move towards our BLA submission. We'd like to take more of a staggered approach, which is we file first in the United States and then go back to Europe and start looking for the potential for also filing and seeking similar indication.

So moving to slide number 10, I'll switch gears to other clinical programs. And I will start with TRYbeCa-1, which, as you know, is our pivotal trial in second-line pancreatic cancer. We have presented the key highlights from the study a few months ago at ASCO-GI. And in that study, we have also seen an interesting signal in a subgroup of patients based on a pre-planned analysis. So we continue to assess the data and work with our [QA] to see what merits further investigation in that disease.

The rESPECT trial, which is the investigator-initiated trial led by Georgetown, continues to enroll patients, and we are really on target to expect results following from the center around the second half of this year.

Lastly, but not least, the update on TRYbeCa-2. As you know, this was our proof-of-concept trial in triple-negative breast cancer where GRASPA would combine with gemcitabine and carboplatin in metastatic disease. So given the TRYbeCa-1 results, we truncated this study until we completed the enrollment [case before] almost close to what we would have expected for an interim analysis, so it's close to 30 patients in total. And again, we are expecting the results during the Q3 of this year. So we are currently doing a lot of data cleaning to be able to report the results of the study.

So I think with this, I will stop here and then hand over to Eric for the remaining of the financial update and the strategic priorities. So, Eric, it's over to you.

Thanks a lot, Iman. Thank you. Good morning, everyone. Bonjour à tous. We're now reviewing the financial highlights for the first quarter of this year.

We are on slide number 12 of the slide deck, and we are starting with P&L information. You can see that net loss for the first quarter of 2022 was EUR11.9 million and was stable year over year with a EUR0.7 million improvement. It was minus 5.5% in operating loss, and a EUR0.7 million decline in net financial income. The EUR0.7 million improvement in operating loss was attributable to the EUR2.4 million decrease in preclinical and clinical development expenses. And that was offset, in part, by the EUR0.9 million decrease in other income from R&D tax credits, but both reflecting the decrease in the company's clinical development activities.

In the same time, G&A expenses increased by EUR0.8 million, and that was mostly related to legal and due diligence expenses for partnering activities.

We're now moving to the next slide, slide number 13, for comments on cash. As of March 31 this year, Erytech had cash and cash equivalents totaling EUR25.1 million, and that was approximately USD27.9 million, compared with EUR33.7 million as of December last year. The EUR8.6 million decrease in cash position during the first three months of this year was the result of the EUR10.7 million net cash utilization in operating and investing activities and EUR1.8 million generated in financing activities, and that included a EUR2.3 million prepayment of a portion of the expected 2021 R&D tax credit. In the same time, the variation of USD against the Euro led to a EUR0.3 million positive currency exchange impact.

Please note that the company (inaudible), but also, since long ago, has not drawn any new charge on the convertible note facility, actually, since August 21. And as of September 21, there were no outstanding and unconverted notes, and the company does not plan to draw any further [caps] and convertible notes tranche until the expiration of the financing facility next month.

As already mentioned by Gil, the sale of the Princeton facility for USD44.5 million, approximately EUR40 million to EUR41 million, depending on the exchange rate, has brought Erytech's cash and cash equivalents to approximately EUR55 million, which is about USD60 million at closing of the transaction on April 22.

With that and further to general cost reduction efforts, which are already undertaken, and the reduction in yearly cash disbursements of approximately USD7.5 million related to running costs of the Princeton facility, we believe that the company's current cash position can fund its current development programs and planned operating expenses to mid-2024.

Now, and before we move to Q&A, we're now on slide number 14 of the presentation for a quick summary of our key strategic priorities and upcoming related key milestones over the next 12 months. Already stated by Gil and Iman, the submission of our BLA dossier for eryaspase in hypersensitive ALL is still a key operational priority for the coming weeks and months. As explained, we look forward to being able to submit once the FDA has completed its review of the remaining information request and gives us the green light to file the application.

We currently target submission by the end of the third quarter of this year. We also have two ongoing trials, and our teams and trial investigators are working on presenting data to date, starting with the Phase 2 trial of eryaspase in TNBC. The trial's name is TRYbeCA-2, where we expect to report data in the third quarter of this year and the Phase 1 IST trial in first-line pancreatic cancer. The trial's name is rESPECT, with results also expected in the third quarter of this year. And of course, last but not least, the ongoing strategic review and partnering process.

The sale of the Princeton facility to Catalent was already a first step in that process. And that gives us the means now to pursue the GRASPA BLA, complete the ongoing trials, and pursue the most attractive preclinical programs. And we are now looking at options for the further development and commercialization of eryaspase and for ways to leverage our clinical development and manufacturing capabilities, including broader strategic options.

With that, I would like to thank you already for your attention, and we'll now open the call for any questions you may have. Operator, Norma, over to you.

Thank you. (Operator Instructions) Boris Peaker, Cowen.

Good morning, and thanks for taking my question. I guess, maybe, let's start with ALL. Assuming you get approval, can you comment on the commercial potential in hypersensitive ALL?

Hi Boris. I'll take this question. Thanks. Thanks for it. So hypersensitive ALL, it's the patients who develop indeed hypersensitivity to the -- In the US, it's the pegylated asparaginase, which is the Oncaspar or the Asparlas. It's roughly -- the numbers vary, but around 20% of the patients will develop these hypersensitivities, leading to about 1,000 patients in the US every year with these forms of hypersensitivity or -- and which includes silent inactivation.

Got it. And what do you think a reasonable pricing is in those patients?

The price levels for Rylaze are high. So Rylaze is a drug that needs 12 to 14 injections per month, up to five vials, each vial in the order of $4,000. So you see, price ranges from between a little bit below $100,000 and up to $200,000 per month. So that's one of the more expensive oncology drugs. And the advantage we would -- with eryaspase, it's only -- instead of -- every other day. In fact, Rylaze's now got a Monday, Wednesday, Friday injections, so it's 12 times per month. But we can have two times per month. So it's at every other week dosing with eryaspase.

Got it. And my second question on TRYbeCA-2, what do you need to see in that study to continue with triple-negative breast cancer?

I leave this question to Iman.

Boris, can you repeat? I didn't hear the first part on the T2.

Yes. I'm just talking about the TRYbeCA-2, the triple-negative breast cancer study that you guys are running. What do you need to show in this trial in order to justify further investment in breast cancer?

Okay, sure. Because it was a [proof-of-concept] trial, the primary endpoint is disease control rate. And then we have a key secondary endpoint, which is objective response as well as progression-free survival. We would like to see, really, a difference. It's a comparative trial, so we'd like to see a difference. I think, at least, if I remember, about 20% or 25% difference from the control arm to see that there is an interesting signal of activity to get it further into a larger trial.

Got it. Thank you for taking my questions.

Thank you. Jacob Mekhael, Kempen.

Hi there, and thanks for taking my question. And I'm just curious if you can provide any additional color on the kind of discussions you're having with the FDA on the BLA for ALL, and what additional information have they asked of you?

Thank you, Jacob. I think Iman is best placed to answer these questions also.

Okay, thank you, Jacob. So when we had -- actually there's continuous discussion on the clinical front as -- they're interacting each module. For example, on the CMC, there were a lot of information that they requested, which they are still under review. And we get -- like every few weeks, we get a response on -- based on an accepted proposal, et cetera. On the non-clinical, there was a request to have a rationale for a development, or why we should not be doing a development and toxicity study or provide the rationale. We're still waiting for some of the feedback and so forth.

These are the things that when we provided our structure for the (inaudible), they subsequently have some questions and information that they wanted to review prior to the actual BLA this year. And that's exactly what is happening. I also alluded to the point that part of the submission is that you have to meet the requirements for pediatric plan or pediatric waiver. And since this indication is also including pediatric patients, we are not and seeking a pediatric waiver. So we've provided information on how we would address the whole thing around the pediatric plan.

And so these are, again, additional responses from the -- questions from the agency. We're working on this. The next meeting, for instance, for the pediatric committee is in July, which they will review our revised application. So you can see, it's a very iterative process, more or less. We get question, we'll respond. We may get additional questions, or the issue or the topic is closed and moved to the next step, which is, actually, by the way --

It's okay.

-- very helpful because, hopefully, when we breach the BLA field, we know what the agency is requiring for their [PT], and so, that iterative process is also helping us to continue improving our overall -- [these changes] of how to address these specific topics, et cetera.

Okay, I see. Thank you. I also have another question. So besides larger indication that require a lot of money to pursue, are there any smaller ones, [or do you see] indications that you could consider investigating [within that space]?

I would take that question, Gil.

Yeah, sure, Iman. Yeah, go ahead.

The short answer is yes. The longer answer is that there are a few activities that we are doing. For instance, we would like to see the completion on the report of [rESPECT-2] as well as our ongoing interrogation further of the TRYbeCA-1 result, first to see whether or not we should continue investigating GRASPA in pancreatic cancer. Of course, the TRYbeCA-2 will also inform a decision. But more globally or more broadly, this is a drug that targets metabolic -- at least one of the metabolic pathways in cancer. And therefore, we have not utilized the full potential of this drug in other tumor types as we continue looking at these two immediate clinical activities.

And then in the bigger picture, as Eric alluded to the overall, complete, and strategic plans, that will give us a better-informed insight and decision, which indication to go further to assess GRASPA. But the story's not yet finalized, and it's not yet over with this drug. Gil?

[Noted.] I think that's a good answer, Iman. And maybe just to add, I think if you asked for smaller indications, but still -- whereas the cancer metabolism, the asparagine glutamine metabolism is known to play a role. For example, NK/T-cell lymphoma. And so, obviously, pending further progress with the ALL, but that clearly could be an indication to take a next step in [hemog]. So Iman mentioned the solid tumor indications with the [hemog] also, so we see opportunities.

Nice, thank you. I have one more, if that's okay.

Sure.

Can you expand on what would be some of the applications of the red blood cell vesiculation technology that you would consider pursuing yourself, or is it something that you're considering to make fully available for partnering?

It's a real good question. And we're -- obviously, it's still early for us. But for example, we have seen interesting application already in immuno-oncology, like, for example, encapsulating STING agonist then vesiculating, and really seeing very good uptake by the macrophages and -- obviously, still, work to be done there. So that could be depending on how we progress, something we continue to do internally for our partners.

But another application we see clearly an increasing interest and also exciting is if the red cells could be a very good -- the physicals of red cells could be a very good vehicle to, for example, deliver RNA. So if we encapsulate RNA in the red cells and then vesiculate, this could be a way, for example, for RNA delivery in ex vivo or in vivo, sorry, or in-vivo CAR type of approaches.

Clearly, this is something we will not do alone. We don't have the competence, so we are indeed also looking there, whether partnering would be an option to take the see the RNA space is helped. But there, I hope, we can progress there.

Okay. Thank you very much for the answers.

And I'm showing no further questions at this time. I'd like to hand the conference back over to Mr. Gil Beyen for closing remarks.

Great. Thank you very much. I just want to thank everyone for your participation, your interest, your attention today and for your continued support of Erytech. I wish you a great rest of the day, and I look forward to speaking again at the next occasion. Thank you.

This concludes today's conference call. Thank you for your participation. You may now disconnect. Have a wonderful day.