Palvella Therapeutics Inc (PVLA) 2020 Q4 法說會逐字稿

Greetings, and welcome to Pieris Pharmaceuticals, Inc. Year-end Earnings Conference Call. (Operator Instructions) Please note, this conference is being recorded.

I'll now turn the conference over to your host, Tom Bures. You may begin.

Thank you. Good morning, everyone, and thank you for joining us for our year-end 2020 conference call and corporate update. On the call today, we have Steve Yoder, our President and CEO, who will provide a corporate overview and outlook on our pipeline; Hitto Kaufmann, our Chief Scientific Officer; and Shane Olwill, our SVP and Head of Translational Science, who will be available for Q&A. You can access the press release released this morning on the Investor Relations page of our website at www.pieris.com.

Before we begin, I'd like to caution that comments made during this conference call may contain forward-looking statements involving risks and uncertainties regarding the operations and future results of operations of Pieris, including statements relating to the timing and progress of our clinical trials and preclinical programs. Our partnerships and our financial position and actual results or events may differ materially from those expressed or implied by such forward-looking statements.

Factors that might cause such differences are described in our filings with the SEC including our annual, quarterly and current reports. The information being presented is only accurate as of today, and Pieris undertakes no obligation to update any statements to reflect future events or circumstances.

I will now turn the call over to Steve.

Thank you, Tom, and thank you to everyone for joining us today for our 2020 year-end earnings call. It's been a busy and exciting past few days, including this morning's update within our AstraZeneca collaboration. But before diving into those updates as well as a recap of some of last year's highlights and an outline of our future plans, I would like to simply remind everyone that we're building a proprietary and partner pipeline of large molecules called Anticalin proteins, which are engineered versions of naturally occurring proteins called lipocalins.

Lipocalins are small specific binding proteins with good drug-like properties. We're currently focused in 2 areas: inhaled Anticalin proteins to treat respiratory diseases locally; and bispecifics designed to activate the immune system of cancer patients locally. In both cases, the local or focused approach that any calin proteins offer is intended to drive superior outcomes for patients compared to systemically active agents.

Beginning with our respiratory franchise, I first will provide an update on PRS-060 or AZD1402, an IL-4 receptor alpha antagonist we are developing for moderate-to-severe asthma in collaboration with AstraZeneca. We are pleased to have announced earlier today the achievement of the USD 13 million milestone payment in connection with the initiation of the Phase IIa study for this program.

In this global 2-part Phase IIa study, PRS-060 will be evaluated at up to 3 dose levels in an inhaled dry powder formulation versus placebo. The first part of the study, we'll evaluate the compound in approximately 45 moderate asthmatics controlled on standard of care asthma therapy over 4 weeks to establish the safety and pharmacokinetics of the dry powder formulation. The second part of the study will assess its efficacy, safety and pharmacokinetics in up to 3 arms plus a placebo arm and up to 360 moderate uncontrolled asthmatics with the blood eosinophil count of greater than or equal to 150 cells per microliter and fractional exhaled nitric oxide, or FeNO, greater than or equal to 25 parts per billion.

Patients will be dosed and monitored over 4 weeks with FEV1 improvement compared to placebo as the primary endpoint. The initiation of this trial is a significant milestone for our respiratory franchise. This program remains a high priority one for Pieris, and we look forward to continuing our collaboration with AstraZeneca on this program and sharing the Phase IIa results next year.

Additionally, we recently amended our agreement with AstraZeneca to restructure certain commercial terms for PRS-060 by adjusting various milestones and royalty provisions while fundamentally maintaining the overall value split between the 2 companies.

In connection with the amendment, AstraZeneca is also making a USD 10 million equity investment in Pieris. We believe this investment further strengthens our joint vision for the future of inhaled biologics and demonstrates AstraZeneca's ongoing commitment to our alliance. Beyond this lead respiratory program, we have several other inhaled respiratory programs in development. There are 4 discovery stage programs that are part of the 5 program collaboration with AstraZeneca, and there are multiple fully proprietary programs we are developing outside our partnership with AstraZeneca. We have continued to make progress on our proprietary programs, and we envision disclosing program details, including IND plans, for one of those programs later this year.

Now turning from our respiratory franchise, I will now give an update on our immuno-oncology pipeline, which is focused on a target known as 4-1BB or CD137, which is an immune cell co-stimulatory receptor that is expressed on activated T cells and natural killer cells in particular. Pieris is a leader in the 4-1BB space, and our data-driven belief in this target underpins most of what we're doing in immuno-oncology. Our localized 4-1BB agonism approach was designed to overcome the challenges that systemically active 4-1BB agonists have faced in the clinical setting, rendering them ineffective in achieving a suitable therapeutic window.

We believe our 4-1BB-based bispecifics can open up that window and take advantage of the biology fundamentals of 4-1BB. And what makes 4-1BB so special is that its activation is believed to provide a critical signal that leads to increased T cell proliferation, cytotoxicity and cytokine secretion and enhanced T cell memory, among other effects, which collectively help to mediate effective and durable antitumor activity.

Our lead program with international nonproprietary name cinrebafusp alfa, which you all know is PRS-343, and from here, I'll often refer to as cinre, is a 4-1BB HER2 bispecific and the first tumor-targeted 4-1BB agonist who have entered clinical trials. It was engineered specifically to take advantage of the potential of 4-1BB, while avoiding off-tissue toxicity limitations.

Clinical data we have generated, which are based on a monotherapy dose escalation study and a combination dose escalation study with atezolizumab, Tecentriq, provided under a drug supply agreement with Roche, they have demonstrated clinical benefit linked to biomarker evidence indicative of a 4-1BB-driven mechanism of action. And not only does cinre demonstrate clinical activity, but it does so with an acceptable safety and tolerability profile.

Most recently, we presented results from both studies at the 2020 European Society for Medical Oncology, or ESMO, Virtual Congress. The results confirmed that cinre provides durable clinical benefit, including a durable confirmed complete response, in heavily pretreated patients across multiple HER2-positive tumor types. The observed clinical benefit coincides with significant expansion of CD8 T cells observed in longitudinal biopsies of responders and a substantial increase of soluble 4-1BB in the active dose cohorts demonstrating 4-1BB activation.

Data presented at ESMO included several patients from the highest dose cohort, cohort 13b, which is an 18-milligram per kilogram dose dosed Q2 weekly those patients who had only recently enrolled in the study as of the conference cutoff date and had not yet reached the first radiological assessment under RECIST criteria.

At AACR, on April 10, we will present additional clinical benefit and safety data for these patients as well as additional biomarker data across all active dose cohorts. Our objective in presenting additional data is to lay further foundation for our Phase II trial plans, including the development of cinre in both the HER2-high and HER2-low settings.

As announced last year, we intend to build on the positive clinical activity we observed with cinre in the HER2-high setting that is IHC2+ and ISH positive as well as IHC3+ through a study of cinre in gastric cancer patients in combination with second-line standard of care, paclitaxel and ramucirumab. For this study, Lilly is supplying ramucirumab under a drug supply agreement.

Given the clinical activity we observed in monotherapy in heavily pretreated patients, the positive safety profile and the fundamental underpinnings of 4-1BB biology that drive T cell proliferation, cytotoxicity and memory, we are encouraged that the prospect of cinre offering a meaningful treatment option to HER2-positive patients in what has become a very dynamic space.

And turning beyond the HER2-high gastric cancer setting, we are also excited to be exploring the combination of cinre with TUKYSA, tucatinib, for HER2-low gastric cancer patients. And we have recently signed a trial collaboration with Seagen, who will supply tucatinib for this study. Based on cinre's mode of action and data we have been generating, we believe the HER2 low setting is an area where cinre can be particularly differentiated. The combination of cinre and tucatinib is intended to address a high unmet medical need in HER2-low expressing gastric cancer patients who do not respond to traditional HER2-targeted therapies.

Preclinical studies we generated in collaboration with Seagen show that tucatinib synergizes with cinre to enhance 4-1BB-mediated immune cell stimulation. This effect was observed across a range of HER2-expressing cell lines, not just IHC3+, but also IHC2+ and 1+ cell lines regarded as HER2 low, including those where cinre had limited single-agent activity.

In terms of the synergy at play here, we know that in general, tyrosine kinase inhibitors have been shown preclinically to upregulate or stabilize tumor cell surface HER2 expression. One hypothesis behind the synergy we're observing is that tucatinib can impact HER2 stabilization on tumor cells, which can facilitate increased clustering of cinre on the tumor cell surface to further drive 4-1BB cross-linking, and therefore, enhanced activation of immune cells.

So not only does the HER2-low gastric cancer setting represent a sizable market opportunity, but also it's an area where competitor drugs that showed benefit in HER2-high gastric cancer have not fared as well in the HER2-low setting. We look forward to studying this combination and are pleased to be doing so with an existing supportive partner. Not only is Seagen providing tucatinib for this study, but they recently also made a USD 13 million strategic equity investment in Pieris in connection with the amendment of our existing immuno-oncology collaboration agreement, and we believe that this investment further strengthens our joint commitment to developing novel cancer therapies together.

As we work on Phase II initiation for these 2 studies, which we expect will begin this summer and will include a number of sites in South Korea and the U.S., we have dosed 2 of 6 intended patients in a small safety cohort that is progressing well and which employs the co-diluent technique we refined as part of our efforts to remove the partial clinical hold, which was lifted by FDA in January of this year.

Looking beyond cinre and our immuno-oncology collaboration with Seagen, we are also working hard to advance PRS-344, a 4-1BB PDL-1 bispecific under co-development with Servier. On April 10, we will present what we believe are compelling preclinical data for 344 as part of a poster session at AACR. The presentation will showcase synergistic data, including in vitro data, evaluating potential effects of combining 4-1BB and PDL-1 and the effects of PRS-344 on CD8 T cell as well as dose-dependent antitumor response in, in vivo preclinical models.

We expect that the Phase I trial of PRS-344 will begin this year. And as a reminder, Pieris holds exclusive commercialization rights for PRS-344 in the United States and will receive royalties on ex U.S. sales by Servier for this program. Additionally, within our Servier collaboration, we completed non-GLP preclinical work for PRS-352, a preclinical stage program addressing undisclosed targets for immuno-oncology last year. Servier is fully responsible for further development of the program.

This concludes my prepared remarks, and I would now like to hand the call back over to Tom to guide you through our year-end 2020 financial results. Over to you, Tom.

Thanks, Steve, and good morning again, everyone. Cash and cash equivalents totaled $70.4 million for the year ended December 31, 2020 compared to our cash, cash equivalents and investment balance of $104.2 million for the year ended December 31, 2019. The decrease was primarily due to funding operating and capital expenses in 2020, partially offset by ATM proceeds and milestone achievements during the year. The December 31, 2020 ending cash excludes the $13 million received from Seagen in March 2021 and the $23 million to be received from AstraZeneca in connection with the Phase IIa study initiation and equity investment.

R&D expenses were $46.5 million for the year ended December 31, 2020 compared to $55 million for the year ended December 31, 2019. The decrease in R&D expenses was primarily due to lower clinical and manufacturing costs on our immuno-oncology programs, in part due to the partial clinical hold in cinre, lower manufacturing spending on PRS-060, which is fully reimbursed from AstraZeneca and lower travel-related expenditures due to COVID-19 restrictions. The overall decrease was partially offset by an increase in allocated IT and facility costs due to the move to a new R&D facility in Hallbergmoos, Germany, in early 2020.

G&A expenses were $16.7 million for the year ended December 31, 2020 compared to $18.4 million for the year ended December 31, 2019. The decrease in G&A expenses was primarily due to lower personnel costs, lower audit and professional fees related to Sarbanes-Oxley readiness and lower travel-related expenditures due to COVID-19 restrictions. These decreases were partially offset by higher allocated IT and facility costs due to the move to the new R&D facility.

Our net loss attributable to common shareholders was $37.2 million or $0.68 per share loss for the year ended December 31, 2020 compared to a net loss of $28.3 million or $0.56 per share loss for the year ended December 31, 2019.

With that, I'll turn the call back over to Steve.

Thanks, Tom. I'd just like to conclude by saying that 2020 was a tough year for everyone to say the least, and I am very proud of how our team adapted and stayed the course. The challenges we faced last year made us a more resilient organization, and I look forward to maintaining this mindset in 2021 and beyond.

This year is already off to a good start, with partner support and a number of clinical program starts recently announced or anticipated. PRS-060 is progressing through its next phase of development. And this year, we will be advancing both cinre and PRS-344 into the next phases of development.

We would now like to open the call for any questions that you might have.

(Operator Instructions) Our first question is from Matt Phipps with William Blair.

Congrats on minute agreements here. I'm just curious if you guys have been able to glean any learnings from the recent data sets or updates from competitor or PDL-1/4-1BB bispecific programs? And really, it seems like competitors are not able to reach a dose level where they can fully inhibit the PD-L1 pathway and therefore, may even look to combine with a separate PD-1 antibody.

So really just curious if you guys have any reason to think that 344 might be able to still have good 4-1BB agonism at a higher dose level to saturate the PD-L1 pathway and then any gleanings from maybe the tumor types or things like that to go into the developments in clinics.

Matt, Steve here. Thanks for the question. It's a great question, and we know a lot of people are focused on not just 4-1BB, but 4-1BB/PDL-1, and we do believe it's a great example of a combination where the bispecific itself drives novel biology compared to a cocktail approach. And where you're giving on this, in this case, an antagonistic approach on one side, an agonistic approach on another, you have to really put a lot of thought into the design and the dosing schedule of the molecule.

And here, I think this demonstrates our position of leadership, a lot of the thought that's going into designing the molecule and how we can extract learnings from 343 in the clinical setting, for 344 going forward. And I would say, before turning it over to Shane to get into some of those important nuances that you highlighted, we believe that the data we're seeing in general out there from third-party molecules in the clinic really confirm the rationale to pursue this combination, and it does show the nuanced challenges of getting the right dosing schedule, dose levels, of course, you have to work with the molecule you have.

And given the thought that we've put into the design of our molecule, we feel really encouraged about the opportunity for a best-in-class approach. And I'll let Shane go into the details. He was largely the brainchild behind the development or design of this molecule. So I would be remiss if I didn't let him share that with you firstly. So Shane, over to you.

Thanks, Steve, and thanks, Matt, for the question. Yes. Thanks, Steve. So as you say, there is some emerging data. And as Steve mentioned, we see this as positive in the sense that it's further validating and confirming 4-1BB's importance. But when it comes to the actual design of a molecule, there are a number of things you need to bear in mind. And we certainly consider things like the isotype of a molecule. We wanted to ensure that would be -- would have a complete silent backbone. We spent a lot of time working on valency and the geometry of a molecule.

From a valency perspective, we feel bivalent is best. Geometry, we wanted to have an optimized, flexible formats that would allow a natural synapse to form. And then other things like the actual affinity for the partners, be it 4-1BB or PD-L1. As we said many times, we feel on the 4-1BB side, you need to have a moderate affinity to really allow you to take advantage of a therapeutic window. So we've gone for that whereas some competitors have gone for a high-affinity molecule, and that may impact the therapeutic window they seek. We also have thought a lot about the particular epitope 4-1BB we bind to.

So all in all, as Steve said, we've been working in the 4-1BB space for a number of years. We've learned a lot from PRS-343 and all those learnings can go into PRS-344. We feel we have the opportunity to have a best-in-class play here. Notwithstanding that, we are -- we do feel the data coming out from competitors is supporting the general approach of targeting 4-1BB.

So then on the cinre combo, the new cinre combo with tucatinib, why not also explore chemo in that combo? Just it seems like in gastric, a lot of drugs and regimens really kind of need some chemo there to help slow down the aggressive tumor?

Shane, do you want to answer that one as well?

Yes. Sure. Matt, it's a good question. Certainly, I can answer it, Matt. And it's a good question. And again, we've taken an approach to gastric cancer and that we want to explore different regimens. And what we would say is there's a lot of rationale for combining PRS-343 with cinre. We see a dramatic increase in T cell activation with the combination. We also would remind you that as a single agent, we're seeing really nice activity with PRS-343.

So we do feel, combining those 2 agents, certainly makes a lot of sense. What I would also say that with our other arm and the gastric trial, we are exploring chemotherapy. So we've got 1 arm, which is looking at around paclitaxel and an arm which we're look at tucatinib.

So I would say we're covering our basis there. We do feel that with regards to the cinre combination with tucatinib, there's a strong biological rationale. We've got some really nice preclinical data and building on the clinical data we've seen as a monotherapy at our agent, we feel that there's a real opportunity here.

Yes. And I would just add to Shane's very thoughtful answer that we certainly are exploring the chemo regimen in combination with HER2-positive cancer, and that's also because of the standard of care being ram, taxol and that allows for an efficient enrollment on top of standard of care. It's not for fear of any toxicity that we wouldn't add a chemo regimen on top of tucatinib right now, we feel it's following the biology based on data we generated in-house and with the collaborative efforts of Seagen, and we look forward to moving both of them forward in parallel. Great questions, Matt. Thanks.

And if can just sneak 1 last one in there for Tom. Can you say where this additional cash now gets you from an accounting runway standpoint?

Yes. Sure, Matt. We haven't really guided beyond saying we have more than 12 months of cash. But certainly, this puts us in a really good position to run these Phase II trials for cinre start and get to readouts on those, certainly get to a readout on the recently initiated Phase IIa trial for PRS-060 and go forward with the 344 study as well, getting that into the clinic, along with a number of earlier-staged discovery programs that are partnered and some that we have proprietary as well. So I think we're well positioned now with some of the positional cash that's come in, in the last couple of days.

All right, and it seems as if we have reached the end of the question-and-answer session, and I will now turn the call over to Steve -- actually, I do -- I'm sorry, I do see Matt Phipps from William Blair again who has another question.

Well, yes, I was going to leave some for others. But just -- so I know you guys can't say too much on the 060 trial, but ClinicalTrials.gov lists mid next year for the primary completion. What should -- what can we look for, for updates? I know you guys have to work with AZ on this. But will we know when it reaches through the first part of the trial? Or will you be able to provide some updates as it goes?

Yes. Matt, I'm happy to take the question. It's nice to have a nice dialogue with you today. But no worries. Look, we have to align, as you said, with AZ on a disclosure strategy across the duration of the trial. We've clearly talked about the enrollment criteria for subjects for Part 1 versus Part 2. You can see that for Part 1, they're moderate asthmatics controlled on standard of care that don't have to have a type 2 phenotype versus for the efficacy part that is moderate uncontrolled that have the classic T2 phenotype with the EO and the FeNO cutoffs.

So I think we're encouraged to say that we think enrollment of Part 1 should be straightforward, okay, with all the caveats that we're still in a COVID world out there. But I would like to think that, that can go forward efficiently with the multiple sites we have up and running.

And we would like to be able to talk about getting through that stage-gate in a timely manner. That's our expectation. That's our hope. And so that's something that hopefully we can be able to comment on later in the year. And we'll work with AZ to be able to do that in a way that meets their corporate communication strategy. So that's what I would hope to be able to do on the way to announcing the overall efficacy data, which would be absolutely next year.

All right. There appears like there are no...

Well, thank you -- no other questions, I guess. So I'm happy just to thank everyone for your attention today and your continued support of Pieris, and we certainly look forward to keeping you updated on all of our progress. Thanks again for joining the call, and have a great day.

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