Palvella Therapeutics Inc (PVLA) 2023 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Pieris Pharmaceuticals to host First Quarter 2023 Investor Call. (Operator Instructions)

At this time, it is my pleasure to turn the floor over to your host Tom Bures, CFO. Sir, the floor is yours.

Thank you. Good morning, everyone, and thank you for joining us for our First Quarter 2023 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 Chief Development Officer, who will be available for Q&A. You can access the press release issued 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 related to the timing and progress of our clinical trials and preclinical programs, the anticipated timing for the reporting of data, 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.

With that, I will now turn the call over to Steve.

Thank you, Tom, and thank you to everyone for joining us today. I will be providing an update on the progress we are making to advance our inhaled biologics pipeline for respiratory diseases. We continue to drive towards key catalysts in the next 12 months to 15 months for our clinical and preclinical programs, which we believe carry transformative potential versus current modalities.

Our top priority remains the study completion and readout from the elarekibep Phase IIa study in asthma. Elarekibep is an oral inhaled IL-4 receptor alpha antagonist also referred to as PRS-060 or AZD1402, which is partnered with AstraZeneca. In addition, I will provide commentary on our 2 fully proprietary inhaled respiratory programs, PRS-220 and PRS-400 that Pieris is advancing alongside elarekibep. Pieris' Anticalin platform may offer a fundamentally new approach to treating high prevalence respiratory diseases by directly targeting the relevant lung tissue. Building upon clinically validated biology, our pipeline of therapeutics has the potential to provide increased clinical benefit, reduce side effects and improve convenience. Our programs target large opportunities with significant unmet need that continue to be underserved by the biopharmaceutical industry.

And turning first to our top priority, elarekibep, we continue to work closely with our partner, AstraZeneca, who is enrolling the ongoing Phase IIa study for asthma as study sponsor. As we have previously communicated, AstraZeneca has committed additional clinically focused resources to achieve study completion, including adding several new countries and a number of additional clinical sites that would bring the total to more than 100 sites across all geographies.

AstraZeneca is on track with this plan to add 3 new geographies this quarter. With this broader clinical footprint and the important protocol amendments that became effective earlier this year, we are witnessing the positive impact in patient screenings. We anticipate this to result in a meaningful uptick in the rate of patients randomized into the study. Top line results measuring placebo-adjusted FEV1 improvement at 4 weeks, the study's primary efficacy endpoint, are anticipated to be reported by the middle of 2024. This readout will focus on the 3 milligram DPI dose versus placebo.

Separate from these improvements in patient enrollment for the efficacy portion of the study, we were pleased to have announced that the safety review of the 10 milligram DPI dose cohort in mild controlled asthmatics was successfully completed. That portion of the study enrolled all comer, moderate controlled asthmatics who received either 10 milligrams of elarekibep or placebo twice daily on top of background therapy, which was ICS/LABA over 4 weeks. This not only provides additional data supporting the elarekibep safety profile, but also enables higher doses to be evaluated in the future if needed.

The elarekibep commercial opportunity remains substantial when considering the current multibillion dollar asthma therapeutics market. By directly targeting lung tissue through a convenient route of administration, elarekibep has the potential to provide a superior product profile, offering a route of administration that many patients and healthcare providers would prefer. If we are successful, we believe that elarekibep could address important shortcomings of currently approved drugs and transform how asthma is managed.

With elarekibep being strongly supported by AstraZeneca's organizational commitment and with the increased resources provided, we look forward to obtaining study results. This important data set, alongside the delivery of a development plan and budget from AstraZeneca, will trigger our opt-in decision. Being in a position to opt-in, in co-development if the data are positive, is a top priority for our company.

Next, I would like to discuss 2 other highly differentiated inhaled respiratory programs that we are advancing, PRS-220 and PRS-400, both of which are fully proprietary. PRS-220 is an inhaled Anticalin protein that targets connected tissue growth factor, or CTGF, for the treatment of idiopathic pulmonary fibrosis, IPF, and other forms of fibrotic lung disease and has best-in-class potential.

Preclinically, PRS-220 has demonstrated superior on-target potency compared to pamrevlumab, which is an intravenously infused CTGS antagonist in late-stage clinical development. Critically, we believe that an inhaled route of administration provides for superior lung exposure and may lead to a superior clinical outcome compared to a systemically administered approach in this pathway. Based on these potential benefits, the convenience of at-home delivery via inhalation, as well as the potential to combine PRS-220 with current standard of care for IPF, we believe PRS-220 could have best-in-class potential for this serious disease.

As with elarekibep, we believe that PRS-220 could represent a tremendous commercial opportunity for our company. We continue to administer PRS-220 according to plan to subjects in a Phase I study that is evaluating the safety, tolerability in pharmacokinetics or PK in healthy volunteers. We expect to report Phase I study results in the second half of this year. This study, along with other ongoing activities is supported by a meaningful grant from the Bavarian government. We are also excited to present new preclinical PRS-220 data at the ATS 2023 International Conference. In a poster session, presented data will show how PRS-220 significantly reduced collagen deposition in a silica-induced lung fibrosis model when delivered by inhalation. This presentation will be on Sunday, May 21.

Next, I want to provide an update on PRS-400, an inhaled Jagged-1 antagonist being developed for the treatment of muco-obstructive lung disease. Our enthusiasm for this program is based on the large market opportunity represented by mucus-driven respiratory diseases and is supported by preclinical data showing that PRS-400 can regulate mucus production in the lung.

PRS-400 is designed to block the JAG1 Notch signaling locally in the lung via oral inhalation with the objective of reversing goblet cell metaplasia, hyperplasia and mucus plugging, as well as increasing the number of ciliated cells. Unlike other interventions that aim to reduce mucus burden, PRS-400's mode of action is independent of stimulus, which we believe offers applicability across a broader patient population.

Previously presented preclinical data at the European Respiratory Society or ERS Meeting in 2022 showed that in vitro, PRS-400 drug candidates can penetrate mucus-coated epithelia to potently inhibit JAG1-induced signaling on lung epithelial cells, thereby reducing mucus expression. And on May 22, later this month, we will be presenting preclinical data at the ATS 2023 International Conference, demonstrating that PRS-400 reduces inflammation-driven goblet cell metaplasia and mucus hypersecretion in a therapeutic disease model. PRS-400 is advancing towards clinical development candidate nomination later this year.

Turning now to our immuno-oncology pipeline. We remain committed to delivering with our partners on the several programs that they support and are advancing. With the benefit of our existing collaborators, which include Servier, Seagen and Boston Pharmaceuticals, our immuno-oncology pipeline is being advanced in a cost efficient manner and we believe multiple opportunities exist to generate value from this portfolio based on promising preclinical and clinical data.

First, in April, highly encouraging clinical results from the company's study of cinrebafusp alfa or PRS-343 in second line and beyond HER2-positive gastric cancer were presented at the AACR Annual Meeting. The results presented there showed an unconfirmed 100% objective response rate and a promising emerging durability profile in the 5 patients enrolled into that study.

Prior to these promising results being available, enrollment in the study have been discontinued for strategic reasons. Pieris is now considering a range of transactions from an immuno-oncology-focused spin-out to traditional partnering transactions to facilitate the continuation of this program given the emerging transformative activity generated in gastric cancer and the exciting potential of this program in other HER2 studies. Moving beyond PRS-343. In our collaboration with Servier, we continue to progress in the dose escalation portion of the Phase I/II study of PRS-344 or S095012, which is a 4-1BB/PD-L1 Mabcalin bispecific for the treatment of solid tumors.

Next, within our Seagen collaboration, we earned a USD 5 million milestone payment when the first patient was dosed in a Phase 1 study for SGN-BB228, also known as PRS-346 at the start of 2023. SGN-BB228 is a first-in-class CD228/4-1BB bispecific antibody-Anticalin compound designed to provide a potent costimulatory bridge between tumor-specific T cells and CD228-expressing tumor cells. And beyond this program, we are committed to delivering on 2 other programs with Seagen for which we received full reimbursement for internal and external spending on those programs.

And lastly, within the immuno-oncology franchise, Boston Pharmaceuticals continue to advance BOS-342 also known as PRS-342, which is a 4-1BB/GPC3 bispecific Mabcalin compound towards the clinic, with Phase I expected to begin in the coming months. We are eligible to receive a modest milestone payment upon the first-in-human dosing on this program. And we believe that clinical entry of this program, which will be the fourth clinical stage 4-1BB bispecific from our franchise, offers additional long-term upside.

This concludes my prepared remarks. And I will now hand the call back to Tom.

Thank you, Steve.

Cash, cash equivalents, and investments totaled $48.4 million for the quarter ended March 31, 2023, compared to a cash and cash equivalents balance of $59.2 million for the year ended December 31, 2022, with the decrease being a result of funding operations during the first quarter of this year. Also, the first quarter historically is a higher cash burning quarter due to annual bonus and insurance payments that occur in this timeframe. And compared to the first quarter of 2022, our operating cash burn decreased by more than $8 million. The company believes that operations are sufficiently funded for more than the next 12 months.

As previously noted, our operating plans for the current year include the benefit of cost saving actions we have already taken, and we are prepared to gauge future investments on PRS-220 and PRS-400, including certain Phase II readiness activities for PRS-220 and IND-enabling activities for PRS-400 in the interest of achieving our top priority, namely obtaining data for the elarekibep Phase IIa study in asthma.

Based on the current timelines for AstraZeneca to deliver this study, we are confident we will be able to achieve our cash reach objectives by making appropriate investment decisions, leveraging anticipated modest milestones from existing collaborations, and we will continue to pursue partnering discussions and assessing the opportunities of using the equities market to maintain pipeline progression while awaiting the elarekibep readout.

Research and development expenses were $13.4 million for the quarter ended March 31, 2023, compared to $14.1 million for the quarter ended March 31, 2022. The decrease was due primarily to lower clinical costs for cinrebafusp alfa and lower personnel costs, license fees and software costs. These lower costs were partially offset by higher overall program investments on PRS-220 and higher preclinical costs for discovery-stage programs, both partnered and proprietary.

General and administrative costs were $4 million for the quarter ended March 31, 2023, compared to $4.4 million for the quarter ended March 31, 2022. The period-over-period decrease was driven primarily by lower professional services, consulting and insurance costs.

For the quarter ended March 31, 2023, $2 million of grant income was recorded with respect to PRS-220, compared to $2.1 million for the quarter ended March 31, 2022. The decrease was due to slightly lower overall cost incurred in PRS-220. In addition, interest income was $400,000 -- approximately $400,000 for the quarter ended March 31, 2023, given the impact of rising interest rates over the last 12 months compared to a de minimis amount in the quarter ended March 31, 2022.

And finally, the company's net loss was $13.2 million or $0.45 loss per share for the quarter ended March 31, 2023, compared to a net loss of $5.1 million, or $0. 07 loss per share for the quarter ended March 31, 2022.

And with that, I will hand the call back over to Steve.

Well, thank you, Tom, and thank you for joining us all on call today. We would now like to take the opportunity to open the call for any questions you might have.

(Operator Instructions) And our first question comes from Jonathan Miller from Evercore.

I would love to ask about the 220 program. Let's suppose that FibroGen's Phase III looks good, looks great. What's your path forward for 220, given other constraints on bandwidth? How can you advance rapidly off of the healthy volunteer data coming second half, again, supposing the FibroGen study is supportive?

Thanks, Jon. Thanks for the question. So, we continue to be very mindful of the upcoming FibroGen readout for pamrevlumab. And we are mindful of the guidance that, that data will be presented by the middle of this year. We believe that we can cost effectively manage the progression of PRS-220 through that time and beyond that. As a reminder, the ongoing Phase I is budgeted and has continued on plan and we intend to finish that and announce top line data by the end of this year, in the second half of this year.

And for any related activities that are gating to Phase IIa, we can modestly keep those moving forward for the near term. And we do believe that the pamrevlumab readout, which would be anticipated soon will, if positive, lead to a very strong inflection point for PRS-220 and our story. And we believe that we could leverage that inflection point to cost effectively continue to advance the program towards the clinic.

And as we have always done, we've looked at different ways to access capital that leverages whether it's the balance sheet, equities or partnering. And we continue to see all of those as possible and things that we will continue to look over the next couple of weeks, a couple of months, in particular. So, we will be watching closely and we look forward to, and we are rooting for that program. And we think that it will be a further validation of the intervention point for CTGF to treat IPF, and we think that a superior approach is to go locally.

Okay. Makes sense. And then, I guess sort of relatedly, although different targets, for the PRS-343 program, which you had previously discontinued for strategic reasons. I agree with the AACR data, looked really supportive. But again, if you're seeming more focused in the respiratory direction now, I know you mentioned a bunch of different options in your prepared remarks for how to advance that program. Can you give us any color about any conversations you've been having already? And what the timeline would look like for you making some sort of strategic decision about PRS-343?

Sure, Jon. Thanks. I'll start with just the data. I mean the data that we presented at AACR, albeit a small data set, they were striking in 5 patients who were all rather heavily pretreated, all had had HER2 therapies, checkpoint blockade, multiple patients had what is seen as one of the most amazing advancements in the HER2 space in some time within HER2 patients had progressed off of those therapies and responded, not just responded but had durable benefit in nearly all cases with this regimen on top of second-line standard of care regimen of ramucirumab and paclitaxel. So although the data sets are small, they're compelling. And we think that a number of groups appreciate that, ranging from potential investors, private investors, as we talked about a SpinCo option to pharma, large and small.

These things take time. I think no company knows that better than peers, who has a number of partnerships under its belt and knows that the right deal isn't rushed. And so we will continue to leverage, what I would characterize as very real, very enthusiastic interest in the program that we will continue to pursue given our strategic focus to use our balance sheet and our P&L on the respiratory franchise as we had previously communicated, and we'll continue to focus on going forward. So, I'm not going to comment on the specific discussions. That wouldn't be appropriate. But I will just reiterate that interest is real. It's advancing. And I believe that there will be additional patients dosed with this drug in the future, and it won't be Pieris Inc. So stay tuned. And I would say in terms of guidance, again, no deal is rushed, but I would say, towards the back half of 2023 is a good line of sight to be able to talk more about that program.

And our next question comes from Matt Phipps from William Blair.

Just curious [play], if pamrevlumab fails in the primary endpoint of the ZEPHYRUS-1 trial, I guess, what else would you be looking at that if there's maybe some secondary endpoints like lung fibrosis that would give you still confidence in the mechanism, but maybe just issues with, obviously, pamrevlumab itself? Or are there any other indications you might consider as well?

Thanks, Matt. I mean, I'll start at a high level, and I'm happy to turn it over to Shane to add just a bit of color. I would say that if the trial is negative, if the pamrevlumab Phase III ZEPHYRUS-1 trial is negative, of course, we would want to understand the reason for missing the endpoint. So for example, lower-than-expected efficacy may not be a reason to stop development as we believe that targeting the lung directly with an inhaled Anticalin will achieve a better inhibition of the actions of CTGF.

So it will be a function of when one could access the data at a deeper level. While there are other indications beyond IPF that could be relevant including progressive fibrotic interstitial lung disease, we do believe that the PRAISE data are pretty compelling and that is showing the validation of IPF as a high-priority indication for a CTGF intervention. So that's still, in our view, remains the top indication to pursue.

We will, again, with caution on not wanting to scoop the conference next week or 2 weeks ATS. We will be presenting additional data that support, I think, a compelling rationale for a local approach, and that's preclinical data. But we will have news that we'll -- in press release that will detail that in due course, coincide with the poster being released later this month.

Shane, you're welcome to provide additional more color on how we'd be thinking through a gray zone or other outcomes that are not a positive top line hit on FVC for pamrevlumab.

Sure. Thanks, Matt, for the question. So just to remind people that pamrevlumab did show striking activity in the Phase II PRAISE study. So, there was a significant impact at the FVC level, but they also had some additional assessments, including quantitative lung fibrosis. So another measure that you're actually reducing, slowing down the disease progression. When we consider the pamrevlumab data, we will certainly look at those primary and secondary endpoints. We'll also look at the behavior of placebo within the study.

But just to point out a few things where we feel that we are differentiated. CTGF is expressed at high levels in the system. We don't believe that, that plays any role in the lung fibrosis. However, if you actually administer a drug systemically like with pamrevlumab, there will be a large target sync there. And only a portion of the drug administered will actually make its way to the lung, the site of disease. By administering our drug by inhalation, we're going to have better long exposure, and we feel it's very important.

One of the things that FibroGen has presented is a subpopulation analysis after study where by their own admission, they feel they may be under dosing some patients. So, they have identified a trough level, which they felt would give maximal efficacy. However, with the current dosing regimen, only about half of the patients will actually receive that. So by our more potent molecule, it's got a higher affinity for the target, so it's more potent than pamrevlumab. We -- by our administration routes, we have the ability to deliver the drug more effectively. And by our dosing regimen, we can ensure that we are also over what we believe is the optimal dosing. I think there are some significant differences.

Along with that, from a clinical strategy perspective, there's the opportunity to differentiate as well. So one of the things that FibroGen have decided to do with pamrevlumab is go without standard of care, and we see the opportunity to go with standard of care. So some strategic decisions there. Notwithstanding all of that, we're big believers in the pathway and the data that FibroGen has generated through that Phase II phase. We just have to wait like everyone else from the Phase III data and review it when it comes in the middle of the year.

Yes. And just quickly remind me the Phase I is nebulized and that is what you plan to take forward as well?

So, our Phase I study is within nebulizer. The nebulizer technology has moved on dramatically. So, these handheld devices are pretty portable and the delivery time is just a matter of minutes. So when we talk to key opinion leaders and consider the primary research, we believe that nebulized delivery is appropriate for the IPF population.

Great. And one last question. I know you mentioned 344 collaboration with Servier. I'm sorry if I missed it. Are you planning on presenting results for that anytime soon? Are you kind of waiting also to see the landscape shake out with those targets from some competitor programs?

Yes. Thanks, Matt. It's Steve here again. Yes, I think you've added 2 points to your question around the timing, maybe timing for data, timing for decision on expansion. And I think, as I said before, Phase I escalation can take time. It's hard to predict when one gets to an RP2D or an optimal biologic dose. We continue to advance the program with Servier as planned, as budgeted, and we will continue to look at the data over the middle and the second half of this year to inform OBD, RP2D and a potential expansion. There is flexibility in the collaboration around how one could parse out expansion and prioritize expansion, whether to commit expansion. And so we will be looking at, firstly, our data.

We will, of course, also secondarily be looking at or importantly, reach the competitive landscape, and we expect additional data to come out of medical conferences over the second half of the year. And of course, we often look at our overall strategy, where, as we said, we are continuing to prioritize our respiratory franchise. So, I think good data will be rewarded, and we're continuing to work through the all-important first part of escalation. And we're not yet ready to talk about the data publicly. But once we can, we will, and we will likely put that out in the context of a medical conference together with Servier.

Thank you. That was the last question. I would now like to turn it back to Steve Yoder for any closing remarks.

No other remarks other than to thank everyone again for your attention and for your continued support of our company. We are truly excited by the promise of our inhaled biologics pipeline and the opportunity to improve outcomes for patients with respiratory diseases. We look forward to updating you on our progress as we go forward. Thanks, everyone, and have a great day.

Thank you. This does conclude today's conference. We thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.