Cartesian Therapeutics Inc (RNAC) 2016 Q2 法說會逐字稿

Welcome to the Selecta Biosciences Second Quarter 2016 Financial Results Conference Call. At this time, all participants are in a listen only mode. This call is being webcast live on the Investors & Media section of Selecta's website at www.selectabio.com.

This call is the property of Selecta Biosciences Inc., and recordings, reproduction or transmission of this call without the express written consent of Selecta Biosciences is strictly prohibited. As a reminder, today's call is being recorded.

I would now like to introduce Werner Cautreels, Chief Executive Officer of Selecta.

Thank you, operator. Good morning and thank you for your interest, and for attending this first quarterly results call for Selecta. Before we begin, I will read Selecta's safe harbor regarding forward-looking statements.

During today's call, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These may include statements about the impact of our initial public offering on our financial position and development of our pipeline; our expectations for the Phase 2 clinical trial of Selecta-212, including the timing of initiation and announcement of initial results; our expectations for our gene therapy programs and related collaborations; the ability of our SVP platform, including SVP-Rapamycin to mitigate immune responses and create better therapeutic outcomes; and the sufficiency of our cash, cash equivalents, investments and restricted cash. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the risk factors section in our final prospectus filed with the SEC on June 23, 2016, relating to our registration statement on Form S-1 and other reports filed with the SEC. Any forward-looking statements represent our views as of today only.

So today is certainly a significant milestone for Selecta. The first half of 2016 has been very important and very busy for Selecta, with hard and good work from our management team and our employees, and I would like to thank them for all that work.

We made significant progress to advance our SVP platform in antigen-specific tolerance this year. First, we demonstrated clinical activity in the Phase 1 program of our lead program, Selecta-212, that is a product candidate for refractory and tophaceous gout. Second, we secured collaborators and resources to advance two differentiated and proprietary gene therapy programs towards the clinic. And, of course, we completed a successful initial public offering, which we believe indicates confidence in our science, in our team and our data to date, and it also gives us the financial runway to advance and expand our pipeline.

Looking ahead, we are on track to initiate the Phase 2 study of Selecta-212 later this year, and expect to announce initial data from this Phase 2 trial in the first half of next year. We also plan to advance our gene therapy programs designed to overcome immunogenicity and enable repeat dosing.

So let me provide you with some more color on the most important aspects of our progress. First, on Selecta-212. Again, our product candidate for chronic refractory and tophaceous gout and also our lead program in the clinic.

The objectives of our Phase 1a/1b program in patients with hyperuricemia were achieved by identifying clinically active doses of Selecta-212. That is the combination of SVP-Rapamycin plus pegsiticase, and by identifying also a maximum tolerated dose of this product candidate. The role of SVP-Rapamycin in the Selecta-212 product candidate is to induce antigen-specific tolerance against the uricase enzyme. In the Phase 1a single-ascending dose trial of pegsiticase, that is without SVP-Rapamycin, antibodies against uricase enzyme were formed as expected, curtailing control of uric acid in many patients to no more than 14 days. It is notable that up to 92% of patients treated with the currently marketed version of uricase for gout also developed immune responses, and those immune responses have been linked to reduce efficacy and safety.

Data from the ongoing Phase 1b single-ascending dose trial of SVP-Rapamycin plus fixed doses of pegsiticase demonstrate that clinically active doses of Selecta-212 are well tolerated and can prevent the formation of antibodies against the uricase enzyme. That enables sustained control of uric acid for at least 30 days after a single dose, and those data supports the monthly dosing in the upcoming Phase 2 trial.

At a dose of 65% above the maximum tolerated dose, that is about 5x above the clinically active dose of Selecta-212, 2 serious adverse events of stomatitis, which is a known side effect of rapamycin, occurred and they resolved without issues. The second of these two cases was actually initially diagnosed as a sore throat and graded as a nonserious adverse event, but retrospectively was reclassified in July 2016 by the investigator of that subject. The presentation of the clinical data from the Phase 1a and 1b trial is planned at a scientific meeting in the second half of 2016.

Preparations of the Phase 2 trial of Selecta-212 in symptomatic gout patients with hyperuricemia remain on track for initiation during the second half of 2016. This study is expected to be conducted in approximately 15 centers across the United States, with initial data expected in the first half of 2017. That was for Selecta-212.

We are also advancing our gene therapy programs. And we announced plans to focus the 2 first gene therapy programs that will be developed with the same immunotherapeutic candidate, SVP-Rapamycin, for two rare genetic disorders of metabolism, methylmalonic acidemia or MMA, and ornithine transcarbamylase deficiency or OTC. Both disease cause severe development issues and lack currently effective treatments. SVP-Rapamycin has been shown to inhibit antibody responses to AAV vector and enable repeat dosing in animals by our collaborator, Dr. Federico Mingozzi at Genethon. Mitigation of undesired immune responses associated with gene therapy vectors would enable earlier and more frequent treatments. This could result in better therapeutic outcomes compared to gene therapies without the SVP-Rapamycin.

And in the context of our gene therapy programs, we have entered into an exclusive license agreement with Mass Eye and Ear to apply the next generation gene therapy vector, Anc80, to MMA. And we also have two collaboration agreements, one with NIH and MEE for the MMA indication, and also one with the International Center for Genetics and Biotechnology in Trieste, Italy, in the case of OTC.

We are very motivated that we now have these two differentiated and proprietary gene therapy projects, and we are delighted that we will be able to leverage the expertise of these collaborators to advance these projects.

We continue to make progress in our Sanofi programs for a severe food allergy and for celiac disease. And we achieved a $1 million milestone payment for the celiac disease program. As a reminder, under the terms of the collaboration with Sanofi, Selecta is eligible to receive research reports and several R&D regulatory and sales milestones, totaling up to $300 million for each program. We are also entitled to up to double-digit tiered royalties as a percentage of product sales for any commercialized immunotherapy resulting from these efforts with Sanofi.

Nature Nanotechnology published last week an important paper on the science of our tolerogenic programs. The preclinical data in that publication support the company's lead clinical program and our tolerogenic platform in general, showing that our SVP-Rapamycin induces antigen-specific immune tolerance and mitigates the formation of anti-drug antibodies to biologic drugs. It was demonstrated in the paper that once tolerance is induced in mice and in nonhuman primate, the biologic drug could be administered without the SVP-Rapamycin, while avoiding subsequent formation of ADAs.

The publication further elucidates the mechanism by which SVP-induced tolerance and that includes induction of tolerogenic dendritic cells, increase in regulatory T cells, reduction in B cell activation and germinal center formation and also inhibition of antigen-specific hypersensitivity reactions. We are obviously delighted by this publication in this important and peer-reviewed journal.

And, of course, we successfully completed our initial public offering. In June 2016, Selecta completed its initially public offering of common stock, raising net proceeds of $60.8 million, that is after deducting underwriting discounts and commissions and offering expenses. And in July 2016, we received additional proceeds of $3.7 million, again, after deducting underwriting discounts and offering expenses. And that was the result of the partial exercise of the underwriters' overallotment option.

Before we go quickly to the financials, I wanted to provide you with an update on our governance structure. We are delighted that following our IPO, we have 2 new board members. The first one, Dr. Tim Springer, will join our board and has joined our board and also are nominating and governance committee. Dr. Springer is the Latham Family Professor of Biological Chemistry and Molecular Pharmacology, and also Professor of Medicine at Harvard Medical School and Children's Hospital in Boston. He founded LeukoSite in 1993 and LeukoSite developed three drugs approved by FDA. He has served as the Resident Professor at Pfizer, and he was a very early investor in Selecta. And he is also a founding investor in Moderna and Editas as well as a founder, investor and board member of Scholar Rock and Morphic Therapeutics.

Next to Tim Springer, we have also appointed Mr. Tim Barabe to our Board of Directors and also to our Audit Committee. Mr. Barabe has extensive experience in the life sciences industry and serves on a number of boards, including ArQule, Vigilant, Veeva Systems, and Opexa. Mr. Barabe retired in 2013 from his position as EVP and Chief Financial Officer of Affymetrix. Previously, he was also SVP and CFO of Human Genome Sciences and Regent Medical Limited, and served also with the Novartis from 1982 through 2004 in a succession of senior executive positions in finance and general management, mostly recently as the CFO of Sandoz. So we are very delighted that Dr. Springer and Mr. Barabe could join our board and that they will bring their scientific and business experience to Selecta.

So maybe now finally, let's go quickly to the financials. We recorded a net loss in the second quarter of $6.9 million, which was the same as actually about a year ago, that same quarter a year ago. In terms of revenue for the second quarter of 2016, total revenue was $2 million, which increased by $0.8 million, and these revenues are related to the grants we have for the different projects.

Our research and development expenses for the second quarter of 2016 were $6 million, and those increased by $0.7 million as compared to the same period in the prior year. The increase is primarily related to the Selecta-212 clinical program.

In general administrative expenses -- or general and administrative expenses were $2.4 million for the second quarter, and they increased by $0.2 million compared to the same period in the prior year. This is primarily due to an increase in patent costs, but also accounting fees for quarterly reviews of our financial statements.

And then with cash position. Selecta had cash, cash equivalents, investment and restricted cash of $85.3 million as of June 30, 2016. And then in July 2016, Selecta received additional net proceeds of $3.7 million from the exercise in parts of the underwriters' overallotment option.

And then my last comment is on financial guidance. Based on our current operating plan, we expect that our cash, cash equivalents, investments and restricted cash will fund operating expenses and capital expenditure requirements into the first quarter of 2018.

So this was the last of my statements, and thanks for your attention. And, operator, I think we can now open this to Q&A.

(Operator Instructions) And our first question will come from Jeff Hung at UBS. Your line is now open.

Can you remind us what we will see with the final Phase 1 data? Is it mainly Cohort 8?

Okay. So as we have reached the maximum tolerated dose with Cohort 7, Cohort 8 will not be dosed. But we will continue to dose some patients at lower doses in those cohorts on that study.

Okay, thank you. And then I guess related to the two cases of stomatitis, how are you thinking about this side effect in your Phase 2? Is there a need or a way to mitigate this?

Our Phase 2 study will be multiple increasing doses. So we may not reach those events. But otherwise, I mean, those events can be -- are well understood for rapamycin and they will be treated following standard care.

And then for the maintenance therapy of tophaceous and refractory gout. How often are you thinking that patients would need to be treated with 212?

I think as we had announced already in our S1, what we have contemplated for Phase 2 is three doses of the combination of pegsiticase plus SVP-Rapamycin following by two doses of the enzyme only.

I guess, I mean, more -- I think I had heard previously that you guys were considering treatment for patients, like once every 5 years. So I guess is that still the belief?

Yes, yes, correct, yes.

Okay. So is that --

And that frequency of five years may actually be influenced and depending on diagnosis and all new diagnostic techniques, including [dex cell], whether it's five years or other will depend on the patient specifics, of course.

Okay. Thank you very much.

Sure.

And our next question will come from Tom Shrader at Stifel. Your line is now open.

Good morning. Congratulations on making it through your first couple of weeks.

Thanks, Tom.

I really just have one question and it's on Anc80. So I understand the principle there is to avoid preexisting antibodies. I'm curious if you think to what level of patients will still have preexisting antibodies? Do you have a sense of that? Other companies are engineering, but really people are kind of stalling it, maybe 40% of patients still have preexisting antibodies. Do you have a sense you could do better than that? Or is that maybe a theoretical limit and is already better than most people are seeing? I'm just curious what you know about this point so far.

Okay. What we know so far is really information that came from the inventor, Dr. Vandenberghe. We expect that preexisting antibodies to this Anc80 vector will be extremely low, and so it should be significantly less than those 40% you mentioned, if any.

[Interesting]. Any sense of why no one else can get there, because I think many people are trying the same thing, but it's a -- because a lot of people are focused on this and people aren't doing that well. So I'm curious when we'll see data on this kind of thing.

Yes, I think there are several approaches to this. But I think the approach that was followed in this case was very specific and different than going back in time, and I think that probably makes it so different and, hopefully, also successful in the clinic.

All right. And when would we see data on this point?

We have not disclosed detailed plans for this. And entering into the clinic, we have not disclosed the timing for that.

Okay. Well, anyways, congratulations again and good luck going forward..

Thanks, Tom.

(Operator Instructions) And our next question will come from Chad Messer at Needham & Company. Your line is now open.

If we could just maybe discuss a little bit the reclassified case of stomatitis. How much after the original classification did the physician reclassify? And do you have any details on why he changed his mind?

Yes, sure. I think the initial observation that, that was then classified as sore throat and non-serious happened actually the first week in May. He was one of the first subjects in what we refer to Cohort 7. And it is only after we had informed the investigators and the IRB about the occurrence of the first SAE, and that happened, I believe, sometime at the end of June that the investigator, I think, went back and then looked into the data. And sometime early July, he informed us that he thought he had to reclassify that.

Okay. So it sounds like maybe just, I don't know, caution or conservatism on his part. Okay, so it sounds like so 0.3 is the MTD, and you're going to be taking multiple doses into Phase 2. Have you decided or are you leaning on what those are? Or are we waiting for -- I guess there's some additional patients you're dosing at that 0.3 and lower.

No, we have decided, at least, on the starting doses for Phase 2. So there is nothing that at this point in time limiting in time. Of course, we will start with a lower dose in Phase 2 and then go -- and go gradually up, but we have not disclosed those doses yet. That's currently proprietary information.

Okay. All right. Well, thank you very much. Looking forward to hearing more on the progress.

Okay. Thanks, Chad.

Thank you. At this time, I'm showing no further questions. I would like to turn the call back over to Mr. Cautreels for closing remarks.

Thanks, operator, and again, thanks, everybody, for your interest. Much more information to come in the future, and I thank you for your support in this.

Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program, and you may now disconnect. Everyone, have a great day.