Cartesian Therapeutics Inc (RNAC) 2016 Q4 法說會逐字稿

Welcome to the Selecta Biosciences Fourth Quarter and Year End 2016 Financial Results Conference Call. At this time, all participants are in a listen-only mode. This call is being webcast live on the Investor and Media section of Selecta's Web site at www.selectabio.com and it is also being recorded.

For opening remarks, I would like to turn the call over to Jason Fredette, Senior Director of Investor Relations and Corporate Communications at Selecta. Please go ahead, sir.

Thank you William and thanks to all of you who are joining us this afternoon. Within the past hour, we issued our Q4 press release and also posted some slides that we'll be referring to on today's conference call. These documents can be accessed on our Web site, selectabio.com. In particular, I would encourage those of you who have tuned in live to access the slides now by clicking on the Investor and Media section and then clicking on events and presentations.

With me today, are our CEO and Chairman, Werner Cautreels; our CMO, Skip Sands, who will provide an update on the Phase 2 trial of our lead product candidate, SEL-212 and our CFO David Siewers, who will review our financial results.

Before I turn the call over to them, we'd like to refer you to slide two in the presentation and advise that certain remarks we make during this call about the company's future expectations, plans and prospects constitute forward-looking statements for the purposes of the safe harbor provision under the Private Securities Litigation Reform Act of 1995.

Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of our most recent quarterly report on Form 10-Q, which is on file with the SEC and can be accessed on our Web site.

In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so, even if our views change. Therefore, you should not rely on these forward-looking statements as representing our views as of date any subsequent to today, March 27, 2017.

And now let me turn the call over to our CEO, Werner Cautreels, to begin our quarterly review.

Thanks much Jason and good afternoon everyone. We are delighted to be speaking with you once again and I have a lot on the agenda today, so let's just jump in. Please turn to slide three, which sets the stage.

We at Selecta are seeking to resolve the immunogenicity that plaques many of today's biologic therapies and hampers the development of numerous, promising new medicines and novel modalities. This immunogenicity comes in the form of anti-drug antibodies or ADA that reduce or completely negate a drug's efficacy and can cause severe adverse reaction. This issue is now well-recognized by regulators, KOLs and industry experts. But its impact remains highly unpredictable for individual patients. Please turn to slide number four.

We believe our SVP technology may be the key to unlock the full potential of biologic treatments, enabling today's drugs to be safer and more effective and opening the door to a multitude of novel medications for rare and serious diseases. First let's focus on our lead product candidate SEL-212 which is being developed as a potential treatment for severe gout. So please turn to slide number five.

Market research indicates that there are over 8 million patients with gout in the U.S. alone. Most of these individuals are well-served by oral medications that are on the market such as Allopurinol. However, our market research indicates that more than half a million patients in the U.S. have severe gout that is treated by Rheumatologists.

And we believe that about 160,000 of these patients have severe, uncontrolled bouts and suffer from severe pain, inflammation of joints and debilitating flares. This disease can also potentially exacerbate kidney and cardiovascular disease if left untreated. It is these 160 controlled - uncontrolled patients that would be the first target for SEL-212.

Slide six shows our focus for SEL-212. Within the medical community, it is well understood that gout patients should receive treatment to lower their serum uric acid level below 6 milligrams per deciliter. Importantly, 6 milligrams per deciliter is also defined by the FDA and EMA as the primary clinical endpoint for the approval of gout medications.

So why is this? Well, it just so happens that 6.8 milligrams per deciliter is the limit of solubility of uric acid in water. So if uric acid rises above this level, crystal begin to deposits on build up in joints and tissue causing those debilitating symptoms. Clearing patients of these deposits is an important, unmet medical need today.

Oral therapies are unable to do this rapidly because they only moderately lower serum uric acid levels and because a number of patients have proven to be a refractory to those treatments. Uricase enzymes on the other hand have demonstrated an ability to drastically and to rapidly lower uric acid levels. However, these exogenous enzymes are highly immunogenic causing ADAs and the loss of efficacy in most patients.

SEL-212 is design to be the first non-immunogenic uricase treatment. It consists of our proprietary SVP-Rapamycin, which is dosed in combination with the potent uricase called Pegsiticase that we have in licensing. We believe it has the potential to drastically and durably lower serum uric acid levels, enabling the removal of the uric acid crystals through a short treatment cycle.

And many patients may require periodic retreatment as deposits come back. Therefore, by preventing the immunogenicity to Pegsiticase with our technology, we believe SEL-212 could provide such retreatment option. In December, we presented Phase 1 data showing that SEL-212 was able to prevent ADAs and thereby enabling the control of serum uric acid levels in patients for at least 30 days after a single injection.

We initiated our Phase 2 trial in the fourth quarter. While we remained in the early stages of this trial, we have been emboldened by its progress and by the patient data that has been generated thus far. We are particularly pleased that we have already reached the dose level of SEL-212 that has enabled all patients to maintain persistent clinical activity following two or more administrations.

Now let me turn the call over to Chief Medical Officer, Skip Sands to talk through some of the initial patient data. Skip?

Thank you Werner. Please turn to slide seven. In our Phase 2 trial design, patients are enrolled who have both symptomatic gout and serum uric acid levels greater than 6 milligrams per deciliter. The primary and secondary endpoints of Selecta's Phase 2 trial include the safety, tolerability and PK of repeated monthly doses of SEL-212, the clinical activity of SEL-212 which is defined as the reduction of serum uric acid levels and the reduction and prevention of ADA levels.

We have been enrolling patients in multiple ascending dose cohorts as we seek to define the optimal ratio of SVP-Rapamycin and Pegsiticase, the minimal effect of dose of SEL-212 and the dose regimen for our Phase 3 program. Two dose levels of Pegsiticase are therefore being studied, namely 0.4 mg/kg which is the dose studied in our Phase 1b trial and 0.2 mg/kg which is half the dose in a level we looked at in our Phase 1a trial.

We have currently dosed at two levels of SVP-Rapamycin, 0.08 mg/kg and 0.05 mg/kg which is above the starting dose of our Phase 1b trial. The trial has two controlled cohorts that receive Pegsiticase alone every 28 days for up to five doses. All other cohorts received a three plus two regimen, consisting of three monthly doses of SEL-212 followed by two monthly doses of Pegsiticase alone.

Because of the known immunogenicity of uricase enzymes like Pegsiticase, the loss of serum uric acid control essentially serves as a surrogate for the formation of ADAs and a potential increase in risk of infusion reactions. So we developed stopping rules for our Phase 2 trial and further we find them in the first part of the trial. These are stringent rules that call for serum uric acid levels to be frequently and rapidly analyzed and for further dosing to cease the serum uric levels fail to be controlled at day 21 following a dose.

And indeed as we expected, the application of the stopping rule has been applied much more frequently in the controlled cohorts dosed with Pegsiticase only and in the cohorts receiving the low-dose of SVP-Rapamycin. As of March 23rd, a total of 38 patients had been dosed in the Phase 2 trial at 10 U.S. clinical sites.

Enrollment had been completed for the first six patient cohorts and recruitment of two additional patient cohorts is ongoing. Note that the patient data we are providing today is limited to serum uric acid levels. Multiple serum samples had been collected from all patients with a measurement of ADA levels and the analysis of these samples is currently ongoing.

Slides eight and nine contain what we believe is very compelling data for mid-dose cohorts. Slide eight shows the cohort receiving 0.4 mg/kg in Pegsiticase in combination with 0.08 mg/kg of SVP-Rapamycin. You can see control of serum uric levels for all patients here. All but one of these patients had received a third dose as of March 23rd.

There have been no serious adverse events reported for this cohort and one patient was replaced in this cohort for a protocol violation after he received an unrelated vaccination for shingles just before his second dose of SEL-212. His uric acid level had been fully controlled over the first month.

Slide nine shows the cohort receiving 0.2 mg/kg of Pegsiticase with 0.08 mg/kg of

SVP-Rapamycin. Here you can see some reduced activity near the end of the first 28-day dosing period for a few patients correlating with the lower dose of the uricase enzyme. The control is still solidly below 6 mg/dL.

One patient shown third here, reached the trial stopping rules. All but one of the remaining patients in this cohort had received a third dose as of March 23rd and there had been no SAEs reported in this cohort. While we are still a couple of months of dosing to go, we believe these data indicate that we already may have identified the lowest effective doses of SEL-212.

On slide 10, you can see the patients receiving 0.4 mg/kg of Pegsiticase in combination with 0.05 mg/kg of SVP-Rapamycin. One patient remains enrolled in this cohort and his serum uric acid levels have remained fully controlled thus far.

The rest of the patients you see here had reached the trial stopping rate. It also should be noted that four additional patients were [reformed from] this cohort with protocol deviations as they missed the second injection window while stopping rules were being refined.

Slide 11 shows the patients receiving 0.2 mg/kg of Pegsiticase in combination with 0.05 mg/kg of SVP-Rapamycin. You'll note that one of these patients had completed the full five-month regimen, demonstrating persistent serum uric acid control over the trials' duration including the Pegsiticase only phase.

And another two patients have maintained solid serum uric acid control to a third dose as of March 23rd. One patient reached the stopping rule and two serious adverse events were reported for infusion reactions that were successfully treated. Three additional patients were withdrawn from this cohort for protocol deviation.

And finally on slide 12, you can see patient data from our controlled cohorts, which received doses in 0.2 or 0.4 mg/kg of Pegsiticase alone. Not surprisingly, five of six patients who received Pegsiticase alone were unable to maintain serum uric acid control. One infusion reaction was reported during the second administration. It was classified as a serious adverse event and was successfully treated.

As a result and as expected, the enrollment and dosing of these cohorts were stopped early. SEL-212 has been generally well-tolerated [as far as] patients in the mid-dose cohorts with no SAEs being reported being reported for these patients. Our current findings are entirely consistent with the expected reduction in immunogenicity with Pegsiticase as SVP-Rapamycin dose is increased.

We recently began recruiting two higher two cohorts which will receive three monthly doses of 0.1 mg/kg of SVP-Rapamycin plus Pegsiticase followed by two-monthly doses of Pegsiticase alone. And now I'll turn things over to Werner.

Thanks much Skip. We are obviously very excited to with the progress that has been made in this trial. We plan to present data from this trial at a medical meeting by the end of June 2017 and as a consequence we do plan to provide the data update during our Q1 call in May. We expect to complete the trial by yearend following an end of Phase 2 meeting with the U.S. FDA. We expect them to initiate a Phase 3 program in 2018.

Now please turn to slide 13. We believe that the potential of our SVP platform, to resolve the issue of immunogenicity, extends far beyond SEL-212. In recent months, we and various collaborators have presented pre-clinical data demonstrating how the same immune tolerance SVP technology could enable novel and improved therapies in a broad range of therapeutic areas.

For instance, SVP can be applied to viral vectors for gene therapy, immunotoxins for oncology and enzyme replacement therapies. Just last month, Dr. Priya Kishnani's team at the Duke University Medical Center, presented pre-clinical data suggesting that the co-administration of SVP-Rapamycin could mitigate the formation of ADAs to Myozyme, an enzyme replacement therapy for Pompe Disease.

In October, Dr. Ira Pastan from the National Cancer Institute presented pre-clinical research demonstrating that SVP-Rapamycin would mitigate ADAs against immunotoxins that are in clinical development for the treatment of solid tumors. This work has led us to begin planning with NCI for a potential combination of SVP-Rapamycin with LMB-100.

LMB-100 is a next generation recombinant immunotoxin as a potential treatment for mesothelioma and pancreatic cancer. And also in the fourth quarter, Dr. Federico Mingozzi of Genethon presented further pre-clinical data showing the potential therapeutic benefit of [collagenous string] SVP-Rapamycin with an AAVH in therapy vector expressing the vector 9. Dr. Mingozzi's research together with the data from our Phase 1b trial led to our December 2016 license agreement with Spark Therapeutics.

Now, at the same time we continue to advance more proprietary gene therapy programs. As a reminder, these programs are focused on the treatment of two in-born areas of metabolism, MMA and OTC, with MMA being our most advanced program. A few weeks ago, we announced the strategic manufacturing agreement with Lonza, one of the industry's largest contract manufacturers of biologics and a leading supplier gene therapy. They will be producing the Anc80-AAV-based MMA gene therapy product for us. Our plan is to be IND ready with this program in the first half of 2018.

Now, let me turn the call over to our CFO, David Siewers to review our financials.

Thanks, Werner. Please turn to slide 14. Total revenue for the fourth quarter of 2016 was approximately $2.9 million which is up from $2.1 million in the fourth quarter last year. This increase was primarily the result of accelerating the revenue recognition associated with the notification of termination of our Sanofi collaborations as well as some initial revenue recognized from our license agreement with Spark.

R&D expenses for the fourth quarter of 2016 were $11 million. This is up from $7.2 million of the same quarter last year. The increase is primarily the result of a $2 million milestone payment that was made subject to our Pegsiticase license agreement. Other costs related to our Phase 2 Clinical Trial, as well as increased salary and stock compensation expense.

General and Administrative Expenses were $5.8 million to the fourth quarter, up from $2 million for the fourth quarter of 2015. This increase is largely the result of approximately $1.7 million in sublicensing fees associated with licensing our core technology thus far; as well as increase salary, legal, accounting, consulting and insurance fees associated with being a public company.

For the fourth quarter of 2016, we reported a net loss attributable to common stockholders of $14.1 million or a net loss of $0.77 per share. This compares to a net loss of $9.2 million or a net loss of $4.26 per share for the same period in 2015. The decrease in net loss per share, in the most recent quarter, is primarily the result of shares of common stock that were issued in our June 2016 IPO and conversion of the redeemable preferred stock into common stock in connection with the IPO.

As of December 31, 2016, we had $84.5 million in cash, cash equivalents, short-term deposits, investments and restricted cash. This is up from $79.9 million as of September 30, 2016 mainly as a result of the receipt of $15 million from Spark pursuant to the recent license agreement and stock purchase agreement, partially offset by our fourth quarter operating expenditures.

As you may recall, we previously said that we expected our existing cash to be sufficient to take us into the first quarter of 2018. Based upon the payments where you see from Spark in December and our current operating plan, we believe we now have extended our cash runway into mid-2018.

And now, William, would you please open the line for questions?

(Operator Instructions) Jeff Chang with UBS.

For the low-dose cohort, what lead to the seven patients dropping out of the trial?

Thanks, Jeff. This is Werner. During the first part of the trial, we refined the stopping rules and while we were doing that, some of the patients missed the dosing window around the 28 days; therefore, we decided to withdraw those patients and to replace them.

Right. And then in the mid-dose cohort, even though there weren't any SAEs so far, have you seen any infusion reaction?

No, we have not seen that.

Okay, so things that in the low-dose patient who had those infusion reactions as they occur on second dose. So why do you think that wasn't being in any of the patients on that dose cohorts?

These infusion reactions are expected because of the immunogenicity of Pegsiticase so; therefore, we had expected to see some of that in the controlled cohorts and in the low-dose cohorts but as the dose of SVP-Rapamycin increases, and that is what we see in the mid-dose cohorts, we mitigate that immunogenicity and therefore we have not seen those infusion reactions.

I see. Thanks and then the last question I guess for the data by the end of June, which cohort do you expect to be included in the presentation? I wanted to clarify what [you said the initial data build].

So we will include as much data as we have. It will be more data on the patients that you have seen today. There will be additional data from new cohorts and also today we focused on the serum uric acid levels but by June we have also ADA data and other data.

Chad Messer with Needham & Company.

I know it's still early and you're looking at the data but you did seem to indicate that you feel you hit an effective dose, so I just wanted you to expand a little bit more on your thoughts. I mean it seems 0.05 SVP-Rapamycin is maybe too low, you need at least 0.08 just wondering if you would agree with that statement and then also what you think of the two different Pegsiticase doses, their relative efficacy and are you trying to get to just one dose for a Phase 3 or might you take a couple forward?

This is of course a very important study in view of preparation for Phase 3 and as this is a complex product with two ingredients it's really important we define the correct ratios of the two ingredients, the minimal effect of dose of the product and on that basis then think about the dose regimen for Phase 3. So our purpose was to be really very thorough and to look for the minimal effect of dose of both ingredients.

We define those doses on the basis of the best data we had available from Phase 1 and pre-clinical and so far I think the data would support how we have designed that. I agree with you that 0.05 is probably too low and so that's why I think Skip in his comments said that with 0.08 we may have defined the lowest effective dose for SEL-212.

Can you just remind us what the change in the stopping rule was and what brought about you needing to come up with the new stopping rule?

Yes, I'll turn that to Skip.

Surely. So the loss of serum uric acid is accepted as a surrogate for ADA formation. So the formation of the ADA is obviously been is a cause for safety concerns with potential infusion reactions, so from our early data we were able to define the serum uric acid control as day 21 and it's become a rather reliable marker for the stopping rule.

(Operator Instructions) Tom Shrader with Stifel.

Hi, good afternoon. I guess I was having trouble keying in. If we look at slide 11, if we look at patient 114-001, I mean how definitive is that patient I mean what kind - you kind of have your miracle, don't you I mean your dosing naked enzyme?

Thanks, Tom. Yes, this is a very interesting patient because indeed the patient shows control again which is below six for the entire duration including the two injections with Pegsiticase only. Remember, we don't have the ADA data yet, but - so we don't know if this is caused by indeed the combination or maybe that patient is one of those patients that would not have developed ADAs or at least low levels. But where it is interesting is that, it shows that indeed this enzyme at the dose of 0.2 allows us to have full control over that period of the study, provided of course we keep those ADAs low and therefore it's a very interesting patient. Too early to say what it really - what it truly will mean when we have more patients.

I think you're being very cautious but and then these - if you look at the points where the curve goes up again and then goes back down, that would never happen once they lost control, correct? That's just the enzyme kind of being degraded.

Absolutely correct and this is why we like the data between the 0.2 and the 0.4 dose because it means that from extrapolating the data we have, we are actually indeed on the slope of the dose response curve and not on one of the plateaus which is an additional validation of trying to look for the best dose.

Okay. And then it seems like you're being pretty cautious with dose, from 0.08 to 1 - a 0.08 to 1 isn't a very big increase, this is all being driven by I think one case of Stomatitis that you're trying to stay away from, is that true?

No not really. I think as we have these two doses of the enzyme 0.4 and 0.2, the slope or the dose response of those doses can be different so we wanted to really to match the Pegsiticase, the SVP-Rapamycin dose to the Pegsiticase dose and it's going to be very interesting at the end to look at the full matrix of these combinations.

Okay. And then one remedial question, I probably should know, but when you say 0.08 mg/kg of SVP-Rapamycin, is that the amount of Rapamycin or is that the particle?

It's the amount of Rapamycin.

John Newman with Canaccord.

A really interesting dose response that you see here; it's very encouraging. I just had two quick questions. The first was wondered if you had any initial data at all regarding antibodies that perhaps maybe you had a measure in place so that if there was someone that had a very, very high increase in antibodies you pick that up? And then the second question is, have you decided specifically on the SVP-Rapamycin dose that you are going to in the high dose and I guess it probably has since you started that thing?

Okay. Thanks, John. As we have stated, so we have these serial samples of that were taken for ADA measures, we don't have that data yet and reason for that is that we grouped those samples because it's more difficult to have an ADA level that you can compare across patients and cohorts, so we regroup that and so those data will come a bit later.

We know from Phase 1 that there was always a good relationship or I wouldn't say correlation but a relationship between ADL levels and serum uric acid level, so that's what we expect but let's wait until we have the data. And what is the SVP-Rapamycin, maybe Skip - maybe you can make a comment to additional cohorts?

So we started the two cohorts, at the 0.1 mg/kg with SVP-Rapamycin and that data should be coming fairly shortly as we start to dose those patients and then we'll let that information guide us as to where we go with increased doses.

All right.

Yes, and as you remember, this isn't an open-label ascending dose so that it gives us the opportunity and I think it was the right decision to do it this way so that we could indeed develop these stopping rules and further cohort data on a very straightforward basis.

All right, and how far out will you be able to follow the patient from the different cohort in the study so after - if patients get to the two Pegsiticase doses, I'm just curious as to how long after that you can still keep track of them?

So all patients will be followed from their 30 days from their last dose plus an additional 30 days, so a total of 60 days.

Looks like we have no further questions, so this will conclude the question-and-answer session, I would now like to turn the conference back over to the Chief Executive Officer, Werner Cautreels for any closing remarks.

Thanks so much, William and thanks to all of you who have joined us today. In closing I would say that after a pivotal year 2016, we believe that 2017 will be of great and lasting importance for Selecta Biosciences and importantly also for patients with rare and serious diseases. So we hope to see some of you on the conference [circuit] over the next couple of months and we'll be sure to provide you with updates on our continued progress throughout the year. That concludes our call. Thank you and good night.

The conference call is now concluded. Thank you all for attending today's presentation. You may now disconnect your lines.