Cartesian Therapeutics Inc (RNAC) 2017 Q1 法說會逐字稿

Welcome to the Selecta Bioscience First Quarter 2017 Financial Results Conference Call. (Operator Instructions) This call is being webcast live on the Investors and Media section of Selecta's website at www.selectabio.com, and it is being recorded.

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

Thank you, Lara, and thanks to all of you who are joining us today. Within the past hour, we issued tow press releases and published slides that we'll be referring to on the call today. All of these documents can be accessed on our website, selectabio.com. Those of you who haven't downloaded the slides yet are encouraged to do so now. You can find them on the Investors and Media section, and then Events and Presentations.

In terms of the agenda for today's call, our CEO and Chairman, Werner Cautreels will review our recent activities and accomplishments; our CMO, Dr. Skip Sands will review a status update -- will provide a status update on our Phase 2 trial of our lead product candidate SEL-212; and our CFO, David Siewers will close the formal portion of our call by reviewing the financials. We'll then take your questions.

Before we get started, please refer to slide two in the presentation. We'd like to advise that certain remarks we make during this call about the company's future expectations, plans and prospects constitute forward-looking statements for purposes of the Safe Harbor Provisions 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 was just filed with the SEC and can be accessed on our website.

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 any date subsequent to today, May, 11, 2017.

And now, let me turn the call over to Werner to begin the quarterly review. Werner?

Thanks much, Jason, and good afternoon, everyone. We are happy to be speaking with you again to review Selecta's continuous progress. Those of you who have met with us or tuned into our past calls know that we are focused on leveraging the power of our SVP technology to develop a range of new biologic therapies that have worked in (inaudible) immunogenicity for rare and serious diseases.

We believe SVP can benefit many biologic drugs and clinical development that are restricted by immunogenicity. It also holds the potential to be used in combination with the dozens of approved drugs on the market today that cause anti-drug-antibodies; we call that ADAs, in a high percentage of patients. And we believe it could unlock the full potential of novel treatment modalities, such as gene therapy. As a result, we believe that our technology will allow for the effective treatment of many more patients and diseases.

The top of Slide 3 shows the key to this, SVP-Rapamycin, which is our proprietary immune tolerance nanoparticle. While we believe SVP can benefit virtually any biologic, our immune tolerance pipeline today is focused on three core therapeutic area, enzyme therapies, oncology and gene therapies.

Our strategy is to develop proprietary product candidates in each of these areas, meaning we want to own both the biologic together with our SVP-Rapamycin, resulting in a normal treatment. In doing so, this enables us to establish additional intellectual property in specific therapeutic areas, to be in full control of the clinical development and timeline and, of course, very importantly to capture the full commercial value of these novel biologic products.

Once we have established the IP and knowhow in specific therapeutic areas, we will consider partnership or license agreements to more broadly penetrate the space.

Selecta's lead product candidate, SEL-212 combines SVP- Rapamycin with uricase enzyme known as pegsiticase that we in-licensed for the treatment of uncontrolled and highly debilitating gout. We believe SEL-212 holds the potential to be the first uricase treatment that avoids immunogenicity, and it is currently in the midst of a Phase 2 trial. Dr. Sands, our Chief Medical Officer, will bring you now up to speed on the status of that program. Skip?

Thank you, Werner. On Slide 5, you will see the therapeutic objective of SEL-212. Many severe gout patients continue to have uncontrolled hyperuricemia, meaning that their serum uric acid level is well above 6 milligrams per deciliter. This is the primary endpoint for gout medication approvals by the FDA and the EMA. The rationale is that 6.8 milligrams per deciliter is the point at which uric acid begins to crystallize and form sodium urate deposits, known as tophi in joints and other tissues.

For most gout patients, oral therapies are able to lower serum uric acid levels just below 6 milligrams per deciliter, which prevents the further accumulation of deposits in those responding patients. However, this is not enough to rapidly resolve existing tophi and deposits for severe gout patients. And it is these deposits that cause their intense flares, arthritis and renal damage.

These deposits are also described as being associated with increased morbidity and mortality. Severe gout patients would benefit from a drug that could significantly reduce serum uric acid quickly, clearing existing uric acid deposits from the affected tissues. That is the therapeutic objective from the development of SEL-212.

Slide 6 provides an overview of the design of the ongoing Phase 2 trial. To be eligible, patients must have both gout symptoms such as flares or tophi and an elevated serum uric acid. The primary and secondary endpoints for the trial include the safety, tolerability and a PK of repeated monthly doses of SEL-212, the prevention of anti-drug-antibodies to pegsiticase and consequently, the clinical activity of SEL-212, meaning the reduction of serum uric acid levels, which is expected to result in better clinical outcomes, such as less frequent and intense flares and the resolution of tophi.

We have been enrolling patients in multiple ascending dose cohorts in order to define the optimal ratio of both SVP-Rapamycin and pegsiticase, the minimal effect of dose of SEL-212, and the best dose regimens to carry forward into our Phase 3 program.

In the Phase 2 study, patients received treatments with pegsiticase every 28 days for up to five doses, the first three of which are in combination with SVP-Rapamycin. We are pleased to report that enrollment continues to be faster than anticipated, and as of May 10, we had a total of 58 patients in eight cohorts. This includes 20 patients that were added since our last call on March 27, who are being dosed with pegsiticase in combination with 0.1 milligrams per kilogram of SVP-Rapamycin.

We provided a first view of patient data on that call, and we'll provide another update during the week of June 12, in conjunction with our presentations at EULAR in Madrid and FOCIS in Chicago. At that time, we plan to share updated serum uric acid data, a first look at ADA data, some safety data and also an initial look at clinical observations such as flares.

Now, let me turn the call back over to Werner.

Thanks for that, Skip, and just to complete the SEL-212 conversation today, please turn to Slide 7. As Skip mentioned, this product candidate is intended to treat patients diagnosed by rheumatologists with refractory or uncontrolled gout. Based upon our market research, we estimate that there are approximately 160,000 of these patients here in the US alone. And while it is still too early to disclose pricing or peak sales forecast, we believe, based upon our commercial model that SEL-212 holds $1 billion potential.

In terms of our platform, the clinical data obtained with SEL-212 continue to provide validation for our SVP tolerance platform, and furthermore, will inform the development of our other product candidate.

Now, let's move on to our second clinical stage product candidate. As announced last week, we have in-licensed LMB-100 from the National Cancer Institute or NCI, on compelling financial terms. LMB-100 was developed by Dr. Ira Pastan -- channel Slide 9 -- a renowned NCI scientist, a member of the National Academy of Sciences and a pioneer in the field of immunotoxins. He is also credited rediscovering mesothelin, which is a protein that is overexpressed in virtually all mesothelioma and pancreatic adenocarcinoma, but also in a high percentage of older malignancies, including ovarian, lung and breast cancers.

LMB-100 is a second generation immunotoxin that is derived from pseudomonas exotoxin A and targets mesothelin. NCI has conducted Phase 1 clinical trials of LMB-100 but also of its precursor called SS1P, and that in patients with two of today's deadliest cancers, those are mesothelioma and pancreatic cancer. These trials have shown that ADA's prevented a vase majority of patients from receiving multiple treatment cycles.

On Slide 10, you'll see the results from one of the trials we've combined SS1P with potent immune suppressants and that in patients with advanced mesothelioma. 8 out of 10 terminally ill patients were only able to tolerate two cycles of treatment before the formation of ADA's prevented further use. However, NCI reported that two patients were able to receive four or more cycles of treatment and both experienced major tumor regression. And in fact, one of these patients is still alive today more than five years after the treatment.

This is quite remarkable when considering that the average life expectancy of a patient following a mesothelioma diagnosis is 12 to 18 months. This data provided NCI with confidence that if the formation of ADAs could be prevented, the treatment may significantly benefit patients with these solid tumors. We believe the fact that these immunotoxins act by the inhibition of protein synthesis could make them very synergistic with tubulin inhibitors.

In an effort to reduce is immunogenicity, Dr. Pastan and his team reengineered the immunotoxin, removing B cells and T cell epitopes and that resulted in the product LMB-100. They then worked on a Phase 1 clinical trial with Roche, that began in December 2014. However, Roche backed out of the program when patients produced ADAs against LMB-100 during the trial.

We then began collaborating with Dr. Pastan to assess the combination of LMB-100 with [SVP-Rapamycin] in preclinical molds. As reported this past October and as reflected on Slide 11, the combination prevented the formation of ADAs and enabled extended treatment. As a result, LMB-100's antitumor activity was enhanced in mouse models. According to Dr. Pastan, this result was unprecedented in his more than 30 years of experience with immunotoxins. We are now in discussions with NCI regarding a planned Phase 1b trial to evaluate multiple cycles of this combination treatment.

Another core area in immune tolerance is gene therapy, and that is a field in which we believe our technology could have a real transformational impact. Because the gene therapy delivery of vehicles modified viral vectors are very immunogenic to patients when delivered systemically, antibodies always form upon the first dose, limiting patients to one shot at an effective treatment. SVP has the potential to change this.

Slide 13 shows just one of the benefit, one that is particularly relevant for our proprietary gene therapy programs, which are being developed for rare inborn errors of metabolism, known as MMA and OTC. These disorders cause an accumulation of toxic metabolite impacting patients very early in life. And in fact, the maximum life expectancy for an MMA patient is approximately 35 years, and large spans for patients with urea cycle disorders such as OTC are also significantly reduced.

We are working with Dr. Charles Venditti and his team at the National Human Genome Institute to develop the first treatment for MMA, one that could enable us to treat patients both early and later in life. Dr. Venditti is a leading worldwide expert on MMA, treating many patients and running a patient registry for the disease.

We announced today that we have in-licensed the proprietary colon optimized strategy known as synMUT from Dr. Venditti's lab. We are utilizing a SVP-Rapamycin, synMUT together with Anc80, a novel vector we exclusively in-licensed from Dr. Luk Vandenberghe at Mass Eye and Ear Harvard in our MMA program.

Dr. Venditti, Dr. Vandenberghe and their respective teams are presenting novel preclinical data at the ASGCT conference in Washington D.C. today, showing the application of Anc80 and synMUT in functional animal models of MMA. Further, they showed the prevention of ADAs to Anc80 by using SVP-Rapamycin. This combination was optimized for expression on the enzyme missing or defective in patients suffering from MMA and demonstrated curative efficacy in animal disease models.

And tomorrow, further data from both mouse and non-human primate studies will be presented also at ASGCT by our collaborator, Federico Mingozzi's, team at Genethon, showing the benefits of repeat dosing and dose titration of gene therapy using SVP-Rapamycin. We continue to expect that we will be IND ready with our MMA program in the FDA -- with the -- for the FDA in the first half of 2018.

Now, each of the programs we have discussed so far utilize SVP to induce immune tolerance to a biologic and prevent the formation of antibodies. This is -- and remains our core focus.

However, we have also demonstrated that SVP can be utilized to stimulate the immune system and trigger the production of antibodies. Our work in this area is primarily performed using non-dilutive funding, and we view this as an upside potential.

If you turn to Slide 15, under an $8 million award from the National Institute of Drug Abuse, which is part of NIH, we had been working on a program to address one of the greatest public health challenges, cigarette smoking, which continues to be the leading cause of preventable disease and mortality.

Today, we announce that we had begun dosing patients in a Phase 1 trial of a nicotine vaccine called SELA-070 that we developed for smoking cessation and relapse prevention. This vaccine candidate consists of nicotine conjugated to the surface of nanoparticles that also encapsulate the immune stimulating agent.

It is designed to induce a strong and durable immune response by triggering the production of a very high level of anti-nicotine antibody. These antibodies bind to the nicotine inhaled by smokers, and would therefore prevent the nicotine from crossing the blood brain barrier and triggering an addictive response. We expect to enroll 48 smokers in these double-blind, placebo-controlled escalation Phase 1 trial. They will receive three injections like a prime and two boosts of the vaccine or placebo over a 12-week period, followed by eight weeks of monitoring.

In addition to safety, we will evaluate the vaccine's potency by measuring concentrations of nicotine specific antibody. We expect to be able to share results from this trial by mid 2018.

So, in summary, 2017 has already been a time of great progress on a number of fronts, and that demonstrates the strong execution by our team, but also and more importantly, the far reaching potential of our SVP technology platform.

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

Thanks, Werner. Please turn to Slide 16. Total revenue for the first quarter of 2016 was approximately $100,000, which is down from $2.1 million in the first quarter of last year. The decline is primarily the result of reduced revenue from our award with the National Institute on Drug Abuse, as well as the recent termination of our collaboration with Sanofi.

R&D expenses for the first quarter of 2016 were $11 million, which is up from $6.6 million for the same quarter last year. The increase is primarily the result of increased clinical trial related activities related to our SEL-212, as well as greater headcount, salary and stock compensation expense.

General and administrative expenses were $33.9 million for the first quarter of 2017, up from $2.4 million for the first quarter of 2016. The increase is primarily the result of the increased salaries, legal, accounting, consulting and insurance fees associated with being a public company.

For the first quarter of 2017, we reported a net loss attributable to common stock holders of $15.1 million or $0.82 per share. This compared to a net loss of $9.8 million or $4.52 -- $4.52 cents per share for the same period in 2016. The reduction 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 the conversion of redeemable preferred stock into a common stock in connection with the IPO, partially offset by our increased net loss.

As of March 31, 2017, we had $68.9 million in cash, cash equivalents, short term deposits, investments and restricted cash. This is down from $85.4 million at yearend 2016. We continue to expect our existing cash, cash equivalents, short term deposits, investments and restricted cash will be sufficient to take us into mid 2018.

And now, operator, would you please open the line to questions?

We will now begin the question and answer session. (Operator instructions)

And our first question comes from John Newman of Canaccord. Mr. Newman, your line is open. Is it possible your phone is on mute?

Okay, we'll move on to the next question, and that comes from Chad Messer of Needham and Company.

I'm kind of interested in discussing this smoking cessation program just a little bit further, because it is -- it is a bit unique, both in its market opportunity and in the -- in the use of your technology. So, kind of a two-part question, one on the technology, you're basically creating a vaccine here, just wondering what attributes of your technology make it better than other possible vaccine kind of technologies, because there are -- there are a bunch of those to there. So, what's the advantage of using yours?

And then, this is a really large market opportunity, it's kind of different than a lot of the other things you're going after. So, assuming -- and I know you've got grant funding for this -- for this study that you've just kicked off here, but assuming that's positive, how do you think about that in terms of what next steps would be. Is this something you'd maybe partner earlier or -- how do you think of bringing something forward that's so sort of large market?

Thanks, Chad. Let me address first your first question about what is so specific about this. Well, as you know, nicotine is a small molecule and it's a hapten. So in order for the immune system to react to it, you have to present it in the appropriate way. And the fact that our technology can aerate nicotine on the surface of these synthetic particles makes it unique. Now, that's not enough and therefore, you need to also add immune stimulants and those are both an adjuvant and also a T cell help.

Where this is certainly different is this is not using biological carrier to this hapten but really a synthetic particle, so that in the past, we have not measured antibodies against the carrier and it's probably a really important feature.

You're absolutely right about this being different. As you know, we're doing this on non-dilutive funding with existing capabilities and capacity, manufacturing and in the company, and as this is funded and it's a real important public health, this is the kind of activities that we are engaging in. If this is successful, clearly we will have to partner.

Great. Thanks for -- thanks for that added information. And very excited to see the updated 212 data in June.

So I'll reach out. Thank you.

And the next question comes from Tom Shrader of Stifel.

I'm not sure what else you want to say, but on June 12, can you give us a sense of how many patients will be done? Do you have any guidance of for instance how many patients will have had challenged doses, things like that? Do you have good visibility into that?

Yes, we have good visibility. So, I think Skip mentioned earlier that we now have 58 patients. As you know, they are in different stages, but some of them will indeed have completed the three plus two schedule.

Now, we are only a few weeks away from EULAR and FOCIS, so we like and need to comply with some of their requirements. And so that's why we elected to present data in June and of course, related and in conjunction with the conferences, we will certainly provide you with all the available data.

And Skip mentioned that we'll be -- not only serum uric acid level, there will be ADA levels, but also the first initial clinical view on these patients.

Okay. And maybe if I can follow up on the last line a little bit, so some -- there have been a bunch of nicotine vaccines, we were pretty involved with NicVAX. How good was the data that immunogenicity was the problem? Are you -- do you feel like you -- it was understood why those things didn't work?

I think there are probably a number of factors involved in this. Compared to what would be a conventional vaccination, you need, of course, very high level of nicotine antibodies --

Yes.

-- in order to kind of stop geometrically neutralize the nicotine that is inhaled. So, that is certainly a challenge, and we do not underestimate that. And we will have to show that stills in patients.

On the immunogenicity on the other vaccines, maybe -- Kei, you are - Kei, our CSO is on -- also available. Kei, any further comments on that?

On immunogenicity -- so the -- in our first clinical trial, we definitely saw antibody levels that we're -- that we were pleased with, but based on the results of the prior clinical trials that you described, one of it was NicVAX. We felt that we weren't at the level that we would need to show efficacy in humans, again, because of what Werner said about the levels of antibodies that you'd need. And so, we went back to the lab to reformulate and that's what this latest grant that the NIH provided funding.

And maybe, Tom, to complete that indeed because we had this synthetic carrier, we don't have like bystander immunogenicity to that carrier.

You're right. okay. Okay, thanks a lot.

(Operator Instructions) And our next question comes from Martin Auster of UBS.

Hi, everyone. This is [Mark Connelly] on for Marty. Thanks for taking my question today. And so, my first question is with respect to SEL-212, just thinking about as these moves forward, what are the key gating steps to get the registration trial? And what do you think the FDA wants to see?

Well, I think the first thing we need to see is the Phase 2 data. There is, of course, some experience with trials in the space of gout, so we know the clinical endpoints, which is the serum uric acid level. But of course, the pain, the flares and clinical observations in these patients are very important.

In terms of the expected Phase 3 program, I think we have said that before, we believe that we would have to conduct two Phase 3 trials with a relatively limited number of patients, maybe something like 120 patients each. But all of this is premature to confirm until we have our end of Phase 2 meeting with FDA.

Lara, do we have anyone else in the queue?

Yes, I'm sorry. We have John Newman from Canaccord.

I apologize if this has already been asked, but will you be able to present data on the antibodies for both the first and the second portion of the study for all of the patients that you've discussed when we get to June? Thanks.

Maybe, Skip?

Our data will be on the initial patients who have completed. They're, obviously, we have just started dosing some additional patients at the end of March, so they will not have completed all five cycles by the time the June date is presented.

And this concludes our question and answer session. I would like to turn the conference back over to CEO, Werner Cautreels, for any closing remarks.

Thank you so much and thanks everyone for joining us this afternoon. We hope to see some of you in the weeks ahead, as we are at the UBS and also at the Jefferies healthcare conferences. And otherwise, we are looking forward to sharing additional data from our Phase 2 trial in June. That's the most important. And that concludes our call. Operator?

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.