Cartesian Therapeutics Inc (RNAC) 2017 Q2 法說會逐字稿

Welcome to Selecta Biosciences' Second Quarter 2017 Financial Results conference call.

(Operator Instructions)

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

On the call with me today is our CEO and Chairman Werner Cautreels, who will provide an update on our recent activities and accomplishments in just a moment, our Chief Medical Officer, Dr. Skip Sands will them provide a brief update on the status of our Phase 2 trial of our lead product candidate SEL-212, and then our CFO, David Siewers will close the formal portion of the call by reviewing the financials. We'll then be happy to take your questions.

Before we get started, we would 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 Private -- 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 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, August 11th, 2017.

Now, let me turn the call over to Werner to begin the quarterly review.

It's my pleasure to report back to you on what has been a time of significant accomplishment at Selecta Biosciences. At Selecta, we have an important mission, which is to overcome the [unwanted] immunogenicity that hampers many biologic therapies that are currently on the market or are in development.

The problem of immunogenicity is now well recognized by many key stakeholders in our industry, and we believe that our synthetic vaccine particles or [our] SVP technology platform could be the key to overcoming this hurdle and unlocking the full potential of biologic therapies.

So what value would the prevention of immunogenicity provide? Well, this could mean that an existing drug's efficacy and your ability could be substantially enhanced and that it could benefit patients who otherwise could not be treated.

It also could mean that the product safety profile could be greatly improved, therefore clinicians could consider entirely new dosing regimens and new indications for [novel] products and technologies. Also, drug manufacturers could reach much broader patient populations with existing treatments. And new biologics and novel modalities that might otherwise be abandoned because of immunogenicity could be advanced towards commercialization.

We have demonstrated in our lead clinical program for SEL-212 that SVP Rapamycin can prevent the formation of antidrug, antibodies or IDAs, and we have generated preclinical data indicating that this technology induces antigen specific tolerance with many biologics, which is the ability to down regulate the immune response specifically to the [coadenstic biological]. And that is in stark contract with global immune suppression.

Our strategy is to focus on several strategic therapeutic areas and to develop proprietary non-immunogenic biologic product candidates, enabled by SVP Rapamycin. These product candidates include SEL-212 for severe gout, LMB-100 [in oncology] and our proprietary MMA and OTC gene therapies.

We believe our strategy of owning and advancing SVP enabled product candidates will allow us to more rapidly move into the clinic to provide significant additional layers of intellectual property protection and capture much greater value for Selecta and all of our stakeholders.

During the second quarter of 2017, we were pleased to add an important second clinical stage asset to our portfolio in LMB-100, which we licensed from the National Cancer Institute.

This is a potent recombinant immunotoxin, targeting mesothelin and mesothelin is a protein that is over expressed in virtually all mesotheliomas and pancreatic cancers, as well as in many ovarian, lung and breast cancers. An LMB-100 precursor called SS1P had shown promising phase 1 clinical trials in terminal mesothelioma patients, inducing (Inaudible - microphone inaccessible) reduction.

However, it caused ADAs in nearly all patients, preventing patients from receiving the necessary number of treatment cycles, even when dosed in combination with very potent immune suppressants.

Roche licensed the technology from NCI, worked with NCI to remove certain epitopes to reduce immunogenicity and then conducted a Phase 1 trial with LMB-100. However, [YKSS 1P] and other immunotoxin developed in the past, LMB again proved to be highly immunogenic, and so Roche returned the product candidate to NCI.

Selecta and NCI then generated compelling preclinical data showing how a combination of LMB-100 and SVP Rapamycin can enable the prevention of ADAs and allow for extended treatment, thereby enhancing the immunotoxin's antitumor activity. We are now working closely with NCI on an FDA submission to move this combination into the clinic as soon as possible.

We are particularly excited about this because we believe the SVP platform has broad applicability in cancer. Immunotoxins can be directed toward other cancer targets beyond mesothelin, and we also know that ADAs afflict patients treated with certain check point inhibitors and oncolytic viruses.

Our other two propriety programs are in the gene therapy field, from preexisting antibodies that limit patient pools to the humoral and cell immune responses seen after dosing, the impact of immunogenicity on gene therapies has become well recognized. We believe that SVP Rapamycin could enable a new repeat dosing paradigm for systemic gene therapy applications, presenting the opportunity for more precise and effective dosage and for the maintenance of the gene therapy expression over the course of the patient's life.

This is precisely what we are looking to achieve with our gene therapy programs for inborn errors of metabolism, known as MMA and OTC. During the second quarter 2017, we were pleased to share initial preclinical data regarding our lead program in MMA at the American Society of Gene and Cell Therapy. We are now working toward an IND filing with our collaborators at the National Human Genome Research Institute and [Mass Ionear], as well as with our manufacturing partner, Lonza Houston.

We currently expect that this filing will take place in 2018.

With that, let me turn the call over to Skip Sands, our Chief Medical Officer for our SEL-212 update.

Thank you, Werner.

We continue to be excited about the progress that is being made in our ongoing Phase 2 trials of SEL-212. As a reminder, SEL-212 consists of a uricase enzyme therapy called [exiticase] that we have [in] license and [are] dosing in combination with SVP Rapamycin [with attributive] patients with chronic severe gout. Today, there are an estimated 160,000 such patients in the US alone that are being treated by rheumatologists.

Chronic severe gout patients tend to have inflamed nodules of crystallized uric acid deposits known as tophi in their joints, tissues and organs, and they often are refractory to standard oral therapies.

Our market research indicates that rheumatologists recognize that these patients have serious unmet needs, chief among them being recurrent and debilitating flares and progressive kidney disease. In fact, a growing number of clinical publications from some of the foremost KOLs in the space are shedding light on the association of tophi with increased comorbidities and mortality.

Chronic severe gout patients require a treatment to significantly and durably lower serum uric acid levels in order to rapidly dissolve those tophi. This is something that uricase enzymes such as our pegsiticase are uniquely able to do. However, uricases are highly immunogenic, causing ADAs in most patients that negatively affect efficacy and presents safety issues.

By combining pegsiticase with SVP Rapamycin, we believe SEL-212 can prevent ADAs, allowing for the elimination of crystallized urate deposits, thereby addressing patients' comorbidities [and] pain.

We commenced our Phase 2 trial in late 2016 and have been enrolling patients with symptomatic gout and elevated serum uric acid levels. Our goal is to determine the safety, tolerability, pharmacokinetics and clinical activity of repeated monthly doses of SEL-212 to demonstrate the prevention of ADAs to pegsiticase and to identify the appropriate doses of SEL-212 and its two components to take into our Phase 3 program.

In June, we shared data from the trial indicating that SEL-212 is able to prevent the formation of ADAs and control serum uric acid levels for up to five months. We also announced that we had identified the minimum effective dose of SEL-212, consisting of 0.4 milligrams per kilogram of pegsiticase, combined with 0.08 milligrams per kilogram of SVP Rapamycin.

We noted that we had enrolled patients at a higher dose of SVP Rapamycin and shared early data on those cohorts. We also presented data indicating a lower than expected rate of flares in patients treated with SEL-212.

And finally, we shared the safety data from the trial to date, demonstrating that SEL-212 had been generally well tolerated and that the [ADA] related serious adverse events had been reduced as the dose of SVP Rapamycin has been increased. Since that time, no additional SAEs or notable safety trends had been observed in the trial. As of August 1st, 63 patients had been enrolled in the trial.

Now, that we have identified the clinically active doses, we're in the process or expanding cohorts to include patients that will undergo dual energy CT scans to demonstrate and visualize SEL-212's benefit to patients. These scans are used to gage whole body uric acid burden and measure the dissolution of urea of deposits in joints, tissues and organs.

We plan to record additional data from the Phase 2 at a medical meeting late this year, and we have already begun preparing our Phase 3 program, which we would expect to initiate next year.

Finally, I would like to take this opportunity to thank the patients, their families and our investigators for participating in this Phase 2 trial.

That concludes our update of SEL-212.

Our CFO, David Siewers will now review the financials for the second quarter.

We generated $26,000 in revenue for the second quarter of 2017, which is down from approximately $2 million in the second quarter of last year. The decline is primarily the result of reduced revenue from our nicotine vaccine [candidate] grant award from the National Institute of Drug Abuse, which is now winding down, as well as the termination of our collaboration is Sanofi, that we announced in November of 2016.

Research and development expenses for the second quarter 2017 were $11 million, which is up from $6 million for the same quarter last year. The increase is mainly the result of clinical costs related to our ongoing Phase 2 trial, incremental headcount and consulting, licensing, supplies and testing activities related to our other programs.

General administrative expenses were $4.9 million for the second quarter of 2017, up from $2.4 million for the second quarter of 2016. The increase mainly results from greater patent related costs, as well as general expenses and increased headcounts and related salaries needed to support a clinical stage public company.

For the second quarter of 2017, we reported a net loss attributable to common stockholders at $16 million or 85 cents per share. This compares to a net loss of $9.1 million or $2.75 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 conversion of the redeemable preferred stock into common stock in connection with the IPO, partially offset by our increased net loss.

As of June 30, 2017 we had $113 million in cash, cash equivalents, short term deposits, investments and restricted cash. This is up from $68.9 million at March 31st, 2017, as a result of the $50 million financing we completed in June, and additional cash received in connection with the license and stock purchase agreements with Sparks Therapeutics, partially offset by operating costs. This provides us with a run way of cash, cash equivalents, short term deposits, investments and restricted cash that extends into 2019.

Additionally, Selecta filed a shelf registration statement on form S3 with the Securities and Exchange Commission this morning, which provides us with greater financial flexibility going forward.

That concludes our formal remarks.

Operator, would you please now open the line to questions?

(Operator Instructions)

Chad Messer, of Needham and Company.

Great, good morning, and thanks for taking my questions -- and congrats on all the progress in the quarter. You said you're beginning planning for Phase 3 for SEL-212, just wondering what early thoughts on what that program might look like (Inaudible - microphone inaccessible) testing different doses, how long you're going to treat patients for? (Inaudible - microphone inaccessible) I know you obviously have more work to do, but what are your current thoughts on what that program's going to be?

Yes, we have indeed started to design the trial. As you can imagine, that is [in a] very important exercise, so that those phase 3 trials we will indeed include a number of different dose regimens. We are thinking about whether there will be a comparative arm, so all these questions need to be raised. It's too early to say what the outcome of that will be.

And of course, before we will engage in that, we will also have an end of Phase 2 meeting. With the data we have on hand, we can actually make a good progress in the design of those trials.

Tom Shrader, of Stifel.

Related to Chad's question, what are your thoughts about an active control arm? We get that question all the time. You think it's likely?

Again, early to say. I think it is unlikely.

And you said you've had no new stomatitis, can you tell us how many patients you've dosed at higher doses? Are you willing to share that?

Maybe, Skip?

Yes, we have no new cases. We have looked at -- it's probably an additional 40 plus doses or dosages that have gone on, but we have not experienced any new SAEs or episodes of stomatitis.

And Tom, just to clarify, the -- if you refer to stomatitis, you refer to the Phase 1B study--

Right.

-- falls into Phase 2 study. We haven't seen it.

Okay, have you changed anything? Or is it--

No, I think in the Phase 1B study, as you remember, we dose ranged with the SVP Rapamycin, maybe pushed the dose up to a level where we started to see things -- that was the purpose. But that was at much higher doses, and today, the clinically active doses in the Phase 2 are much lower. So, we didn't expect to see anything anyway, in the first place.

Okay. Perfect, and then one question on LMB-100, it's interesting the Roche efforts, I'm not sure I was aware of those -- we run into companies trying to de-immunize things all the time, is that the competition? Does it ever work well? Is there an example of how well they can do? Or is that an approach that you just don't think is worth it?

That would indeed be an alternative approach to take out epitopes, B cell epitopes, T cell epitopes. And that is indeed exactly the effort that Dr. [Paston slapped] together with Roche had followed to go from this precursor to the LMB-100.

While I believe that that showed in some preclinical work less immunogenicity, it still was highly immunogenic in two patients. Taking out epitopes is something that indeed has been done. I am unaware of actually something that has been completely successful. And maybe, a combination of both by reducing immunogenicity of proteins and then adding to that SVP Rapamycin, is therefore a very elegant approach.

And do you have access to the version Roche created?

That is exactly the product we have licensed. That product, by the way, is currently in two Phase 1 clinical trials by NCI, because NCI had -- when the license was returned, had also the clinical supplies returned. So, NCI is conducting two Phase 2 trials, one in mesothelioma and one in pancreatic cancer.

And that is for us, an ideal starting point, so that clinical asset -- so that asset is in those two clinical trials and then combining that information with all the information that meanwhile we have obtained with SVP Rapamycin from our clinical program, we believe the combination of that is what we are now putting together as an [IND] file.

(Operator Instructions)

John Newman of Canaccord.

I'm just curious if you have a definitive sort of stopping point. It seems like you're still enrolling additional patients in the Phase 2 212 study, just curious if there's a number of patients that you have in mind or a certain range of doses or if the plan is to continue enrolling until you start Phase 3? Thanks.

No, we don't really have any specific in mind. As you know, this is an -- this is an open label trial, so we discover the data as we go along. And depending on what we will see, we make -- we will make decisions.

I think as Skip mentioned before, now that we have reached clinically active doses, we now -- our major effort is to include patients that can undergo dual energy CT scans, because we believe that will be very, very important -- show the real activity and the impact of what he says. And as we go forward, we will make decisions. And yes, we will continue to include patients sometimes to expand cohorts until we go into Phase 3, there's -- that's good practice.

Martin Auster of UBS.

Hi, it's [Diago] on for Marty.

Given the shelf offering filing, should we expect any short term increases in expenditures? And would that be to fund any specific program? And also, Selecta had recently better performance (Inaudible - microphone inaccessible) and it's continually growing, what's the read through for you guys?

I'll take the S3 filing relative to (Inaudible - microphone inaccessible), that is just general practice that we put in place. The increased expenses is tied, as I indicated just basically to running through our clinical trial for the SEL-212. We anticipate that to continue until we complete the trial.

[Yes], and maybe to complete David's answer, so [our goals] are very, very crisp, and that is to put 212 into Phase 3, to have LMB-100 in combination with SVP Rapamycin into the clinic, and to put one of our gene therapies into the clinic. And I think it's the combination of those three priorities that leads us to lower guidance on the runway as we have today. But -- and we don't have currently any specific plans to use the shelf filing to raise anymore.

And was the second question regarding (Inaudible - microphone inaccessible) and Horizon's recent results with that product?

It performed better in (Inaudible - microphone inaccessible) and [they keep pointing to a] $400 million drug, and just wondering about the read through and if that would change anything for you guys? Thanks.

No, absolutely not. We believe that uricases have a unique capability to reduce significantly serum uric acid levels, and that is very important in the severe gout patients that cannot be reached with otherwise the oral drugs. So, I think for these patients, it's really important.

And we now see also from our Phase 2 trial that patient inclusion is certainly not another hurdle. So, these patients are there. They haven't had a lot of options -- treatment options in their past. Now, for 212, of course the data as we have it now, would show that we have the advantage of monthly injections, and as you know, these are IV treatments, so monthly is certainly an advantage.

If we can continue to show that we prevent this immunogenicity, then uricase is -- and in this case pegsiticase can be offered to many more patients that otherwise could not benefit from that. And then very importantly, these patients may need to be retreated in the future, and that is only possible if there is no immunogenicity or the immunogenicity is prevented the first time.

All efforts we believe, that are done to make -- to increase the awareness of these treatments for those severe patients for which more and more [now] there is data showing that [these] comorbidities and mortality, we applaud all efforts in that area, and we are very happy about that [actually].

This concludes our question and answer session.

I would now like to turn the conference back over to CEO, Werner Cautreels for any closing remarks.

And again, thanks everybody for joining us this morning. We look forward to speaking with you again next quarter. We have announced also data on 212 [in] medical meetings, and so it will be another business quarter and we will see you soon. Thanks a lot. Thank you very much.

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

Have a great day.