Cartesian Therapeutics Inc (RNAC) 2018 Q2 法說會逐字稿

Welcome to the Selecta Biosciences Second Quarter 2018 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 John Leaman, Selecta's Chief Financial Officer and Head of Corporate Strategy. Please go ahead.

Thank you, Steven, and good morning, everyone. Earlier today we issued a press release containing our second quarter 2018 financial results and other corporate updates, and we filed our 10-Q. This release and the 10-Q can be accessed by visiting our website at www.selectabio.com. I'm joined today by Werner Cautreels, our CEO and other members of the management will be joining us for the Q&A portion of this call.

Before we get started, we'd like to advise that certain remarks that are being made during this call about the company's future expectations, plans and prospects constitute forward-looking statements for the 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 Selecta's most recent quarterly report on Form 10-Q filed with the SEC, which can be accessed at selectabio.com.

In addition, any forward-looking statements represent the company's views only as of today, August 08, 2018, and should not be relied upon as representing the company's views as of any other subsequent date. While Selecta may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, even if management's views change.

And now let me introduce Werner, who will kick things off.

Thank you, John, and good morning, everyone. 2018 is proving to be an important year at Selecta as the data from the Phase II clinical trial of our lead program SEL-212 for the treatment of chronic severe gout patients continued to show improvement in clinical activity. Thus providing us the appropriate guidance as we make plans for our Phase III program that we expect to begin in the fourth quarter of this year. I will start today by summarizing briefly the expanded treatment data, we recently presented for SEL-212 at the European League Against Rheumatism or EULAR Annual European Congress in June, and then I will comment on our timeline as anticipated upcoming milestones, including the plan presentation of the 5 monthly dose data at the upcoming American College of Rheumatology or ACR, annual meeting to be held October 19 to 24. As well as the start of our pivotal Phase III program and planned head-to-head trial against Krystexxa, which we plan to initiate in parallel with our pivotal Phase III program.

Just quickly and for brief background, we are currently conducting a comprehensive dose ranging Phase II trial of our lead product candidate for chronic severe gout. SEL-212 is a combination of SVP-Rapamycin, our novel immune tolerance technology and pegsiticase or proprietary pegylated uricase and was designed to be the first non-immunogenic version of uricase, which would allow for the effective and safe administration of multiple doses with concurrent mitigation of antidrug antibodies against the enzyme.

In June 2018, we presented a new 3-month expansion data from patients receiving SEL-212 at the EULAR Congress in Amsterdam. The data was from patients receiving 3 monthly doses of SEL-212 with up to 0.15 milligram per kilogram of SVP-Rapamycin in combination with 0.2 milligram or 0.4 milligram per kilogram of pegsiticase, followed by 2 monthly doses of pegsiticase alone. Approximately 80% of 27 evaluable patient had serum uric acid control below 6 milligrams per deciliter at week 12. By comparison in a separately conducted and designed study of the only FDA-approved uricase therapy, the Krystexxa triple study, 44% of evaluable patients had serum uric acid control below 6 milligrams per deciliter at week 16, as reported also last November of ACR. Additionally, 33% of the patient population represented by our EULAR data, and only 27% of all current patients in the SEL-212 Phase II trial, experienced gout flares during the first month after treatment with continued reduction of gout flares over months 2 to 5. This reduced rate of gout flares appears to be substantially lower than the incidence of gout flares reported in clinical trials involving the current FDA-approved uricase, and also other uric acid lowering therapies.

And now as we push through the finish line for the Phase II trial, we expect to present data from new course of patients who are receiving 5 monthly doses of SVP-Rapamycin in combination with pegsiticase at the upcoming ACR meeting and that will be in October 19 to 24 of this year. These patients are receiving regimens with SVP-Rapamycin doses ranging from 0.1 milligram to 0.15 milligrams per kilogram in combination with the 0.2 milligram per kilogram of pegsiticase. We expect the data from our comprehensive Phase II trial will provides appropriate guidance for the selection of the dose regimen that will be taken into the Phase II program.

SEL-212s emerging product profile has indicated that SEL-212 may provide better and more sustained serum uric acid control, fewer flares and with a convenient once-monthly dosing versus the current approved uricase, which is bi-weekly. We believe SEL-212 has the potential to truly change the treatment paradigm for the severe gout patients and we are working to get this product to those patients as rapidly as possible. We are actively engaged in preparations for the start of the Phase III program and plan to initiate patient enrollment in the fourth quarter of this year in a couple of clinical trial sites. Preparations included plan in the Phase II meeting with FDA. Our plan for patients in the 2 pivotal placebo-controlled Phase III trials will be to dose monthly, with the combination therapy for the entire 6-month period. We anticipate enrolling about 150 evaluable patients in each of the 2 pivotal trials and expect that the primary clinical endpoint will be serum uric acid control below 6 milligrams per deciliter and that's measured at months 3 and 6. This can be achieved rapidly upon dosing, it's easy to measure, and it remains strongly correlated with low or negative anti uricase antibody titers. We expect to report top line data from these 2 Phase III trials in 2020.

Beyond these 2 placebo-controlled pivotal Phase III trials, we are also planning to initiate in parallel head-to-head trial versus the current FDA-approved uricase and that is Krystexxa. That study will be designed to have the potential to demonstrate superiority. We plan to report data from this head-to-head trial after 3 months and the 6 months' time frame and expect this to happen in 2019.

Further market research based on the anticipated product profile derived from our Phase II clinical data, both in terms of clinical activity and safety continues to point to the billion-dollar potential of SEL-212. And with the seemingly broad applicability of our proprietary SVP-Rapamycin technology platform, which we believe has the ability to unlock the full potential of biologic therapies by mitigating unwanted immunogenicity. We have several promising pipeline programs, and maybe more potential applications in the future. Specifically, our second product candidate, SEL-403, is a combination of SVP-Rapamycin with the clinical stage oncology asset called LMB-100 that's we in-licensed from the National Cancer Institute or NCI, which is part of the National Institute of Health.

Patient dosing is ongoing into Phase I clinical trial for the treatment of patients with malignant pleural or peritoneal mesothelioma, who have undergone at least one regimen of chemotherapy. This open label dose escalation Phase I trial is being conducted under a collaborative research and development agreement, that's CRADA with the NCI, and it is expected to enroll at least 18 patients. The trial is evaluating the safety and tolerability of this treatment and will provide data on pharmacokinetics, antidrug antibody levels, as well as an objective response rate assessment. We will provide further guidance about data disclosure at a future time point. The company is also working with investigators at the NCI to potentially conduct a Phase I study of SEL-403 in patients with pancreatic cancer, and we are further exploring additional studies in other cancer.

In the field of gene therapy, we've previously presented data from the 2017 Annual Meetings of the American Society of Gene and Cell Therapy, ASGCT, and the European Society of Gene and Cell Therapy also. That data provided evidence of the potential of SVP-Rapamycin [to allow] the full potential of this novel modality. The company continues to engage in preclinical work focused on its proprietary product candidate for the treatment of methylmalonic acidemia, as well as in support of its collaboration with Spark Therapeutics. As you can see there is a strong momentum across our organization and pipeline, and we are very much look forward to our next data readouts at ACR in October for SEL-212.

Finally, I also wanted to let you know that the Board process to replace me post my retirement later this year is progressing, and we expect to get you on that in the near future.

With that let me turn the call over to John to discuss our second quarter financial results. John?

Thank you, Werner. For the second quarter of 2018, the company recognized no revenue, which compares to less than $0.1 million for the second quarter of 2017. The decline is the result of reduced revenue recognized from the company's grants and collaborations. Research and development expenses for the second quarter of 2018 were $14.4 million, which compares to $11 million for the second quarter of 2017. The increase is primarily the result of higher clinical costs related to the company's Phase II trial of SEL-212, preparation for the start of the SEL-212 Phase III program, and incremental headcount-related expenses.

General and administrative expenses for the second quarter of 2018 were $4.4 million, which compares with $4.9 million for the second quarter of 2017. The reduction in cost is primarily the result of reduced patent-related costs and contract license fees associated with collaborations.

For the second quarter of 2018, Selecta reported a net loss of $18.8 million or $0.84 per share compared to the net loss of $16.0 million or $0.85 per share for the same period in 2017. Selecta had $66.2 million in cash, cash equivalents, short-term deposits and investments as of June 30, 2018, which compares with a balance of $83.1 million at March 31, 2018. Selecta expects with its cash, cash equivalents, short-term deposits and investments will be sufficient to fund the company's operating expenses and capital expenditure requirements through the end of the third quarter of 2019. The current operating plan accounts for funding in preparation for the planned Phase III clinical trial for SEL-212 and initial patient enrollment in a couple of the Phase III clinical trial sites, but the company will require an additional equity offering or other external sources of capital to expand enrollment in the Phase III trial and to conduct the planned head-to-head trial against Krystexxa.

Finally, tomorrow, August 9, we will be at the Canaccord Genuity Annual Growth Conference in Boston, and at the Janney Montgomery Scott Healthcare Conference in New York City on September 17. We hope to see many of you there.

That concludes our formal remarks. Now we will open the line up for questions. Operator?

(Operator Instructions) Chad Messer, Needham & Company.

Can you just start out with the 5 dose combination data that we're waiting for in October? Could you maybe give us some context on where this fits in the planning for the Phase III, is it safe to say that 0.1 and 0.15 mg/kg are the two most likely doses under consideration for pivotals?

Thanks, Chad. This is Werner. Yes, absolutely, I think what you will see [inaudible] 5 monthly doses of the combination and the dose ranges that will be shown as from 0.1 to 0.15 and that would be 0.2 of the enzymes. So I think it's a fair assumption that will be in the dose regimen that we would take into Phase III.

Okay. And then just on the Phase III program, another study you've contemplated including in the future is also in Krystexxa failures, didn't hear any mentioning of that in your plans today, is that off the table?

No. We maintain that idea. We have to do the appropriate preclinical work before we can engage in that. And that is certainly something that's still in our plans.

Okay. Great. Look forward to the data on October and hearing about your Phase III plans.

Difei Yang, Mizuho.

So just a couple, the first one is on Krystexxa, head-to-head study, would you give us a little bit more detail on how many patients will the trial you include and what -- other than uric acid controls, what other measurements you're hoping to help to differentiate your product versus Krystexxa?

Okay. Thanks, Difei. John, will you take that?

Difei, good morning. So I think as we've described previously, lot will have to do a little bit with the efficacy difference that we continue to see between ourselves and Krystexxa. I think we've guided, and again we haven't set a number in the Krystexxa trial, but right around the 100 patients, sounds right? Equal parts in both Krystexxa and SEL-212 for the head-to-head. I think we've powered it through statisticians, we'll finally do that as we have the final Phase II data and decide on what doses we'll look at in the head-to-head. I think as we take a look at basically, what measures we look at, obviously serum uric acid is going to be the primary endpoint, and I think very similarly to what we would see in the Phase III, we would also probably look at gout flares as another objective as we look between the two. Yeah. And we may also look at tophi as well, but I think that's again something that we're contemplating.

Okay. And so how important is it for the rate of patients, who has anaphylaxis reactions to the injection, or to the infusion?

So it's a great question, Difei. I think, as we've shown and we've previously sort of mentioned, I think our rate -- I think we've only looked at, we've had over 380 doses of our product in only 8 sort of anaphylactic reaction. So I think when you look at our rate of anaphylaxis, we feel pretty good about that, especially as you look at the comparison on the label versus our competitor. So I think it's important, but I think we've obviously and I think both now and the Phase III, we can show, we feel very good about our infusion reaction and anaphylactic rate as we go forward.

Carter Gould, UBS.

Just wanted to dig in a little bit more to the upcoming readout and maybe, if you could just set a little bit of expectations on terms of the number of patients we'll see. Any commentary that -- you will definitely have sort of adequate follow-up. And then obviously, you posted pretty good data we saw at EULAR. How should we think about the upcoming readouts relative to the benchmarks that EULAR data set, and then I have a follow-up.

Thanks, Carter. This is Werner. So by the time we will show the data, I think that would be between 30 patients and 40 patients that are dosed in the sort of 5 monthly doses -- at a certain dose range. And so you can expect that we will present those data there. In terms of going back to EULAR, we expect that data that we will share will be in that order of data that we have shown at EULAR.

Okay. Great. And then as far as the end of Phase II meeting with FDA, has that already been scheduled, and are there any other sort of inputs or other work that needs to be done beside sort of giving the upcoming data meeting with FDA before you can move into Phase III?

We are very actively preparing for all of the above. That includes, by the way, not only just internal processes, but that also has included extensive consultation with key opinion leaders that will eventually become also our investigators. So everything that you can think of that needs to be put in place to start the Phase III in terms of supplies, materials, all of that is actively involved.

Okay. Great. And just last question for me, your competitor in this space has been very vocal on the opportunity in the nephrology segment, can you maybe talk about how that kind of fits into your billion dollar commercial potential that you kind of put out there for 212?

Okay. Thanks. I will -- Stephen, who is our Chief Commercial Officer for that question.

Yes. Thanks for the question. Right now, I think our main focus would go into commercializing, that would be focused on the rheumatologist, who [are going to be actually] the majority of these severe gout patients. I think in nephrology, it's an interesting proposition, but probably comes with its own challenges, again I think making sure those patients, who are actually referred to the rheumatologist for appropriate treatment is, in my opinion, the best strategy to move forward with.

(Operator Instructions) Yun Zhong, Janney.

So first one on the head-to-head study with Krystexxa. I wanted to know your thinking behind conducting the study in parallel with your Phase III program, instead of waiting for the Phase III program to proceed first then to initiating that study. Do you expect the study to have any impact on patient enrollment? Assuming that all studies will probably target same patient populations?

Yes. So we continue to plan to continue to conduct these trials simultaneously. And thus indeed, we have to be careful of how to plan for patient inclusion, but as far as we know there shouldn't be any interference in terms of all placebo studies versus reactive study. So we will be careful to make sure that -- that doesn't happen. John, anything else?

Yeah. And I would just add, I think you asked about the strategy of doing a head-to-head versus waiting for the Phase III trial. I think it's twofold, one is, I think we have an opportunity based on the efficacy difference that we see between Krystexxa and SEL-212, I think to do a robust study that we're very confident in. And I think the fact we're doing a head-to-head, shows our confidence in our drug. I think secondarily, it allows basically, as we proceed through the Phase III program for data points in 2019, as we're going to be showing both 3 months and 6 months superiority, which we feel again very confident about. And then lastly, we have Stephen over here, our Chief Commercial Officer. By doing this study in the same way as we'll be doing the Phase III, even though it's not pivotal, it will allow that for a marketing that Stephen can use with the salesforce and others to show patients how good SEL-212, I think can be for them in their treatment of chronic and severe gout. So that was the rationale for doing all of that.

I see. So about the end of Phase II meeting with the FDA, I believe you said that the 2 Phase III studies will have 150 patients in each. So besides that dose, anything else that you needed to finalize with the FDA, regarding the design of the study?

No. We have been working with our statisticians and our clinicians to put those designs together, and the whole purpose of the end of Phase II meeting is indeed to present those studies and those designs and I think they're important.

I'm showing no further questions. This concludes our question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

Thanks, Steven. And thanks, everyone, again for your attendance and for your questions, and we look forward to meet you maybe at one of the upcoming health care conferences tomorrow at Canaccord and in September at the Janney Montgomery Scott Healthcare Conference. Thanks, again.

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