Cartesian Therapeutics Inc (RNAC) 2019 Q4 法說會逐字稿

Good morning, and welcome to the Selecta Biosciences Fourth Quarter 2019 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 like to introduce Elona Kogan, General Counsel, Selecta. Please go ahead.

Thank you, and good morning, everyone. Welcome to our fourth quarter and full year 2019 financial results and corporate update conference call. A press release reporting our financial results is available in the Press Release section of our website, www.selectabio.com, and our Form 10-K for the fiscal year ended 2019 will be filed later today with the SEC. Joining me today is Carsten Brunn, our President and Chief Executive Officer; and Brad Dahms, our Chief Financial Officer. In addition, Dr. Alison Schecter, our Chief Medical Officer; and Kei Kishimoto, our Chief Scientific Officer, will be available for the Q&A portion of the call.

As a reminder, during today's call, we'll be making certain forward-looking statements, including, without limitation, statements about the potential safety, efficacy and regulatory and clinical progress of our product candidates, financial projections and our future expectations, plans and prospects. These statements are subject to various risks that are described in our filings made with the Securities and Exchange Commission, including our most recent annual report on Form 10-K, which will be filed with the SEC later today. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, March 12, 2020, and Selecta disclaims any obligation to update such statements even if management's views change.

I would now like to turn the call over to Carsten Brunn, our President and CEO. Carsten?

Thank you, Elona, and good morning. I appreciate you joining us today. 2019 was a pivotal year for Selecta. We made substantial clinical advancements, highlighted by the completion of enrollment in the head-to-head COMPARE trial of our lead product candidate, SEL-212, which is being developed for the treatment of chronic refractory gout. We were able to complete enrollment of the trial in 7 months, which we believe speaks to the significant unmet need in patients with chronic refractory gout. SEL-212 combines our ImmTOR platform and pegadricase, and the COMPARE trial is evaluating a once-monthly dose of SEL-212 in comparison to biweekly pegloticase. The primary end point is the percentage of patients who maintain serum uric acid levels of less than 6 milligrams per deciliter at 3 and 6 months 80% of the time. We expect to announce top line data from this trial in the third quarter of 2020.

As we advance into our Phase III program, which we'll outline shortly, we remain strongly encouraged that SEL-212, if approved, could address some of the current unmet needs in the marketplace with a once-monthly dosing profile and the potential to mitigate the formation of neutralizing antibodies without suppressing the immune system.

We're pleased to report that in January, we had a productive discussion with the FDA in which we discussed the proposed design of the Phase III clinical program. The discussion has given us clarity on the registrational study, which will consist of 2 placebo-controlled trials. Each trial will have a 6-month end point and one of the studies will contain a 6-month placebo-controlled extension to evaluate extended safety. As per suggestion to the FDA, we'll be evaluating 2 doses of SEL-212: 0.1 milligram per kilogram of ImmTOR and 0.15 milligram per kilogram with ImmTOR versus placebo in each of the 2 trials. In other words, there'll be 2 active treatment arms and 1 placebo arm. Patients will be randomized 1:1:1 with approximately 35 patients in each of the 3 arms in each trial. From a manufacturing perspective, we have enough supply to commence the Phase III clinical program.

Our gene therapy program continues to be a strategic focus, and we made important advancements in 2019, all of which support our entry into the clinic later in 2020. In December 2019, we were excited to report that we broadened our existing strategic partnership with AskBio. We jointly entered into a license agreement, under which AskBio exercised its option to license development and commercialization rights to Selecta's ImmTOR, immune tolerance platform, for use in AAV gene therapy for the treatment of Pompe disease, which is AskBio's lead indication. Pompe disease is a rare, genetic, lysosomal storage disease characterized by the abnormal buildup of a sugar molecule called glycogen inside cells.

Under the terms of the agreement, Selecta will receive upfront payments totaling $7 million and is eligible to receive milestone payments of $237 million plus royalties on product sales. This builds upon the strategic partnership we announced in August 2019 with AskBio to jointly develop, manufacture and commercialize the portfolio of AAV gene therapies with a lead indication in methylmalonic acidemia and several other indications, which we have not yet disclosed.

Our partnership leverages the technology platforms of both companies with AskBio's expertise in clinical and manufacturing AAV gene therapies and Selecta's expertise in immune tolerance biology, and there will be a human proof-of-concept trial to validate the technology and its potential for redosing in patients. The potential to redose gene therapy may be an important therapeutic breakthrough that is currently not possible to redose AAV gene therapy due to the development of neutralizing antibodies against the AAV capsid. Preclinically, ImmTOR has been shown to enable repeat dosing and enhanced first-dose transient expression up to fourfold compared to gene therapy with AAV vector alone. We look forward to bringing our gene therapy programs into the clinic later this year.

Our propriety gene therapy program includes research in ornithine transcarbamylase, or OTC deficiency, which we intend to advance, and we look forward to providing updates on this program later this year.

In 2019, we significantly strengthened our organization's leadership and financial infrastructure, adding several new members to our executive team, appointing a new Chairman to our Board of Directors and completing a $7 million financing. We're proud to have welcomed Carrie Cox as our new Chairman of the Board of Directors. Ms. Cox is a renowned industry leader and successful biopharmaceutical executive. She has served on several boards and held the position of chair for multiple biopharmaceutical companies and health care entities, including Cardinal Health, Celgene, Array BioPharma, Humacyte, Prism Pharmaceuticals, among many others.

I'll now turn the call over to our Chief Financial Officer, Brad Dahms. Brad?

Thank you, Carsten. Our detailed financials are laid out in our earnings press release, which we filed this morning and we further outlined in our 10-K. So I'll just highlight a few key items here. Before we delve into Selecta's finances, I want to note that the ongoing COVID-19 situation will not impact our clinical programs from a supply perspective.

Now with regards to our financials. We ended the year with $91.6 million in cash, cash equivalents and restricted cash. Net cash used in operating activities was $12.9 million and $51.4 million for the fourth quarter and fiscal year 2019, respectively, as compared to $12.7 million and $59.2 million for the same periods in 2018.

As Carsten noted, we completed a private financing in December with a high-quality syndicate of investors and certain board members, which resulted in a net proceed to the company of $65.6 million. Together with the upfront cash received from the license agreement with AskBio for the lead indication in Pompe disease, we believe our current cash will fund operations into the first quarter of 2021.

R&D expenses for the fourth quarter and fiscal year 2019 were $15.2 million and $42.7 million, respectively, which compares with $10.3 million and $47.7 million for the same periods in 2018. The quarterly increase reflects additional costs incurred specific to our Phase II head-to-head COMPARE clinical trial of SEL-212, for which we completed enrollment in December 2019. The decrease year-over-year reflects reduced costs in 2019 due to the completion of prior programs in 2018 combined with reduced salaries and benefits resulting from the head count reduction in early 2019. The cost reductions were partially offset by an overall increase in costs incurred in our lead product candidate, SEL-212.

G&A expenses for the fourth quarter and fiscal year 2019 were $4.1 million and $16.4 million, respectively, which compares to $5.1 million and $18.2 million for the same periods in 2018. The decrease is the result of lower salaries and stock compensation expense resulting from reduced head count at the end of 2018 combined with reduced professional fees.

For the fourth quarter and fiscal year 2019, we reported a net loss of $14.9 million or $0.28 per share and $55.4 million or $1.22 per share compared to a net loss of $14.7 million or $0.65 per share and $65.3 million or $2.92 per share for the same periods in 2018.

I'll now hand the call back over to Carsten for closing remarks. Carsten?

Thank you, Brad. As mentioned earlier, 2019 was a year of substantive, meaningful growth for us as we evolved in the areas of clinical and regulatory development, organizational structure, finance and strategic partnerships. In 2020, our focus remains on the further development of SEL-212, and we look forward to announcing top line data from the COMPARE study in the third quarter as well as through the initiation of the Phase III clinical program in the second half of the year.

In parallel, we'll continue to advance our gene therapy program independently and with our partners, entering the clinic in the second half of this year as we continue to pursue new breakthroughs in treating diseases that can benefit from redosing with gene therapy. We look forward to continuing to generate value from our ImmTOR platform.

I'd like to conclude by reiterating our gratitude to the many people who have been supportive along the way, including our patients and their families, our investigators helping us with COMPARE and our great team at Selecta.

With that, we're happy to take questions.

(Operator Instructions) The first question will be from Ellie Merle of Cantor Fitzgerald.

Congrats on all the progress. Can you discuss a bit your perspective on the Krystexxa methotrexate combination study? If that study were to show a significantly improved response rate versus, say, Krystexxa alone, how would that affect your outlook for SEL-212 in the gout landscape from a competitive positioning perspective?

Thanks for the question. Obviously, we are following this study very closely. I think to date, we haven't seen any controlled data, and we're obviously focusing on executing our COMPARE study and moving into Phase III in the second half of this year.

Got it. And then in terms of the doses for the Phase III, can you discuss a little bit more about the rationale for the multiple doses of ImmTOR versus exploring a single dose?

Yes. I think that's a great question as well. I think it's quite common to explore 2 doses. We're obviously looking for the minimally effective dose. Chronic refractory gout is a heterogeneous disease, and therefore, we want to test those 2 doses, 0.1 and 0.15 in the Phase III program.

The next question will come from Raju Prasad of William Blair.

Can you remind us of the statistical analysis plan that you've put in place for the head-to-head trial because of an ITT analysis and how you're dealing with potential dropouts on each arm? And then I have another question on the gene therapy platform.

Yes. So good question, Raj. So we haven't shared the details of our SAP. Obviously, the trial is powered to show superiority and in terms of differentiation in sUA levels. We will disclose middle of this year in Q3 is the primary end point, which is sUA levels below 6 at months 3 and 6 [each end of] the time and some of the secondary safety measures.

Great. Maybe as a quick follow-up on that, can you just kind of provide some general color on the interim stopping rule criteria when that occurred? Did that occur in the first month where the SEL-212 arm has kind of a higher standard? Or did it happen kind of towards the later where they had the similar stopping rule criteria?

Yes. So we haven't disclosed any details. And as you know, we provided an early readout on December 2, but we have not shared a breakdown in terms of dropouts by months. We'll obviously share this during the high-level readout in Q3.

Okay. And then on the gene therapy platform, it seems like you're going to be advancing in kind of rare liver target diseases. Is there plans or optionality to go into other tissue types? Or is it primarily liver-focused? Just any color on potential expansion of the platform would be interesting.

Yes. That's an excellent question. So you're right. I mean all the data we have currently is in liver-directed diseases, and we'll definitely go into a liver-directed disease as a first indication. But I think from a scientific perspective, there is no reason why it shouldn't work in other nondirected diseases because the immune response is still facilitated the same way. We don't have any data. But I think from a pure scientific perspective, we definitely see applications beyond just liver-directed diseases.

The next question is from Chad Messer of Needham & Company.

First one, quickly on the AskBio deal, just trying to understand a little bit of the mechanics there. You announced it -- a big one in August and then talked about Pompe in December. Is that the same deal we're just hearing about one of the previously undisclosed programs? And how should we expect to hear about other programs over time? Is there -- will you announce them when they're decided or when they reach a certain point in development?

Yes. Thanks for the question, Chad. Yes. It can indeed be confusing. It's important to understand that the announcement in August is around a strategic partnership where we co-develop and co-commercialize across a number of indications. So we're basically sharing costs but then also profits, whereas in December was a pure licensing deal. So they're completely separate transactions, where we've licensed ImmTOR for the exclusive use in Pompe disease for AskBio's lead program. So they're 2 different collaborations, 2 different deals.

Okay. Appreciate the clarity there. And then obviously, what you guys are trying to accomplish is redosing. Very exciting advancement for gene therapy, if you can pull that off. Do you have any thoughts about when redosing is supposed to happen, how long between initial and subsequent doses? Is that something you've worked out and you can discuss?

Yes. I don't think we're at this point yet, Chad, to talk about this. But I think what I can say, what we're looking at initially, what we see as a proof of concept, if we were able to prevent the formation of neutralizing antibodies because that's really the challenge right now. If a patient is dosed to an AAV capsid, they have such high titers of neutralizing antibodies that it's impossible to redose them. So we would, in an initial experiment, try to show that we can actually prevent the formation of neutralizing antibodies. The second step would be indeed to be able to redose. But we haven't guided to an exact outline of the clinical trial design for that.

Understood. And what do we know about the time course of development of neutralizing antibodies? Is that something that happens in weeks or months? Or what do we know?

Yes. That's a great question. I'll let Kei Kishimoto, our CSO, answer this one.

Chad, this is Kei. Yes. You do see neutralizing antibodies come up pretty early. They will be seen over the first few weeks to a month after dosing. And then the issue with redosing is that those titers will persist for years, if not decades.

The next question will come from John Newman of Canaccord.

So Carsten, obviously, there's a lot of focus on the head-to-head study with pegloticase in terms of efficacy. But I just wondered if you could roughly outline what types of analyses you might be able to look at with regard to the safety for 212 as it really seems like, in your past studies, you've been able to show pretty low incidence of gout flares especially the severe flare. So I'm just curious as to, generally speaking, what you might be able to look at in the upcoming head-to-head study.

John, great question. Yes. I mean definitely, there's a focus on safety. And as you said, we'll look at the overall AE profile, sUA profile and obviously, gout flares as well. And we obviously hope to see similar results that we have seen in the Phase II dose-finding study, where we saw quite a reduction in terms of the number of gout flares. So this will all be part of the analysis of this trial.

The next question will come from Yun Zhong of Janney.

The first one on the primary end point of the COMPARE study, 80% of the time in month 3 and 6. Were you trying to use the primary -- same primary end point, I assume, that was used in the pivotal studies of Krystexxa? But in your planned Phase III study, it looks like it's only one time point, month 6. And is that 80% of the time? Or is that a single time point? And during your discussion with the FDA, did the agency show any preference regarding which time point they would like to see?

Yes. That's an excellent question. Yes, exactly right. We are using in the COMPARE study exactly the same end point as Krystexxa per label, but we also have a secondary end point where we actually look at 6 months only. The FDA has changed their guidance. So they are, at this point, only interested in a 6-month readout, and it will be also 80% of the time. And the rationale from them is that, obviously, 6 months is the month that counts and they see bringing patients in for weekly blood draws as a potential issue. So they were very clear in their preferred -- or in their guidance, actually, that they're only looking at 6 months for 80% of the time.

Okay. Then the second question on the Pompe program. Is AskBio going to take the lead in developing this program in terms of timing and strategic plan?

Yes. So as mentioned earlier, so we licensed ImmTOR to AskBio. So they have the rights and they drive the program and they make all the decisions as well. So it's a question you have to address to AskBio.

The next question comes from Difei Yang of Mizuho Securities USA.

Just a couple. The first one related to the SEL-212 upcoming Phase III trials. How should we think about stopping rule with the head-to-head study? If we look at head-to-head study, would that be a reasonable base to think about stopping rules?

Yes. Excellent question. Indeed, we plan to use the same stopping rules in the Phase III as we've used in COMPARE for SEL-212, which is just to remind everyone, sUA has to be below 1 and then months 2 to 5 sUA levels below 6. So we'll use the same stopping criteria in the Phase III.

Then changing subject to gene therapy. Would you give us a quick update on what Spark decided to do or they're planning to do with the additional -- with the opt-in additional indications?

Yes. That's a good question as well. So just to remind everyone, Spark, or I guess, Roche now holds the license for ImmTOR in the use of hemophilia A, and they continue to hold that license. They had the option to pick 4 additional indications. They have not opted in those and -- which allowed us to -- obviously allows us to partner those indications or potentially develop them ourselves. And you can see with -- AskBio is one example how we can license those indications to other partners.

And this concludes the question-and-answer portion of the call. I will now turn the call back over to Selecta's CEO, Carsten Brunn, for any closing remarks. Carsten?

Thank you, operator, and thank you, everyone, who joined us this morning. We achieved critical benchmarks in 2019 as we further advance the ImmTOR platform in chronic refractory gout and gene therapy. And we're extremely excited about the upcoming milestones in 2020 and the continued growth of our company and its technology. We look forward to sharing further updates about the broad potential of the ImmTOR platform throughout the year. That concludes today's call. Thank you.

Thank you. The conference has now concluded. Thank you all for attending today's presentation. You may all disconnect. Have a great day.