Cartesian Therapeutics Inc (RNAC) 2020 Q3 法說會逐字稿

Good morning, and welcome to the Selecta Biosciences Third Quarter 2020 Financial Results and Corporate Update 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 Brad Dahms, Chief Financial Officer of Selecta. Please go ahead.

Thank you, and good morning. Welcome to our third quarter 2020 financial results and corporate update conference call. The press release reporting our financial results is available in the Investors and Media section of our website, www.selectabio.com, and our quarterly report on Form 10-Q for the quarter ended September 30, 2020, will be filed later on today with the SEC.

Joining me today are Carsten Brunn, our President and CEO; and Dr. Peter Traber, our Chief Medical Officer. Kei Kishimoto, our Chief Scientific Officer, will be available for the Q&A portion of the call.

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, partnerships and prospects. These statements are subject to various risks, including those related to the COVID-19 outbreak that are described in our filings made with the SEC, including our most recent quarterly report on Form 10-Q, which will be filed with the SEC later on today. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, November 5, 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.

Thank you, Brad. Good morning. I appreciate you joining us today. This past quarter has been a busy and productive one for our team as we continue to progress our clinical programs, leveraging our ImmTOR platform. We reported top line data from the non-registrational Phase II COMPARE trial of SEL-212, which demonstrates the potential of ImmTOR towards when combined with a highly immunogenic enzyme, in this case, pegloticase. In September, we commenced the Phase III DISSOLVE program in partnership with Sobi and expect to have top line data from the 2 Phase III studies in the second half of 2022. We look forward to continuing to advance our gene therapy program in methylmalonic acidemia, or MMA, with AskBio having received Rare Pediatric Disease Designation from the FDA.

Finally, we're excited to commence our IgA Nephropathy program and anticipated IND submission for this program in 2021, having recently announced an option and license agreement with IgAN Biosciences to give Selecta access to an IgA protease. Importantly, this program will build on SEL-212 in combining an immunogenic enzyme within ImmTOR.

In late September, we released and reviewed the top line data from the Phase II non-registrational COMPARE trial comparing the efficacy of once-monthly infusions of SEL-212, a combination of Selecta's ImmTOR immune tolerance platform and a therapeutic uricase enzyme, pegadricase, to bind the infusions of pegloticase, the currently approved uricase in the U.S. for the treatment of chronic refractory gout. We will not review all the details again on this call. I want to reiterate that while we missed statistical superiority in the primary endpoint in the preprotocol set by 1 patient, the data were consistent with the stronger performance of SEL-212 with numerical superiority on all 12 of the endpoints reported and statistical superiority on 6 of the 12. Unfortunately, the conduct of the trial was affected by the ongoing pandemic due to the site closures, missed appointments or other nondrug-related protocol deviations. Importantly, the data show the effectiveness of our ImmTOR platform at mitigating unwanted immune responses to immunogenic therapies.

As a reminder, in our Phase I/II programs, when patients were dosed with pegadricase alone, only 3 out of 19 or 15% of patients made it to week 4. COMPARE demonstrated that 61% of patients in the reportable set made it through to month 6. We believe this data demonstrates the clinical benefit and broad applicability of our ImmTOR platform in any specific immune tolerance. Our strategy for ImmTOR moving forward is twofold: amplifying the efficacy of logic therapies, including redosing of lifesaving AV gene therapies; and restoring self-tolerance in autoimmune diseases.

Our lead gene therapy program in MMA, which is being conducted in collaboration with AskBio is expected to enter the clinic in the first half of 2021, with preliminary data expected by the end of 2021. We recently announced that the FDA granted Rare Pediatric Disease Designation to MMA-101, formerly SEL-302, for the treatment of isolated MMA due to methylmalonyl-CoA mutase gene mutations. This highlights the significant unmet medical need that Selecta and AskBio are seeking to address with MMA-101 for this rare metabolic disorder. And we look forward to advancing this program in the hopes of helping young patients affected by MMA and their families. We and AskBio believe that this product candidate is differentiated and that it could allow for retreatment when combined with ImmTOR.

As you likely saw last week, Bayer announced that they will be acquiring AskBio to broaden the innovation base in cell and gene therapy. As a result, AskBio will operate as a wholly owned subsidiary of Bayer. We do not believe this will affect our current partnership with AskBio, and our program MMA is expected to progress as planned as well as the license agreement with AskBio in Pompe disease. We're looking forward to working with the teams at AskBio and Bayer.

You may know that prior to my joining Selecta in 2018, I spent nearly 10 years at Bayer in various roles, most recently as President of Bayer Pharma in the Americas. And I expect to have a strong working relationship going forward. We continue to push our proprietary gene therapy program in OTC deficiency forward and will provide updates on this program at a later date.

To wrap up on gene therapy, Selecta continues to do -- conduct preclinical work, looking at the combination of ImmTOR in certain neuromuscular disorders, including Duchenne Muscular Dystrophy and LimbGirdle Muscular Dystrophies. If Selecta exercise its option to enter in any commercialized agreements, we will be eligible for significant economics, including additional development, regulatory and commercial milestone payments as well as tiered royalties on net product sales.

Moving on to IgA Nephropathy. During the quarter, we entered into a research license and option agreement with IgAN Biosciences, which provides Selecta with the option to an exclusive license for the rights to develop and commercialize the ImmTOR platform in combination with IgAN's immunoglobulin A protease for the treatment of IgA Nephropathy. The barrier of IgA protease formulization is the bacterial origin of the protease, which makes it immunogenic. As demonstrated with SEL-212, ImmTOR has shown the ability to mitigate the combination of antidrug antibodies to immunogenic enzymes, and we intend to leverage our learnings from the SEL-212 program as we advance this product candidate forward. We intend to submit its IND by the end of 2021.

I will now turn the call over to Peter Traber for a more detailed update on Selecta's pipeline. Peter?

Thanks, Carsten, and good morning, everyone. As Carsten mentioned, we had an exciting quarter with several updates to the pipeline. Let me start with SEL-212, and I'll focus on the Phase III pivotal program. As Carsten mentioned, we commenced the DISSOLVE program with Sobi in September. The clinical program consists of 2 double-blind, placebo-controlled trials with SEL-212, in which SEL-212 will be evaluated at 2 doses of ImmTOR, 0.1 milligrams per kilogram and 0.15 milligrams per kilogram; and 1 dose of pegadricase, 0.2 milligrams per kilogram in both studies. Each trial will aim to enroll 105 patients with 35 at each dose level and 35 on placebo. In DISSOLVE 1, in which first patient was dosed in September, safety and efficacy will be evaluated at 6 months and will have a 6-month extension. DISSOLVE 2 will assess safety and efficacy at only the 6-month time point with no extension. We expect to dose the first patient in DISSOLVE 2 later this quarter.

The primary endpoint in both studies is serum uric acid levels at 6 months, a well-validated measure of disease severity in chronic refractory gout, based on learnings from the COMPARE study, we intend enroll a higher proportion of patients with visible tophi. As you'll recall, a delta of 19 percentage points was observed on the SEL-212 versus pegloticase for patients with visible tophi at baseline on the primary endpoint and only 41% of patients in COMPARE had visible tophi at baseline. We believe the proportion of patients with chronic refractory gout with visible tophi is closer to 60% to 70% of the patient population in specialty care in the United States. Secondary endpoints include gout flare incidents, tender and swollen joint counts and tophi's burden as well as patient-reported outcomes of activity limitation and quality of life.

Chronic refractory gout remains a disease with a significant unmet medical need with an estimated 160,000 patients in the U.S. and only a fraction receiving treatment with the currently approved uricase. We and Sobi are confident that SEL-212, if approved, could be transformative for patients living with this debilitating condition. The Phase III DISSOLVE program is underway. Together with Sobi, we look forward to reporting top line data from this program in the second half of 2022.

Our gene therapy programs continue to advance. We expect to file the IND for MMA-101 in the first quarter of 2021 and commenced the Phase I clinical trial for this product candidate in the first half of 2021. We expect to report the preliminary data on the first patient cohort by the end of 2021. For this preliminary data, we will be looking at biomarkers of disease and the formation of neutralizing antibodies to the AAV capsid.

Our proprietary SEL-313 program in OTC deficiency continues to progress. We continue to work on the IND-enabling activities for this program in anticipation of moving this program into the clinic. We will share updates on this program in early 2021. OTC deficiency is a rare genetic disorder that causes ammonia to accumulate in the blood due to mutations in the OTC gene, which is critical for proper function of the urea cycle. Severe symptoms include inability to control body temperature and breathing rate, seizures, coma, developmental delays and intellectual disability.

For IgA Nephropathy, we are moving forward aggressively on our IND-enabling work, which we expect to have, as Carsten mentioned earlier, an IND by the end of 2021 so we can commence our first clinical study in 2022. IgA nephropathy is characterized by deposition of immune complexes of the lactose-deficient IgA1 immunoglobulin in the glomerular mesangium and is a leading contributor to the development of chronic kidney disease and renal failure. Genetic or environmental factors that cause this abnormal IgA1 and its accumulation on the kidney can result in the development of IgA Nephropathy, one of the most common causes of kidney disease. Hypertension, proteinuria and decrease estimated GFR at the time of diagnosis are associated with core prognosis. It can result in incremental loss of renal function and results in end-stage renal disease in approximately 30% to 40% of patients.

There are no approved therapies for the treatment of IgA Nephropathy. Previous studies in animal models conducted at independent laboratories established the ability of IgA protease to remove injurious IgA from kidneys and improve markers of renal dysfunction. These results suggest that it is an excellent candidate to decrease the rate of disease progression and possibly even reverse the disease. The barrier to IgA protease commercialization is the bacterial origin of the protease, which makes it immunogenic. With ImmTOR, we intend to develop a combination product candidate to treat the root cause of this disease, in which there are currently no approved therapies.

We are excited also to look at the potential of ImmTOR in restoring self-tolerance in autoimmune diseases, while we believe this is a natural fit for the platform. Our lead autoimmune diseases indication is primary biliary cholangitis, or PBC, a T cell-driven autoimmune disease that causes destruction of the bio blocks. Patients with PBC are in need of a highly targeted liver-directed approach through treating the root cause of the disorder. PBC has a well-defined target antigen and a significant unmet medical need. We are currently working on IND-enabling activities for this program, and we'll share specific guidance on timings later.

Now I will turn the call over to Brad to run through this quarter's financial results. Brad?

Thank you, Peter. We're very well capitalized, having ended the quarter with $147.6 million in cash, cash equivalents and restricted cash. We believe our liquidity position will enable us to fund our operating expenses and capital expenditures into the first quarter of 2023, and this guidance excludes any impact of incoming milestone payments, which could further extend our runway.

I'll discuss a few highlights on our financial results, which we issued in detail this morning in the press release. Revenue recognized for the third quarter 2020 was $4.6 million. During the 3 months ended September 30, 2020, we recognized $4.3 million under the Sobi license resulting from the shipment of clinical supply and the reimbursement of costs incurred for the Phase III DISSOLVE clinical program and $300,000 for shipments under our collaboration agreement with Sarepta.

Net cash provided by operating activities was $42.1 million for the 9 months ended September 30, 2020, as compared to $38.6 million used in operations for the same period in 2019. The increase in net cash provided by operating activities was primarily due to the collection of $99.5 million deferred revenue, a $7.4 million change in accrued expenses and other liabilities, offset by $10.1 million in changes in prepaid expenses, deposits and other assets and accounts receivable -- excuse me, accounts payable, and a $7.6 million change in accounts receivable compared to the prior year.

Research and development expenses for the third quarter 2020 were $14 million, which compares with $8.1 million for the same period in 2019. The increase in cost was primarily the result of the initiation of the Phase III DISSOLVE clinical program. These costs are subject to the cost reimbursement arrangement under the Sobi license. The increase in expense was also the result of the completion of our Phase II COMPARE trial for SEL-212 and for work done under the AskBio collaboration.

G&A expenses for the third quarter of 2020 were $4.4 million, which compares to $3.7 million for the same period in 2019. The increase in cost was a result of expenses incurred from facilities, legal and professional fees, offset by decreased travel expenses. During the quarter, we also announced a debt financing facility of the $35 million of Oxford Finance and Silicon Valley Bank, of which $25 million was drawn at closing. Proceeds from the financing were used to retire $12.6 million of existing debt and associated fees. This debt was amortizing at $700,000 per month. The additional proceeds will be used to support further advancement of our ImmTOR pipeline and for selected business development activities.

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

Thank you, Brad. As mentioned earlier, the third quarter was very productive for Selecta. The Phase II COMPARE data of SEL-212 validates the ImmTOR platform and its potential to mitigate unwanted immune responses. We look forward to continuing to advance SEL-212 in our ongoing Phase III DISSOLVE program and providing updates on our progress with Sobi. We continue to leverage the learnings of the SEL-212 program as proof-of-concept for what is to come for ImmTOR, amplifying the efficacy of logic therapies, including redosing of life-saving AAV gene therapies and restoring self-tolerance in autoimmune diseases.

To quickly recap our upcoming milestones. On the gene therapy front, we and AskBio expect to file the IND for MMA-101 in Q1 2021, commence the Phase I trial in the first half of 2021 and report preliminary data looking at biomarkers of disease and the formation of those antibodies to AAV capsid by the end of 2021. For IgA Nephropathy, we expect to file the IND for the combination of IgA protease and ImmTOR by the end of 2021, commencing the first clinical study in 2022. For SEL-212, we have picked up the Phase III DISSOLVE program and expect to report top line data from these 2 trials in the second half of 2022.

We also intend to advance our proprietary gene therapy program in OTC deficiency in our proprietary program in autoimmune diseases in PBC. Lastly, we look forward to sharing updates from our population partners, including AskBio and Sarepta. This is an exciting time for Selecta, and we'll continue to provide updates on our programs as they advance.

With that, we're happy to take questions. Operator?

(Operator Instructions) The first question comes from John Newman from Canaccord.

Congrats on the progress. So Carsten, I wondered if you could talk to us a bit about really both the MMA and the OTC gene therapy programs and just try to help us understand sort of what success would look like here in these 2 different indications. We know that you've shown preclinically that your technology is very effective in mitigating the formation of neutralizing antibodies. I'm just curious as to how you will look to demonstrate that in the clinical setting.

Thanks, John. Yes. That's an excellent question. Obviously, primarily, we're looking here to address the underlying disease, but in terms of biomarkers. But in terms of success, and that's why it's a fairly quick readout, we will look at can we prevent the formation of neutralizing antibodies. And I think there's probably a couple of different scenarios in terms of outcomes, as you can expect, with any therapy that affects the immune system. There'll be a set of patients that will respond and will completely prevent the formation of neutralizing antibodies so they can be retreated immediately, which might actually not be needed as there's usually quite a duration between treatment cycles. But there's potentially also a number of patients where we are able to significantly reduce those antibodies, but still have tiers that don't allow immediate retreatment. But we also think that is acceptable as well.

As in many indications, it takes sometimes years in order to retreat. And there is, of course, a chance that those titles go down over time. There's other interventions like lots of reasons that we can also deploy potentially or physicians can deploy. And there might be also a subset where we are not able to reduce these antibodies. So -- but we think the first 2 buckets will make a tremendous difference from a clinical perspective that, as a physician, you can tell patients that there is a chance that you actually are eligible to retreatment. And as I said earlier, we can assess this fairly quickly 30, 60, 90 days after you get the combination of the gene therapy with ImmTOR.

If I could just ask one additional question. Could you talk about how this technology could better enable dose escalation in gene therapy studies and just what that would mean for patients, whereas now their -- they sort of get their single dose, and that's all they are able to receive.

Yes. I mean, that's definitely a big unmet need, as we all know, John, that the translation from end models to humans is not very accurate. So if you give too high of a dose initially, you're running into toxicity issues. If you give too low of a dose, you still expose patients to AAV capsid. You remain below the third-party window, but you still trigger the formation of antibodies. You can't give a second dose. I think that's really we're into our -- can be very helpful to give a dose. And if dose was too low, you actually are able to escalate and give a second dose. That's definitely an interesting and important application along the same lines. Another potential application is in indications where you have to give very high viral vector loads, like in neuromuscular disorders, where you can potentially also spread out the dosing over numerous doses as well. So great, great question, John.

Our next question comes from Kristen Kluska from Cantor Fitzgerald.

So the first one is in regards to the ImmTOR platform in gene therapies. So given that we're at a unique time where there have now been over 4,000 clinical trials in gene therapy, either conducted or ongoing, coupled with the fact that we've now seen some long-term results for pediatrics and adults, I wanted to ask, broadly speaking, where you think this platform has the most potential outside of where you are conducting studies both internally and with your collaborators?

That's a great question, Kristen. We obviously believe that the applicability is very broad, actually. Right. It's just that we, as a company, are right now focused on liver-based diseases as the data we have generated. There's a natural fit with ImmTOR as ImmTOR accumulates in the liver, and we have demonstrated that we see a first dose effect actually where we get higher expression of the transgene. So that's definitely a focus area.

The partnerships are focused on liver diseases and neuromuscular disorders, which is a big unmet need, where you get very high vector doses and you have to retreat. But there's also other therapeutic areas outside of neuromuscular orders and liver diseases where this can be applicable. Obviously, as a small biotech, we stay focused on one area and we picked indications where we feel there's the biggest unmet medical need and the highest chance of success. And that's why we picked MMA, which is a rare disease in kids, where we know that the liver actually grows up to twentyfold between birth and adulthood, so there's a high chance that we actually have to redose.

Okay. Great. And the second question is on the DISSOLVE study. So given that there were some protocol deviations in the COMPARE study, just wondering how you're thinking about this current study in the current pandemic situation. So for example, with the understandings and the findings from COMPARE whether there are any protocol items in place to collect data by other means, if necessary, in the future.

Yes. So I'll let Peter answer this question. I mean, one of the changes we have made in the protocol based on COMPARE is to ensure we have a set of patients with tophi in the study that definitely want change, but there are also indeed changes in the way we got to conduct the study due to the pandemic. Peter?

Yes. Thank you. It's a very important question that everybody doing clinical trials today needs to address, and we are very fortunate that we have a lot of learnings from the COMPARE study, which have all been implemented in the DISSOLVE study. Just to name a couple of them, we're having a virtual study initiation visits for all of the sites. We just had a virtual investigator meeting for both DISSOLVE 1 and DISSOLVE 2. But those are kind of operational things on how we get the study up and going in a time of COVID pandemic.

In terms of addressing the direct patient needs, we have implemented home health care visits for both drawing blood samples within the appropriate windows doing examinations, et cetera, across both studies. So we're spending the extra time, effort and money to make sure that we can go to patients with individual home health care. We have also implemented electronic iPad that each of the patients have for entering patient-reported data at the appropriate time slot, so there doesn't have to be direct interaction between sites or medical personnel for the patients to comply with entering data. We're receiving our CRO. Parexel is receiving information to keep up with ensuring that patients fill those out joint diaries, et cetera. So all of the things that we may have encountered issues within the COMPARE study, we addressed in the DISSOLVE study.

(Operator Instructions) Our next question comes from Raju Prasad at William Blair.

I was wondering a little bit if you can give a little bit more color on what's left to do for the MMA trial and what to expect as far as kind of durability or what you're expecting the durability to have data by end of '21. Just trying to figure out the cadence of events that are going to happen and whether the IND filing is based on inter-related stuff that needs to be submitted or the gene therapy-related stuff in AskBio.

Yes. Maybe I'll start, Raj, and then have either Peter or Kei jump in as well. So obviously, we are working on the preclinical studies that is looking both at ImmTOR, but also, of course, the impact of ImmTOR in the specific disease model as well. So that work is ongoing and almost done and on track actually for an ID filing early next year. So we're very excited about that. So we feel very much on track to file in Q1 and then have the first patient dosed in the first half of next year. But Peter or Kei, if you want to add some more color.

Yes. So this is Kei. As Carsten said, we're doing the preclinical IND-enabling studies. So that includes both pharmacology studies as well as toxicology studies. So it's a combination of both the ImmTOR component as well as the gene therapy component. And again, those studies are on track for the submission.

Great. And just a quick follow-up. On the potential durability of response that you want to kind of see to put out clinical data. Is that 1 month, 3 months? I mean can you just comment at least on the preclinical studies what -- where you might see a potential to do so?

Yes. Yes. I mean it's hard to speculate. But we will look basically at 30, 60 and 90 days after we give the combination of the vector and ImmTOR for neutralizing antibodies. I mean that's kind of the initial setup where we believe -- because we know from published data that antibodies titers go up very quickly after the administration. So that's why we believe, at least from that aspect, it's a fairly fast readout.

Our next question comes from Difei Yang from Mizuho.

Dan Clark on for Difei. For the preclinical work for IgA Nephropathy, can you just help us understand like what data you're looking for out of that program before you decide to exercise your option?

Yes. So I'll hand the question to Kei. But obviously, we, as I said during the call, we're very much taking the learnings from SEL-212 where we're able to address immunogenicity of the enzyme. So the approach will be very, very similar that you combine the IgA protease with ImmTOR to prevent the formation of ADAS over a certain period of time in order to dissolve the IgA1 immune deposits in the kidney.

But I'll let Kei provide a bit more color on this.

Yes. I mean, I think it's a really interesting approach because this enzyme has been around for a while, but what's really limited from being tested in the clinic is its immunogenicity. So I think combining it with ImmTOR, we have the chance to really enable a novel therapy that addresses the underlying mechanism of the disease.

This concludes our question-and-answer section. I will now turn the call back over to Selecta's CEO, Carsten Brunn, for closing remarks. Carsten?

Thank you, operator, and thank you to everyone who joined us this morning. We're extremely excited about the continued growth of our company and our platform as we head into the end of the year. We look forward to sharing more information about the growth of the ImmTOR platform. Please stay safe and healthy. This concludes today's call. Thank you.

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