Cartesian Therapeutics Inc (RNAC) 2021 Q1 法說會逐字稿

Good morning, and welcome to the Selecta Biosciences First Quarter 2021 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, operator, and good morning. Welcome to our first quarter 2021 financial results and corporate update conference call. The press release reporting our financial results is available on the Investors and Media section of our website, www.selectabio.com, and our quarterly report on Form 10-Q ended March 31, 2021, which was filed today with the SEC. Joining me today are Carsten Brunn, our President and Chief Executive Officer; Dr. Peter G. Traber, our Chief Medical Officer; and Kei Kishimoto, our Chief Scientific Officer.

During today's call, we will 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 that are described in our filings made with the SEC, including our most recent quarterly report on Form 10-Q. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, May 13, 2021, 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, Brad. Good morning. I appreciate you joining us today. The outset of 2021 was marked with several strategic and financial milestones as well as substantial pipeline progress, particularly in our gene therapy business. They continue to advance our clinically validated ImmTOR platform across enzyme therapies, gene therapies and autoimmune diseases.

I'll start with our enzyme therapies programs. Our SEL-212 program, which was licensed to Sobi, is comprised of ImmTOR co-administered with our proprietary uricase, pegadricase. We've continued to make progress in getting SEL-212 approved to treat patients with chronic refractory gout, which is a significant unmet need. As a reminder, our DISSOLVE clinical program kicked off in the third quarter of 2020 and consists of 2 double-blinded, placebo-controlled trials of SEL-212.

In September, the first patient in DISSOLVE I was dosed. DISSOLVE II was initiated December 2020. In both trials, 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 the pegadricase 0.2 milligrams per kilogram. Each trial aims to enroll 105 patients with 35 at each dose and 35 on placebo. Both trials have a 6-month primary endpoint of serum uric acid levels below 6 milligrams per deciliter at the 6-month time point, and only DISSOLVE I will have a 6-month extension for safety. Secondary endpoints include gout flare incidents, tender and swollen joint counts and tophus burden, patient-reported outcome of activity limitation and quality of life.

We're pleased with the pace of enrollment, which is progressing on schedule as we have put into place several procedures to proactively minimize the potential impact of the ongoing COVID pandemic. Top line data from the DISSOLVE program are expected in the second half of 2022.

We intend to leverage the success of SEL-212 and filed an investigational new drug or IND application for a second enzyme program indication that combines ImmTOR with an IgA protease by the end of 2021. IgA Nephropathy is a kidney disease that occurs when immune complexes of an antibody called immunoglobulin A1 accumulated in the kidneys. Genetic and/or environmental factors that causes abnormal IgA1 and its accumulation in the kidneys can result in the development of IgA Nephropathy, one of the most common causes of kidney disease.

There are currently no approved therapies. However, with our novel combination therapy, we intend to treat the root cause of the disease and overcome previous limitations associated with IgA protease development.

Now turning to our gene therapeutic programs. In collaboration with AskBio, we initiated the first in-human Phase I dose escalation trial of SEL-399, an AAV8 empty vector capsid containing no DNA combined with ImmTOR in February. The trial is being conducted in healthy volunteers and aims to determine the optimal dose of ImmTOR to mitigate the formation of antibodies to aviate capsid use in gene therapies. We are pleased with the progress made to date. We remain on track, and together with AskBio, expect to report top line data in the fourth quarter of 2021.

Moving to an update for our gene therapy candidate MMA-101 and ImmTOR for the treatment of methylmalonic acidemia, or MMA, a rare monogenic disorder in which the body cannot break down certain proteins and fats. We recently strengthened our wholly owned gene therapy portfolio by obtaining exclusive rights to the MMA-101 program.

AskBio's decision to give all rights to Selecta is based on an internal strategic review and portfolio prioritization exercise conducted by Bayer, which acquired AskBio in 2020. We're grateful to the AskBio team for their partnership in progressing MMA-101 through IND-enabling studies and look forward to independently advancing the program to clinical development.

Due to a third-party gene therapy-related manufacturing delay, we expect to file an IND in the fourth quarter of 2021 for MMA-101 in combination with ImmTOR. ImmTOR manufacturing continues to proceed smoothly, and there is no impact to any of Selecta's ImmTOR programs. The Phase I/II MMA-101 program, which is expected to commence in 2022, will explore biomarker disease, neutralizing antibodies, and will evaluate safety and tolerability.

The advancement of our gene therapy programs into the clinic builds an extensive preclinical data that we have demonstrated the potential benefits of the ImmTOR platform in AAV gene therapy and prevent production of AAV-specific neutralizing antibodies in vivo. In the recent preclinical study in nonhuman primates, Selecta observed that coadministration of AAV vector and ImmTOR enables higher and more durable transgene expression as well as robust inhibition of neutralizing antibodies. Earlier this week, we presented these findings at the annual meeting of the American Society of Gene and Cell Therapy, further demonstrating the potential of Selecta's ImmTOR platform to mitigate AAV immunogenicity and enable re-dosing of gene therapy treatments for various genetic disorders.

Looking ahead, our proprietary gene therapy product candidate, SEL-313, is being developed to treat ornithine transcarbamylase or OTC deficiency. OTC deficiency is an X-linked genetic order caused by genetic mutation in the OTC gene, which is critical for proper function of the urea cycle. We expect to file a clinical trial application, or CTA, and/or an IND in 2022. We will also provide updates on our pediatric investigation plan, or PIP for SEL-313, which was submitted to the European Medicines Agency Pediatric committee in February 2021.

Before we wrap up on gene therapy, Sarepta Therapeutics continues to conduct preclinical work, looking at the combination of ImmTOR in certain neuromuscular disorders, including Duchenne Muscular Dystrophy, or DMD, and Limb-Girdle Muscular Dystrophies, or LGMD subtypes. We recently received a $3 million milestone payment related to the completion of a preclinical study under our research license and option agreement with Sarepta. This further validates the potential of ImmTOR's platform.

Overall, ImmTOR holds significant promise and has the potential to be revolutionary for the gene therapy field. We're encouraged by the data generated to date, demonstrating the potential of ImmTOR to enable repeat dosing by preventing formation of neutralizing antibodies in addition to more durable and robust expression of the transgene after the first dose.

Our autoimmune program is advancing through IND-enabling studies with an initial focus on primary biliary cholangitis. PBC is a chronic progressive autoimmune liver disorder that leads to inflammation, damage and scarring of the small bile ducts. It is a well-defined target antigen, significant unmet medical need, and is well suited to the application of our ImmTOR immune tolerance platform. We expect to file an IND in PBC in the second half of 2022, and we look forward to providing additional updates on this program later this year.

Now I'll turn the call over to Brad to run through our financial results for the first quarter ended March 31, 2021. Brad?

Thanks, Carsten. We remain well capitalized. We had $149.2 million of liquidity as of March 31, 2021, which compares to liquidity of $140.1 million as of December 31, 2020. We believe our liquidity position will be sufficient to meet our operating requirements into the second quarter of 2023.

Net cash used in operating activities was $12.1 million for the first quarter of 2021 as compared to $11.7 million for the same period in 2020. Revenue recognized for the first quarter of 2021 was $11.1 million compared to no revenue recognition for the same period in 2020. Revenue was recognized under the license agreement with Sobi, which began in July 2020, resulting from the shipment of clinical supply and the reimbursement of costs incurred for the Phase III DISSOLVE clinical program. Research and development expenses for the first quarter 2021 were $13 million compared to $14.7 million for the same period in 2020.

During the quarter ended March 31, 2021, there was a reduction in expenses for the SEL-212 clinical program and for the AskBio collaboration, offset by an increase of expense for discovery and preclinical programs. General and administrative expenses for the first quarter 2021 were $5.2 million, which compares with $4.1 million for the same period in 2020. The quarterly increase in expense was the result of expenses for consulting and professional fees and salaries, offset by reduced travel expenses.

For the first quarter of 2021, we reported a net loss of $24.6 million or $0.22 a share compared to a net loss of $19.6 million or $0.21 a share for the same period in 2020.

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

Thank you, Brad. We have a few corporate updates to share. We're excited to announce the addition of Kristen Baldwin as Chief People Officer. She brings 20 years of human resources and consulting experience to company. Most recently, she served in dual capacity as the Chief People Officer for the LIVEKINDLY Collective, a high-growth plant-based foods company and as a Senior Partner at CEO.works. Kristen has also held senior HR roles at Bayer and Otsuka Pharmaceuticals.

We're also pleased to announce the addition of Dr. Satish Tripathi to Selecta as Vice President of Regulatory Affairs. Satish was most recently Vice President of Global Regulatory Affairs for AveXis, which, as you know, became Novartis Gene Therapies. He led the regulatory strategy and implementation for the gene therapy product, AVXS-101 for spinal muscular atrophy, including simultaneous submissions of AVXS-101 in 2018 for global registration, which has been approved as Zolgensma for SMA in U.S., Europe, Japan, Canada and Brazil. He is a fantastic addition to the team to support the gene therapy business as we advance multiple programs in gene therapy.

Finally, Brad will be stepping down as CFO for Selecta effective May 21 to pursue another opportunity. While we're disappointed to see him go, I'd like to personally thank him for his many contributions to Selecta. We have a search underway for a successor for a sound financial footing and have a strong finance team and have recently promoted our Controller, Ann Donohue, to Vice President of Finance.

As mentioned earlier, we're extremely excited about the continued growth of our company and confidence in our 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 and our great team at Selecta.

With that, we're happy to take questions.

(Operator Instructions) And the first question comes from Kristen Kluska with Cantor Fitzgerald.

Brad, best wishes to you in your new endeavor. The first question I had was, there was a study published in genetics in medicine recently, which was based on a breath test to determine severity of disease in MMA by measuring exhaled carbon dioxide, which the authors noted could be useful to see if there might be candidates for surgery or for a gene therapy approach.

As the case with most rare diseases, where researchers are, of course, still learning more about the indication, I wanted to ask if you've thought about some of the ways you could evaluate clinical outcomes for this indication.

Yes. Thanks, Kris. That's a great question. We haven't guided in detail on the clinical trial. But I'll have Peter share at least our initial thoughts and maybe he can also comment specifically on this study, which we're well aware of. Peter?

Yes. Thank you, Kristen, for that question. In fact, the authors, the primary authors of that study and who performed that study are our collaborators at the NIH on our MMA program. As you know, our MMA program, although we haven't guided on the exact structure of the clinical trial, will be done at the NIH with Chuck -- Dr. Chuck Venditti and Dr. Irini Manoli, who is the first author on that paper. That analysis of propionic acid, propionate oxidation with a breath test will be a part of the biomarkers that we evaluate in the clinical trial.

And then I had a question, which was actually asked during Vivet's presentation at ASGCT this week, where they were looking at VTX-803 and ImmTOR. As you, along with your collaborators, have now evaluated the potential of ImmTOR with the gene therapy across a few different indications now, I wanted to ask how you think the data could help inform thoughts around starting doses and when to potentially consider the redosing, especially as in some of these indications like Vivet noted, the therapeutic window might be very narrow in terms of when to initially intervene.

Yes. I'll let Kei answer specifically to that study. But obviously, that data kind of reconfirms the need for redosing in especially pediatric disorders. And we really see this data set confirming what we've seen in previous data. but I'll let Kei specifically comment on that data set.

Sure. Thanks. Thank you, Carsten. Yes, I thought that this was actually one of the best examples of using ImmTOR to enable redosing. Because clearly, an initial dose of the vector in the juvenile animal wasn't sufficient. And it was only with repeat dosing that was enabled by ImmTOR where they saw a correction of the underlying metabolic defect in those animals.

With respect to the question of timing, I think that will vary somewhat between different diseases and the severity of the diseases as to when you would initially want to go in. But again, for many metabolic diseases, you want to be able to treat children when they're young.

The next question comes from Raju Prasad with William Blair.

I wanted to know if you could provide any more clarity on the studies that you received, the milestone payment from Sarepta for. Were they disease-specific models? Was it using ImmTOR? And are you able to kind of utilize the data from that collaboration to kind of guide your understanding of ImmTOR as it relates to neuromuscular disorders? And then I have a follow-up.

Yes. Raj, good question. Yes, so we received a milestone payment of $3 million for a preclinical study. Unfortunately, we can't give details on this. But I can confirm, it is in a neuromuscular disease model, and it is with ImmTOR. And obviously, we will also learn from the data set. But unfortunately, we can't share details or the detailed data set, Raju. But it's definitely very encouraging what we observed.

Great. And then to kind of maybe follow on the question asked earlier. Can you maybe talk a little bit about the potential for ImmTOR to be redosed sequentially every 5 or x amount of years given some of the nuances-related pediatric disorders or just in general? Obviously, it's important, I think -- you've shown it's important to dose ImmTOR with AAV initially to mitigate neutralizing antibodies. But I'm just trying to understand what -- where you see the therapeutic kind of paradigm on multiple redoses kind of over the course of what's the MMA and OTC, just because those are the lead candidates. But I'd be interesting to kind of hear your thoughts there.

Yes. That's a great question. Obviously, we -- and we see an unmet need really across AAV gene therapy, right? I mean while the redosing might be years apart on the adult indications, and we always refer to the BioMarin hem A data we see the immediate need, obviously, in pediatric liver-based diseases where we know that the younger the kids get treated, the liver obviously grows up to 40 fold from birth to adulthood. So there's a high need to redose, and potentially multiple times.

But also in neuromuscular disorders like DMD, we know those poised with DMD, their muscle tissue grows and they need to be redosed as well. So I think as Kei said earlier, it really depends on the disease and severity of the disease, what the timing is between dosing and the frequency. But we definitely see the need across the field, and Selecta as a company, we're pursuing specifically liver-based pediatric diseases with MMA and OTC.

The next question comes from John Newman with Canaccord.

Just had a question on the SEL-399 program. What should we be looking for in those top line data to confirm success? Also wondered if you'll learn anything from that study regarding potentially using a lower dose of gene therapy compared to what has been done with other approaches due to ImmTOR. Then just wondered if you could comment a bit on the third-party gene-related manufacturing delay for MMA. Just curious if you could just give us a little bit more color there.

Yes. Thanks, John. So we haven't guided any detail on the OTC deficiency program. But I think it's fair to say it's obviously a Phase I/II study. We're looking at biomarkers of the disease, but mainly looking at safety and tolerability. But I'll let Kei or Peter maybe talk a bit more on what some of the biomarkers are of the disease.

John, this is Peter. Were you referring to the 313 program, which is the OTCD in that question, or the 399 program, which is the empty capsid? I might have missed that.

Sure. Sorry about that. I was actually just referring to the empty capsid study, just kind of what the takeaways should be or what the focus should be from that study.

Sure. Well, as you know, the empty capsid study is a dose of empty capsid with escalating doses of ImmTOR in order to identify the best dose of ImmTOR for inhibition of empty AAV8 antibodies, both neutralizing and otherwise. So where -- it's a study where we will be identifying the increase in antibodies over a period of time of 3 months or plus to try and see whether in humans, we see the same effects that we've seen in animals and nonhuman primates on the antibody production. So that's the primary goal.

With regard to your question about whether we would be able to identify a reduction in the dosing of the gene therapy vector potentially as we think is a potential for ImmTOR, that's really not relevant because there's not a transgene in the empty capsid. So we really can't assess transduction of the transgene in the empty capsid program. So the primary goal will be to look at neutralizing antibodies to AAV8. And as we know, that is a very good surrogate for being able to redose gene therapy. Because if you inhibit the AAV8 neutralizing antibodies, that's a criteria for being able to redose AAV8 gene therapy.

Yes. Thanks, Peter. And apologies, John, if I misunderstood your question and get the programs messed up here. Just on the manufacturing issue, I think there's not a lot more to share than the fact that the issue is related to a component of source from a third party, and obviously not related to ImmTOR. We believe we can file the IND by the end of the year and obviously, progressing with the work on filing the IND and working with the NIH to get the trial started early next year. So we believe that we're on track for a filing by the end of the year.

The next question comes from Difei Yang with Mizuho Securities.

So we have 2. The first one is on ImmTOR. So just on the very high level, do you think ImmTOR is really only for liver-directed gene therapy, AAV gene therapy? Or does it have the capability to go beyond liver-directed gene therapy?

Question number two is around the manufacturing for gene therapy. Now that you have a fully owned asset, would you consider at some point to bring the entire AAV vector manufacturing in house?

Yes. Thanks, Difei. Good question. Yes. So as you know, Difei, all the work that we have done to date has been in liver-directed gene therapy. And obviously, as you also know, ImmTOR accumulates in the liver. So there's good proximity. But as we have -- unfortunately, we can't disclose details. We're also exploring other modalities like in neuromuscular disorders where we're progressing nicely as well. We don't see a limitation only to liver-based diseases, but we believe with all the data we have so far, we want to start where we have the strongest evidence, which is in liver-based diseases, but there's no reason why it should be limited to the liver only.

Obviously, we induced antigen-specific TRegs that migrate through the entire body. So there's also a good theoretical approach that this could work in other diseases such as neuromuscular disorders, but all the evidence that we have generated so far is in liver-based diseases. But as you know, we are strategically pursuing partnerships like with Sarepta to explore other modalities. And what we've seen so far is very encouraging.

Then the second question. Yes, the second question. We have been very specific that we don't see ourselves as a gene therapy manufacturing company. Our strength is really the manufacturing of ImmTOR and the immune tolerance biology. So at this point, we don't have plans to bring manufacturing in house since this requires significant capital to set this up. We don't have currently plans to bring the manufacturing in house.

The next question will come from Chad Messer with Needham & Company.

Great. And let me add my best wishes to Brad in his future endeavor. Just on the gene therapy program. So for 399, we're doing this empty capsid study, which I think is a clever way to get some data, that's both useful and sort of principal establishing. Just wondering for the other 2 gene therapy programs going into the clinic, 101 and 313, if you have any idea how much dose-finding work might have to be done at the beginning. I mean are we going to learn a lot in 399 that be applied? Or any sense of how much preparation you need to do for those when you get in the clinic?

Yes. I'll start, and then I'll let Peter answer as well. Obviously, we're excited about the empty capsid study. But it is somewhat limited since we're only giving 1 dose, and there's no transgene. So it definitely will not help -- it will help with dose findings for ImmTOR, but not necessarily for the gene therapy product. So I think that's something that, obviously, we have to establish for each disease model.

And as you see, we have so far seen 2 benefits of ImmTOR. One is the prevention of neutralizing antibodies. That's what we're looking at the empty capsid study. The second is a first dose benefit where we see a higher expression of the transgene. Obviously, that we will not see in the empty capsid study. That's something we'll be looking for, obviously, in the MMA and OTC program. So -- but I think to answer your question, we'll have to do dose-finding in both those indications to get to a therapeutic dose of the gene therapy product.

Great. And then maybe just to follow up a little bit on an earlier question on empty capsid program. Obviously, there, we're looking to see prevention of antibody formation. Is there anything -- is it -- I don't even know if we know enough, so I'm asking. Is there a reduction that we should be looking for? I mean should we be keeping these below detection level? Or is it just a statistically significant reduction? Do we know enough to know what an important and meaningful reduction in antibody formation looks like?

Yes. I mean that's a good question, obviously. And if you look at our nonhuman primate data, I think there's kind of a good indication what the efficacy could look like. Obviously, what we'd like to see is very low titers, like we have seen in the nonhuman primate study with 3 monthly doses of ImmTOR. We saw very low titers of negative antibodies in most animals below 1 to 5. So I mean these are levels you want to see.

And then in the controlled animals, we saw very high titers kind of in the 1,000, 3,000s up to over 10,000s. And then in some of the animals that we only get 1 dose of ImmTOR, the titers were in the hundreds, which is still a success because you don't have to redose immediately so that the titers will go down over time. And there's other technologies you can also use at those titers in the hundreds like plasmapheresis, for example, that gets you to lower levels.

So I think that's kind of -- obviously, we're hoping to see really low titers. But it might be a more differentiated picture that we see, similar to what we've seen in the nonhuman primate data.

Okay. So maybe hundreds are lower and certainly, the sort of order of magnitude differences. So it sounds like more or less what we're looking for.

Yes. Exactly.

The next question comes from Ram Selvaraju with H.C. Wainwright.

This is Boobalan dialing in for Ram Selvaraju. So I just wanted to follow up on the manufacturing issue that was highlighted in your prepared remarks. So is there any connection between AskBio's desire not to proceed with the MMA program and the manufacturing issue that you faced for MMA-101? I'm just wondering.

Yes. That's a fair question. And they're not related with the -- obviously, acquisition of AskBio by Bayer. They conducted a strategic review and decided not to pursue MMA, so not a strategic focus. But it's independent of the manufacturing issue.

What's important to note, the relationship is unchanged. We still have 2 relationships. One is a licensing agreement for the lead program in Pompe disease. And obviously, the strategic collaboration, where we still have a number of undisclosed indications that we plan to pursue together. And obviously, we're conducting the empty capsid study together at the moment.

Understood. So assuming you're on track for MMA-101 IND by the end of 2021. So when do you expect the pre-IND meeting with the FDA to happen and what key elements would take center stage during that discussion?

Yes. So we haven't guided really in detail, but maybe Peter can share kind of the process that we have planned now to file the IND. Peter?

Yes. Just to clarify, this is on the OTCD program?

No. This is for the MMA-101 and the plans for the -- by the end of 2021.

I see. I understand. I'm sorry. The -- first of all, the IND-enabling studies have been conducted and analyzed. And so we're really in the process of putting together the IND with the additional information now of the manufacturing time line. And so we feel very confident that we'll be able to submit the IND this -- by this -- the end of this year, by the fourth quarter.

Understood. One final from me. So could you provide additional color on the enrollment you've progressing for the DISSOLVE trial, SEL-212? Do you see any issues due to ongoing persistence of the COVID pandemic?

We're happy to...

Peter, go ahead. Yes.

Yes. I missed the last part, you broke up a little bit, but you were asking about the progress of the enrollment of the DISSOLVE trials. As Carsten mentioned, we started the enrollment of the DISSOLVE I last September and DISSOLVE II in the beginning of this year. They are progressing very well. And in terms of enrollment on schedule for being able to report top line results in the second half of 2022.

The next question comes from Derek Archila with Stifel.

This is Ben on for Derek. Most of my questions have been asked, but I guess, just one last. And sorry if I missed this, but have you thought about how you're going to present the data for 399?

Yes. So we -- the data will be available in the fourth quarter. And primarily, I mean, we'll be looking at levels of neutralizing antibodies at day 30, 60 and 90. I mean that's really the focus, and then we have a number of other markers we're looking at. But I think that's really primarily what we're going to show in the fourth quarter.

And I think what's important as well, I mean, obviously, we don't really see this kind of as a binary study. I mean it's kind of -- it's adding to the evidence around what's the right dose of ImmTOR in gene therapy. But I think what's important to note, these are healthy adult volunteers. And we're going to go into the clinic basically in a pediatric indication. So obviously, we're excited about the learnings from the study, but we don't think this is going to be necessarily a binary study, but it will be important learnings, of course.

Okay. And have you guys thought if you're going to present at a conference or just issue a PR or something like that?

Yes. I mean we're not necessarily bound to a medical conference. Of course, we'll present the detailed data at a medical conference. But we'll likely issue a press release and potentially have a call around it as well to give some color on the data similar to what we've done in the past.

As we have no further questions, this concludes our question-and-answer session. I would now like to turn the conference back over to Carsten Brunn, Selecta's CEO, for any closing remarks. Carsten?

Yes. Thank you, operator, and thank you to everyone who joined us this morning for the many questions. Please stay safe and healthy, and this concludes today's call. Thank you.

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