Q3 2019 Earnings Call

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I'd now like to hand, the conference over to your speaker today.

Ban Chief Executive Officer of Erie Tech. Please go ahead Sir.

Thank you said needs.

Good afternoon, and good morning, everybody.

Thank you for joining us for our third quarter earnings call.

We announced our Q3 financial and business update the yesterday evening and you can access the press release <unk> earnings presentation on the Investor Relations page.

Right.

With me here is a Eric so are you hearing so your our chief financial and Chief operating officer, and see how really or Chief Medical officer.

She's makes it.

Before.

I will switching beach to draw your attention on the disclaimer slides the forward looking statements and switch immediately to phase two speech three.

Victory with the agenda. So it's really following our quarterly routine I will start with the business update for the third quarter and year to date.

Eric will take over for the financial updates of the third quarter and year to date.

And then we will have adequate continue with a summary of the news flow and the milestones and then we'll open up for pure they were did feel this will be available to respond to your questions.

Oh before starting to update I switched to slide four it's good to remind who we are showed essential that we don't need slide four presents.

Them in a slightly different form and then what you may be used to we're still the red cell company very focused on cancer metabolism with late stage trials in pancreatic cancer second line pancreatic I'm sure. It's three yes, you know triple negative breast cancer phase two and an ice tea in second line.

Lymphoblastic leukemia.

To the right. It was like we now have to operational manufacturing sites, one India, serving the needs for patients in Europe , and the Singapore in Princeton for the U.S.

As we produce hour.

The candidates from matched the owner Red cells, we really have established some partnerships with blood banks in Europe and in that and in the U.S.

The next slides slide five you'll see the pipeline.

Essentially what I said already.

The clinical pipeline very focused on the every a space products aspire journeys in red blood cells.

I have explains the different.

The different trials, maybe the Ford Arrow is did not go in there just try that has not started but since we're gearing up for it to launch first half next year is a.

Got it in pancreatic cancer the phase one study in first line pancreatic.

Cancer inform you that.

Every airspace in combination with Folfirinox.

On the preclinical pipeline, we have the kinase works.

Essentially the same us with this burgeoning but with.

Well, there enzyme and targeting the time and attendance.

Tumors.

Oh renewing this was not last quarter was a quarter before no partnership with squeeze.

Greece Biotechnologies to advance the skin to immune polarization.

Activities and we also still have work ongoing in metabolic diseases working therapeutic enzymes given that we are late stage phase three face to face to face in with the lead program. It's it's probably feel that indeed, the real focus is more and more on the late stage programs in that.

Earlier programs get for the time being less attention and focus.

Moving to slide six is the summary over the recent business highlights.

Related.

Two.

Rick I wanted to phase two trial in every a speech in second line pancreatic cancer I'll come back to them in the next slides. There's obviously also the manufacturing facility, but that's also related to try to make a one and then maybe do the cash position.

Given the importance of the focus on this pancreatic cancer I thought it was good to remind a bit why why are we doing this and create the cancers. So I'm on slide seven.

You know with large unmet medical needs its.

One of the leading causes of cancer, that's currently defaults, but moving up to rapidly being the second.

Important indication its hundred we just read 185000 people.

People being diagnosed every year with pancreatic cancers.

Europe U.S. This is your view as a combined.

The prognosis is this more or less than 10% five year survival.

We are specifically working in second line pancreatic cancer for the tightening. So we estimate a rocket is estimated at about 50% of patients diagnosed with pancreatic cancer will.

Evolve and will be.

Digital second line treatment, both in second and first and second line. There are still very limited treatment options and there is also little activity in progress.

So if you go to slide eight you'll see the.

Chemotherapy rate remains to the domain treatment option both in first and in second line. There are two principal treatment regimens in first line.

Jim cited in based treatments insight.

Most often you gotta with Abraxane, sometimes immunotherapy for.

Worst performance status equal extends for the eastern Corporative groups performance status. So the two is worse than the zero one.

And the older group is the flu were buried within based typically Folfirinox book to bill for different chemotherapy.

And then when patients progress to second blind they will receive similar treatment variations on the same themes, but crossed over it so patients who progressed after gen side have been based treatments.

We'll go on to.

Drugs like full FIA sales like full field, which is life. If you look before.

The renal began in which the interim look to Ken can be only if I did not know liposomal you may not be Ken.

Were full folks would just if you look of or and Oxaliplatin.

For for the worst performance. It is true repeating we didn't alone or best supportive care.

[noise] visions, who progressed after folfirinox will be typically be treated with Jim sites have been based fitness Jim side to be in alone or in combination with the Brexit or a supportive.

So there is.

Little bit did most of these rigs have been.

I'm Recs in was approved I think in 2012, so there's been little movement. The only fight was approved more recently and the small.

It was subset of patients.

Drumline recommendations there with the.

Hello trial, there is indeed.

David there seems to be.

At the positive signal in the first line therapy.

In maintenance after first line therapy.

So essentially the these are the treatment options.

Also good we can you remind our phase two study which was in the second line. So in combination with Jim side have been or.

Full folks.

Where you see it here, we can say that we had we done.

The strongest Oh no knowledge.

It is.

Through our knowledge the strongest fees to survival benefits. That's was has been seen so far in second line pancreatic cancer.

With a hazard ratio of 0.6, you see the survival curves you has a residual zero onesix, which means the 40% reduction in risk of that rate.

Every significance and the only other reference is the number the trial, which see that.

Left.

Only right, where it has a pretty sure. What's your 0.67. This was the fees the basis for 40 approval.

So strong single in phase, two which then let us do.

Designed the phase three study Tribeca, one Tribeca, one randomized phase three.

Studying or is this space in combination with chemotherapy.

Or alone versus alone again in the second line treatment. So the it's a trial with approximately 500 patients to be enrolled patients adults stage, three or four pancreatic cancer and they have received one prior systemic chemotherapy that measurable disease and it's in the performance status several one.

Randomized one to one of this difference with previous side, where we had a two to one randomization, but it isn't de.

We are space plus chemotherapy, which in this is Jim sites have been plus abraxane.

For full theory.

And then versus coincide.

Versus chemotherapy alone primary endpoint overall survival and the entire battery of secondary endpoints as you see on this on the site.

So now to the highlights the.

Most of them are very recent so even on a Monday, we announced that we had to beat the safety data review of the first 150 patients in the trial by the Idmc.

For the trial.

No safety issues were identified and the recommendation was simply to continue the trial Asplund, obviously important as we are.

Combining this area space, probably with significant compounds with significant toxicity. So thats.

We knew we had it would safety profile, we've seen that in order problems still it's always good and reassuring, we see that confirmed.

Then the older.

Big news of the of the week I can say is that we opened the trials for enrollment into United States. We have our Princeton manufacturing sites now fully ready to manufacture clinical batches and indeed, we will now concentrate older patients who were treated us will.

Products for these patients will be produced from the Princeton facility and in parallel we have activated the first clinical sites.

We are targeting about 30, clinicals approximately 30 clinical sites.

Yes, so basically the trial on track is on track for.

You enrollment in Europe is these referred to on track and so we remain on track for full enrollment and when citing roughly around same time, the interim analysis, which is foreseen.

When two thirds of events will will have happened, it's an interim analysis for superiority only so no no futility analysis and this we expect continued to expect in the third quarter of.

Thank you.

That's the main updates for for the quarter and year to date.

The next slide.

Rick Zoom in on our newest manufacturing facilities in a tremendous effort to get this ready in time. It's so we quit we was an existing building in which we think.

3000 square meter 30000 square feet of GMP manufacturing facility.

We have we have 16 clean rooms, essentially that Weve. In fact, we have 60 that which we now have four will be equipped invalidated qualified to start producing we will gradually increase that that number.

So we have completed the necessary compatibility studies and indeed this.

Facility is ready to manufacture.

Anytime.

Patient you as patients will probably two to two to study.

That concludes the business update.

Handover to Eric to take us through the financials for the quarter.

Thank you Bill good morning, everyone Motor autos.

Well no reviewing the key financial highlights for the first nine months of fund to 19.

And we're starting with the CNL information we're on page 13 after his presentation.

As you can see the net loss for the first nine month of the year was 43.3 million Euro which is an increase of 13.6 million over the same period of last year, which is mostly or I should say entirely driven by the increase in the printing gross I think.

He is by 13.2 million two in the parking lots of 46.8 million.

And that is.

Comprised of an increase in preclinical and mostly clinical development activities and increased by 11.3 million, which is of course.

Mostly mainly related to our phase three trial the trial because one trial in pancreatic cancer, but also the phase two trial in triple negative breast cancer, the tri be CA to trial and the notable trial in the leukemia.

In the same time, we had an increase in GMI, an increase of 3.2 million of which.

A good part of it more than half of its 1.1 point 9 million Euro was actually related to them launch readiness activities or us production facility in Princeton, which is no GMP ready for nickel budgets.

And finally.

We had the 1.2 million increase.

In other income.

As you know well this other income is mostly comprised of.

Grants and the research tax credits from the French covenant, but the increase over the over the the.

The same through the last year was actually mostly related to the.

Upfront milestone payments.

Which was a fund the the agreements have to squeeze biotech licensing deal.

Immuno oncology with a tweet, which we closed in June this year.

With that ill, then turn to the cash flow information on page 14.

As you can see the.

The net cash variation for the first nine months of the your was 52.4 million Euro.

When she's.

Indeed, a net cash utilization for operating investing and financing activities of 55.6 million Euro.

And that's a that's was as you can see that was a.

Quite heavily impacted by or investing activities capex for the.

Production increase activities, we had earlier this year.

For the expansion of the facility and of course in Princeton for the.

For the building launch of or Us production facility.

So you may recall that we had the peak in cash utilization in the first quarter of teacher and no I should say that.

Cash utilization is sort of back to normal with.

16 million Euro in the second quarter, and now 12.5 million euro into third quarter.

Which leads us to a total cash position at the end of September this year of 81.9 million Euro which is approximately eight to 9.2 million U.S. dollar.

This is perfectly in line with our expectations and also perfectly in line with the earlier cash guidance, we've given of cash runway.

Until the end of Quentin Andy and I should say that we also working on.

Cost, probably relation and cost saving initiatives to help us for the stretch this cash runway into 21.

And.

No.

Turning to the the rapid.

Of the of this presentation with key milestones expected.

Over the next 12 month, we're on page 15 of this.

This presentation.

You may recall that we started the year, we the objective of having are all GMP production ready at Princeton. So this is this is don.

We were also for seeing the safety review by the MDC.

For the tried to come on phase three trial and that is also done with the first 150 patients of the trial ahead of US now we have the first us patients enrolled and treated and to try to kill ones.

Newest arm of the phase three and I should say this should be imminence no.

And then towards the first part of next year's 2020 , We will have the initiation of the phase one trial in first line and credit concern disease.

I guess, the an investigator sponsored trial.

In the first part of the you're also we should see the interim results of the phase II also and I guess to trial and this one is in acute lymphoblastic leukemia, that's what we call the know for trial in the Nordic countries of Europe .

And finally she'll mentioned it towards Q3 next year, we're expecting the interim analysis in the Tri be CA, one trial that interim analysis is for superiority.

With that I will turn the call over to the operator I would like to remind you that for those of you would like to ask questions in French These of course feel free to do so.

So not a book is what they are yet to give it a new because it gets wholesaler shows on clause middle conduit unfair.

And I would like to thank you forget attention and.

Now turning the call over two to two Sydney for the Q and incision didn't they over to you.

As a reminder to ask a question you need a press star one on your telephone.

Your question press the pound.

Please standby compile the Q and a roster.

And our first question comes from Randy Benjamin.

Securities. Please proceed with your question.

Hi, This is Justin Walsh on for Rennie, Congrats on the progress and my friends is a little Rusty so I'll stick with English.

The.

First the first question.

As your enrollment has progressed have you gotten a sense of the the mix of patients who are taking gen cited being versus fall theory in the front line.

And do you still expect about the 60% of patients by the end of the trial team have taken density.

Hey call a hand this over do M&A I hope a month if you can.

Can answer this.

Yes, Hi, Justin.

So yes, we do expect.

To surge that patients proximity.

We achieved.

60 in the second line.

We just need to remember right now a lot of most.

Hi.

Countries in Europe .

I see in front of course.

Okay.

Right.

Therefore, we have.

Okay.

But we don't believe that that.

We continue to need.

And.

Okay.

And any future competing.

Got it. Thank you and then one more question what was your Princeton and Leon facilities, the sufficient to supply all of the clinical trials that you plan to initiate.

And do you anticipate needing to add on any more facilities following a potential approval and launch.

Good question, Justin So for the clinical trials, yes, we foresee that given that both.

Both sides half are also early commercial sites I would say weekly leak and cope with significant additional clinical trials.

Center in other indications, we both sites our.

For seem to be also therefore, the early commercial.

And as commercial activity will be built the plan is that indeed, both in Europe and us additional sites.

Most likely be necessary, we hope in any case.

And then the plan would be given also.

Sort of optimize logistics et cetera for example, and U.S. Nextcyte most likely.

More sort of west coast.

Based and in Europe .

The second side, most likely more the north of your based it's still early days B. We we've shown that weekend equipped and start a trial in that in a short period of time, so as soon as we see the.

Commercial activity picking up we will obviously make sure we are ready so that we have lined up the options and that we can trigger them quickly for additional capacity.

Great. Thank you congrats again.

Thank you.

Our next question comes from Ingrid Ghassan, how kempen. Please proceed with your question.

Hi, good morning. Thanks.

Could you.

Sure.

I see.

Hi.

Yes.

Okay.

Good morning, Ingrid I'm not sure I fully understood. The question can you repeat.

Yes, sure. So I was just wondering if you have.

Estimated.

Right.

Great. Thanks.

Maybe let's say for the next so seeking some insight.

Open.

Yes, okay. Good so ill and so we target approximately 30 sites and we plan is that would be completed in the first quarter next year. So indeed, roughly six months to get them all open.

Alright, thank you.

Thank you next question comes from.

Filippo Gardiner with Jefferies. Please proceed with your question.

Oh, hi that a couple of questions if I could please.

Well just in terms of the number of fights in the U.S.

Thank you said previously that you were looking at around sort of 100, almost slices title for the trough I'm. Just wondering now why we're already looking at 30 sites in the U.S. and then my second question for Eric You mentioned sort of looking at crop cost prioritization and savings to extend the cash runway what sort of things are you considering when you when you're looking at that please.

Thank you.

The first part of the question L.L. transfer to remind me again.

Hi.

Actually.

We have been giving guidance that we.

This does.

Inboard.

And.

The number.

We also expected that to have maybe 70, 30 or 60, before but now coming down to.

The Mississippian chief.

In Europe .

So that has been nine from does she said.

Sorry can I just saw so are you going to open additional sites in Europe still because I think you're currently asked about 50 sites in Europe .

We are not opening actionable.

So the initiation.

Touching yodle Joel.

So these projects we've done we completed.

Uh huh.

Once you go.

But from different countries.

And so now we are going through the initiation and activation.

Yes.

We are raising approximately 50 sites, but we expect to compete against the enrollment.

In yodle.

Tours and.

Okay. Thank you.

Hi, Phil if this is Eric <unk> just to your second question. So indeed.

We are.

Well this is working progress I should say, but.

It's quite obvious that's the two main focus of the company right now are a execution I should say perfect execution that we're trying to get one study in the phase three study of course and the second focus is to be very.

Very disciplined cash to make sure that Oh, we keep the cash runway at least until the end of 2020 and possibly indeed into 21. So are we are reviewing our portfolio project and activities in light of these two priorities in two focuses.

And.

So that will help us to to make sure that we are well spending cash wisely and.

Indeed, absolutely in line with these two major priorities.

Great. Thank you.

Thank you please.

Thank you and as a reminder to ask a question.

Star one telephone.

And I'm not showing any further questions at this time I'll now turn the call over to Jeff Van for any further remarks.

Thank you.

Well, thank everybody for everyone for your participation and attention and obviously for your continued support and interest supportive in very thick and interest in everything.

We look forward to keep you updated on the progress.

Through the remainder of this year and next year or next appointment is similar in March for the full within full year quarterly update.

So thanks for joining wish you a great day and.

And weekends also it's approaching so.

Thanks again.

But.

Ladies and gentlemen. This concludes today's conference. Thank you for participating you may now disconnect.