Q3 2019 Earnings Call

Dr. <unk> Sciences third quarter 2019 financial results conference call.

Oh apart at this time, all participants are in listen only mode.

This call is being webcast lives on the investors and media section of select does website at www dot select the bio dot com and it is being recorded.

For opening remarks, I would like to introduce a lot Cogan General counsel.

Please go ahead.

Thank you and good morning, everyone welcome to our third quarter 2019 financial results and corporate update conference call.

The press release reporting our financial results and the 10-Q, which we filed is available in the press release section of our website www dot select the buyout dot com.

Joining me for today's call it Carsten Brian .

But and Chief Executive Officer.

Dr. Alison Chapter, our Chief Medical Officer, and Brad Dogs, our Chief Financial Officer.

As a reminder, we would like to the certain remarks. There are made during this call, including without limitation statements about the company's future expectations plans and prospects the potential of our into our platform. The anticipated timing of glam trial are weighted data read outs and ability of personnel extended warranty.

Your trials.

Our collaboration without while the development and market potential for our products the efficiency of the company's cash cash equivalents and short term investments constitute forward looking statements for purposes of the safe Harbor provisions under the private Securities Litigation Reform Act.

1995.

Actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in the risk factor section. So what does most recent quarterly report on Form 10-Q filed with the FCC, which can be accessed a double.

W. W Dot select a buyout dot com.

In addition, any forward looking statements represent the company's views only as of today November eight 2019 and should not be relied upon as representing the companys views as of any subsequent date.

So what the may elect to update these forward looking statements at some point in the future. It's specifically disclaims any intention to do so even if management's views changed.

I'd now like to turn over the call to Carsten broaden our president and CEO Carsten.

Thank you know and good morning, everyone. I appreciate you joining us today.

Got an important quarter for select though that's the announced several key achievements demonstrating the investment, but whether gene therapy and chronic refractory gout programs.

We presented new data at the recent European Society Gene and cell therapy, I know Congress, which demonstrated the ability for codrescu challenge has been gene therapy, specifically the potential for Reed dosing.

It is not possible to read those Avi gene therapy treatment due to the development of neutralizing antibodies against the baby caps.

Our chief Medical officer, Okay, I wasn't a sector will provide more details on this compelling data in a few minutes.

In August we announced a strategic alliance with bio.

Uhhuh leader in next generation gene therapies.

Joining debello manufacture and commercialize a block 40 or life changing baby gene therapies.

This is a key milestone for select though and we are thrilled to partner with them to move this effort will work and we anticipate entering the clinic in 2020.

Well provide further details around initial indications and timing so what.

I would you know call them in chronic refractory gout continues to make significant progress.

We anticipate completing enrollment compare the exit that trial copper lead product candidate at Seattle to 12.

And 2019 announcing interim data during the first quarter 2020, and announcing top line statistical superiority data by mid 2020.

We're also pleased that we have recently confirmed and meeting with the F.D.A. to be held in January 2020 regarding the phase three clinical development plan for STL to 12.

We're excited about potential threats to l. to 12 to help patients because chronic refractory gout represents the most severely affected subpopulation all people without impacting approximately 860000 patients in the U.S.

Based on our data and quantitative market research with 100 Rheumatologists. We believe that's the L. to 12 has the potential to address many significant unmet needs in this debilitating condition and represents over a billion dollar market opportunity.

The close to 5.7 million financing in the third quarter that consisted primarily of can management team and board of directors, which must stop at market price.

In addition to extending a runway its financing demonstrates the continued confidence in the broad applicability offering into a platform.

We've also made important advancements as a business strengthened the company's executive management team with the addition of the Alison Schachter, Chief Medical Officer, and Brett Downs, as our Chief Financial Officer.

Alex It's a position scientists with unique experience imports early and late stage development and translational medicine and has led several assets who ft a DNA approval.

Brings deep financial and strategic expertise on his experience as an investment banker from life Sciences companies.

I'd now turn the call over to Alison to provide some more color on our gene therapy, and chronic refractory gout programs Hello.

Thank you Carsten.

I've heard from previously mentioned in October we presented new data from four preclinical studies I think yes, she said too which demonstrated the ability of into our to address.

Challenges in gene therapy.

Basically doubling read dosing limitations, which stemming from adaptive immune responses against the Avi Katz it.

These data demonstrate that into our enables repeat dosing and enhance its first dose trans gene expression up to four fold compare to gene therapy.

With AG sector alone.

We look forward to the clinical development of RV Gene therapy program I know you know to see the fishing.

Provide further update as these programs move forward.

In terms of our partnership with US Bio This alliance will leverage unique proprietary technology platforms both company.

With a human proof of concept trial to validate this portfolio products and their potential for me dosing of patients.

Currently the ability to we go systemic gene therapy is limited by the developer we think of neutralizing antibodies against the 80 tapped it.

We believe that our platform has the potential to increase the proportion of patients.

Who are cheap and maintain therapeutic benefit.

Biotech.

[laughter] pipeline of potentially curative gene therapy.

Extensive captive library and scaled manufacturing capabilities will accelerate the development of these gene therapy.

Cars Convention, we didn't have bio anticipate entering the clinic and 20 and 2020.

Moving onto our chronic refractory gout program, we look forward to the presentation of three abstract of additional encouraging data from our phase two dose ranging study of STL cheer 12 at the American College of Rheumatology annual meeting on November 11.

A press release detailing the results of these studies will be issued following the meetings embargo left.

Turning to the head to head compare clinical trial.

We continue to advance the six month study, which is evaluating STL trick 12 against the globe Okay.

The current Sta approved you're a case.

The trial, comparing efficacy and safety of a once monthly dosing of that C.L., King 12, which is a combination of into our plus our proprietary pegylated you're a case.

Gotcha Okay.

Compared to.

Got it glitter case.

The primary endpoint of compare it is maintenance the serum uric acid or anyway levels of less than six milligrams per deciliter at six months.

This trial is built upon the phase two dose ranging study, which showed that inside monthly dose cohorts.

Let's see how to 12 maintained actually way levels below six milligrams per deciliter, 66% of a valuable patients.

And that only 35% of patient and these cohorts experience flare it in the first month of treatment.

The compare trial will enroll approximately 150 patients and we expect enrollment to be completed by the end of 2019, you plan to report interim data into first quarter of 2020, I report top line statistical superiority data.

In 2020 mid 2020.

Finally, we look forward to receiving.

Guidance and our meeting with the FDA in January 2020 on our phase three clinical development plan.

I will now turn the call over to our Chief Financial Officer, Brian Dalton.

Thank you Alex and good morning, everyone are detailed financials I laid out in our earnings press release and will be filed in our 10-Q. So I'll just highlight a few key items here.

We ended the third quarter with 35.9 million on cash cash equivalents restricted cash and short term investments when compared to 42 million as of June Thirtyth 2019.

We believe our cash cash equivalents and restricted cash will be sufficient to meet our operating requirements through the first quarter 2020 .

Scott noted, we completed a private finance brown with participation primarily from the board and management team this quarter, which resulted in net proceeds of $5.7 million.

The transaction consisted of approximately 3.2 million shares issued at a price on $1.81 the market close price at the title of the transaction.

R&D expenses for the quarter ended September Thirtyth, 20 minutes or $8.1 million, which compares with $11.9 million for some period of 28 you.

The decrease reflects the timing of expenses recognized for head to head compare study in addition to reduce salaries and benefits, resulting from the head count reduction in early 19.

And the completion of firework progress.

General and administrative expenses for the quarter ended September 32019 were $3.7 million, which compares with 4.1 million for the third quarter 2018.

A reduction in cost was primarily the result of reduced legal fees and professional fees.

For the quarter ended September Thirtyth 2019 reported a net loss of $12 million for 26 cents per share compared with a net loss of $16 million were 71 cents per share the same period in 2018.

I'll now hand, the call back over to Carseland for closing remarks Carson.

Thank you Brad.

As mentioned earlier, we had an important an exciting third quarter I'd like to reiterate that our teams focused on two priorities in the near term.

Executing on our head to head compare study in chronic refractory gout.

And advancing our gene therapy pipeline.

At least announced that we expect to complete enrollment in the compare study by the end of this year and expect to guidance from the FDA on a phase three clinical development plan in January 2020.

But provide interim data in Q1, 2020, and topline statistical supplier data by mid 2020.

With regards to our gene therapy program. The preclinical data presented at yes, GCG show that our technology Potemkin able to repeat dosing of therapeutic Abby vectors, which currently is not feasible.

Partnership would ask Brian will allow us to move into the clinic in 2020, and we could not have a better partner to drive this effort forward.

I would like to conclude by reiterating our gratitude to the many people with being supportive along the way, including our patients and families. Our investigators, helping us with compare and our great team at select up.

With that we're happy to take questions.

[laughter].

We will now begin question and answer session.

You asked a question you May Press Star then one on your Touchtone phone.

If you're using these speakerphone, please pick up your handset before pressing the keys.

To withdraw your question. Please press Star then too.

At this time, we will pause momentarily to assemble our roster.

[noise] My first question comes from Chad Messer Needham and company. Please go ahead.

Great. Thanks, Good morning, and thanks for taking my questions.

But just to start off regarding this updated college of Rheumatology and a few days.

It's possible to discuss just how much.

More data might be in there for example, how much how much more follow up time, we'd be pad is that something you can tell us.

Thanks for the question Chad so.

You mentioned, we will have.

Three posters there.

And if it is more detailed data we have shown a I think specifically.

What is new is specific analysis on the gout flares.

Are we see that.

Patients.

In one month at 35% of gout flares and there were no new initial flare off the month shoe.

Okay. All right. These are more new sorta deeper analysis.

It's a deeper analysis there is a deeper analysis.

On the correlation as well between Sq, a control and use antibodies. So.

That's the information we show here, so it's more detail.

Information on data, we presented in the past.

Okay alright. Thanks, Thanks for that and then just wondering if there's any update on your collaboration with cure CN and have been able to released any data about how there.

Single agent gene therapy.

Studies is proceeding we had been they've been dosing for a wireless.

Yeah, I am I understanding to have not disclosed and so you'll see our Q that.

Our guidance remains unchanged waiting to get guidance from the German authorities.

There was no real update should we kind of up to get out of this earnings call but.

We're still on track expedited the last quarter, obviously, we're very excited about the partnership it acts bio and obviously shifting towards that.

Yeah no understood in were.

We are waiting.

What you have to be able to say more about that.

Thanks, and congrats on one of the progress.

Thank you Chad.

Our next question comes from Derek our children of Stifel. Please go ahead.

Hi, Bill on for Gary. Thanks for taking my question just on the ask bio partnership can you give us a little more insight into what you're thinking for the human proof of concept.

[noise] sort of the size and length of that that study might be and then.

And timing and kind of.

What do you think the phasing of your R&D expense might look like as you.

Complete enrollment that's compare things about the phase three study and then obviously this study asked thanks.

Yeah. So thanks. Thanks for the question is an excellent question and.

Yeah, we definitely will guide more detailed in the future I think for now as we guided today, we plan to be in the clinic with asked by late 2020.

We.

I have guided in the past that one of the programs will be a wonderful programs will be enemy.

And I think.

What we're looking at primarily is.

We prevent the formation off neutralizing antibodies, because we think that's a fast and point and Thats something you can measure up to 30 to 60 days updating a dose off the Avi Katz it together with each war. So that's definitely got anything you want up the endpoints that we're going to look at but it makes you to call.

We will be more detailed guidance, we obviously working at high speed right now and full full steam ahead with asked bio shoe finalized both indication answer to clinical development plan So stay tuned.

So is that consistent around people.

But.

So you you may not actually need to do.

A couple of breed doses in that study you think just just showing the and a b should be enough.

So obviously, the ultimate who will be the ability to read dose and expressed transgene of course, but we think from the started we've done so far the a good.

Marker is actually developing or can prevent the formation off neutralizing antibodies. So we think thats, where the fastest read out to half was because the return, but it will take longer.

That makes sense. Thanks.

Just on the R&D expense as well to onto a follow up.

Obviously once we complete compare those.

Thanks will go down significantly we have not guide on the phase three expenses yet.

And obviously, we have also look guided around the expenses in gene therapy I think the one important note is these are much smaller trials.

Yeah, now that that makes sense. Thank you.

Thank you.

Our next question comes from John Newman, Oh Canaccord. Please go ahead.

Hi, Thanks for taking my question. This is Chris for John Newman for the last into our poster that you guys had one thing that was mentioned was that you can overcome low levels of pre existing anti bodies. I'm. Just wondering if that also meant that if someone was dose than avian they had a low level of antibodies.

Lets say you could still use this product to kind of circumvent or if it meant something else.

Sure. Thanks, Thanks for the question, Chris I think I would say at this point.

Thats the speculation I think we have shown this in animal experiments that you actually can overcome lower levels of anything antibodies.

And we'll have to see how does translate into human studies obviously.

Yeah, I think that's that's as far as we can say right now.

Got it and I just wanted to get the gene therapy programs in a row, so kind of could you talk about.

The timing of the gene therapy programs and when they're going to be going into the clinic from first to last just start get the timing straight in yep.

Yeah. So so we have you heard.

On the call we do have two programs in M&A and Otcs.

We.

Previously guidance that emanation will be part of the collaboration with ask bio.

We are around okay see we're slowing the preclinical face and half a lot guide I want to go into the clinic.

So.

As I said, we plan to take it remains to clinic.

But the other indications in the collaboration which we have let us close that haven't guided soon as I mentioned earlier once we have more clarity on which indication to move forward at what time and go back to that.

Got it and just for the last question on as steel tubing too for the interim readout in first quarter 20.

Is there anything more specific you could tell us about what data, we'll see we'll be for example, I see wake up gout flares and other things.

Yes, good question that we have not.

In detail I think the question comes up of course.

I think what I can say if that we've got a look at numerical difference.

Tweed FPL to want to.

That's a lot of case.

At month, three and modest six I think that's farkas guidance.

And we'll provide more of an update wants to get closer to the data read out.

So now we're happy that that we're able to announced that we plan to complete enrollment by the end of this year.

Got it thank you.

Thank you Chris.

Our next question comes from D.C. Yang of Mizuho. Please go ahead.

Hey, Good morning, guys. This is Alex on for Difei <unk>.

I guess I was just wondering if you could comment a little bit on the come compare trial in terms of the timeline shifting the timeline there.

Yes, thanks for the question Alex.

Sure. If you recall, we guide of last quarter that we have eight quarter.

Hey.

Which is driven by the fact that we had extremely aggressive timelines.

To recruit a 160 patients an orphan disease.

Completing two sites.

Thanks for the longer to get those sites up and running.

We're very pleased with the recruitment rates were seeing right now.

So we're not guiding to a different times as a readout.

We just looking out obviously to provide investors and all of you and meaningful interim readout Ah you need a certain number of patients for that that's what kind of move this into Q1 next year, but otherwise than that the China nice backlog shifted or change.

Guiding that we're going to complete enrollment this year.

Okay. Thank you and then on the gene therapy from I was wondering if you had an update on the collaboration with spark and opting into additional indications.

Yes around the spot collaboration as you recall.

Mark license.

For for the treatment in combination you will see a and behalf the additional right to opt into four additional indications by the end of this year and well here and we'll guide as to what's that doesn't mean once we get Honda.

Okay. Thank you.

Thanks.

Our next question comes from you on zone of Janney. Please go ahead.

Hi, Thanks for taking the questions. So on the meeting with the FDA in January I guess, most likely you will not be able to help interim data before the meeting when you meet with the FDA and if I remember correctly have you ever had a in a phase two media with <unk> and if that's the case what would you.

And information that you will be able to provide to the agency.

Yes. Good question just to remind you we head of end of Phase two meeting in December off last year and.

We obviously are not disclosing our plan discussions with the F.D.A.

And but I think what is important is that the compare trial is independent from the phase three I think that is that it's very important.

Well we plan.

Yes, as Alex mentioned is to get final guidance on the phase three.

Okay.

Thank you.

This concludes our question and answer portion of the call I will now turn the call back over to select as CEO Carsten Brown for closing remarks.

Thank you operator, and thank you everyone, who joined US. This morning, we've made significant progress this quarter as we've achieved critical benchmarks in advancing the entire platform across chronic refractory gout and gene therapy.

Extremely excited about the continued growth for company and it technology and we look forward to continuing development to unlock the broad potential off the into a platform that concludes today's call. Thank you.

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