Q1 2020 Earnings Call

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Good afternoon, ladies and gentlemen, and welcome to the boom is far most first quarter 2020, <unk> earnings conference call.

Hi, all participants are in a leasing ldmos.

He told me will conduct a question and answer session and instructions will follow that's fine I remind this conference call is being recorded.

I'm not trying to call over to Lisa Mullan director of Investor Relations.

Thank you before we proceed but the call I would like to remind everyone that certain statements made during this call. Our forward looking statements under U.S. Federal Securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present.

Expectations additional information concerning factors that could cause actual results to differ is contained in our periodic reports filed with the FCC.

The forward looking statements made during this call speak only as of the date hereof and the company undertakes no obligation to update or revise the forward looking statement.

Information presented on this call is contained in the earnings release, we issued this afternoon, and then or form 8-K, which may be accessed from the investors page of the company's website.

Joining me on today's call, our Rick Hawkins, CEO, President and Chairman, John MCU, Chief operating officer in Chief Scientific Officer.

Gene Kennedy, Chief Medical Officer, and Carl Landgren, Chief Financial Officer.

Rick Hawkins will provide a corporate update and comment on cobot 19, John to Cuba were viewed the company's lead therapeutic candidate and target indications gene Kennedy will go over the design of our planned phase Twob trial, and Carl language, and we'll wrap the call with a review.

With a review at the Q1 2020 financials and an update of cash guidance I will now turn the call over <unk>.

[noise]. Thank you Lisa good afternoon, and thank you for joining us on todays call.

After the market close we issued a press release reviewing recent corporate events.

Updating our clinical in business development strategy and highlighting financial results for the first quarter of 2020.

It has been an extraordinarily busy and exciting time for Lumos pharma.

At September Thirtyth last year, we announced our plans for merge with Newlink genetics and on March 18 solve a close to this merger with overwhelming shareholder support [noise].

The following day the company stock began trading on NASDAQ under the new symbol L. you ammo.

In conjunction with this merger the new board of directors, consisting of seven members was formed and held its first meeting on March 26.

Now when our solid balance sheet integrated experienced management team Lumos pharma isn't as strong position to execute on his strategy to develop them to a one our oral therapeutic candidate for pediatric reform and deficiency or P.J.C.

We continue the preparatory work and begin or phase Twob trial and believed that this world therapy has the potential to disrupt the standard of care of daily injection injectable treatment regimen for this indication that has said for a decade as well as long acting formulations in development.

In addition, the anticipated monetization of our priority review voucher will further strengthen our balance sheet, allowing us to pursue additional business development opportunity in the rare disease sector.

We have also strengthen our management team with the recent promotion John Mcewen, Chief operating Officer, and Chief Scientific Officer.

And I've hired biotechnology veteran Aaron sure to our Chief business Officer.

These executives along with the entire Luma pharma management, an operation team will support the company's critical strategic plans to develop acquire or license and commercialize therapies for rare diseases.

Our newly formed board of directors with remembers from each of the previously independent Lumos pharma and Newlink genetics.

One member independently selected will provide support to the company's management team in.

Their efforts to implement you must pharma strategy.

Well Lumos pharma has gotten off to a great star I would like to briefly discuss the grown about iressa pandemic and its potential impact on our business.

These are truly unprecedented times as everyone is aware.

Mark The 11 World Health organization declared this virus and pandemic and soon thereafter, social justice in Cana mandates were issue across most of the U.S. and the world.

We have at Lumos pharma.

Well, many similar precautionary measures throughout our organization and continue to encourage our employees to work from home when possible.

[laughter] global pandemic has caused disruptions in the pharmaceutical industry as it has every other industry and society at large.

For biopharmaceutical company, the why spread social distancing restriction of caused many academic center trial sites, the close of curb patient visits to clinicians in general.

For many companies. This is resolved in halted clinical trials incomplete data collection and the owners <unk> prospect of restarting trial, all with potentially significant financial consequences.

For others in the process initiating trials. This pandemic has forced the late starts.

Unclear timeline timeline for trial completion and data readout.

Lumos pharma isn't a lot of category.

Recently, the company announced that we now anticipate initiation of our phase to be a trial targeting P.J.C. before the end at 2020 somewhat somewhat later than our prior guidance of a start date in the middle of this year.

We believe this to be a conservative estimate based on our conversations with a number of our site investigator and the fact that many areas of the U.S. and nations around the world are beginning to open up again.

Numerous bartmess targeted trial sites, it's been very geography, as well as types of centers from private practices to academic centers [laughter].

We are there for optimistic that this will allow our trial to proceed with less disruption that others face.

In addition, we are well financed and our managing our cost conservatively. So we continue to believe that our current cash on hand, we'll be able to fund current operations through to read out in this phase Twob trial.

Again, the anticipated monetize monetize priority review Boucher provides us with substantial non dilutive funding for our operations going forward, including expanding our pipeline with additional rare disease assets.

So with that overview I would now like to turn the call over to John The Q2 review loomed drew a one and the opportunity we see for this drug candidate.

Sean.

Thank you Rick as Rick mentioned, we are in the process are preparing to begin or phase Twob trial evaluating 201, P. ghd and believe our therapy may offer a significantly different treatment option for a subset of children suffering frankly hormone deficiency.

Personally deficiency is the consequence of lower absent secretion agree Cameron from the pituitary gland children with untreated Gerstein deficiency will experience significant growth failure and in many cases attain adult heights significantly less than five feet with other potential consequences, including decreased phone mineralization.

Decrease lean body mass and increase fat mass.

PDH. He is a long recognized condition that affects approximately one and 3500 children in the U.S. and maybe of genetic or gender calls banks Argenis factors.

The market as well established and over $1 billion in size across the U.S., Japan and five major countries in Europe.

This market consist of the current standard of care of daily injections of recombinant human grade.

Typically administered to a child for approximately seven years.

Moving to a one represents a significantly different treatment option for P.G.H.C., both standard of care therapy and other therapeutic options currently in development represent treatment regimes, consisting of a bolus ever comment Greg permanent delivered by injection.

Into one on the other hand is an orally administered great secreted got that selectively acts on receptors, primarily in the pituitary as well as opposed to hypothalamus stimulating the body's ability to release growth hormone utilizing the same mechanism and different pathways that occurred naturally.

Moving to a one also stimulates the secretion of growth hormone and opposed to tell fashion.

Similar to the body's no of course on cycle.

Mimicking puts the caliber Lisa growth hormone has been shown some preclinical studies to produce greater efficacy that continuous exposure to growth hormone.

Moving to a one acts by increasing be amplitude of the natural pulsatile agreements accretion and its stimulus jury effect is regulated by the same growth hormone I'd up one feedback loops that occurs naturally ensuring a proper balance of gerson, where the Nigerian levels in the body. We believe this is key differentiating factor for daily or weekly formulation separate comedy.

Human growth.

Since linked to a one works to stimulate the endogenous production growth hormone individuals must be able to make and release some growth hormone for this drug candidate to be applications.

It certainly for 970 is the growth and then deficient population has been bifurcated into those who were severely versus moderately grismer deficient.

The severely gerzema deficient population is characterized by those who cannot make growth them at all or produce growth hormone and very limited quantities and is not the target population for alluded to a one.

Instead likely responders to them to one therapy or those with the ability to produce growth hormone, but only at a level insufficient to achieve normal group.

Based on our analysis. This targeted patient population represents approximately 50% to 60% because the total peach tea population.

Once an individual has been diagnosed and P.G.H.D. the measurement of baseline idea funds level plus the measurement of circulating growth hormone EFI administration of a single dose of linked to a one should identify those who would likely respond to limit to one therapy.

These identification markers are intended service what the FDA describes as predictive enrichment markers for Pete Yeah.

S.P. ends or suggested a potential into one efficacy in this patient population and are expected to accurately identify patients for a trial and for treat should lead to a one be approved by the FDA.

I would now like to turn the conversation over the gene Kennedy, our Chief Medical officer to discuss our planned phase Twob trial gene.

Thanks, John.

Rick and Jon I've mentioned, we are preparing to initiate our phase to be trial of loom too little one in P. ghd.

Well, we now anticipate this trial to get underway a bit later than originally planned we are proceeding with all activities under our control to ready our company and our investigators to begin to enroll patients. We have identified and continued to qualify the clinical sites. The trial and are preparing the drug product inventory required for the trial.

The primary focus for this phase Twob trial is to generate the efficacy and safety data necessary to move loomed too low on into a phase three registration trial. There also two additional expectations. We have set for this trial. The first it's a prospectively confirmed the utility of our predetermine predictive enrichment markers.

Selecting patients we expect to respond to live until a one.

Second is determined the optimal dose of Bloom tool one to move forward in our phase three trial.

The phase Twob trial will treat naive to treatment patients and randomized them to want to for treatment arm.

Three different doses of loom tool one.

0.81, 0.643, 0.2 milligrams per kilogram and they comparator arm of standard of care dosing injectable recombinant human growth hormone.

Dosing movie.

[laughter] high velocity as the primary outcome measure.

Our interactions to date with FDA had been fruitful and we received a study you May proceed letter from FDA. After that review of our study protocol.

Trial initiation is currently the laid by the Cobot 19 pandemic, we are evaluating whether there is opportunity within the phase Twob study to address addressed additional FDIC feedback that could improve phase three registration readiness again, we anticipate this phase twob trial to be initiated before the end of 22.

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Based on our analysis of preclinical and clinical data, thus far we believe orally administered bloom to a one has the potential to really a substantial subset of P.G.H.D. patients of the need for repeated injections over the course of years to attain their normal height.

We continue to execute on our clinical development plan to achieve the goal of delivering a therapeutic alternative the P.G.H.D. population.

Should the data from our PDH. These studies warrant we plan to expand our clinical development program to evaluate womb to a one in other indications for which recombinant growth hormone isn't approved therapy with Turner syndrome and children born small for gestational age being the first two priority.

Beyond moved to a one we're pursuing business development opportunities to license to require other rare disease assets in order to expand our pipeline and our ability to provide innovative therapies to those suffering from rare diseases.

I'll now turn the call over to Carlyn rent, our CFO to discuss financial results for the first quarter and review our forecast Carl.

Thank you gene.

Before we moved to the community I will comment on the kids.

And its impact on our Q1 financial results.

I will also review our cash guidance and provide an overview overview of keep financials for Q1 2020.

Corresponds with the devastating upside to the Corona virus pandemic.

Which which it has had on business worldwide.

On March 27th 2020 Congress passed the carriers that to provide financial assistance to American workers families and businesses.

Due to one of the provisions of the out a couple in Q1 2020 financial results included tax benefit of approximately $4 million to $5 million.

This is resulting from changes to the trade back treatment for U.S. income tax net operating losses.

We ended the first quarter of 2020 with cash and equivalents of 85.8 million compared to 5 million and pro forma 95.5 million on December 31st 2019.

We continue to cancer paid cash use of approximately six gonna have to southern and a half million dollars per quarter, which we believe have sufficient to fund our current operations through the data read out or plan to change to be trial MPG age.

This excludes any additional financing new partnerships for the anticipated phones from our 60% influencing our priority review Roger.

While we can't guarantee the value a priority would be vouchers in the future. The most recent open market transaction in February of this year, though you develop vouchers at approximately $110 million.

Our voucher derives from the licensure of our a bowl vaccine candidate to Merck.

Hold and 60% interest in the Boucher and learn the process of monetizing the PRB.

[laughter] dissipated.

Nondilutive phones.

Should serve to further strengthen our balance sheet and support our product candidate acquisition strategy beyond loom tool one.

He was formerly reported net income of $340000 for the first quarter of 2020 compared to a net loss of $2.1 million for the first quarter of 2019.

The company ended Q1, 2020 with approximately 8.3 million shares outstanding.

Please refer to the press release, we put out this afternoon for more detail on financial results.

Looking ahead, we hope to speak to many of you participating virtually in the Jefferies Healthcare conference on June 2nd and several other investor conferences throughout the year.

Let's turn the call back over to Rick before we open up the call to questions Rick.

Thank you Carl we're excited about future as a company and are executing on our clinical and business development plans.

We're fortunate to be in a position of financial strength, which gives us confidence that we'll be able to pursue our strategy.

With that we'll open up the call for questions.

Operator.

As every mine gate to ask a question you will need to fresh parwan on your telephone.

We draw your question press, the pound or hashed.

Your first question comes from the line of using young from Jefferies. Your line is Nelson.

Thank you so she said he'd be trial <unk>.

Discussion has he been finalized the would have skiing.

Hi, gene you want to answer that.

I mean, we have a study may proceed letter. So we are free to move forward. At this time study May proceed letter you know obviously in a come in a clinical development program your discussions with FDA or ongoing through filing and yet so it's hard for me to say that finalized, but we do have that study may proceed letter.

That said, there's always additional aspects to a clinical trial things you want to address that sometimes could be handled within the phase two phase three study it sometimes are done.

You know on a smaller sized studies and ideally since we have the time now we're trying to see if we can optimize it can do it I'm going to streamline fashion.

Yes. So you also mentioned that you guys are evaluating.

Whether if needed to be kind of address another FTC. The bats, <unk> what was so can you disclose a lot the fee that was <unk>.

There's a lot I I'm not going to get into all the details I mean, there's obviously a lot of routine boilerplate.

I ask you about across on any program and as I said, you know, sometimes you can handle that with it right within your study and sometimes you need to do let's talk separate studies on the side and we're just trying to see if we can optimize that but I don't I don't really want to get into all the little details with you know the Bakken forces out there it would be where we have the state you May proceed letter about very satisfied that.

You know things that you know this week, we ever I, Andy we're really excited about that.

Okay. So you did they don't think are you mentioned, how many patients doesn't have enrolled in phases TV.

Yeah, that's still.

Ongoing discussion.

Hi.

Gene once you answer that question to.

Yeah, certainly I mean, our guidance up to this point had been approximately 80 patients in this study.

We haven't got into a different number but again, if we can accomplish some of the sort of.

Side things you need to do with FDA within the study that number may change somewhat we don't it you know, but that that you know when we have more to share we will.

Can I ask easy to Lucky 80 to 100 patients.

Once you start the study.

Do you have any guess kind of how long he may take a can enroll patients.

[noise], Yeah, you and we mentioned that there was a slight delay into sort of or trial to the end of the year due to covert 19, and so as a result, we're not really given any guidance investor to read out.

We will do that shortly.

As soon as we circle back with our trial sites and we get greater clarity from them.

No. My question is a once you start to study how long you to take us to completing enrollment.

[laughter] about 80 to 100 to patient Yeah gene do you want to you and yeah I mean.

Certainly I mean, we obviously have here it was that our work that we're working with and sites that we've talked to directly and they have metrics on how many patients you see per site and how long it takes to enroll those and you know what visible to the outside world is that a couple of the phase three studies that were done in this area a enrolled within two years what that data doesn't.

Reflect though is that they're going to be any change in the slope a rate of enrollment of screening of patients coming into the clinic as this pandemic sort of winds out through hopefully a decrease and ultimately a vaccine or some other solution to the problem. So without really knowing if server that slope of enrollment is change we can't be real for.

<unk>, but our our base case expectations, where you know based around the data that 200 patient trials took about two years okay.

Right and then you also mentioned the pipeline extension and expansion.

Sort of BD activities of the Iraqis used to portfolio.

Thank you Daniel specific set up unique set up unique area.

Disease or you would you primarily focused on.

Endocrinology.

Well I think we're going to focus we are rare disease company, that's where we're going to focus although we believe our compound probably has the other indications far beyond that but we're we're focusing strictly on rare rare disease.

Indications.

And then my last question is it needs to be Directv, So pipeline expansion contingent upon the same level parody.

Yes, I mean that that that will give us the flexibility to a look at oh, a wide variety of opportunities we've already initiated that process.

Thank you very much.

Okay.

Your next question comes from the line of had 10 off from site for some nice your line is.

Great. Thank you very much and thanks for the up that everybody.

Question with respect to.

Coil site enrollment, but I'm wondering whether or not or some potential through the sort of give way to either strengthen or increased.

Relationships and maybe even make up for maybe some of that Calais bye.

During some additional trials, which took us we're sort of all of the holding pattern here. Thanks, so much for answer that.

Yeah, and you know I'll, let you take that.

Yes, certainly you know our.

Hey, Ted Nice to talk to you know as we've said before we plan to do the trial with you know a you know large U.S. presence, but also in Europe and Australia. New Zealand is part of the World has had a different impacts some have or you know you either been more fortunate or better prepared call. You know you can debate that to the end of time, but.

I think it has given us a chance, especially in some of these other actually best places to be a little more thorough not more thorough but just be more complete and really finding what we feel will be the best sites for us. So its if that were use as I said since were delayed beyond our control rather than sit on our hands are trying to I can talk to me.

This thing so once it's up and running will be efficient.

Uh huh.

Yeah and.

And it goes without saying that this is the first oral product in this field, yet and as a result, the interest from the experienced a investigator NK wells out there are pretty high so.

We're evaluating new folks as big as they come into.

Okay, well. Thank you so that's a.

Great progress over the last year I'm glad to her let it all the Oh, that's gotten done limos and acceptance for what's come with a study Scott. Thank so much.

Thank you Ted.

Your next question comes from the line of Yasmeen Rahimi from Roth Capital Partners Your line.

Hi team. Thank you so much for taking my question I have a number of them for you on the first one.

Can you shed some light into if you're able to utilize the patient registry or clean databases currently to really extract out which patient population, which centers could be ideal to be screen. As soon as you know sites are ready to go.

So are you working on that into this and you can buy color would be helpful. The second one is we are very made its way that workable and new meeting starting to E. I would love to hear if there will be additional data that he will be presenting into didn't extend that he can comment on what types eat up what should be.

Hoping to see would be cool and then and then we have it last follow up question.

Okay Gene why don't you take the first one in terms of the sites.

Yeah as far as isn't the patient registries, where we're focusing on naive to treatment patients in this first trial.

So, though you may see some you know you may see some patterns.

Presentation to certain sites, if you were to dig through those they're not going to find us our patients because we want naive to treatment. So what we really focused on is finding sites that have high volumes and regularly screen patients and have a long track record of participating in these trials. We have members of our teams have been involved in growth hormone trials going back decades.

Everywhere, we're relying as much on those connections that experience those relationships as we are the metrics and data we have through our cereals and other sources to really find the sites. We think are going to perform for.

Yeah, and John do you want to answer the question about the Endo meeting.

Sure.

As we had we had submitted an abstract to the endo meetings.

They canceled the meeting and then Didnt really guidance on what they were going to do after that so we actually went through the aspect and submitted it to.

Yes be meeting and then the SPP cancel so we decided to a too and then later they you know Endo decided they were going to do a virtual presentation. So we actually just decided to write those happens publications and try to submit them as quickly as possible. So that's what we're in the process that too.

Yankees.

Another question, we for you as we recently had I've spoken with leading expert of course hormone deficiency and he actually you know commented on the large number more than even 50, 80% of kits were still producing growth hormone and for which a screen to god would be ideal can you.

Maybe help us to understand how you or remind us how you derive a 50% and if whether maybe given what I understand it was a single position, we spoke with whether that number significantly higher and more than 50%, maybe if you could share that as would be very well.

Gum in Q1, if you take that question.

So I think.

We started out by just trying to.

Be conservative and how we guide and that patient population.

We had to based you know where estimates on a on a small sample that kids who were.

Given the therapeutic given linked to a one and then had there.

At their gross number levels measured and then that we could correlate back to their high velocity rate. So its a.

You know.

68 kids altogether that we could do that with so it's got a big.

Population that we're working with we can do some estimates from that and look at other larger databases, but they really become estimates it at that point to weaken.

Screen, a larger number kit the currently back to the growth philosophy at six months or our best guess right now our best guess being conservative these 50% to 60% and it may well be that Dr. Rosenfeld is right and there was a larger portion of the kids, but I think would be.

Great You places research it test markets and evaluate their group.

Thank you and then I'm sorry, one last question can you maybe headlights last in regards to or how you're working closely maybe with a pediatric growth hormone advocacy group you know already preparing everything to that could be very helpful. Raising awareness of an oral product that isn't development.

And and Jean you worked directly with Carol. So you go ahead and answer that question. Yeah. We're fortunate to have someone on our team name Carol Dot. She has a long history of working with a patient groups an advocacy groups in rare diseases and she's she's great and she has been on this subject.

You know for essentially simply must required them to a one and we do believe it's going to be a key part of the overall strategy to get patients screened and get patients helps you did with the structure. We you know.

Show it to be safe and efficacious. So those efforts have been underway for sometime.

Thank you. Thank you so much for taking your questions and congrats on the continued progress you're making.

Thank you yes.

Your next question comes from the line of Rob from GE alike.

You know line.

Hi, I'm congratulations so some of the progress.

Restarting to some of the studies I've got to have passed a quick question from the past a you know merger or Oh.

Any any interest in some of other activities.

Such as that used to work out work on coal that or anything in that nature that you might take a look at.

The answer to that question deal is no or Rob. It's no is and we are sticking to our move to a one at our our compound it has no indication or use and coated in any way that we're aware of.

And.

I think that's all it is to it.

Alright, thank you.

Okay.

Thank you I'm showing no further question in the queue at this time.

Called back to Rick for closing remarks.

Okay. Thank you.

So just let me say our thoughts are with those suffering from the current pandemic and we wish everyone. The best in health and the wherewithal to sustain themselves through these difficult times.

Well. Thank you for your interest and look forward to speaking with investors at the Jefferies Healthcare Conference next week and other venues for the rest of the year and beyond so thank you.

Operator.

Ladies and gentlemen, this concludes todays conference call. Thank you sorry.

You may now disconnect.

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