Q2 2020 Selecta Biosciences Inc Earnings Call
Good morning, and welcome to the select a bio scientist second quarter 2020 financial results in corporate update conference call. At this time all participants are in listen only mode. This call is being webcast live on the investors in media section of Silicas website at Www Dot select a bio dot com ended.
It is being recorded for opening remarks, I would like to introduce you to Brad dorms, Chief Financial Officer of select a please go ahead.
Thank you operator, and good morning, welcome to our second quarter 2020 financial results in corporate update conference call. The press release reporting our financial results is available in the investors and media section of our website www dot select a bio dot com and our quarterly reports on form 10-Q for the quarter ended June Thirtyth when.
20 will be filed later today with the FCC.
Joining me today is Carson Broon, our president and Chief Executive Officer, Dr., Peter GE Traver, our newly appointed Chief Medical Officer, Kishimoto, Our Chief Scientific officer will be available for the Q and a portion of the call.
During today's call 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, including those related to the covert 19.
[noise] outbreak that are described in our filings made with the Securities and Exchange Commission, including our most recent quarterly report on form 10-Q, what should we filed later today with the FCC.
You are cautioned not to place undue reliance on these forward looking statements, which speak only as of today August six 2020, and selected disclaims any obligation to update such statements, even if management's views change.
I would allow I'd now like to turn the call over to Carson Broon, our president and CEO Carson.
Thank you Brad Good morning, I appreciate you joining us today.
Second quarter of 2020 can be best described as the transformational time for select them. We've made a number of important strategic business decisions that have reinforce our position as the leader in immune tolerance.
As a teacher licensing agreement, we entered into with Sobi puts us in the financial position that allows us to maximize our efforts to unlock the full potential helps to ensure intolerance platform.
We also believe that provides the most value per se L 212, given sotheby's commercial presence and resources.
Our objective you searching the potential applications of inventory remained the same.
They are using technology to optimize the efficacy and safety of biologics.
Ample read dosing of lifesaving gene therapies, and create novel immuno therapies for autoimmune diseases.
That's a digital licensing agreements Sobi, which closed on July 28, 2020 is for a field from 12, I'll say stream product candidate for the treatment of chronic refractory gout.
Under the terms of the Greenland Sobi assumes responsibility for all development regulatory and commercial activities and expenses in all markets, except China, plus Alexa will run the phase three study on behalf of Sobi.
As a reminder, in addition to covering the expense is off the phase three program Sobi has 45 days from the effective date to pay $75 million as an upfront license fee and they have paid $25 million as an investment in the private placement of select a common stock at $4 and six it.
Two cents per share.
We're also eligible to receive potential development regulatory and commercial milestone payments of up to $630 million and double tiered double and tiered double digit royalties on net sales.
We look forward to work when we still will be and remain committed to the development of sale to 12.
We anticipate the initiation of the phase III clinical program is sobi for sale to 12 into third quarter of this year.
This program will consist of two double blinded placebo controlled trials of sales grew 12. Each trial is expected to enrolled 105 patients and have 35 patients receiving 0.1 milligrams per kilogram of into war and coin two milligrams per kilogram of but after case.
35 patients receiving 0.15 milligrams per kilogram of getting tore and 0.2 milligrams frequent from I'll forget the case and 35 patients receiving placebo. Each trial will have a six month primary endpoints and one of the trials will have a six month extension.
Topline data from the phase two compare trial are expected in the third quarter of this year. As you know is the head to head study of a once monthly dose of sales with 12, which is a combination of EMCOR and for gastric case compared to bite every two doses of another case for the primary endpoint often maintenance.
Oh serum uric acid levels of less than six milligrams per deciliter at three and six months.
Compared trial has enrolled 170 patients.
We're also very pleased to have entered into research license and option agreement with Sarepta for the use of into our in neuromuscular diseases in June.
Under the terms of this agreement Sarepta has the option to license to rights to develop and commercialize the into a platform for use in select neuromuscular diseases. In particular, you Gen muscular dystrophy and certain limb girdle must have this dystrophies.
Terrestrial evaluate evaluated investigations in the therapies in combination with into war to prevent or minimize the formation of neutralizing antibodies.
Our gene therapy in autoimmune disease programs remain a priority for us and we're pleased to confirm the timing for these research and development initiatives.
Our lead gene therapy program in method, Maloney, academia, or M&A, which is being conducted in collaboration with as filed.
It's expected to enter the clinic in the first half of 2021 with preliminary data expected in the second half of 2021.
Also intends to advance our proprietary program in owners in transit hub of my lays for OTI see deficiency and will provide an update on that program later in the year.
In addition, we intend to submit an investigational new drug application for one of our autoimmune disease programs in 2021.
The first indication will be Iga nephropathy kidney disease that occurs when an antibody called Logan accumulates into kidneys.
We intend to builds upon our learnings from the sale to 12 program of combining and immunogenic enzyme with into work to be risk This program and advance and safely and effectively serve clinical trials.
The second indication will be in primary bill, Larry Collinge itis or PVC.
Most diseases have well defined target antigens significant unmet medical needs and are well suited to the application of our initial platform.
We're also pleased to have strengthened our key recently well it coming Dr. PDG driver to the position of Chief Medical Officer.
Peter had been serving and an interim capacity since March 2020, and has now joined US full time as of August one 2020.
Peter brings a wealth of experience.
In large pharma and biotech and academia.
It's probably experience includes chief Medical Officer, and senior Vice President clinical development and medical Affairs at GSK.
We'll have Baylor College of Medicine, and chairman of Medicine, and CEO of the University of Pennsylvania Health system.
He was most recently CEO Galectin therapeutics biotech company that he guided to phase III in Nash.
It will oversee medical affairs program management, and all aspects of clinical development and strategy has developed provide scientific and clinical guidance for potential business development initiatives.
Before I turn the call over to our Chief Financial Officer, Peter will say a few words Peter.
Thank you very much carsten.
I'm very proud to be part of an organization that is.
Hi, I'm hearing innovations and that May advance the treatment of a number of challenging diseases with unmet medical needs slipped to has the capabilities and scientific acumen to become the undisputed leader in targeted and specific immune tolerance.
And I'm excited to help advance inventory and explore its role in driving innovation that will ultimately help patients.
In the immediate term my goal is to ensure the phase three studies commence enrollment quickly and safely and we believe we are well positioned to conduct the successful pivotal program with Sobi.
In the near term I look forward to helping the team kick off our first gene therapy clinical program and they may in the first half of next year and advancing our proprietary program Otcs deficiency.
Furthermore, I'm excited to help select to kick off our auto immune disease efforts as there is substantial unmet need and applicability of the into our platform to benefit patients, who both fiveg inappropriately and primary billerica Colin joined Us.
I will also be helping the team on our business development efforts evaluating opportunities from a strategic clinical perspective.
Overall my goal is to translate our deep science into products in partnerships that rate value and help patients I believe we have the right team here at selected to achieve this goal.
Now I'll turn the call over to our Chief Financial Officer Brad.
Brad.
Thank you Peter.
Our detailed financials are laid out in our earnings press release, which we filed this morning, we further outlined in our 10-Q. So I'll just highlight a few key items here.
We had 61.4 million in cash cash equivalents unrestricted cash as of June Thirtyth, 2020, which compares to cash cash equivalents unrestricted cash of 91.6 million as of December 31st 2019.
[noise], our cash balance at June Thirtyth 2020 does not include 100 million in initial payments under the license agreement with Sobi. We believe that are available cash cash equivalents and restricted cash together with a $25 million payment received in July 2020 from Sobi under the Sobi private placement and the contractually obligated payments from.
We have 75 million under the so we license, which is do 45 days. After the effective date of July 28, 2020 will enable us to fund our operating expenses and capital expenditures into the first quarter of 2023.
Net cash used in operating activities was 23.5 million for the six months ended June Thirtyth 2020, as compared to 27.4 million for the same period in 2019.
Research and development expense for the second quarter 2020 were 10.7 million, which compares with 12.1 million for the same period in 2019.
The decrease in cost is primarily the result of less expense for our phase to compare trial for FCL to 12 offset by increases for our gene therapy program in collaboration with asked bio and salaries and benefits.
General and administrative expenses for the second quarter 2020 were 5.6 million, which compares with 4.1 million for the same period in 2019.
The increase in costs was the result of expenses incurred for salaries legal and professional fees, partially offset by decreased travel expense.
For the second quarter 2020, select a reported a net loss of 24.1 million.
25 cents, a share compared to a net loss of 16.4 million or 37 cents a share for the same period in 2019.
I'll now hand, the call back over to Carson Carson.
Thank you Brad as mentioned earlier, the second quarter was 20 summation of course, Alexa and I'm pleased to have been able to capitalize on business development opportunities in a way it will fuel our research and development efforts to grow the application something tour.
Commitment to use of technology to optimize the efficacy and safety Bellatrix enabled read dosing of life saving gene therapies and create novel immuno therapies for autoimmune diseases is unwavering and we're very excited about the possibilities that our initial platform provides.
Provide specific details when our gene therapy and audit easiest programs at an R&D day, we plan to host sometime in October.
With that we're happy to take questions.
Thank you we will now begin the question and answer session to ask a question you make press Star then one on your Touchtone phone, if you're using a speakerphone. Please pick up your handset before pressing the keys. If at any time. Your question has been addressed and you will like to withdraw. Your question. Please press Star then to at this time, we'll pause momentarily to assemble our roster.
And our first question will come from Elaine of Merrill with Cantor Fitzgerald. Please go ahead.
Yes. Thanks, so much for taking my question and congrats on other progress I'm, just I'm not chemotherapy front I'm curious in terms of kind of like just steps before entering the clinic I'm just first on M&A I guess what are the gating factors. Both I guess, maybe I'm currently in first half bio as well.
On the Aptiv perspective, before you can does first patient and we've seen MTR safe and out I guess, just kind of curious kind of what the you know preclinical work to support sort of safety and in humans as needed and more color on sort of other steps that you need to take their break in first test case, and and then I guess with a sarepta.
Collaboration and neuromuscular I'm kind of curious well from sort of I guess on with perhaps perspective, but also with the ASCII I guess like what exactly do you have to do before you can you know enter patients I mean, you've seen EMCOR and patients already for kind of just curious how quickly you can move this platform into the clinic across.
You know a number of gene therapy. Thanks.
Yeah. Thanks for the question I always as always see out on that on the M&A front. We're currently conducting are finalizing our tox studies.
I'm working on we already had a three year R&D meeting the FDA and currently working compiling preparing for the I'd filing. So we are on track to.
You know started the trial in the first half of next year.
In regards to the Sarepta collaboration so just to remind you. This is a a research agreement. So they really trying to replicate the data that we have generated so far.
Preclinical.
In in basically liver based diseases and apply those.
Learnings in neuromuscular disorders, So thats really the focus on behalf 24 months to do so it's really the first step is to replicate source results in animal models.
Got it thanks.
And our next question will come from John Newman with Canaccord. Please go ahead.
Hi, guys. Good morning, Thank you for taking my question.
Carson I'm, just wondering if you could talk little bit about.
But you'll be looking to do when you adventure proprietary program is otcs efficiency.
But just curious as to.
How you'll go about them.
Determining.
The dosing schedule given.
With with him tour.
You should be able to dose.
More than once and also just curious as to kind of how you define.
Success here that really we really haven't seen any other programs that have been able to definitively demonstrate the ability to reduce the wonder if part of the FCC program will maybe focus on that first thanks.
Yes, John Thanks. Thanks for the question. So we'll provide more details on timing it or R&D day in October, but obviously in terms of dose finding will have learnings from the M&A program, which will go into the clinic first a in the first half of EUR of of next year and you're right.
Good question or how do we define success and I think we've clearly demonstrated a in the preclinical data that we were able to prevent the formation AOS, who doesnt antibodies and that's really what we're looking for asking me. Some proof of concept you know our we are we able to mitigate that risk and an obvious.
Ultimately in the second step is are we also able to retreat and be happy.
Demonstrated both in.
Animal models, both in Roadms, and then on human primates, and that's really I think the first kind of in terms of proof of concept really is are we able to prevent the formation offsite neutralizing antibodies.
[noise] based just one quick follow up question if I may.
You talked about your auto immune program and you mentioned one of the indications.
Yes.
Being.
The kidney indication.
In fact, I see just curious.
If you have.
Specific answers in mine, which is looking to go after there I'm just kind of wondering what type of approach you might take its an interesting indication.
Especially with your platform. Thank you.
Yeah. That's a great question, John So we really what we're trying to do here and what makes us an attractive indication that it has a clear that's their defined antigens and the approach would be really building on the learnings from our growth program, where we.
Combined immunogenic enzyme to your case, we didn't or and ready bulking patients pump uric acid deposits.
The approach with IP and it probably will be very similar.
We plan to combining tour with him I see a protease ER, which specifically addresses ijames in complex deposits in the kids makes us very similar approach where here we plan to.
Basically the bulk patients of Ita BBA you complex in the kidney.
In in able to read dosing with him towards there's lot of learnings that we have obviously from the town indication that we plan to.
Transfer to I change across the seats and obviously, there's a significant I'm in medical need there is no approved therapy is on the market at the moment.
Great. Thank you.
Our next question will come from Roger you precise with William Blair. Please go ahead.
Thanks for taking the question.
Kind of wondering on the into our platform and gene therapy as it relates to Ciro type and they've done some did any of the 85 I believe but with next gen kind of catch that's coming I mean, what are your thoughts on on the translatability of IMTT or across kind of.
Of all serotypes.
I'm going to follow up on.
Yeah. Thanks Raj that's a great question so.
As you know EMCORE as the technologies is pretty much.
Combined any antigen within tore we as you as you rightly said, we have demonstrated that we're able to retreat, a with ER and HIV AIDS and Amy fives.
But we basically the belief that is agnostic to the serotypes and.
Specifically in regards to the next generation, though caf suits, which are designed to basically a evade pre existing antibodies. We believe definitely there there is an application for into as well as.
Those normal capsid actually quite immunogenic themselves.
So we definitely think we're well.
Prepared to address those challenges.
That was faces ABVD as gene therapy, but also potentially addressing a next generation assets as well.
Great. Thanks for this or that color on.
On the compare trial, how you know how should we think about the data in regards to maybe de risking the auto immune disease program.
Is there any some similarities between Immunogenicity, that's developed with with the guide case versus.
Hi, Jane property.
Yeah, I think imminent we definitely.
We believe with the data we have said you know the approach is definitely de risks also now going to face read the placebo controlled study. So we definitely feel that we are de risks can be space, you've demonstrated that we're able to.
Combined.
I see energenic enzyme with him tore and really especially the idea in the property indication is it's really a one to one translation, where we plan to combine and immunogenic enzyme Nigeria Coty ace with inventory so we definitely.
Have learnings, we can or we can transfer here in terms of Ah you know addressing m. 80 days, which we have demonstrated in indigo try already in phase one or two.
Great Thanks, taking questions.
Thanks Roger.
Our next question will come from Derek or till now with Stifel. Please go ahead.
Okay. Great. Thanks, guys. This had been on for Derek Thanks for taking my call and listen nine had been answered I guess, just one for Brad.
I guess, how should we think about the opex ramp just considering the.
Sobi deal and then also be.
[noise] Oh studies asserting you know this year and next year as well thanks.
Yes, that's a good question and thanks for it.
So obviously, so he's going to be reimbursing selected for the phase through so that should take our expenses down significantly. So if you kind of pro form our cash balance as of June thirtyth with the Sobi deal you can kind of get a flavor for where we think it's going to ramp up obviously as we advance the gene therapy auto immune diseases programs.
You'd expect to see that go ups, the I wonder if they're going the R&D line in starting in late 2021.
2022, but we expect our operating expenses to be significantly lower for the coming years versus where they were given that were given that we're not funding. The S. You up to 12 program going forward.
Okay.
We shouldn't forget.
The next question will come from defy Yang with Mizuho. Please go ahead.
Thank you this is Dan Clark on for defect.
The Sobi deal change out we thinking is on the hiring process or the final decision for the hiring of the CMO.
So.
Obviously as we as Weve talked.
Talks about Peter yet an impressive backgrounds Bose and quite a unique skills that having worked and big pharma.
In biotech and academia and use obviously you know.
Ideally suited to oversee to phase three program, which is critical but also be overseeing the translation offer signs into the clinic on as the next step in gene therapy with the M&A program.
But also Peter is actually a liver specialists and then as you know into accumulation deliver aggressively pursuing a primary biliary cholangitis as an indication. So there's lot of disease knowledge actually that Peter brings to the table. In addition, just one is belt.
Of experience and obviously now we do have to funding to actually move or platform forms definitely was the key part in Peterson, who make courses as well to join select them.
Thank you and then just as a follow up she for future product and licensing opportunities for select a or should we sort of expect to see a similar structure to that that you had with three aspire for your case.
Somebody, but we don't want to comment on on BD activities, but things versus say now we do have to farms.
And definitely our you know.
Looking at in licensing opportunities and.
I think that we as biomarker Stephanie.
Modeled it can be replicated, where we license an enzyme which as you magenis and can be retreated without even tour.
I think just can definitely be replicated for other indications as well.
Thank you.
Our next question will come from Berlin Pasha, Yapping, what H.C. Wainwright. Please go ahead.
Hi, This is bill Baldwin dialing in for Ronson, Roger can you hear me okay.
Yes. Thank you.
Alright, great just to start off with might have been asked previously, but well jumping cost I like to hear your thoughts regarding the so the partnership reflected a sell two and two phase three trial can you clarify the responsibility for healthy.
Yes so.
We will executes the phase three on behalf of Sobi in Sobi will be real will reimburse us for.
For the costs.
Obviously they'll have to final say on the program, but its you know its run collaboratively, but we actually got to be in the driver see them and execute to study on behalf of Sobi and fully get reimbursed by Sobi.
Okay. That's actually very helpful. Hum along the lines I'd like to discuss some possible scenarios for Merrell try on the horizon pharma is currently running.
Like the likely to make a difference for the future fell to one too it's a mirror tired reserves repository or exceed expectations or is there to until going to be affords to be reckoned that as long as they come back trial data are positive I'm going on there from what happens to the Merit study.
Yes. So we you know we have looked at as a you know extensively.
Over the last couple of months obviously.
And don't feel that's you know the results will impact the commercial potential off their sale to 12 and I'll tell you why its really limitations with the use of our methotrexate or the first one is patient eligibility right you have to exclude patients with chronic kidney disease and.
We know I'm actually from from the prospects of Phase III studies that about.
50% of patients at chronic kidney disease.
We believe that pocket Gulf population in general I look in everyday that's about 30% of patients actually that have to exclude it we have to exclude patients that are consumed more than three drinks alcoholic beverages per week. So that's.
An issue obviously in this in this patient population that oftentimes abuses alcohol.
And then you have to exclude patients that don't tolerate methotrexate and we know from other studies that about 20% of patients don't tolerate it should the first two weeks. So you have to exclude quite a number of patients. Obviously, there's just a question of safety metrics and has a black box warning around end organ toxicities.
Which I think especially in this patient population is critical or when it comes to out of it attracts M&A exists.
And also you know.
Got it methotrexate actually heating costs off medication error ADESA due to medication error. So I think that's another concern in a you know quite noncompliant population and the third one maybe the most practical it's really the the convenience or lack of convenience.
You have to retreat.
Methotrexate for six weeks before you actually initiate therapy.
The therapy.
You have a daily intervention year to date take daily folic acid.
Wiki Methotrexate and then layer on the therapy. After six weeks every two weeks.
Versus a once once monthly therapy, where you don't have restriction or on chronic kidney disease and I'll call. You. So we feel that we have differentiated product with a with FCL to 12.
That's very helpful. Thanks, so much on that I'm, assuming you unsold initiate say pretty by end of this year what would be your next big focus are going to be felt theyll accurately will increase our bulwark unwind.
Yes, so as we as we guided today, we actually will start to phase three at this quarter I'm. So I think that's that's important milestone for us.
And we really as a mix a you know.
As is going to the clinics is our focus on gene therapy, and we plan to enter the clinic and made its first half of next year and plan to have at least preliminary data in the second half of next year definitely the focus.
But also we are moving forward.
Our old you see program, which will guide more in October and our autoimmune diseases, specifically I chain across the and and primarily finnair apologize and plan to find an R&D.
For one of the indications.
Our next year as well.
Okay.
That's helpful. And then just couple of will cover more from me.
Perfect your collaboration with set up what specific safety and efficacy signals would determine whether this program would be at coal are no go I think is that a timeline associated with this collaboration.
Yeah. That's a great question, obviously, we haven't disclosed the exact details of the experiments disruptor will be conducting but obviously they have been impressed by the data we have generated so far which have been generated LIBOR based diseases.
We are we able to demonstrate prevention office antibodies when you combine the 80 captured within tore.
And they plan to run a number of animal experiments.
To demonstrate that you can blamed he immune response to gene therapy, and ask 24 months to do so it's a 24 months research agreements and obviously hefty opportune due to update at any point.
Okay, that's very helpful.
I should think about modeling R&D cost for the remainder of the here.
Yeah, let the brand answer that.
Yes. So obviously so we're we're running the phase three on behalf of Sobi. So we're as the transaction closed in Q3, we're still working with our accountants to determine whether that will be booked as revenue or a reduction in costs.
It's obviously the the same net effect, but you would expect overall that our cash burn would go down.
Given that we're not running the phase three or we're not we're not paying for the phase III.
You know as you can see our and as you can see from the cut from the compare study winding down as well, our R&D expenses were down significantly quarter over quarter.
So I think that trend should continue.
And then what we've got further to it to you guys and sort of how will account for the the the expense reimbursement from Sobi.
Okay. That's very helpful. Thanks, a lot.
Thanks for your questions.
Our next question will come from John Newman with Canaccord. Please go ahead.
Hi, guys. Thanks for taking follow up question.
How should I just wondered if you could briefly go over the economic terms that.
You have in terms of the spinal partnership Tom just got several programs there that you will be working on together.
Just curious how that would look over the long term.
Should those programs to be successful thanks.
Yeah. That's a great question, John and we have we have two partnerships actually with with Asps iOS. One is a oh you know classical licensing deal where dates in license Im tour for their lead acid in pumping disease they license into.
In December last year, a 7 million upfront.
And then there will be ask you disclosed it will be regulatory development and commercial milestones plus plus royalties associated with that the second calibration behalf as a true strategic collaboration.
Where M&A or program is part of where we share the costs and also the profit. So it's a 50 50 partnerships and you know where we have up to 10 indications that we plan to develop together and commercialize together.
Okay, great. Thank you.
This concludes the question and answer portion of the call I would now like to turn the conference back over to select the CEO Carson brewing for any closing remarks Mr. Brian.
Thank you operator, and thank you everyone, who joined US. This morning, we're extremely excited about the second half 2020, and the continued growth or for a company and are platform. We look forward to sharing more information, but the growth of the into platform throughout the year. This concludes todays call. Thank you.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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