Q4 2020 Neoleukin Therapeutics Inc Earnings Call

Ladies and gentlemen, please stand by you and you know Luke and Therapeutics Conference call will begin momentarily. Thank you for your patience and please standby.

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And.

Good morning, and thank you for joining us today for the Neo Luke and Therapeutics Conference call. At this time, all participants are in a listen only mode.

And the conclusion will be prepared remarks, we will conduct a question and answer session and instructions will follow at that time.

As a reminder, today's conference call is being recorded I would now like to turn the call over to Julie Rathbun immune.

Communications for and you'll look and therapeutics Julie. Please go ahead.

Thank you.

Good afternoon, and welcome to near Luke and Therapeutics year end, 2020 Conference call. Joining me on the call today from Neal look and are Jonathan draughtsman, CEO and Bob Ho CFO during todays call Jonathan will provide an overview of recent events and update on the company's progress and upcoming milestones and Bob will then provide it.

<unk> financial results today's call is being recorded there will be available for replay and the Investor Relations section of the Neo Luke and website approximately two hours after the call for at least 30 days before we start I'd like to remind you that today's call will include forward looking statements based on current expectations such statements represent management's judge.

And then intention and intentions beliefs and expectations about future events strategies product candidates and operating plans. All forward looking statements included in this presentation are made as of today and involve assumptions risks and uncertainties and actual results could differ materially from those anticipated in the forward looking statement.

And Neil Luke and undertakes no obligation to update or revise any forward looking statements. Please refer to the company's filings with the SEC, which are available from the SEC or and then you look and website for information concerning the risk factors that could affect the company and.

And now like to turn the call over to Jonathan Draftsmen.

Thank you Julie and good afternoon.

I'm pleased to have this opportunity to review our recent progress as well as look ahead to our priorities for 2021.

2020 was a remarkable year for neo Luke and therapeutics. It was our first full year as a public company and despite the challenges of the pandemic, we grew significantly doubling the size of our team and establishing our new headquarters in Seattle.

Our key scientific accomplishments for the year include first.

Completing preclinical development of NL 201 are our lead de Novo protein program and submitting regulatory applications in the U S and Australia.

Second presenting new preclinical data demonstrating potent monotherapy activity and combination data across a broad range of tumor types.

And third designing and testing and now see be ex one a day.

Novo protein decoy for Sars, Covid, two which has demonstrated the ability to protect rodents after intranasal prophylaxis.

2021 will be another exciting year for the company as we anticipate transitioning to clinical development.

Our priorities. This year are first and we're working diligently to address the clinical hold for <unk> 201, and initiate what we believe will be the first clinical trial with a fully de novo protein.

We're focused on our pipeline developing future IND candidates using that de novo protein platform to address unmet medical needs.

And third we will continue to invest and our people and culture. As we believe this is critical for long term success and achieving our ambitious goals.

It's been over a year since we were first impacted by the COVID-19 pandemic, we instituted work from home guidelines last March and other safety protocols intended to keep our workforce safe and healthy.

We've been able to gradually bring a portion of our research staff back to work without any work related infections.

In February of this year, we were able to occupy our new headquarters facility and Seattle with greatly expanded office and lab space, enabling more research personnel to work on site.

As the rollout of vaccines proceeds we will continue to monitor guidance from Washington State and the C D C and refine our policies as appropriate.

Throughout 2020, we remained focused on advancing our lead immunotherapy program and L. Two O one towards clinical testing and.

<unk> hundred one is a potent de novo agonist of both the IL, two and IL 15 receptors, which expands cancer fighting effector T cells and NK cells.

Unlike other approaches and development that are modified and forms of native IL, two or IL 15, and now 201 is designed as a completely new protein with no potential binding of the Alpha sub unit for CD 25, and increased potency on both T cells and NK cells compared to native IL.

Two.

In November we submitted a clinical trial and notification or C T and application for it and hope to have one in Australia.

In December 2020, we submitted an investigational new drug or IND application with the U S food and drug administration.

On January seven 2021, we received a clinical hold letter from the FDA requesting that we develop a new assay from methods of use testing to increased precision and to demonstrate that dose preparation and administration procedures will accurately deliver the intended dose if and L 201.

We are working to address the fda's questions as quickly as possible and currently expect to resolve the clinical hold as well as to begin enrollment of patients in the first half of 2021.

We will provide notification when the clinical hold is lifted.

Our first in human clinical trial of NL 201 will focus on intravenous monotherapy administration and up to 120 patients with relapsed or refractory solid tumors.

The trial will include the evaluation of multiple schedules and dose levels of NL 201 in order to assess safety pharmacokinetics immunogenicity.

<unk> dynamics and antitumor activity.

After a recommended dose and schedule is identified we plan to enroll indication specific expansion cohorts, including patients with renal cell carcinoma and melanoma.

In addition to our systemic trial, we're planning to begin a study evaluating local administration of NL 201 in order to achieve higher drug concentrations in the tumor microenvironment and to decrease the potential risks of systemic exposure.

The company expects the local administration trial to begin by the end of 2021.

We continue to expand our knowledge of NL 201, and antitumor activity through the evaluation of a variety of Syngenta and tumor models and novel regimens.

In November 2020, we presented preclinical data on and off 201 at the society for immunotherapy of cancer annual meeting.

These data highlighted multiple experiments of NL 201 in combination with immuno therapies and demonstrated that NL 201 has additive or synergistic activity when combined with checkpoint inhibitors and tumor targeting antibodies in preclinical models.

We believe that and O to O. One could work broadly across many indications and in combination with a wide variety of standard of care agents.

Turning now to our pipeline. We are just beginning to explore the range of possibilities that the neo Luke and de Novo protein technology platform has to offer.

Our approach represents a revolutionary shift and the way new drugs are developed using computational algorithms to build proteins that fits specific binding sites using high resolution structural information.

By creating completely new molecules, we can optimize multiple parameters, including potency affinity stability size and exactly which part of the target receptor is engaged.

The development of and they'll see VX, one our de Novo protein designed to prevent or treat COVID-19 demonstrates both the broad applicability and speed of de Novo designed to tackle serious biological problems.

As reported and published in Science. This past November our optimized protein and access and Ace two decoys binding to the Sars Covid two spike protein with high affinity preventing association with the viral receptor <unk> and blocking cellular entry.

And they'll see VX, one has been shown to prevent infection of multiple human cell lines in vitro and to protect hamsters from serious consequences of Sars Covid two infection when administered intra nasally.

Our team was able to develop this molecule and under three months highlighting the speed of our de Novo protein platform. We're currently evaluating the resiliency of this molecule against new variance of Sars Covid, two and planning for a potential first in human trial, we will continue to evaluate the program as the Sars Covid two landscape.

Evolves.

I'd now like to discuss our ongoing research and pipeline and activities.

We're focused on expanding the capabilities and sophistication of our computational methods to remain leaders in de Novo protein design.

Our research priorities include first choosing high impact targets for activating or suppressing specific immune cells.

That would benefit from a de novo approach to increase specificity stability or conditional activation.

Understanding the biology of the target receptors will enable us to have the greatest impact to help patients with cancer and inflammatory diseases.

Second widening the therapeutic index of potent immuno oncology therapies by modifying the bio distribution and developing conditional activation strategies such as the split technology that was featured at ACR in 2020.

And third increasing our understanding of de Novo proteins. So that we can continue to focus on therapeutic candidates that are hyper stable, well behaved and vivo and minimize the risk of immunogenicity.

These efforts will enable us to remain leaders and the emerging field of de Novo protein design we.

We anticipate presenting data on one or more of our research programs during the second half of this year.

All of these accomplishments and ambitious goals are made possible by our dedicated and talented employees and our team has grown significantly in the past year at the end of 2020, we had approximately 70 full time employees. The majority of this growth occurred and research and clinical and we expect to continue.

And to grow during 2021.

I'd like to highlight a few specific additions to our team during the latter part of 2020.

In October we announced the appointment of Holly Vance as General Counsel.

Holly previously served as associate General counsel at the Bill and Melinda Gates Foundation, and brings a wealth of legal experience and corporate and transactional matters.

And in September Martin Babbler joined our board of directors.

And its former president and CEO of Principia, Biopharma, where he helped advance the company's platform of therapeutic candidates for immune mediated diseases.

We've assembled an experienced dedicated team at neo Luke and and are committed to fostering an environment of diversity equity and inclusion.

With that I'd now like to turn the call over to Bob to discuss our year end 2020 financials Bob.

Thanks, Jonathan and good.

Afternoon, everyone.

We ended 2020 with cash and cash equivalents of $192 6 million compared to $143 1 million from 2019.

The increase year over year was primarily driven by the completion of a common stock offering in July 2020 for net proceeds of $71 3 million.

Research and development expenses for the year were $24 3 million compared to $4 $4 million and 2019.

The increase was primarily driven by expenses incurred from IND, enabling activities related to our lead product candidate and tier one and investments in connection with the advancement of other technologies and our de Novo protein platform.

G&A expenses for the year were $17 2 million compared to $18 8.002 million 19.

The higher G&A expenses in 2019 are a result of one time expenses incurred and the merger between equinox and Neil Wilkin.

G&A expenses in 2020 also reflects increases in personnel and facility related costs as well as professional service fees.

And 2020, and we also sold our Canadian subsidiary Equinox, Canada.

The sale resulted in a onetime gain of $7 8 million that reduced our operating loss for the year.

As such net loss in 2020 was $33 3 million compared to 69 4.002 million 19.

The higher net loss from 2019 was primarily due to the acquired in process research and development expense from the equinox and the ILUVIEN merger.

In summary, our operating cash burn for the year was approximately $35 million after adjusting for the onetime proceeds from the Iconix, Canada sales.

Based upon our current operating plan, we believe our cash on hand, and will be sufficient to fund operations into 2020 three.

And with that I'll turn the call back over to Jonathan and for some concluding comments. Thanks.

Thanks, Bob.

Neil look and has evolved significantly in just over two years since the company's formation and I'm excited about the transformational activities that are planned during the remainder of 2021, we look forward to the start of clinical trials for our lead oncology product candidate, including both systemic and local administration.

We will continue to progress our de Novo protein research and we will be expanding our development pipeline by creating new product candidates for cancer and inflammation.

We've enjoyed meeting virtually with many members of the investment community over the past year and look forward to times. When we can meet again in person we're thankful for our dedicated team at Neo Luke and for the support of our shareholders throughout it all we remain focused upon our overriding goal to advance our de Novo protein technology platform to benefit patients.

And <unk> with serious diseases, including cancer inflammation and autoimmune diseases.

Operator, we can now open the call up for questions.

Thank you as a reminder is that the question you will need to press star one on your telephone to withdraw.

Question from the bounty.

And while we compile the Q&A roster.

Our first question comes from Tyler Van Buren with Emricasan.

And Sandler you May proceed with your question.

Hey, guys. Good afternoon, congratulations and all the progress.

And I guess the first one is the statement and the release and the prepared remarks, where you say that you expect to resolve the clinical hold as well as begin enrollment of patients from the first half from.

Of the year.

And I guess another three months last year. So it sounds that sounds pretty promising I guess could you say anything about the nature of the fda's questions and maybe what you've resolved since the original full.

Put into place that gives you guys confidence that you'll be able to do that and then the second part is on the.

Trial that we'll be initiating with NL 201 understand obviously safety PK initially it will be important but is it possible that we could have kind of additional biomarker data by year end and specifically what biomarkers are you most focused on.

Great. Thanks, Thanks for the question Tyler.

So first as far as the clinical hold goes since.

And we were notified by the FDA of their questions. We've.

We've been working really hard at addressing those specific issues and they are really related to methods of use testing not.

Assays or anything that would be used as part of the clinical trial.

Fortunately.

And there were no issues that would require long time periods to go back and and repeat things like manufacturing or toxicology or anything like that and we really felt like the what was being asked was fairly straightforward and that we would be able to do this in a number of months.

So.

Ah.

We are not going to be providing.

More details other than that than reaffirming our timeline and.

Just as a reminder debt debt.

We are looking at initiating the trial.

And in Australia and in the U S.

As far as the clinical data and when we could prevent.

Information.

I think that we will present data as soon as it makes.

Makes sense from having enough information to really.

Be meaningful I think that most likely that would be in 2022.

And that would be my my guidance at this point.

And.

And obviously in terms of Biomarkers.

The usual things looking at.

And the PK Immunogenicity and obviously changes in.

And.

<unk> of target cells.

As well as what's happening at the tumor and the tumor microenvironment.

Okay perfect. Thank you so much.

Sure.

Your next question comes from Greg Harrison with Bank of America. You May proceed with your question.

Good afternoon. Thanks, so much for taking our question and this is Jason from Greg's team and the.

And the line congrats on the progress and from the color that's far and was.

Was hoping you could provide a little bit more commentary on how the delay for.

For the 201 trial.

I think the overall R&D.

Our approach.

Is this something that.

Going to impact.

Other programs down the line and.

Something that you can see us getting out of the way or is this unique to 201.

Any sort of insight would be very helpful. Thanks.

Thanks for the question Jason.

I don't see this.

The issues that were raised on review is having any impact on the rest of our portfolio or program.

And really focus on the fact that.

This is a very potent.

Immune agonist that is going into people for the first time and just having.

A level of precision that might be greater than what you would have with other mechanisms of action.

It was something that debt the review or wanted to see.

I don't I don't see that as having an impact on the other things that we're doing or necessarily on future programs.

Got you and so in terms of maybe validating the platform at all with the precision of the molecule.

Do you think that has any impact at all.

Not in terms of the the assay that debt.

And that we're working on that that was really about.

How we wanted to measure very small quantities of protein.

So I think that from the from the precision standpoint that has to do with the mechanism of action and how the proteins designed and now thats not anything thats in question.

Perfect.

Fair enough. Thank you so much for the color appreciate it.

Sure.

Thank you and our next question comes from Arlinda Lee with Canaccord. You May proceed with your question.

Guys. Congrats on the progress and I had a couple of questions and.

And one.

And when can you maybe talk about how you expect.

And locally local administration Krishnan.

IV administration and are you planning to go into similar indications or not and how do you think about that and then secondly on your.

Covid.

Sure.

I'm wondering.

I think and the article you talk about how this might help.

Address Darius and I am curious how with engie.

Generic into the program. Thank you.

Sure.

Let me I'll start with the local administration.

Question, and then and then move to the Covid volatile.

Local administration.

Various cytokines have been.

Used locally for years.

And.

One of the rationale to look at that is that it enables you to get much higher local concentrations without getting the high systemic concentrations. There's a lot of different ways that you can administer and NIM.

Immune activator locally it could be.

Directly injected into or around the tumor it could be.

Given in.

And intra vesicle form as and IL 15 agonist is being done.

And to the bladder it could be used.

And inhaled or other other formats and and all of those cases the.

The goal would be to get a very strong local response, and then theres a possibility that that would also create activated immune cells that could go to other parts of the body and have an abscopal effect and so either by itself or in combination with other systemic therapy. It could result in.

In better results.

I think that it's very <unk>.

Important to understand.

And whether when you whenever you have a very potent molecule.

And the activity is being driven more by the the local activation or the systemic activation and then sales moving to the tumor and this will really help us to understand that and help us to plan our future molecules debt.

It.

It might be either systemic or targeted so.

And I'm really excited about that.

And that trial and learning a lot more about NL 201.

I think it will complement what we learned systemically and they and.

And Ah.

In many ways.

As far as the Covid molecule goes.

And when.

And when it was designed.

Using the <unk>.

De Novo platform the goal was to exactly or as exactly as possible to mimic the portion of the angiotensin converting enzyme two or <unk> two protein interacts with the receptor binding domain of the spike protein and the.

And that that was important and not just to buy and this despite protein anywhere.

We wanted to have and exact interface that looked like the human receptor four and three of the virus and the reason was.

And.

Even a year ago, we were thinking if the virus were to mutate or evolve as RNA viruses do.

And it still needs to bind to <unk> to get into human cells and by making something that would compete with as to we felt that.

It would be almost it would be very difficult for the virus to mutate and such a way that they could still get into human cells.

And would not be blocked by this protein so we.

And that still needs to be empirically tested as variance evolve, but if a if a new variant evolves that Kent is more infectious and it should also be binding to the <unk> protein more tightly.

So there should be a correlation.

<unk>.

And the any mutation of the virus and and it shouldnt be able to evade our protein and still bind to <unk> II.

Does that makes sense.

Yes, thank you very much sure.

Thank you. Our next question comes from Michael Schmidt with Guggenheim You May proceed with your question.

Yes.

Yeah.

Operator, we're not hearing Michael.

Josh are you still there.

[noise].

Yeah.

Yeah.

Yes.

So it sounds like we lost our operator.

Not sure if there are any other questions.

But happy to follow up with folks as needed.

Jonathan do you want to close it out.

Sure.

And I'd like to thank everybody for joining our call today, and we look forward to sharing our progress with you in the months ahead. Thank you very much.

Okay.

Okay.

And as Julian are you there.

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

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Yes.

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Yeah.