Q3 2021 Stealth BioTherapeutics Corp Earnings Call

Greetings and welcome to <unk> Biotherapeutics third quarter earnings Conference call.

At this time all participants are in a listen only mode.

Question and answer session will follow the formal presentation.

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Please note this conference is being recorded.

At this time I'll now turn the conference over to Henry S. Chief Legal Counsel Henry you May now begin.

Thank you and good morning with me on the call are Chief Executive Officer, Reading Mccarthy, Chief Clinical Development Officer, Jim Carr, Chief Business Officer, Brian Blakey, Vice President of business development strategy, Brian Hodgkiss, Chief Research and development Officer, Marty Redmond, and Chief Financial Officer, Rob Weiskopf.

Before we begin I'd like to remind listeners that management will be making forward looking statements on today's call, including for example, the company's expected timelines and plans for development of an older Baton SPT to send them to other pipeline programs regulatory interactions and financial guidance regarding the periods in which we will have capital available to fund its operations.

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 factors section of cells form 20-F filed with the SEC on April six 2021 and in our subsequent SEC filings, while we may elect to update these forward looking statements at some point in the future. We specifically disclaim any obligation to do so if our views change now I'd like to turn it over to culture really Mccarthy sculpt CEO Rudy.

Thank you Henri and welcome to those joining for updates today. So just as a reminder, coming into 2020. One our goals were first to progress our ophthalmic franchise, where we are now positioned to read out on phase two clinical data for element for Todd and extra Ferrovial geographic atrophy next spring and we are.

Turning to progress our interim virtual delivery formulation efforts to support potential partnering I had a phase three setting.

Second our goal was to broaden our cardiology franchise, where we are continuing to try to elucidate a regulatory path forward in bar syndrome, as well as making meaningful regulatory and preclinical progress and sustained muscular dystrophy ahead of a potential phase two trial initiation next year and our third goal was to broaden our neurology.

Franchise, where we are now poised for next month's planned initiation of our phase III, new powered clinical trial in patients with primary mitochondrial myopathy due to nuclear Janney mutations and that trial is enrich to enroll the subgroup of patients who responded and are mitochondrial myopathy program and where we are also preparing for our phase one.

Mad trial of S Beach P 272, starting early next year following multiple positive readouts from preclinical studies and several different models of Neurodegenerative diseases, which collectively inform potential path in a L. S. Parkinson Lewy body syndrome, Frontotemporal dementia and other tower apathy.

To name just a few we anticipate numerous meaningful milestones as we head into 2022, and we believe the success on any of these initiatives may be transformative for the field of mitochondrial medicine.

So I'll be turning the call over to our chief clinical and development officer, Jim Cart to provide more color regarding our pipeline update with phase two dry AMD data read out just around the corner, we will start first with that program Jim.

Thanks, Randy and good morning to those on the line.

Data from our geographic atrophy development program has been presented at recent ophthalmology conferences, and putting that youre running at 2021 virtual Congress.

Annual scientific session of the Retina Society, the American Society of retina specialists annual scientific meeting and just yesterday I accelerator and over the upcoming weekend at the a O.

One of the important data points Sheraton. These presentations ahead of our anticipated reclaimed to readout next year is it the baseline demographics of the patients enrolled in our reclaimed two clinical trial of <unk>.

Similar to those of the geographic atrophy patients enrolled in the original reclaim clinical trial.

You can see a side by side comparison of these baseline characteristics on this slide.

In both studies, we are studying patients with extra Foveole geographic atrophy, which are non central lesions that do not impinge upon the fovea and was relatively smaller lesion sizes less than two disc area.

Based on characteristics may be important predictors of element for tons of potential to attenuate, both lots of visual function in dry AMD and growth through geographic area.

I'll ask my colleague, Brian <unk> to speak to what these baseline characteristics may mean for geographic atrophy progression.

As well as to the importance of that endpoint for potential partnering efforts for this program.

Brian.

Yeah.

Jim we saw a correlation between smaller G. A lesion size and improvements in visual function and are reclaimed phase one clinical trial. So we felt it was important to keep the lesion size similar to in our reclaimed phase II trial and are pleased to have succeeded in that goal. We've also recently presented data summarized on this slide showing.

G a patients with relatively more preserved mitochondrial function, which we are measuring by looking at the relative health of the mitochondrial which ellipsoid zone, the retina or much more likely to have greater improvements in visual function. After six months of the elements of the type of therapy and reclaim on.

On this slide the pink indicates greater attenuation of the ellipsoid zone, which is generally thought to perceive the growth of geographic atrophy and the Green is healthy ellipsoid zone, you can see that the patients with more green, indicating a healthier ellipsoid zone had greater improvements in visual function. After six months development type therapy.

This slide compares the geographic area growth observed after six months element peptide therapy reclaim with the growth observed in both the treatment and sham arm of the pellets as phase II filly trial in America phase two three gather one trial, while there are some differences in patient demographics.

These trials, it's been demonstrated in the literature that extra OBL or non central lesions, which we have focused exclusively in Pos grow more rapidly than lesions, which impinge on the center of the phobia for that reason we are encouraged by these data would show a favorable comparison between the growth rate observed with Allomap, the tide and other agents in development.

As Jim mentioned potential pharma development partners are also focused on geographic atrophy progression as an endpoint of interest so there.

This is an important biomarker as you plan for phase two readout next year, assuming success with development of our interim vitriol formulation, which we are targeting for no more than once quarterly administration, we're hoping to identify a partner to collaborate on a phase III development efforts for extra four wheel geographic atrophy, I'll turn it back to Jim to discuss our car.

All of your franchise.

Thanks, Brian.

As we've previously disclosed we submitted our NDA for <unk> syndrome in August and we received a refuse to file notification from the FDA in October well.

Obviously disappointing to FDA declined to review the NDA, we do want to meet with the FDA to discuss the rationale why speedboat one our positive phase III natural history control trial for which the data is summarized on the left hand side of the slide was not sufficient to support NDA filing and review we also want to discuss once again, whether there is any.

Reasonable path forward to generating additional data to support the review in this ultra rare indication.

We have accordingly requested a type a meeting with the FDA in which the FDA granted yesterday and is scheduled for later this quarter.

We remain committed to the Barr syndrome patient population, which is which was petition both us and the FDA fracs are still and remember tide.

Beyond that we also see meaningful values of syndication, which I'll ask Brian Blakey to principally address Brian.

Thanks, Jim and thanks to those on the line for joining today, our market research and Barth syndrome suggests that diagnosis estimates may be low.

Market Research also suggests that with the endpoint showing reverse cardiac remodeling the reimbursement potential could be meaningful while we continue to explore we think that taken together there may be more patients than previously reported and that the value of therapy, which may improve cardiac function could be high we.

We also have a rare pediatric designation for this program, which opens the possibility of a priority review voucher for.

For these reasons, we do see meaningful value in the syndication that could support additional development efforts. If we can align with the FDA regarding a feasible design and timeline.

I'll turn the line back to Jim to discuss our other clinical programs Kim.

Thanks, and as Brian noted, we look forward to what we hope will be a construction type a meeting with the division of cardiology in nephrology at the FDA on our birth programs scheduled later this quarter.

We also have a pre IMD meeting scheduled next month with the division of cardiology to discuss our duchenne muscular dystrophy developmental efforts.

As depicted in this slide mitochondrial dysfunction pursuits, both skeletal muscle and cardiac dysfunction in duchenne.

With better management of respiratory symptoms cardiomyopathy, we are targeting with our development efforts is now the leading cause of early mortality in duchenne.

Cardiomyopathy onset is fairly early with some clinical science observable as young as six or seven years of age and late stage progression to extensive fibrosis dilation and severely reduced ejection fraction typically occurring after late teenage years, and often leading to premature cardiac death.

We're hoping to intervene in the mid stage of the cardiomyopathy declining when there was evidence of phibro fatty infiltration characteristics of the disease, but before the disease burden, maybe your reverse for unstoppable due to extensive fibrosis and dilation.

I've been working closely with the parent project muscular dystrophy as part of their cardiac working groups seeking to update the fda's guidance and just trying to shine and we're bringing those consensus learnings forward into our development plan, which we'll be discussing with FDA at our pre IMD meeting.

To that end, we've invited both patient advocacy and leading experts in duchenne to join us in a pre IND meeting.

We'd like to align with the FDA and patient population endpoints and trial design ahead of a potential trial initiation during the second half of next year. We have also initiated several preclinical studies to support our developmental thesis in Duchenne and hope to be reading out in those during the first part of next year.

Moving onto our neurology franchise, we will update you on our primary mitochondrial myopathy duty nuclear DNA mutations for nuclear P. M program as far as S. P. T 272 development efforts.

Our new power phase III clinical trial in patients with nuclear P. M. M. P. M. M is expected to initiate next month we.

Partnering closely with patient advocacy groups, including you MTS meadow action as well as the leading thought leaders worldwide in designing and launching this pivotal trial.

This trial is enriched for patients responded to the limit of proton therapy in our prior in our prior empower <unk> III clinical program, which was a much broader basket design enrolling patients with P. M M.

That had many different genetic mutations we align with the FDA and the trial design over the summer and we look forward to being back in the clinic to progress development for this devastating disease.

We are also bringing S E T 272 back into the clinic in a phase one multiple ascending dose trial early next year.

I'll turn it over to Marty Rodman to update you on the preclinical data has are so excited about the potential of this next generation clinical stage compound to treat neurological diseases of mitochondrial dysfunction Marty.

Thanks, Jim.

I'm happy to share with you today, a sampling of the data. We've recently collected for SPT 272 amount upon really active chemical entity that we optimize for improved blood brain barrier permeation.

To date, we've found to 17 to be active in two different models of ILS, one of which may also be relevant for frontal temporal dementia or F. T. D. And then the model of Alpha Nucleon, I'll see which may be relevant to Parkinson's disease, and the only body dementia.

We're also generating data using 217 in patient derived cells displaying tell occupancy, which may be relevant for S. T D in progressive Supranuclear palsy.

Across these models, we've seen evidenced not only by the Congress protection, but in certain models evidence of neural protection reduced inflammation reduction of protein aggregates improved brain metabolism and reduce motor deficits.

On this slide you can see in the upper left from the model of a L. S.

S meeting 217 substantially improve neuro in a branch.

Data from this model work presented most recently in October at the northeast ALS consortium.

In addition, neuroprotective effects had been observed in the model of Alpha Nucleon, apathy, where SPT two seven to reduce markers neuro inflammation shown on the bottom left and also reduce the level of protein aggregates shown on the bottom right.

These data were presented this fall at the movement disorder Society.

On the upper right our results showing the effect of SPT 272 on brain metabolism, and a model of Huntington's disease.

We're excited about these results from a broad a range of models and we're expecting to announce further results for <unk> 272 in preclinical studies during the first half of next year.

With that I'll turn the call over to Rob Weiskopf to discuss our third quarter earnings Rob.

Thanks, Martie and thank you all for joining US today as we issued our press release. This morning with our full financial results I'll try to be brief and focusing on the highlights from the quarter, which is summarized in slide 16, our cash and cash equivalents were $42 3 million at September 30th 2021 compared to $32 8 million at December.

31, 2020 and September 2021 the company received $11 million of the remaining $27 million total due during the second half of 2021 for Morningside under the development funding agreement, which includes the 5 million milestone upon birth NDA submission and the <unk>.

$22 million balance it was committed as additional financing in May 2021.

October 2021 the company received $5 million of the additional five financing and expects to receive the remaining $11 million on or around December one 2021.

The company expects that its cash cash equivalents and investments as of September 30th 2021.

Together with the $5 million of additional financing received in October and $11 million of additional financing expected in December will be sufficient to enable it to fund its planned operations into the third quarter of 2022.

Research and development expenses were $6 7 million for the three months ended September 32021, compared to $6 2 million for the same period in 2020 inch.

The increase was due to a $1 2 million increase in preclinical costs to develop and expand our current pipeline and increases to your point $6 million in head count related costs, and an increase of <unk> 1 million and manufacturing costs. These costs were offset by a net decrease of $1 4 million and clinical cost.

Primarily driven by the close out of the and then power three clinical trial.

General and administrative expenses were unchanged at $4 7 million for the three months ended September 30th 2021 and the same period in 2020 for the three months ended September 30th 'twenty 'twenty. One there was an increase of zero point $3 million and pre commercial costs offset by a 0.2 million decrease in facility related.

Costs in the 0.1 million decrease in costs and professional services.

Other income was $5 1 million for the three months ended September 32021, compared to other expense of 0.3 millions to the same period in 2020.

Other income in 2021 consisted of a $5 4 million gain due to the change in fair value of the derivative liability offset by a 0.1 million loss due to the extinguishment of the Hercules term loan and is zero point $2 million.

Interest expense other expense in 2020 consisted of zero point $3 million and interest expense net loss was $6 3 million or one cent basic and diluted net.

Loss per ordinary share for the three months ended September 30 of 2021 as compared to $11 2 million or <unk> basic and diluted net loss per ordinary share for the same period in 2020, I'll turn it back to <unk> to conclude.

Thanks, Rob we're looking forward to numerous milestones over the next year, including our phase two extra foveole geographic atrophy data and the initiation of multiple new development initiatives in rare diseases with high unmet medical needs. Our team is excited about our science with new pipeline compounds SPT $2 72, and our pay.

One theory on F. B T 550, continuing to add to our deep understanding of the potential of mitochondrial medicine to treat human disease.

For the opportunity to make a potentially meaningful difference in the lives of patients living with these devastating diseases of mitochondrial dysfunction, and we look forward to delivering on our mission in the months ahead with that I'll turn the call over for questions.

Thank you well now be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad and a confirmation tone will indicate your line is in the question queue.

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One moment, please while we poll for questions and Thats Star one thank you.

Yeah.

Yeah.

Our first question is from the line of <unk> Chen with H C. Wainwright. Please proceed with your questions.

Thank you for taking my questions could.

Could you comment on your expectations regarding the readout front recalling two in the first half of 'twenty to 'twenty two.

And what kind of data do you expect would be good enough to.

Sure a partnership for our phase III development.

Yeah, Great question, Ken Thanks for thanks for that so I think what we designed this trial to essentially duplicate the results that we saw in the phase one obviously with the placebo control this time and a longer treatment period, where we would actually hope to see you know even in.

More improvement potentially with longer treatment. So our goal with that would be to be looking at improvements in visual function, particularly low light visual function, which is one of the first clinical manifestations of dry AMD, but very importantly, as well hoping to slow down the rate of progression of geographic atrophy.

And that's why I really mirroring the baseline characteristics of the patients we enrolled in the first trial is so important for us as we look forward to the phase two data in terms of partnering Brian Hodgkiss do you want to comment on what you think partners, who would be looking for there.

Yeah. Thank you Randy.

I think they would like to see consistency in our data from the phase one but at least it's consistent other development programs are shown in the clinic like impulse and library.

With a favorable safety profile that we've shown in our reclaimed one study if we can mirror that in the phase two that would be sufficient combined with any benefit and dosing administration.

Any of these would be looked at possibly from club, it's important that that department partners.

Thank you and in the first half of next year should we also expect to see the completion of development for the intra vitro.

Version of the drug.

We do we do Marty do you want to provide a brief update there.

Sure so where.

We've concluded the feasibility stage and we're just starting in vivo studies to look at the pharmacokinetics. So the rate of release silver.

Up period of months.

And then we will proceed in two columns Tox studies, so that kind of encompasses the the plan.

For next year, including the manufacturing scale up of manufacturing to accommodate those in vivo studies.

Got it thank you.

Sure.

As a reminder, you May press star one to ask a question at this time.

Our next question is from the line of Jason Mccarthy with Maxim Group. Please proceed with your question.

Hi, This is knob on for Jason and Thanks for taking our question. My question is on odd 272, when do you think you could file and IMT and potentially initiate.

Human clinical studies for L S or any other neurological disorder.

So I think we need to see what the results of the sad Mad come back with in terms of dosing. So that is the study that will be conducting the first part of next year I think depending on those data we will make the decision on I N E filing and trial initiation.

But certainly want that those results under under our belt before we can initiate.

Whereas as a result of expected.

Well that trial will be starting in the first quarter of next year and Jim I think you know.

Certainly by year end it would be it would be finished up I don't know Jim you want to comment on the timeline.

I think that's right.

Towards the latter part of next year.

Thanks for taking my questions that'll be gating that'll be gating for IMT submission.

Okay.

Thank you at this time, we've reached the end of the question and answer session I'll turn the call over to rename Mccarthy for closing remarks.

Great. Thank you so much so thanks again to everyone for joining us on the call. Today. We are excited about the year ahead of US we have a lot of new initiatives moving into the clinic and look forward to updating you on our progress in the coming months. Thanks for your time.

Thank you. This concludes today's conference you may disconnect. Your lines at this time. Thank you for your participation have a wonderful day.

Yeah.