Q1 2023 EQRx Inc Earnings Call
Good afternoon, and welcome to the EQ Rx first quarter 2023 financial results Conference call.
At this time all participants are in a listen only mode. Later, we will conduct a question and answer session.
Order to ask a question. Please press star one one.
Please be advised that this conference call is being recorded I would now like to turn the call over to Michele Greene blood head of Investor Relations.
Thank you operator, and good afternoon, everyone earlier. This afternoon, we issued a press release, providing an overview of our first quarter 2023 financial results and our recent corporate progress.
A copy of this release and the presentation to accompany this call are available on the Investor Relations section of our website at Investor <unk> Dot com joining.
Joining me on the call today are Melanie Sheri, President and Chief Executive Officer, and principal Financial Officer, Dr. Eric Hedrick, our chief persistent.
Exactly yes.
Before we get started I would like to remind everyone that some of the statements that we make on this call and information presented in the slide deck include forward looking statements is outlined on slide two.
Actual events or results could differ materially from those expressed or implied by any forward looking statements. As a result of various risks uncertainties and other factors, including those set forth in our most recent filings with the SEC and any other future filings that we may make with the SEC.
You are cautioned not to place any undue reliance on these forward looking statements and <unk> disclaims any obligation to update such statements I will now turn the call over to Melanie.
Thank you Michelle.
Good afternoon, everyone and thank you for joining us for our first quarter conference call.
For those of you following along on the slides I will begin on slide three.
Today, we announced a reset for equal rights.
Going forward, we will focus on developing clinically differentiated high value medicines.
To do this we will leverage our team of experienced drug hunters strong execution skills and significant capital position of $1 $3 billion.
Our goal is to make a meaningful impact to patients and build long term value for shareholders.
Our CDK four six inhibitor there are cycling with its compelling early clinical data and potential for strong financial return.
It's an exciting starting point from which to build our pipeline.
Along with some of our early stage oncology programs.
They were at that clip has an opportunity to expand CDK <unk> inhibition into new indications and additional combinations that could be first for this class of medicine.
As you'll hear from Eric shortly we continue to make excellent progress on the development of new or cyclic, including initiating a phase III trial in first line advanced metastatic or recurrent low grade and Dmitry all cancer, which we believe is the first phase three study with a CDK <unk> inhibitor in the syndicate.
Yes.
Additionally, we're nearing the completion of patient enrollment in our phase II open label trial in first and second line hormone receptor positive her two negative advanced breast cancer.
With this reset.
We plan to remove any programs from our existing portfolio that are inconsistent with our new strategy.
Specifically, we are taking the following actions as outlined on slide four.
First we're seeking commercialization partnerships for I'm alert nib, our third generation Egfr inhibitor, we believe a company with an existing commercial infrastructure is better positioned to effectively deliver I'm alerting them to patients around the world.
Marketing authorization applications for I'm alert for use in the treatment of Egfr mutated non small cell lung cancer.
Main under review by both the United Kingdom, and then Sherry.
Sorry for a great Britain license and E.
For a European Union wide license.
Second we are terminating our existing license agreements for our two checkpoint inhibitors sugar mounting up and no further than the map as well as for our JAK one inhibitor EQ1 to one.
C Stone pharmaceuticals will regain rights for the research development and commercialization of sugar and no further no mab and link Pharmaceuticals will regain rights for the research development and commercialization of EQ1 to one.
We'd like to thank C stone enlink for their partnership and support around our original mission and belief that these assets are well placed back and they're capable of him.
Third in light of our new focus we plan to four wall, our potentially differentiated immune inflammatory programs, which we're excited about into a separate entity under EQ Rx.
We intend to explore its path as an independent company and pursue additional funding options.
Accordingly, we are aligning our organization to our new strategy and we'll be reducing our workforce by approximately 170 positions.
I would like to thank all of our team members for their commitment passion and contributions since our founding.
It has been a true privilege to work with all of you.
Difficult, but necessary. These changes are setting the stage for our go forward build up the company, providing clarity and focus.
We expect that collectively the actions I have outlined will generate annualized cash savings of at least $125 million.
Enabling us to significantly lower our go forward spend.
It allows us to amplify the capital we have and puts us in the best position to move forward.
Before we move on.
Like to take a moment to reflect on what our team has accomplished over the last three years.
We built a global buyer Scott.
Underlying stakeholders from across the healthcare ecosystem around a shared goal of improving patient access.
Showing that the system can change is something we are proud of.
Importantly, and critical for our go forward strategy, we have demonstrated that we can pick targets and assets and advanced them, which along with our $1 3 billion in cash puts us in a strong position for the future.
I'll now turn the call over to Eric who will talk about the current status of our development of New York cyclic.
Thanks Melanie.
Please turn to slide five.
I would like to begin with a reminder of the clinical profile of clearer cyclin, which has been defined and more than 400 patients treated in clinical trials.
The data generated from these studies.
On slide six clearly demonstrate the recycler can be dose continuously without scheduled interruption. In contrast to power cycle had been writer's strike lib with comparatively low rates of neutropenia.
In contrast, two of them are cyclic layer cycle when administered without scheduled interruption.
Associated with acceptably low rates of Gi toxicities, such as diarrhea.
Yes.
<unk> appears to have possible ease of administration advantages within the CDK <unk> inhibitor class potential tolerability advantages for patients.
And an adverse event profile that may afford best in class combine ability potential with a variety of agents and hormone receptor expressing breast cancer and other CDK four six inhibition sensitive tumors.
Yeah.
Turning to slide seven.
We plan to continue further development of FLIR cycling in a variety of ways.
We plan to pursue late stage studies in novel indications for CDK four six inhibitors, while pursuing earlier combinations with novel agents in hormone sensitive cancers.
One example of an indication which has been established to be responsive to CDK four six inhibition, but remains an area of unmet need is metastatic or advanced endometrial cancer.
We have initiated a multi regional phase III clinical trial to evaluate <unk> in combination with Letrozole compare to what you saw with placebo for the first line treatment of patients with advanced or metastatic low grade endometrial cancer.
In addition, we are nearing the completion of enrollment in our multi regional phase two open label trial with recycling in combination with standard endocrine therapy in first and second line hormone receptor positive advanced breast cancer.
This trial provides the foundation for future development of water recycled in novel combinations enabled by its potentially differentiated safety profile.
With that I will turn the call back to Melanie for a financial update and closing remarks Melanie.
Thank you Eric Please turn to slide eight.
Summary of our first quarter 2023 financial results can be found in the press release that we issued this afternoon and more details will be included in our 10-Q, which we will file later today.
As I highlighted earlier, we ended the first quarter of 2023 with $1 $3 billion in cash cash equivalents and short term investments.
Total operating expenses were $102 million versus 86 million for the same period a year ago.
R&D expenses accounted for approximately 70% of our spend this quarter as we continue to advance our portfolio.
Our cash burn was $86 million for the first three months of this year.
We expect cash used in operations to be $275 million or less for 2023, including nonrecurring costs.
<unk> $45 million to $55 million for wind down termination and exit costs related to the announced portfolio decisions and reduction in workforce.
We estimate our 2023 year end cash cash equivalents and short term investment position to be approximately $1 1 billion.
As I stated earlier, we expect to significantly lower our spend and generate annualized cash savings of at least 125 million derived on a 2023 full year basis.
Keith savings will be driven by the collective actions, we outlined today, including the removal of several programs from our pipeline.
This provides capital and financial flexibility to support additional product acquisition costs and the pursuit of additional indications.
Now before we open the call for your questions.
We'd like to conclude with the following on slide nine.
We are resetting EQ Rx.
Our new focus is on developing clinically differentiated high value medicines to make an impact for patients and build shareholder value.
We believe we have the drug hunting expertise.
Rug development and execution capabilities and scale of capital necessary to deliver on this strategy.
Our go forward organization will have a significantly lower expected cash burn, which when combined with our current cash position of $1 3 billion opens up degrees of freedom as we plan to grow our portfolio.
We look forward to sharing more about our plans and progress in the future.
Thank you all for listening I would now like to turn the call back to the operator to start the Q&A.
Thank you.
A reminder to ask a question you will need to press star one one on your telephone once again to ask a question. Please press star one one.
And our first question comes from the line of Chris Chabot, Tony with Goldman Sachs.
Thank you very much for taking the question.
Do you see as you framed very difficult but necessary decisions.
Three things if I could ask can you give us a sense for timelines for regulatory possible kind of decisiveness.
Sure.
Over in the UK and Europe , just frame some of the timelines there number two as you contemplate thinking about a home for the immune assets. There is there anything that you can tell us about a process that may be ongoing.
And number three in particular, you mentioned in your prepared remarks about additional potential product acquisitions can.
Can you characterize what that might be when youre thinking about your capital allocation timelines and strategies there. Thank you.
Yes.
Hi, Chris This is Eric Hedrick, Thanks for the question.
I'm going to tackle the first part of this and maybe handle off hand off to Melanie for the second two parts in terms of the regulatory timelines for MLR.
In the U K and the European Union, we're anticipating decisions on those applications.
This year this calendar year.
So let me hand off to Melanie for the rest of it.
Yes, so on the ini assets I just wanted to.
We emphasize what I said a few minutes ago.
These are very exciting opportunities.
They are.
Nearing the clinic and we believe that to maximize the potential of these assets.
It really requires focus and hence we're putting it into an entity, which originally or initially we are going to a wholly own and then overtime, we are going to identify.
Capital.
For for that entity and so on.
It's it's.
Yes, if you want to call it a process.
We're trying to do is we want to make sure that it's best served.
By dedication to this field.
And then on your third question so on the product acquisition side.
I just wanted to highlight that.
With the scale of capital that we have with one 3 billion that we have as of the end of this quarter and with bringing our cash burn way down.
This is a time when they.
This scale of capital is extremely valuable capital has become expensive and there are a lot of people out there that are trimming their portfolios. There are a lot of companies that are trading below cash and so we believe that that just puts us in an interesting position.
To put something together that is going to be an interesting portfolio. So that's how we're thinking about it I would say more to come Chris on that in the future.
Great. Thank you very much.
Thank you one moment for our next question. Please.
And our next question comes from the line of Chris Schott with JP Morgan.
Hi, This is a catarina on for Chris. Thank you so much for taking our questions.
First question so on the timelines for <unk> can.
Can you just remind us your latest thoughts on potential timelines and how quickly you can bring the asset to market and second question is kind of on the adjuvant opportunity. So given some of the additional financial flexibility you'll have.
Doing some of this that you've announced today does that change your thinking about the adjuvant opportunity and potentially running a study in that setting and then maybe tied to that does novartis is Natalie study that recently read out read all change how you're thinking about the development path more broadly for that assets. Thank you so much.
Yes, Hi, Katherine this is Eric thanks for the question.
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In terms of <unk>.
Timelines for approval again with our program and the focus on endometrial cancer. That's a phase III study that has just initiated.
And it is possible with a positive result.
We'd be looking at seeking approval sometime in 2026 timeframe.
Your question about the adjuvant opportunity.
We're taking a realistic approach to evaluating.
Show indications for <unk>.
We don't believe that the conventionally defined adjuvant setting is one where it would make sense for us to pursue that.
But we do believe that there are some other opportunities.
In the in the breast cancer setting the hormone receptor positive breast cancer setting that we may be able to pursue in lieu of adjuvant.
And.
Right.
Planning on having a bigger discussion of those opportunities I think sometime in the near future.
Alright.
I wanted to.
Emphasize what.
Eric just said.
The core for today, because we've we've shared so much information is to keep in mind, how we're thinking about there are cyclical which is it has a profile that allows us to take it.
First in indication opportunities like the one that we just talked about administered again metrial cancer with its tolerability profile the ability to continuously dose. It doesn't have the liabilities that we have in that class generally neither the neutropenia liabilities, nor the Gi toxicities.
And so it is a very good backbone for combinations, whether those doublets or triplets in the future and that's where we believe the future is really going to go but it would just simply say given the amount of information that we put out here today, we'll come back to that and we'll make sure that we have a more in.
Depth conversation et cetera arena.
Thank you.
Yeah.
I'm pleased for our next question.
And our next question comes from the line of Stephens Gallo with TD Cowen.
Thank you.
Apologies, but I am not clear on the new strategy since it sounds similar to the strategy. The company had been following since its most recent pivot that is to develop <unk>.
Differentiated drugs EQ Rx previously pivoted away from the buyers club in the U S. So that is that's not news today.
The news today is that <unk> has made some progress and you are no longer developing some other drugs.
<unk> had said we're differentiated.
And I guess you are abandoning the buyers club O U S, which appeared to be making some progress.
Can you clarify and for me what I'm missing in this new strategy versus the old one.
And with all due respect it's hard to have high confidence given.
The path that the company has been on for.
For the last year or so thank you.
So Steve Thank you very much for the question, let me first.
Just reiterate that.
We know that today is really important moment for the company and Youre right. After the feedback that we received from the FDA in November we talked about.
Our path forward or the lack thereof, especially for sugar allomap in the United States.
I want to remind everybody that.
As a company we have a lot going on.
We just talked about multiple filings that we have under review a number of late stage trials, we have just under 10 different partnerships and so Steve.
We wanted to be thoughtful and execute such a reset is the one that we're describing today well and that has brought us to today.
With regards to the question around the focus going forward I just want to reiterate what we are doing here today, we're essentially saying we're trimming everything from our portfolio that does not fit the go forward strategy I think in the past there's been some.
<unk> around still retaining some of the assets and starting to pivot to differentiated medicines and today, we are creating that clarity and the focus where we're saying we are only going to fall to focus on differentiated high value medicines going forward.
Perhaps lost.
To your point around the original mission.
I wanted to say the following.
We tried something groundbreaking.
Something that we all knew was going to be hard we're actually proud of the fact that the part that everybody thought it was going to be the hardest the ability to assemble a global bias cut that we've actually done that but ultimately you need to have approved drugs for the buyers club to pull them through.
And we just need to realize that the world around us has changed and to long tail risks that we saw.
Perhaps one of them might happen, but not both at both happened.
It's very sad.
But I think.
We just need to realize where we are today and hence the clarity around what the focus is going forward.
Okay.
Thank you.
Our next question comes from the line of of cash to worry with Jefferies.
Hi, this is ideal for a cash thanks, so much for taking all the questions we have.
Actually the first is given that you have $1 3 billion cash can you just give us a refresh on your BD strategy. The second it's probably a related but it's essentially would you consider looking at rare disease assets, which are less likely to be negotiated by the NRA and where it might be more <unk>.
And you can leverage through our partnership thank you.
Let me start and then I'll see if Eric wants to add to my comments so.
A lot of information that we've put out there. So we will we are looking forward to providing more updates in more detail in the future and really talk in detail what were adding but I just want to reiterate that with the cash that we have.
And with having brought our spend way down we.
We have the ability to assemble something really interesting we belief that narrow as an exciting starting point and so without firepower, we're gonna come back and we're going to talk about how we're going to develop neuro and more detail will also come back and talk about how we're seeing the ever.
Illusion of the portfolio.
Okay.
Yes.
This is Eric I would just add is not only we see later cycle. If there's really a starting point, we're interested in its profile and as.
The field evolves towards novel combinations, having.
A cornerstone drug with that profile for combinations, we think is important.
But we didn't intend to say that we're going to be a company exclusively centered around recycling.
And we are in a fortunate cash position that melody stated before and I think in terms of what opportunities we might be afforded with that cash position, we're not going to be exclusive I believed to certain.
Indications are fields and if they are rare disease assets that we believe are good assets worthy of development and we have the expertise to drive those forward, we will consider those opportunities.
And so more to come later on this.
Next question.
Thank you.
Thank you.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.
Okay.
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