Selecta Biosciences Inc. Q1 2023 Earnings Call
Good morning, and thank you for joining the Selecta Biosciences first quarter 'twenty to 'twenty three earnings call.
At this time all participants are in a listen only mode.
Following management's remarks, we will hold a question and answer session.
At that time lines will be opened for you.
If anyone should require operator assistance. Please press Star then zero on your Touchtone phone.
I would now like to turn the call over to Blaine Davis, Chief Financial Officer at Selecta. Please go ahead.
Thank you and good morning, everyone welcome.
Welcome to our first quarter 2023 financial results and business update conference call.
The press release reporting our financial results is available in the Investor and media section of select this website at Www Dot Selecta bio dot com.
Our quarterly report on Form 10-Q for the quarter ended March 31, 2023, which was filed earlier this morning with the Securities and Exchange Commission or the SEC.
Joining me on today's call are Carsten Brunn, President and Chief Executive Officer, K, Keisha, Moto, Chief Scientific Officer, and Peter Traber, Our Chief Medical Officer.
During today's call, we will be making certain forward looking statements, including without limitation statements about the potential safety efficacy.
Our regulatory and clinical progress of our product candidates, our financial projections, and our future expectations plans partnerships and prospects.
These statements are subject to various risks that are described in our filings made with the SEC, including our most recent annual report on Form 10-K, and quarterly report on Form 10-Q.
You are cautioned not to place undue reliance on these forward looking statements, which speak only as of today may four 2023, and selected disclaims any obligation to update such statements except as required by law, even if management's views changed with that let me turn it over to Carsten.
Good morning.
Appreciate everyone, taking the time joining us today.
The first quarter of 2023 was marked by a significant milestone with the announcement of the results from two phase III studies.
Al to 12, including factory Couch result, one and two both of which met their primary endpoints.
As a reminder, <unk> is a combination drug product candidate consisting of two components.
The first component for gastric case, a potent enzyme that has been observed to reduce serum uric in refractory gout patients who continue to have serious disease symptoms, such as debilitating joint pain, and disfiguring tissue deposits, you're right cultural client.
The second component of the drug candidate is in tour, which is our nano encapsulated formulation offer about my sense that is designed to condition the immune system to reduce antibody formation two drugs with art administered at the same time.
The proposed mechanism of interaction is the induction of immune tolerance rather than immune suppression.
With other commonly used drugs.
He's off wanted to we're identically designed randomized double blind placebo controlled trials in patients with gout refractory to conventional therapy.
Patients were evenly randomized across three treatment arms placebo.
Or one of two doses of <unk> hundred 12.
One five mix per gig 4.1 mixed for kick.
Each arm received their respective intervention as a single treatment every 28 days.
He's the one randomized and dosed a total of 112 subjects in the U S and resolve to randomize and dosed a total of 163 subjects globally.
It's not one met its primary endpoint with 56% of patients receiving monthly doses of LCL to 12 at one five mix per gig.
Excuse me our response.
Do you find as achievement is maintenance of production rate below six milligrams statistically there for at least 80% of the time during month six.
He's off to also met its primary endpoint with 47% of patients receiving monthly doses of Sdl's with 12 at one five mix per gig achieving a response.
Of note in <unk>.
Patients 50 years of age or older. The response rate. After one class mix will keep dose was 65% in the U S study and 48% in the global study.
We're also very encouraged by the safety profile of <unk> 12 for the trials.
In the U S study, 75% of subjects, who completed six months of therapy continued to response, so with 12 months with no infusion reactions and no new safety signals.
The infusion reaction incidents was three 4% in the high dose group.
In contrast to other uric lowering therapies.
Also 12 did not increase Cal cure rates compared to placebo.
We're very excited by these results, which support the sell through 12 could potentially serve as a meaningful new therapeutic option, notably with a convenient once monthly dosing schedule for patients suffering from chronic refractory gout.
Based on these data our partner <unk> is preparing for a regulatory submission and potential commercialization in the U S.
We have long believed in the potential of our approach and believe these data surface validation for our <unk> technology.
To our knowledge now represents the only immune tolerance platform with positive phase III data.
We expect to share full data from these trials.
Scientific conference later this year.
With these trials successfully completed.
And the BLA filing by still be on track for the first half of 2024.
We now have the opportunity to decide where to take our empower platform next.
We have always appreciate it multiple potential applications for our immune tolerance approach.
To solve the toughest challenges associated with unwanted immunogenicity from improving the tolerability profile of existing drugs.
We saw with the <unk> 12 program.
Banding and enabling the applications for gene therapies, and restoring south tolerance in autoimmune disease.
However in the current market environment, we recognize that we need to be especially thoughtful about our capital allocation and clinical development strategy.
Together with our courts, we recently conducted a strategic review to focus our resources on key programs, where we believe we have the highest potential to succeed.
We believe that these steps.
I'll now walk you through would extend our cash runway into the second half of 2025.
First we plan to prioritize the development of <unk> for diseases of the liver.
<unk> L which.
<unk>, our proprietary T Rex selective IL two candidate within tour represents the evolution of our precision immune tolerance platform and has the potential to further enhance the magnitude and duration of immune tolerance in patients treated for autoimmune diseases.
Specifically it is designed to restore natural immune system balance through induction and expansion of regulatory T cells in vivo.
<unk> is the standard approach of broad immune suppression.
Associated with side effects and these patients are vulnerable to serious infections and malignancies.
We remain on track to initiate IND, enabling studies for <unk> in 2023.
Our initial focus will be on diseases of the liver and in parallel we continue to assess additional autoimmune indications for future development.
We also intend to continue to support our existing partnerships and prioritize the work under these agreements. These.
These include our collaborations with Adobe <unk> to 12.
And with Astellas for short.
Well the ICL to 12 program, we are continuing to work with Dolby to prepare the BLA filing which is expected in the first half of 2024.
As a reminder, under our agreement with <unk>. They are responsible for regulatory and commercial activities in all markets outside of China.
<unk> is responsible for into manufacturing and we are entitled to receive up to $630 million in milestone payments as well as tiered double digit royalties on net sales.
We're also advancing our partnership with Astellas for <unk>, our next generation immuno global and G or ITG 40 years.
So it could be developed to used with 80 845.
<unk> investigational <unk> based therapy for the treatment of late onset pompe disease in adults.
The main items reported in development is derived through common human pathogens and as a result, this high prevalence of preexisting antibodies against these proteases that can restrict the utility.
<unk> is differentiated by its low cross reactivity to pre existing antibodies and human Cerro <unk>.
Many patients are currently ineligible for clinical trials with investigational AAV gene therapies due to the presence of naturally occurring antibodies against AAV capsid.
Due to its selective coordinated activity against <unk>, We believe <unk> has the potential to expand access to life changing therapies by addressing pre existing immunity to AAV.
With respect to the remainder of our gene therapy assets we.
We have paused further development and are exploring alternative ways to advance these programs to potential partnerships.
This includes pausing enrollment of our ongoing phase one two re matching study of <unk> hundred two.
Our AAV gene therapy, combined with <unk> tour for the treatment of melancholic academia for MMA.
We have always intended to partner our gene therapy programs.
And we believe pausing the re imaging trial will allow us any potential partners to help inform the clinical and regulatory path forward for this program, while also preserving select us cash resources in the near term.
In connection with this capital privatization initiatives.
We've undertaken the difficult decision to reduce our head count by approximately 25% in order to align our workforce with our priorities and streamline our operations.
I'd like to express my sincere gratitude to all of those who were impacted by this initiatives.
I am confident that Celexa is well positioned to execute on the priorities I outlined today.
Continue to focus on leveraging our <unk> platform to bring newest therapies to patients suffering from autoimmune diseases.
With that I'll turn it over to blame for a review of the financial results.
The first quarter financial results are detailed in the press release and 10-Q issued earlier today. So let me focus my commentary on some key points.
Select the ended the first quarter with cash cash equivalents restricted cash and marketable securities of $127 $5 million.
In light of the strategic initiatives announced today as well as our expectation that we will receive a milestone payment related to <unk> development activities, we believe that our cash position and that would be sufficient to meet our operating requirements into the second half of 2025.
I will note that we do expect to incur a cash charge of approximately $1 million in the second quarter related to severance and benefit related expenses. Following the targeted reduction in force.
Revenue for the first quarter of 2023 was $5 9 million as compared to $34 million in the first quarter of 2022.
Revenue was primarily related to the shipment of clinical supply and the reimbursement of costs incurred for the phase III <unk> program, which was completed in the first quarter of this year.
Research and development expenses for the first quarter of 2023 were $18 6 million versus $17 $7 million for the first quarter of 2022.
The increase was primarily the result of expenses incurred for contract license and milestone payments and.
Personnel expenses, partially offset by a decrease in expenses incurred for the <unk> hundred 12 clinical program.
G&A expenses for the first quarter of 2023 were $5 7 million slightly higher than first quarter 2022 due to personnel expenses.
For the first quarter of 2023, we reported net loss of 21 7 million or basic net loss per share of 14.
Let me turn the call back to Carsten.
Over the past few months, we delivered two successful phase III studies that could potentially pave the way for our lead asset to reach the market and offer a meaningful new treatment option to patients.
This is an achievement that many biotech companies never realized and I'm very proud.
Of the teammates Elekta that help us reach that important milestone.
We also had some difficult decisions about how to advance our mission and position select for continued success.
As we know sharpen our focus on intra L. While supporting our ongoing partnership with still being Astellas. We believe we have the right strategy in place to create value for all of our stakeholders.
I wanted to thank all our stockholders for your continued support and we look forward to updating you on our efforts over the course of the year.
I'd like to open the line to Q&A operator.
We will now begin the question and answer session.
I ask a question you May press Star then one on your telephone keypad.
If you are using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
Once again that was star then one to ask a question at this time, we will pause momentarily to assemble the roster.
And our first question will come from Joseph Schwartz of SDB Leerink. Please go ahead.
Alright, Thanks, very much I was wondering if you could talk about your strategy to develop your IL two in liver diseases first and how much of this is driven by the.
The awareness of the specific antigen in PBC versus other factors and have you identified other antigens that you can address in other liver diseases or diseases outside the liver and then I have a follow up thank you.
Yes, Great question, Joe So as you can tell we're extremely excited by moving into trial forward and we've identified a liberty diseases for couple of reasons. One as you pointed out for PVC. For example, we know the order Amazon impacted but also we.
Belief that inventory alone also will have an impact a positive impact on liver diseases as well as it accumulates in the liver and we've shown this in a couple of various animal models.
Peter walked through a little bit what our thinking is around the.
Liver disease approach Peter.
Peter I think you're on mute.
Yes, I was thank you.
The.
It's a very important question Joe in the we think that collectively the autoimmune liver diseases, which are PBC PSC.
Autoimmune hepatitis represent a very.
Good target for our therapy.
Primarily because they are all known to be T cell mediated.
Diseases as you know PVC hasnt specific antigen, but there are other antigens that have been identified for instance in autoimmune hepatitis certain classification.
Sure.
We are not currently identifying additional antigens, but investigators across.
The various areas are identifying the antigens, which could then be used however, as Carsten said, we actually have we have.
Preclinical data that suggests that each step of the therapy.
Inventory alone inventory IL, two and tour IL, two as well as the EMCORE IL two plus antigen all have.
Added to the effects in.
In liver disease, So we think that.
The approach is likely to yield.
Results with.
With.
Individual agents as well are collectively better results with multiple agents.
So thats one of the reasons why we're very interested in liver disease.
However.
<unk>.
What we find in T cell mediated liver disease can extend to multiple other autoimmune diseases, which are known to be T cell mediated such as type one diabetes multiple sclerosis.
SLE et cetera, So we think that.
Targeting liver diseases one of the.
Greatest opportunities to show efficacy.
The various components, but will then set the stage for autoimmune diseases more broadly.
Okay. Thank you that's helpful and then.
Sort of a different question I was wondering if you could talk about the resources that <unk> is bringing to bear to support a successful rollout of big Aggregators now that you have.
Succeeded in phase III.
And.
What should we look for in terms of new data or analysis, when it is presented or published.
Yes, that's a great question as well, Joe and obviously, we can't really comment on the resources that <unk> going to put behind us. The only thing I can say they are extremely excited about this and the publicly stated this is one of their top priorities.
We'll definitely see.
Share additional dissolve data at an upcoming scientific conference.
From a timing and mix that perspective.
So behalf guidance the plan to file a BLA in the first half of 2024.
Okay. Thanks again.
The next question comes from Christian <unk> of Cantor Fitzgerald. Please go ahead go ahead.
Hi, Good morning, everybody why in your opinion is the size of the market opportunity for PBC and perhaps the liver space in general where you believe you could show some benefits with <unk>, our IL and then for PBC in particular, I know Theres, just a major conference focusing on this indication.
Some of the unmet needs and it seems that the field is moving towards LP normalization, and then also a pretty high unmet need for addressing pruritus. So just wondering with this mechanism. How you think broadly there could be potential impact on the different manifestations that occur with this disease.
Yeah, I'll, let Peter talk about the manifestation of the disease and our approach.
I was just going to comment on the market side. So we think it's actually a sweet spot for select.
These are sizable indications.
But a size, where we can execute ourselves both from a clinical perspective is I'm not going to be huge trials.
And also from a commercial perspective as well. So so we think it's a it's a sweet spot for us from a size perspective, but I'll, let Peter address the specific question.
Yes, Thank you Karsten and it is a very good question Kristen.
The fact is that collectively the three indications of autoimmune liver disease, probably affect about 280000.
Patients in the United States, and if you take that.
Those that are resistant or sale current therapies. There is over 100000 people. So it's a sizable group of patients and our market opportunity.
You brought up another very good point and that is the targets that people have utilized for therapy in the past.
You mentioned.
PVC and the fact is that for approval of drugs you only have to reduce alkaline phosphatase to 167 times. The upper limit of normal there is a lot of data now that suggests that normalization of alkaline phosphatase is much more effective and so.
Therefore the.
Therapeutic successes have been identified thus far are using a standard which is probably not.
Adequate for full therapy, so normalization of alkaline phosphatase is really quite critical to reduce mortality morbidity and the potential for a liver transplant.
That expand the market.
Opportunity.
For a new therapy that addresses the underlying immunologic aspect. The same goes for the other diseases, such as autoimmune hepatitis where now normalization of transaminase is is the goal.
But failure of other therapies has been with a higher.
Transaminase level the normalization.
For PSC there are no therapies so.
That's wide open.
Our next question comes from John Newman of Canaccord. Please go ahead.
Two questions. The first one is could you talk about the expenses that you are responsible for with regard to FPL to want to.
Going forward with so the and the second question is what.
Yeah, Thanks, Dan so relative to the expenses for <unk> 12.
The agreement that we have but there will be basically provides reimbursement for all activities associated with the preparation of the BLA kind of the completion of the clinical trial activities as well as moving towards the manufacturing component on inventory. So all of those expenses as we think about them over.
For the coming months will be reimbursed by <unk>.
So that hopefully provides you the clarification are you there.
Yes. Thanks.
And then just on the timelines or into IL since we've just announcing this strategic shift.
We're not quite ready yet to give you an exact timeline, we're going to be in the clinic.
But we are on track to initiate IND, enabling studies.
Hey, great. Thanks.
The next question comes from Gil Blum of Needham <unk> co. Please go ahead.
Good morning, everyone and thanks for taking our question.
So it's never great to their after just head count but.
My question is when should we start seeing.
On your Opex.
Yes, so on the Opex line.
I think what Youll start to see is as we go throughout the year, specifically around R&D you will start to see kind of a decrease in that operating expense as a reminder, as we think about the reimbursement that we get on the <unk> 12 activity specifically does come in as revenue and then also kind of net out on the R&D expense line.
But as we've gone through the prioritization as we laid out.
On the call and in the press release, you should expect to see a decrease in the subsequent quarters, specifically on the R&D side and then around G&A. You would also start to see a slightly more modest decrease there but.
Overall, this prioritization, obviously results and extending our cash runway out until the second half of 'twenty five and we're also doing this in a relatively.
In a position of strength really given our cash position of $127 million. We believe that we will see a decrease but still allows us to remain focused on our prioritize activities that we think can generate value over the longer term.
Alright, thank you for that.
Yes, that's a good question as well I'm here for ICANN, where basically evaluating next steps and trying to figure out the best path forward for the asset.
We believe there is significant potential for the Iga protease.
Specially now that with the phase III successfully completed on 212, which is kind of a similar approach kind of re dosing are highly immunogenic enzyme and.
No.
Lowering serum uric acid deposits.
In India, the protease, we're trying to de bulk patients.
Immune deposits in the kidney so theres a lot of similarities so we remain very excited but something we're looking at right now and see what the best path forward is for the asset.
Alright, Thank you for taking our questions.
The next question comes from Neely ear of Mizuho. Please go ahead.
So firstly I guess could you just expand on the Iga nephropathy decision.
Evaluation I think before you were kind of excited about it because.
Like what has changed exactly.
And I guess secondly.
The cash runway out into the first half of 2020.
Five include some upcoming milestone payment for <unk> wondering what with the cash runway be without the milestone. Thanks.
Yes.
Elaborating a bit on the <unk> decision, we remain very excited but.
We had to make resource decisions on where we allocate our investments.
And you know.
The IGD Proteus in a sense is the single indication asset, whereas <unk> really opened multiple.
Sizeable indications.
<unk> diseases are where we're going to start but thats also a broader application as well so.
So we think that's the better choice in terms of if we had to prioritize resources, but we still as I said earlier, we remain excited about <unk> again, and we think it's a it's a valuable indication and we will explore the best path forward for the program.
Around the cash one way and maybe I'll, let lane talk a little bit, but the thinking here on how we how are we approaching this.
Yes.
On the cash runway piece.
We feel very confident in our ability to achieve the milestone payment that we mentioned in the cash runway guidance, we can't be specific about what activity that's associated with but just as a reminder.
Reminder.
We have the opportunity to receive an additional $65 million and kind of development and regulatory milestones associated with Adobe deal as well as up to $550 million in commercial milestones as we think about the cash runway guidance we provided.
With that milestone associated with the development is what gets us to the second half of 'twenty five we haven't incorporated additional milestones right. So we think it's a it's a very achievable milestone that we anticipate we do anticipate receiving that.
Well in advance of when that cash runway guidance.
Is associated in the second half so we're not going to kind of go into detail about what it would be without that milestone given the confidence that we have in our ability to achieve that.
The next question comes from <unk> Patel of H C. Wainwright. Please go ahead.
Thank you guys in light of the fact that <unk> would not be exercising its exclusive option under the threat to agreement annual pausing of the phase one two M&A gene therapy study, how should investors think about the future of gene therapy dosing using in tool and then secondly do.
You feel inventories less suited for gene therapies.
Yes.
That's a good question, we definitely think that <unk> is well suited in gene therapy as we've demonstrated with our empty capsid study actually where we clearly demonstrated that even a single dose of am tour meaningfully reduces knapp titers and re dosing as a key challenge.
But as additional benefits as well instead of kind of once and done approach kind of a.
Lower doses as well that's very attractive.
Always guided that gene therapy is a partner play and we'll continue to do that I think we've demonstrated this year actually with an additional partnership with Astellas.
Uh huh.
In an additional indication with our <unk> program.
Great. Okay, and then second did.
The current market conditions and all these old readouts in any material way impacts your business relationship with <unk> and then are you still on track to receive $65 million in development and regulatory milestones and up to $550 million in commercial milestones.
Yeah, so look the market conditions.
Impact our relationship with so I think we've just delivered a very positive and successful phase III program.
So be as excited about this.
Moving forward pricing forward there.
With the market conditions on that partnership or any of the milestone payments that you mentioned.
Okay, and then as we as we think about strategic re prioritization can you clarify your clinical development strategy for <unk> IL. So for example is your goal to complete IND, enabling studies of <unk> IL and partner with an established player for clinical development and commercialization.
Example.
Yes. So I think we are as I mentioned earlier, we're quite confident that we can move this forward ourselves in in autumn diseases of the liver and at this point, we don't plan on partnering in trial.
Okay.
And then as we kind of shift over to the dissolved study readouts and speaking of the secondary endpoints have you had a chance to analyze patient reported outcomes and gout flares between treatment and placebo groups. If so can you share any.
Noticeable trends, particularly between inventory doses.
Yes, so the analysis of the secondary endpoints is ongoing and we have not disclosed those yet.
And then final question.
Dive deep into the dissolved study readouts.
Data at a scientific conference later this year.
Great. Thank you very much for the update.
Thank you.
Thank you operator, and thank you everyone for joining our call today, we look forward to keeping you up to date on selected Biosciences. Thank you.
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