Eloxx Pharmaceuticals, Inc.
Q4 2020 Earnings Call Transcript

Published: 11 Mar 2021

[Operator:]

Good afternoon everyone and welcome to the Eloxx Pharmaceuticals Fourth Quarter and Full Year 2020 earnings webcast and conference call. Today's call is being recorded. At this time, I would like to turn the call over to Barbara Ryan, Eloxx Investor Relations. Please begin.

[Barbara Ryan:]

Thank you, Victor. Welcome and thank you for joining us this afternoon for a review of Eloxx Pharmaceuticals fourth quarter and full year 2020 financial results and business update. Joining me this afternoon are Dr. Greg Williams, our Chief Executive Officer; Neil Belloff, Chief Operating Officer and General Counsel; Dr. Tom Haverty, our Chief Medical Officer; Dr. Matthew Goddeeris, Vice President of Research; and Steven McDonald, our Vice President of Finance and Accounting.

[Greg Williams:]

Thank you, Barbara. And welcome to Eloxx's fourth quarter and full year 2020 earnings webcast and conference call. We are continuing to advance our clinical and scientific programs for our ERSG library. Our highest priority is to complete our Phase II clinical trials for ELX-02 in cystic fibrosis and we are on track to report top line data in the first half of this year. We believe that these proof-of-concept data will be a substantial value inflection point for our company. As we previously shared, we are pleased that ELX-02 Phase II clinical trials independent safety review committees have concluded several planned meetings and allow dose escalation up to the fourth and highest dose level. To date no drug-related serious adverse events have been reported. We are conducting these global trials at top CF clinical trial sites and are gratified that the Cystic Fibrosis Foundation has recently expanded their financial support beyond the US to provide increased funding for our global ELX-02 Phase II clinical trial program. The expressed level of interest and support from top investigators, trial sites and patient advocacy groups has been a fantastic benefit to the program. Previously, we've shared that we continue to evaluate additional clinical trial sites in other countries where patient enrollment may be feasible. We are pleased to report that we are opening additional clinical trial sites in Australia and Canada. As you know, the Cystic Fibrosis Foundation has launched a $500 million Path to a Cure initiative aimed at finding cures for all CF patients. The foundation's initiative is prioritizing innovative approaches for individuals who do not respond to currently available treatments. This includes those with nonsense mutations, such as G542X, which is the focus of our el ELX-02 Phase II clinical trials. Patients with nonsense mediated cystic fibrosis represent about 12% of the CF population.

[Matthew Goddeeris:]

Thank you, Greg. We continue to advance our preclinical efforts across our ERSG library of molecules, working with our research partners to advance our programs. As Greg mentioned, we are pleased to have had several of our scientific manuscripts published in leading peer reviewed journals and plan to continue to present our findings at scientific conferences. In February, we published a scientific manuscript in the Journal of Cystic Fibrosis, titled targeting G542XS CFTR nonsense alleles with ELX-02 to restore CFTR function in human derived intestinal organoids. This manuscript details the work we performed using G542X patient derived organoids. As you know, G542X is the most common nonsense mutation in the population of people living with cystic fibrosis. Like other nonsense mutations, the G542X change introduces an early translation stop in the CFTR gene, leading to a truncated and unstable protein product. Current modulators therapies designed to improve CFTR activity are ineffective when CFTR protein is not being made. To overcome this, cells must be able to ignore or read through this stop signal to produce full length CFTR. ELX-02 is a compound that interacts with the ribosome to induce mRNA read through. Across many experiments, we observed that ELX-02 can produce active CFTR protein in organoids with G542X mutations. While no CFTR activity is found in these G542X organoids when untreated, an increase in activity is seen with increasing amounts of ELX-02. We also observed that ELX-02 increases the CFTR mRNA transcript, the molecule used to produce the protein, about five-fold in some cases. As ELX-02 advances to the clinic for people with CF due to G542X mutations, we will continue to test the molecule with other types of nonsense mutations to determine if they too may benefit from this approach.

[Stephen MacDonald:]

Thanks Matt. As of December 31, 2020, the company had total cash and cash equivalents of $24.7 million, which we believe will fund the company's operations through top line data in cystic fibrosis, and into the fourth quarter of 2021. For the quarter ended December 31, 2020, the company incurred a net loss of $6.1 million or $0.15 per share, as compared to a net loss of $11.6 million, or $0.29 per share for the same period in 2019. Non-cash stock compensation expense totaled $1.3 million, with 1.1 million allocated to G&A and 200,000 to R&D. Fourth quarter 2020 R&D expense totaled $2.6 million, compared to $5.9 million for the same period in 2019. The quarter-to-quarter R&D expense decrease was driven by reduced headcount and related salaries for the 2020 period, as well as decreases in certain clinical and preclinical research costs. G&A expense for the fourth quarter of 2020 was $3.1 million, which decreased from $5.6 million for the same period in 2019 due to lower headcount and professional services cost. For the full year ended December 31, 2020, the company incurred a net loss of $34.6 million or $0.86 per share, as compared to a net loss of $50.9 million, or $1.34 per share for 2019. Non-cash stock compensation expense totaled $8.7 million with 1 million allocated to R&D, 5.6 million to G&A and 2.1 million to the corporate realignment in February 2020. Full year 2020 R&D expense totaled $14.6 million, compared to $26.3 million for 2019. The year-to-year R&D expense decrease was driven by reduced headcount and related salaries for the 2020 period, as well as reduced costs relating to certain clinical and preclinical research activities. G&A expense for the full year 2020 was $14.8 million, which decreased from $24.2 million in 2019 due to lower headcount and professional services costs. For your modeling purposes, our total shares of common stock outstanding as of December 31, 2020, were 40.157 million. This concludes the fourth quarter and full year 2020 financial comments, and I'll turn the call back to Greg.

[Greg Williams:]

Thank you, Steve. It's our highest priority to complete our Phase II proof of concept clinical trials in cystic fibrosis. We are on track to report top line data in the first half of this year. We believe that these data will be a major value inflection point for our company. We're pleased that the independent safety review committees of our ELX-02 Phase II proof of concept clinical trials have allowed dose escalation up to the highest dose level and that to date no drug related serious adverse events had been reported. The patient population we're studying has few if any treatment options and the potential for ELX-02 to restore the production of CFTR protein could be a substantial advance and meaningfully improve the quality and length of their lives. We are laser focused on assuring that we, our investigators and global clinical sites can accomplish these goals. We are pleased to be opening additional clinical sites in Australia and Canada. We're also gratified that the FDA has granted orphan drug designation for ELX-02 for the treatment of cystic fibrosis which confers several important benefits to the ELX-02 program. Beyond cystic fibrosis, we continue to advance our portfolio of novel ERSG molecules. Several of these compounds demonstrate encouraging levels of read through activity and tolerability supporting their further therapeutic development in multiple disease states. As we continue to advance our programs, there's been a marked acceleration in the number of scientific manuscripts being published in important journals. And we continue to present meaningful data in scientific conferences. We thank you for joining us on our fourth quarter 2020 earnings call and we look forward to continuing to update you on our progress. Operator, you may now open the call for questions.

[Operator:]

Thank you. Our first question will come from the line of Ted Tenthoff from Piper Sandler. You may begin.

[Ted Tenthoff:]

Great, thank you very much. I appreciate the update and you taking my question. Want to get a sense for what would you see as a win in these I mean read through mutant patients or nonsense mutant patients, pardon me? There's nothing really that works out well there. So what do you kind of see as sort of a threshold for success? Thanks.

[Greg Williams:]

Hey, Ted, thanks for the question. So when we think about patients with no meaningful therapy, no available therapies, we think about Orkambi like and Symdeko like performance, as being the threshold for clinically meaningful changes. And those compounds also represent a reasonable threshold for regulatory approval. Just to remind you, Orkambi came in with sweat chloride concentration reductions in the five to 11 millimole per liter range. And in bigger studies over longer periods of time, Orkambi was associated with FEV1 increases in the range of 2.7% to about 5.6%. Symdeko was a little better with overall sweat chloride concentration reductions in the range of about 10 with FEV1 increases in the range of about 4%. So from our Phase II study, we would be looking for a threshold of sweat chloride concentration reductions that would be Orkambi and Symdeko like that would be in the five millimole per liter concentration reduction.

[Ted Tenthoff:]

Greg, that's very clear and very helpful. I'm looking forward to data.

[Greg Williams:]

Thanks Ted.

[Operator:]

And our next question comes from the line of Michelle Gilson from Canaccord. You may begin.

[Michelle Gilson:]

Hi, thank you guys for taking my question. I guess kind of building on Ted's questions here. Could you maybe give us a sense of what the variability is day to day of sweat chloride? I guess interpatient variability? And then also, what are you planning to report? What are the data that we're going to get other than I guess sweat chloride and initial safety data? How many patients and well you probably see you are at the highest dose cohort, but will you report data from all the dose cohorts and what territories as well? And then, also, I guess building on that question, what's a good result? Is it important to see a dose response? Obviously, for the cystinosis data, we didn't quite see a dose response. So I'm just curious if that's going to be important in CF?

[Greg Williams:]

Thanks Michelle. We appreciate the questions. You've asked a few there. So I will try to take them in turn, see if I've captured them all. First, you asked about what would be some of the variability maybe intern - interpatient associated with sweat chloride concentration changes. And the literature tells us it wouldn't be surprising to see changes around eight or nine millimoles per liter kind of up and down. So it's important to have sufficient numbers to be able to really tease out that five to 10 thresholds that we've been looking for in terms of Orkambi or Symdeko like responses. We're not today providing updates on our exact enrollment and the details of what our top line data will consist of, but we will be providing those in the future. We will be pooling data across our clinical sites in Europe, Israel, now Australia; we'll also be adding data from the US as well as in Canada. So it will give you a broad dataset that represents the body of data that's available at that point in time. And we would anticipate seeing a dose response. With cystinosis, we did see a good response at one milligram per kilogram. We didn't see any response at 0.5. We saw a good response at one. When we got to the higher dose of two, we had two responders, but there was an issue with the third patient. We think we identified a threshold for activity in the cystinosis trial. But with more patients in the CF trial, we would expect there to be a more clear cut dose response across the four different doses that we're evaluating. Did I cover all your questions?

[Michelle Gilson:]

Yes, you did. You did a wonderful job of covering all my questions. Thank you.

[Greg Williams:]

Thank you.

[Operator:]

Thank you. I'm not showing any further questions in the queue. I'll turn the call back over to Greg for any closing remarks.

[Greg Williams:]

Well, thank you. We really appreciate your interest and your attention in Eloxx. It's an exciting time for us. We remain on target to report top line results in the first half of this year. And we're looking forward to updating you as we continue to progress. Thank you.

[Operator:]

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