ERYTECH Pharma S.A.
Q1 2019 Earnings Call Transcript

Published: 13 May 2019

[Operator:]

Thank you, Michelle. Good morning. I'm in Boston right now. So, people on the side. And good afternoon in Europe. Welcome to our first quarter 2019 business and financial update call. I'm here in Boston with Dr. El Hariry, our Chief Medical Officer, and Eric Soyer, our Chief Financial and Chief Operating Officer, is connected in Lyon. I hope you have the slides in front of you. So, the slides are on the webcast. The link was on the press release. They are also on our website. And for questions, may to remind, the question is only to the audio connection, not to the webcast connection at the end. Slide 2, I'll let you read the disclaimer at your convenience and go immediately to slide three, with the agenda for today. So, as usual, I'll start with the business updates. Eric will take over for the financial results and the news flow. And then, we'll return, the three of us, available for Q&A after this short introduction. I think I don't need to go here in – slide 4, it's just to set the scene. Leader in red blood cell-based cancer therapeutics with our ERYCAPS technology, late stage. We'll talk most about the Phase III in pancreatic cancer, Phase II in triple-negative breast cancer, our production and most about the platform. And you see that reflected on slide five in the pipeline. The pipeline focusing indeed on cancer metabolism and targeting amino acids that are needed for all our cells, but specifically for cancer cells, like asparagine and methionine. And you see here the different programs that we will address in especially the pancreatic second line, the TRYbeCA 1, a little bit about TRYbeCA 2. And we have – and just for reminder, we will zoom in more on it, but we have the trial still ongoing in ALL, trial in IST, an investigator-sponsored study in the Nordic countries in patients allergic to pegylated asparaginase and then other trials in the making. For example, a Phase I study in first-line pancreatic cancer and a Phase I study in solid tumors with methionine damages. So, I think most of you are aware of this. I don't go much further here. Going to the highlights for the quarter, first of all, obviously, TRYbeCA 1, the Phase III study in second line PDAC pancreatic cancer. Actively enrolling in Europe and even ahead of plan – slightly ahead of plan, but ahead of plan in Europe and are now also hoping to start soon in the US because we have submitted our IND. The Phase II study in first-line TNBC, triple-negative breast cancers is – first sites are open since a while already, but we're now enrollments to start in different sites in Europe. To supply all of this, we needed additional manufacturing capacity. We have the extension of our Lyon facility, ongoing, on track for starting end of Q2. And we're building this new site, this really – for the clinical but also commercial in Princeton, also ongoing and we will be able to start give batches in end of Q2 and Q3. We have presented – and I'll comment a little bit later, showing one example of some new data on erymethionase. This was at the AACR. And then, you may have seen, and I'll come back to it, but you've seen that we've strengthened our board of directors with the proposed appointment of Jean-Paul Kress as chairman. So, we'll propose him to the shareholders in June. In terms of cash, solid cash balance, $110 million of cash. $124 million. But Eric will explain more about the financials. So, these are the key highlight. Going to slide 7, our TRYbeCA 1 study, as you all know, it's a Phase III study, a little study in second line in metastatic pancreatic cancer of 500 patients to enroll. It's one-to-one randomized, chemotherapy backbone, gemcitabine plus abraxane or an irinotecan-based therapies with or without eryaspase. We have here a study that foresees an interim analysis at two-thirds of events with a primary endpoint as overall survival. As a reminder, the study started enrolling in September 2018. It's now actively enrolling in several European countries – four European countries. All the 11 countries are now approved, both from the agencies and the ethical committees. And importantly, we submitted the IND recently. So, we hope to be able to broaden the enrollment in the US and the near future. In terms of pancreatic cancer, we're also intending to move this through the frontline and the first step to get us to frontline pancreatic is a Phase I study in combination with FOLFIRINOX. Obviously, FOLFIRINOX gaining a lot of ground both in Europe and US in frontline pancreatic cancer. And there was this recommendation that we do a small Phase I study before going to a bigger program in frontline. This study is an investigator-sponsored study and is more than in planning state. I can say it's really in setup phase, but we are awaiting the IND for the TRYbeCA 1 before we can embark on full launching of this IST study. So, first launch of the site in the US, launching it. So, that's on pancreatic cancer. On triple-negative breast cancer, TRYbeCA 2, just as a reminder here, it's a study in Europe, 65 patients to be treated. It's in frontline TNBC. It's chemotherapy again and randomized gemcitabine and carboplatin, with or without eryaspase. Here, it's an objective response rate endpoint. We have approvals in four countries and we have about eight sites open for enrollment. But we are awaiting the first patient to come in after which we think that indeed the enrollment should pick up as normal in clinical development. Moving to slide nine – it's not moving here. Slide nine, I mentioned it in the introduction, we obviously meet the manufacturing capacity. In Lyon, you see our building where we have our office, but the ground floor, we have our original manufacturing facility and now we are extending this on the first floor. So, the little picture we see here is the extension, which is ready to start. So, validation work is ongoing. By the end of Q2, we will be able to produce those extension, also to make sure that we have sufficient capacity for the Phase III trial and the Phase II trial and where we expect to have further increase in volumes soon. And in New Jersey, in Princeton, you see the building. I think we showed it last time also. We have 30,000 ft.², 3000 m² approximately there. And you start seeing that it's – pictures are small, but that its effective construction work is now down. Validation is ongoing. And we expect, in Q3, to be able to produce here for the trials in the US. Moving to the preclinical programs and the most important is the erymethionase. Erymethionase, it's the other cancer metabolism targeting agent with now a methioninase encapsulated. We have had very interesting preclinical results in different indications. We have completed the preclinical talks and we are now preparing to gear up for Phase I study, mainly CMC activities, mainly the production of the enzyme being the limiting factor to be able to start the study. We hope to have – be able to sort of have approval for the study by the end of this year and first patients in the beginning of next year. In the meantime, we are continuing to explore this molecule, erymethionase, which on its own has this very strong anti-tumor effects, which we saw in gastric cancer in glioblastoma. But we also see now, and it's indicative still, but it's interesting that we have synergistic effects with immune checkpoint inhibitors, with checkpoint inhibitors. You see a combination of methioninase plus anti-PD-1, having like 50% – more than 50% better results than the anti-PD-1 alone or methioninase alone. We explored further, but it opens a series of at least intriguing possibilities of how we can combine this agent with other molecules like the anti-PD-1, something we've never seen this strong with the asparaginase. So, there is something intriguing with the methioninase that we may have to explore further. Up to here, clinical and preclinical. Switching to the recent announcement here on slide 11 of the appointment – of the proposed appointment, I must say, of Jean-Paul Kress. We have – obviously, this appointment is dependent upon the approval of the general assembly. It's clearly in view of preparing the company for the next steps of growth. It's also in view of corporate governance, making sure that we follow corporate governance to the best possible. So, the role of CEO and Chairman, which I have been occupying until now, we're splitting this. And I think it's a good practice to do. So, I'll stay CEO, but Jean-Paul will take over the chairman role. Jean-Paul is, I think, a great combination of pharma and biotech experience and also of European and US experience. He's been in the US since quite some years. Last was the CEO of Syntimmune, which was acquired by Alexion at the end of 2018, a very nice acquisition. Before that, he was at Biogen, at Genzyme. He was also the CEO of Sanofi Pasteur. That was in France and even in Lyon. So, there is a connection to our hometown. And in different other functions with AbbVie, Gilead, Eli Lilly. Also, board experience, for example, at Sarepta. An MD background. So, a good combination again of the different backgrounds and skills we think we need for preparing the company further for future. We are all welcoming him, me included, and I'm looking forward also to work with him. So, that's as of now, in fact. So, that about the board. And I think now I can leave the floor to Eric who will explain about the Q1 financials.

[Eric Soyer:]

Thank you, Gil. And good morning, everyone. We are now on page 12 for a quick summary of our P&L information for the first quarter of 2019. You can see net loss was €11.7 million, which is stable year-over-year. Operating loss was €13.3 million. This is a €4 million increase over the same period of last year. The increase was related to the acceleration of our research and development activities. This is a €1.5 million increase in R&D over Q1 last year. And this is mostly related with our Phase III trial in pancreatic cancer of course. We had also an increase in G&A, which is mainly related with the launch readiness activities, with both our facility expansion projects in Lyon and in Princeton, as Gil just mentioned. The increase in operating loss was actually offset by the increase in financial income. And financial income was €1.6 million in Q1 this year, while we had a €2.5 million financial loss in Q1 last year. And the income this year is mostly related with the favorable currency translation of our US dollar position into euro. I'm turning now to the cash position and cash utilization. So, we are on page 13. The total net cash position as of March 31 this year was €100.5 million, which is approximately US$124 million. This is a net variation of €23.5 million in the first quarter of this year. And that variation is made of a total cash utilization of €25.2 million, which is comprised of €15.9 million in operating activities; €8.9 million in investing activities, CapEx; and €0.4 million in financing activities. And we have again the favorable currency translation of our US dollar position into euro, with a positive €1.3 million impact. The cash position was relatively high this quarter. And, obviously, very much impacted by the non-recurring capital expenditures for the construction of our new production capacities again in Lyon and in Princeton. These new facilities, Gil explained, have now reached completion and we expect our capital position to be lower in the next quarters. Again, the CapEx for the construction project was anticipated and we confirm our cash utilization plan, which is the cash runway until the end of 2020. I'm now turning to page 14 for a quick word on our shareholder base, which is unchanged since as the end of last year, with a, as you can see, well balanced share ownership between the US and Europe and still the 10% to 15% retail base, which is mostly in Europe. And our largest shareholders are now, as you know, based in the US, with BVF holding 25% and RA Capital 11%. I'm finishing on page 15 with a summary of the key milestones for the coming months. The first one, the first patient to be dosed in TRYbeCA 2, the TNBC study in triple-negative breast cancer, as was explained in the first slides, are now open sand the study is open for enrollment. The second line, the start of the GMP production in Princeton and in Lyon, Gil has mentioned that already. Lyon is coming first before the summer and then Princeton, which will come right in time to support the ramp up of the US arm of TRYbeCA 1. This is the third bullet point, which is expected in the trial once we have the IND, which has been submitted. And finally, the fourth bullet point is the initiation of the Phase I trial with erymethionase, which is expected at the beginning of next year in terms of patient enrollment. And last, but not least, not forgetting also the interim efficacy analysis on the Phase III pancreatic trial, TRYbeCA 1, which is expected around midyear next year. And again, as you can see, 2019 is the year of execution on many fronts. With that, I want to thank everybody for your kind attention. I will turn the call over to the operator who will open the Q&A session. And again, I want to remind that if you wish to ask questions in French, please feel free to do so. Michelle, over to you.

[Operator:]

[Operator Instructions]. Our first question comes from the line of Boris Peaker with Cowen. Your line is open. Please go ahead.

[Boris Peaker:]

Great. Good morning. I guess I want to start on TRYbeCA 1. I'm just curious, how many patients or events are required for the interim analysis and just when do you anticipate kind of this interim analysis to occur and what are the statistical assumptions behind this interim analysis?

[Gil Beyen:]

This is a question for Iman.

[Iman El Hariry:]

Hi. Good morning, Peaker – Boris. I'm sorry, Boris. We expect to have the interim analysis [indiscernible] have been approved. We envisage that this is likely to coincide with the full enrollment of the trial and that will also coincide around mid-2020.

[Boris Peaker:]

Got you. So, if it is at full enrollment of the study, it sounds like – would there be any stopping rules at that point or is it just kind of a safety assessment and then you just continue regardless?

[Gil Beyen:]

No. It's only to pre-REACH [ph] analysis. So, if we don't hit the boundary for the superiority [indiscernible] will continue until the final analysis. But just to talk about the safety, we have, as you know, an IDMC and we are planning – as per our [indiscernible], several safety analysis in the trial specifically during the conduct of the study. That interim analysis [indiscernible] only for superiority.

[Boris Peaker:]

Got you. And my last question, on ALL, I know you have an investigator-sponsored study ongoing. I'm just curious what the objective of conducting the study. What do you see is commercial potential in ALL?

[Iman El Hariry:]

Okay. Maybe I'll start with the first one, Gil, and then you continue. This investigator-initiated trial that's – it's what we call the NOPHO trial. It's in several countries in the Nordic region. The study's objective is to study basically – it's more or less a feasibility study assessing eryaspase in second line patients who have received prior Oncaspar and encountering hypersensitivity or allergic reactions. So, essentially, eryaspase is given as Erwinaze would be given in that indication. So, the study in total has 30 patients to enroll and we have enrolled so far over 20 patients. The primary endpoint is asparaginase activity. So, it's really a pharmacokinetic endpoint. And, of course, safety as well as pharmacokinetic activities are also planned in the trial. So, the trial is going very well indeed and we expect to have data in early 2020. Gil, do you want to touch base on that?

[Gil Beyen:]

Maybe, Boris, this trial was ongoing when we decided to focus on solid tumors and cease ALL development. It's ongoing. It's an IST. So, commercially, we don't see – it has not really a commercial perspective. It's showing that we can help patients – it's here patients that are allergic to pegylated asparaginase for which there is few options. You never know. This is, obviously, an indication where the unmet need remains and you never know what may happen. But for the time being, it's really an IST that we continue to support, but not in view of commercial perspective.

[Boris Peaker:]

Got you. Okay, great. Thank you very much for taking my questions.

[Gil Beyen:]

Thank you, Boris.

[Operator:]

Thank you. And our next question comes from the line of Anastasia Karpova with Kempen. Your line is open. Please go ahead.

[Anastasia Karpova:]

Hi. Good afternoon. And good morning. Can you elaborate a little bit more if there were any feedback from the FDA regarding the IND, maybe covering manufacturing or the formulation of eryaspase, which resulted in somewhat already a delay of approval of the PDAC trial in the US? And can you elaborate – also highlight when is the triple-negative breast cancer trial is going to read out at the current enrollment estimates? Thanks.

[Gil Beyen:]

Thank you, Anastasia. Morning. I'll switch over to Iman. But, mainly, related to FDA, we submitted later than [indiscernible] and this was due to our own work on the – the tech transfer and comparability we needed to do between the Lyon site and the American Red Cross site. These experiments took longer. We had some delay in doing that. So, on the FDA side, we submitted. And so, timing now will depend whether and if we get questions from them on the submission we did. I don't know, Iman, whether you want to add to this.

[Iman El Hariry:]

No. We only submitted a few weeks ago. Once we completed the entire application for the file and as soon as we hear the news from the FDA, we will inform everyone. So, on the TRYbeCA 2 – hello, Anastasia. On the TRYbeCA 2, I think it's probably – we share the same sentiment. We hoped that we have our first patient enrolled by now. We have eight sites initiated [indiscernible] data we are targeting by second half of 2020. Even though we have delays in getting the first patients in the trial, we are confident that we will be able to meet our recruitment targets and these are presented again in the first half of – sorry, in the second half of 2020. But I think I would like just add also that all the sites that have been initiated, the investigators are highly interested in – it is just one of those unfortunate realities in clinical trials. Sometimes you get a bunch of patients like the [indiscernible]. And sometimes you just wait for the first patients, but the interest is there from everything [indiscernible] initiated already.

[Anastasia Karpova:]

No, great. And maybe if I can just clarify, the formulation that you are using in TRYbeCA 1, is it exactly the same in terms of manufacturing and other PK/PD characteristics than the one that was used in Phase II or are there subtle differences?

[Iman El Hariry:]

It's a pancreatic clinical trial.

[Gil Beyen:]

So, it's exactly the same indeed. You may remind that, in US, we had a slightly different manufacturing process called ALL. That's the big step forward, which also explains a little bit why we took more time to be able to file the IND because we needed to show the FDA the comparability and everything, but it is to be able to have the formulation that we have in Europe to also use that in the US.

[Anastasia Karpova:]

Great. Thank you so much.

[Operator:]

[Operator Instructions]. Our next question comes from the line of Philippa Gardner with Jefferies. Your line is open. Please go ahead.

[Philippa Gardner:]

Hi there. Just a couple more questions from me please. So, just to be clear, in terms of Princeton, will that be able to be used to supply clinical trial materials for the Phase III in the US for TRYbeCA 1? And if so, when do you think that can come online to be able to supply that clinical trial? And then, my second question is – sorry, Iman, you broke up a little bit when you were talking about what the delay has been in the triple-negative breast cancer as to why we haven't yet seen the first patient enrolled. If you could just go over that again, that would be helpful. Thank you.

[Iman El Hariry:]

I can start with the last one. And I'm sorry for the muffled line. We don't have any specific reasons. Simply there aren't new patients coming through the door. We had two patients screened already, but they were screen failure. Our protocols are really [indiscernible] for both TRYbeCA 1 and TRYbeCA 2. There isn't really any specific reasons why we don't have any new patients. It's just a matter of those patients coming through the door.

[Philippa Gardner:]

Okay, that's very clear. We've got a fire alarm going off here at the moment. Sorry. And, yeah, just on the first question about the Princeton supply?

[Gil Beyen:]

The answer is yes. Indeed, the Princeton site is planned to produce for the US part of the TRYbeCA 1 and other trials we are doing in the US even for probably commercial. And it's to come onstream for clinical production in this third quarter of this year. Don't forget, we still have the American Red Cross site in Philadelphia. So, we can start producing for TRYbeCA 1 in the US earlier. Smaller volumes, obviously. So, the early ramp up of the trial, we can do from the Philadelphia site, but the Princeton site is really there to – once we anticipate higher volumes will be needed – the opening of Princeton will coincide with these higher volumes needed.

[Philippa Gardner:]

Great, thank you.

[Gil Beyen:]

All right. Good luck with the alarm there.

[Operator:]

Thank you. And I'm showing no further questions at this time. And I would like to turn the conference back over to Mr. Beyen for any closing remarks.

[Gil Beyen:]

So, if no further questions, I want to thank you all for your attention, for your questions and for your support to ERYTECH. And as normal, as usual, we'll keep you posted on further developments and we look forward to seeing and speaking to you soon.

[Eric Soyer:]

Thank you.