ERYTECH Pharma S.A.
Q3 2019 Earnings Call Transcript

Published: 8 Nov 2019

[Operator:]

Ladies and gentlemen, thank you for standing by and welcome to the ERYTECH Third Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to hand the conference over to your speaker today, Gil Beyen, Chief Executive Officer of ERYTECH. Please go ahead, sir.

[Gil Beyen:]

Thank you, Cindy. And good afternoon, good morning, everybody. Thank you for joining us for our third quarter earnings call. We announced our Q3 financials and business update yesterday evening, and you can access the press release, also our earnings presentation, on the investor relations page of our website. With me here is Eric Soyer, our Chief Financial and Chief Operating Officer; and Iman El-Hariry, our Chief Medical Officer. She's connected by phone.I will, switching to Page 2, draw your attention on the disclaimer, the forward-looking statements, and switch immediately to Page 3 with the agenda. It's really following our quarterly routine. I will start with the business update for the third quarter and year-to-date. Eric will take over for the financial update of the third quarter and year-to-date, and then we will have - Eric will continue with a summary of the news flow and the milestones, and then we'll open up for Q&A where the three of us will be available to respond to your questions.Now before starting the update, I switch to Slide 4. It's good to remind who we are, show the essentials of the company. Slide 4 presents them in a slightly different form than what you may be used to. We're still the red cell company, very focused on cancer metabolism with late stage trials in second line pancreatic cancer, the Phase 3, as you know, triple-negative breast cancer, Phase 2, and IST in second line acute lymphoblast leukemia.To the right of the slide, we now have two operational manufacturing sides

[Eric Soyer:]

Thank you, Gil. Good morning, everyone. We're now reviewing the key financial highlights for the first nine months of 2019, and we're starting with the P&L information. We're on Page 13 of this presentation. As you can see, the net loss for the first nine months of the year was €43.3 million, which is an increase of €13.6 million over the same period of last year, which is mostly, or I should say entirely driven by the increase in operating loss, to increase €13.2 million to in the operating loss of €46.8 million, and that is comprised of an increase in pre-clinical and mostly clinical development activities, an increase by €11.3 million, which is of course mostly, mainly really to our Phase 3 trial, the TRYbeCA1 trial in pancreatic cancer. But also, the Phase 2 trial in triple-negative breast cancer, the TRYbeCA2 trial, and the NOPHO trial in leukemia. In the same time, we had an increase in G&A, an increase of €3.2 million, of which a good part of it, more than half of it, €1.9 million, was actually related to the launch related activities of our U.S. production facility in Princeton, which is now GMP ready for clinical batches.And finally, we had €1.2 million increase in other income. As you know, this other income is mostly comprised of grants and research tax credit from the French government, but the increase of the same period of last year was actually mostly related to the upfront milestone payments, which was upon the agreement of the Squeeze Biotech licensing deal in immune oncology, which we closed in June this year.With that, I will then turn to the cash flow information on Page 14. As you can see, the net cash variation for the first nine months of the year was €52.4 million, which is indeed a net cash utilization for operating, investing and financing activities of €55.6 million. And that was - as you can see, that was quite heavily impacted by our investing activities CapEx for the production increase activities we had earlier this year in Leon for the expansion of the Leon facility. And of course, in Princeton for the build and launch of our U.S. production facility. So you may recall that we had a peak in cash utilization in the first quarter of this year, and now I should say that cash utilization is thought of back to normal with €16 million in the second quarter and now €12.5 million in the third quarter, which leads us to a total cash position at the end of September this year of €81.9 million, which is approximately $89.2 million. This is perfectly in line with our expectations and also perfectly in line with the earlier cash guidance we have given of cash runway until the end of 2020. And I should say that we're also working on cost prioritization and cost saving initiatives to help us further stretch this cash runway into '21.And now, turning to the wrap-up of this presentation with key milestones expected over the next 12 months. We are on Page 15 of this presentation. You may recall that we started the year with the objective of having our GMP production ready at Princeton. So this is done. We were also foreseeing the safety review by the end of the year for the TRYbeCA1 Phase 3 trial, and that is also done with the first 150 patients of the trial. Ahead of us now, we have the first U.S. patients enrolled and treated in the TRybeCA1 U.S. arm, the Phase 3, and I should say this should be eminent now. And then towards the first part of next year, 2020, we will have the initiation of the Phase 1 trial in first line pancreatic cancer. This is an ISD and investigator sponsored trial. In the first part of the year also, we should see the interim results of the Phase 2, also an ISD trial, and this one is in acute lymphoblastic leukemia. That's what we call the NOPHO trial in the northern countries of Europe. And finally, as Gil mentioned, towards Q3 next year, we're expecting the interim analysis in the TRYbeCA1 trial. That interim analysis is for superiority.With that, I will turn the call over to the operator. I would like to remind you that for those of you who would like to ask questions in French, please of course feel free to do so.[Foreign Language]And I would like to thank you for your attention. And now turning the call over to Cindy for the Q&A session. Cindy, over to you.

[Operator:]

[Operator Instructions] And our first question comes from Reni Benjamin with JMP Securities. Please proceed with your question.

[Justin Walsh:]

Hi, this is Justin Walsh on for Rene. Congrats on the progress. And my French is a little rusty, so I'll stick with English. The first question

[Gil Beyen:]

I'll hand this over to Iman. I hope Iman - if you can answer this.

[Iman El-Hariry:]

Yes. Hi, Justin and Rene. Yes, we do expect that 2/3 of the patients approximately will have received gemcitabine in the second line setting. We just need also to remember right now, our most highly enrolling countries in Europe are; France always being in front of course, FOLFIRINOX is very prevalent [indiscernible]], and therefore, we have a predominance of gemcitabine in the second line setting. But we do believe that that trait will continue to dominate as the trial reaches its final stage of completing enrollment.

[Justin Walsh:]

Got it. Thank you. And then one more question

[Gil Beyen:]

Good question, Justin. So for the clinical trials, yes, we foresee that - given that both sites have - are also early commercial sites, I would say we clearly can cope with significant additional clinical trials if we would - during other indications. Both sites are foreseen to be therefore the early commercial. And as commercial activity will be top, the plan is that indeed both in Europe and U.S., additional site will most likely be necessary. We hope, in any case. And then the plan would be given also to sort of optimize logistics, et cetera. For example, in the U.S., next site most likely more sort of West Coast based, and in Europe, a second site most likely the north of Europe based. This is still early days. We have shown that we can equip and start a trial in a short period of time. So as soon as we see the commercial activity picking up, we will obviously make sure that we are ready so that we have lined up the options, and then that we can trigger them quickly for additional capacity.

[Justin Walsh:]

Great. Thank you. Congrats again.

[Gil Beyen:]

Thank you.

[Operator:]

Thank you. And our next question comes from Ingrid Gussenhow with Kempon. Please proceed with your question.

[Ingrid Gussenhow:]

Good morning and thank you for taking my questions. I was wondering

[Gil Beyen:]

Good morning, Ingrid. I'm not sure I fully understood the question. Can you repeat?

[Ingrid Gussenhow:]

Yes, sure. So I was just wondering if you have estimated what is your rate of opening the U.S. you are expecting to see? Maybe let's say for the next six months, how many sites do you expect to have open?

[Gil Beyen:]

Yes. Okay. Good question. So we target approximately 30 sites, and the plan is that that would be completed in the first quarter next year. So in roughly six months to get them all open.

[Ingrid Gussenhow:]

All right. Great. Thank you.

[Operator:]

Thank you. And our next question comes from Philippa Gardner with Jeffries. Please proceed with your question.

[Philippa Gardner:]

Hi there, a couple of questions, if I could please. So first of all, just in terms of the number of sites in the U.S., I think you said previously that you were looking at around sort of 100 more sites in total for the trials. So I'm just wondering now why we're already looking at 30 sites in the U.S. And then my second question for Eric

[Gil Beyen:]

The first part of your question I will transfer to Iman again.

[Iman El-Hariry:]

Yes, hi. Actually, we have been always getting guidance that we are looking at hundreds of importers in both Europe and United States, and the number we also expect to have maybe 70/30 or 60/40, but now coming down to the modern list of 70/30 split between Europe and the U.S. So that has been that plan from that time initiated [ph].

[Philippa Gardner:]

So can I just ask though - are you going to open additional sites in Europe still? Because I think you're currently at about 50 sites in Europe.

[Iman El-Hariry:]

We are actually going through the initiation and activation of getting meaning sites in Europe. So this process we've done. We've completed our feasibility over a year and a half ago, and want to go through all the approval. Just waiting for the approval from different countries and the ethics committee. And so now we are going through the initiation and activation process in Europe. So yes, we are operating approximately around 50 sites, but we expect to complete again the activation of all sites in Europe towards end of the year.

[Philippa Gardner:]

Okay. Thank you.

[Eric Soyer:]

Hi Philippa, this is Eric. For your second question - so indeed, we are - well this is a work in progress, I should say. But it's quite obvious that the two main focus of the company right now are A) execution - I should say perfect execution of our TRYbeCA1 study in the Phase 3 study, of course, and the second focus is to be very disciplined on cash to make sure that we keep the cash runway at least until the end of 2020 and possible into '21. So we are reviewing our portfolio of projects and activities in light of these two priorities and two focuses. And so that will help us to make sure that we are spending our cash wisely and indeed, absolutely in line with these two major priorities.

[Philippa Gardner:]

Great. Thank you.

[Eric Soyer:]

Thank you, Philippa.

[Operator:]

Thank you. [Operator Instructions] And I'm not showing any further questions at this time. I'll now turn the call over to Gil Beyen for any further remarks.

[Gil Beyen:]

Thank you. I want to thank everyone for your participation and attention, and obviously for your continued support and interest - supportive of Erytech and interest in Erytech. We look forward to keeping you updated on the progress through the remainder of this year and next year. Our next appointment is somewhere in March for the full-year quarterly update. So thanks for joining. I wish you a great day and weekend also that's approaching. So thanks again.

[Eric Soyer:]

Bye-bye.

[Operator:]

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