ERYTECH Pharma S.A.
Q4 2019 Earnings Call Transcript

Published: 17 Mar 2020

[Operator:]

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

[Gil Beyen:]

Thank you. And good afternoon, in Europe, good morning, here in the U.S. Thank you for joining us for our full year 2019 earnings call. As you know, we announced our full year and fourth quarter 2019 financial results and business update yesterday evening, and you can access the press release, and the earnings presentation, on our Investor Relations page of our website www.erytech.com.On the call with are also our Chief Medical Officer, Iman El-Hariry and Eric Soyer, our Chief Financial and Chief Operating Officer. As you can imagine as we have implemented six rules to maximally protect our employees and the company from the Coronavirus outbreak, we are all three connected from different locations.So I draw your attention to the Slide 2, the disclaimer on Slide 2 and here, I underlined one sentence, I want to draw the attention to the uncertainty around the COVID-19 situation. We are, as you can imagine, very closely monitoring the potential impact of the pandemic with a particular focus on the timing and conduct of our trials.And, at this stage, we are able to produce and supply our Eryaspase to our clinical sites even in Italy and Spain. And we will see we are maintaining the timelines as we have guided before. But we are obviously aware that this may become increasingly challenging and we will provide more detail during the update.So, switching to Slide 3, the Agenda. It’s our quarterly routine. I will start with a business update focusing on the key highlights for the fourth quarter and year-to-date. Eric will then take over, present the financial highlights for the full year of 2019 and summarize the major expected milestones for the year to come and then the three of us will thereafter be available to respond to your questions.Now, before starting the update, I am switching to Slide 4. It’s a quick reminder of the company. I see no changes here. We still are and increasingly so the leader in red cell based therapeutics focused on cancer metabolism with late-stage clinical programs and now it’s two fully operational manufacturing sites. The original one recently expanded in Lyon for the treatment of the European patients and the second one now newly established in Princeton for U.S.The graph on the right-hand, just a reminder of the Phase 2 study in second-line pancreatic cancer where we showed this 40% reduction in risk of death rate to our knowledge the strongest results ever seen in a large clinical trial in second-line pancreatic cancer and the basis for our development in Phase 3.The next slide, Slide 5 presents the overview of our clinical and preclinical pipeline. Also here, no change. Our lead program – lead product candidate Eryaspase the asparaginase in red cells is as you know, evaluated in preclinical trials now, a pivotal Phase 3 in second-line pancreatic cancer TRYbeCA 1, a Phase 2 in first-line triple negative breast cancer, TRYbeCA 2 and a Phase 2 in second-line ALL acute lymphoblastic leukemia and this is an IST, an investigator sponsored trial led by the NOPHO, The Nordic Society of Pediatric Hematology and Oncology.Another IST, Phase 1 in first-line pancreatic is being prepared for launch in the first half of next year. And I will provide a brief update on all four of these trials in the coming slides and also on the preclinical pipeline afterwards.So, moving to the main topic, TRYbeCA 1 on Slide 6, the Phase 3 and second-line pancreatic cancer. Very pleased and proud to say that we are two-thirds enrolled or at least, I would say, at the end of February already we were two-thirds enrolled in this trial. It’s a trial with 500 – close to 500 patients to enroll.At this stage, we continue to be on track for full enrollment in the third quarter. As I said in the introduction, we are still able to supply to all the sites. That being said, we are indeed very closely monitoring the potential impact of the COVID-19 on the further conduct and timing of the study. But I think, at least to-date, we are continuing to supply as planned.We are now – this trial is ongoing in 65 sites in 11 countries in Europe and the United States. As we communicated in November, we already passed two safety reviews. In fact the small one in the beginning and then one on 150 patients in November. A next safety review is expected in the coming weeks.The key news flow item for the company this year is the reporting of the results of the interim analysis. It’s an interim analysis for superiority, which is planned for when two-thirds of the events will have occurred.This is also currently expected to occur in the third quarter that with the same caveat as expressed before as we expect increasing difficulties for the monitors to be able to visit the sites to have to – to monitor the data.Just a reminder, this interim analysis is a superiority analysis. It’s a superiority – no test for futility. So there are two possible outcomes or the trial continues towards its final analysis which is expected in the first half, let’s say mid-2021 or the second would be the trial already can be stopped for superiority if the primary endpoint, the primary survival endpoint is met. In that case, that would allow to stop the study and start preparing for the filings both in Europe and U.S.Another highlight of – recent highlight was the publication of our Phase 2 clinical data. That’s Slide 7. Just we expect here – the results. So it was published in the American – in the European Journal of Cancer and the conclusion is highlighted here that Eryaspase in combination with chemo significantly prolong both the overall survival and progression free survival in the entire patient population and this was irrespective of the asparagines synthetase expression.And as mentioned in the introduction, the overall survival result in this ITT population, the whole commerce population is, to our knowledge, the strongest of any large trial in this indication to-date.So that’s the second-line pancreatic, the Phase 3 study. On the next slide, Slide 8, we elaborate on the other Eryaspase trials.The TRYbeCA 2 is the Phase 2 in triple-negative breast cancer. This trial started enrollment in June 2019. It’s now enrolling patients in close to 20 sites in the four participating countries in Europe, Spain, Belgium, Hungary and the UK. The enrollment target is about 64 patients with an objective response of a primary endpoint and we expect trial results in 2021.It’s difficult to say exactly when the trial if slower than expected, but within 2021, we expect to see the results. Then there is a Phase 1 in IST trial where we are – where not do we but where Eryaspase will be tested in combination with FOLFIRINOX.It’s an IST driven by the Georgetown Lombardi Comprehensive Cancer Center who is the sponsor. They obtained their IND giving the clearance to start the trial. It’s an IND-based on our file obviously. And we now expect the enrollment of the first patient in the second half, it could even be a bit earlier as they have now the IND.This is a study with 12 to 18 patients to be enrolled in combination with FOLFIRINOX to prepare the ground for a later Phase 2 or Phase 2/3 study in first-line in combination with FOLFIRINOX on the one hand and GEM Abraxane on the other hand.And then there is the Phase 2 IST, NOPHO IST. This is now – this study is a study with originally 30 patients. It was expanded to 50 patients. We are now or they are now close to full enrollment in the trial. And what is interesting here is that, in this trial, we are – or they are - Eryaspase is being evaluated as an option to treat patients who have developed allergy to the standard pegylated asparagines.And we expect that we should be able to give an interim update by – in the first half of this year, as we will have received an interim update and that final data should become available by the end of this year.So this is the update on the clinical programs. On the next slide, Slide 8, it’s about the manufacturing. As you know, in order to be able to supply the products for these clinical trials, but also anticipating potential future commercial needs, we did a lot of work on expanding the manufacturing capacities.It’s quite an achievement to be able to – while we are doing all these clinical trials, sort of we doubled the capacity in Lyon, even added a second team. So more than doubled and in Princeton, we built this brand new facility or fully equipped. This brand new facility, which is a 30,000 square feet facility where we have 16 cleanrooms, of which we now have four used for the end use and equipped for the ongoing trials.All of this on Eryaspase. Then moving to the preclinical programs on Slide 10. So, it’s important that you can imagine that given the focus on the clinic, the attention to the preclinical has sort of diminished a bit. But still, we are remaining actively leveraging – remaining actively working on leveraging the ERYCAPS platform towards new indications and new product candidates and also partnership opportunities.The teams are working on three pockets. One is looking for combinations. Still this is Eryaspase, but I am just looking for which other treatment modalities could be synergistic with Eryaspase. We already know the combinations with chemotherapies we’ve done a lot of work, but there might be other treatment modalities there and this is in view of we are looking for other indications and even stronger results with the product.The Methioninase program, we have, as you know, very nice data in different indications there. Also, the combination data for example with checkpoint inhibitors that in the current financing climate, let’s say we are focusing obviously on the other programs, on the current late-stage programs that we are advancing the Methioninase program to be able to bring it to the clinic once we will have more financial resources to do so.And then the third pocket is partnering. So, you know in June, we entered into an agreement with SQZ Biotechnologies around our immune modulation activities. We are continuously looking for other partnership opportunities and in particular with the metabolic diseases, the rare diseases activities we have is in view of partnering.And then finally, two governance topics, I want to touch upon the first one, as you may have seen in the press release, it’s the announcement that Alexander - Alexander Scheer, our Chief Scientific Officer will leave ERYTECH to pursue another opportunity. So he will leave by the end of April.He has done tremendous work on focusing the activities of the R&D team, the preclinical team and his work will now be further continued under the leadership of Françoise Horand, who was our Director of R&D Operations and who has – who knows of this throughout the whole R&D activities. So we take the occasion here to thank Alexander for his contributions and wishing him all the best for his future endeavors.And then, the other governance topic is the appointment of a new Board Member, Dr. Melanie Rolli. You see we are now eight in the Board. Just to put a little fright around Melanie. So, it’s an appointment by the Board. It happened last week at the Board Meeting. It is a co-updation which is sort of preliminary appointment that needs still final ratification by the shareholders at the next General Meeting which is in June.So, Dr. Rolli really brings a strong experience in the pharmaceuticals close to twenty years. Most of it at Novartis, 14 years and of which eight years in U.S., six years in Basel in the fields of medical affairs, drug development, safety, and a lot of it in oncology. She is currently the CEO of PIQUR Therapeutics, a private oncology and dermatology-focused company in Basel in Switzerland.So this concludes the company update. I now like to hand the call over to Eric to guide you through our financial results for the full year 2019 and he will also summarize the upcoming milestones for the next 12 months. Eric, all yours.

[Eric Soyer:]

Thank you. Thank you, Gil, and good morning, everyone. We are now on Slide number 12 of the slide deck with the financial highlights for the full year 2019. And we are starting with a summary of our P&L information. As you can see the net loss for the full year 2019 was €62.7 million. It’s up €24.4 million over the previous year 2018, that’s plus 64%.The increase in net loss is made of a €20 million increase – €20.4 million increase in operating loss and a €4 million decrease in financial income. The €20.4 million increase in operating loss is attributable to the increase in preclinical and clinical development expenses, that’s €18.7 million and that was mostly related to expense for the company’s Phase 3 clinical trial in pancreatic cancer of the TRYbeCA 1 study.Also we have €2.5 million increase in G&A, as you can see, of which €2 million was related to the expansion of the company’s manufacturing capacity, as you know in Lyon, but also in the U.S. And also in the same time, we had an €0.8 million increase in operating income and that was primarily due to the $1 million, €0.9 million upfront payments when the company entered into the license agreements with SQZ Biotechnologies of our ERYMMUNE platform.So that was for the P&L information. Now a few words on cash. As you can see, at the end of 2019, ERYTECH had a total cash position of €73.2 million, which is approximately US$82.2 million and that’s compared with €134 million on December 31 last year 2018, the year before and a total cash position of €81.9 million at the end of Q3 on September 30 of 2019.The decrease in cash position during the twelve months of 2019, €61.2 million decrease, it was a result of a net cash utilization of €63.1 million and that was comprised of a €43.3 million for operating activities and €19.8 million for investing activities. And in the same time, we have the appreciation of the U.S. dollar against the Euro and that relates to a €1.9 million favorable currency exchange impact.You would probably remind that we had a few capital expenditure on disbursements in the first quarter of 2019 and that was of course related to the expansion of the manufacturing facilities in Lyon and in the U.S. in Princeton. And after that, cash utilization has gradually decreased during the remainder of the year for again a total cash utilization for the year of €61.2 million.So, at this time, we believe that this cash position at the end of 2019 will be sufficient to fund our ongoing operations into the first quarter of 2021.If I am now moving to the next slide number 13 and that’s a summary of our key milestones over the next twelve months and all those of course have already Gil mentioned in more details as he showed in the previous slides.So we are starting with the interim update on the NOPHO Study, that’s the Phase 2 in second-line ALL. So again, we expect the interim update in the first half of this year, 2020. But again, this is an investigator sponsored trial – investigator sponsored trial. So of course, we are not full in control of the timeline.Then the next is the initiation of the Phase 1 IST, the Phase 1 study with Eryaspase in first-line pancreatic cancer, in which we could expect the first patients in the second half of this year, 2020. And obviously, and the most important milestone of the year will be the interim analysis in TRYbeCA 1 on the Phase 3 study in second-line pancreatic cancer.Again, this is an analysis for superiority, as Gil has already explained with only two possible outcomes, either continue toward the final analysis which is expected in the first half of 2020 – 2021, sorry, first part of 2021. And the other possible outcome is a superiority, which ends with a significant improvement in overall survival.As explained this interim analysis is expected towards the end of Q3 this year, but with the necessary caveat that we don’t have full clarity on the potential impact of the COVID-19 situation yet.Next is the full results of the NOPHO Study in adults. So interim results earlier this year and the final results towards the end of this year, again an IST, so we got no full control on the timeline here. And finally, the Phase 1 study, another IST in first-line pancreatic cancer in which we are expecting interim results hopefully by the end of the year.So that’s the main expected milestones for the next twelve months. And with that, I would like to thank you all for your attention and we’ll now open the call for any questions you may have. Just as a kind reminder, you can of course ask questions in French, if you prefer to do so. And of course, we can answer either in French or in English as you wish.Operator, over to you. Thank you.

[Operator:]

[Operator Instructions] Our first question comes from the line of Boris Peaker with Cowen & Company. Your line is now open.

[Boris Peaker:]

Hello. Good morning or good afternoon if you are in Europe.

[Gil Beyen:]

Hi, Boris.

[Boris Peaker:]

Hello.

[Eric Soyer:]

Hi, Boris.

[Boris Peaker:]

My first question is on TRYbeCA 1. I am just curious, how does patient enrollment to-date compared to the Phase 2 trial? Is that something that you are even able to compare at this time?

[Gil Beyen:]

Iman, do you want to answer this question?

[Iman El-Hariry:]

Yes. So, Hi, Boris, good morning. Good afternoon or good morning, actually. The enrollment, we have different projections for this trial. It’s all very accelerated enrollment and so far what we have been seeing, we only exist as part of the trial that the projection, the actual enrollment is meeting the projections for the trial.So due to the Phase 2 trial, the Phase 2 trial which was conducted in Europe, in France, initially it had a little bit of a lag until the enrollment and then it started to accelerate. So it’s very hard to compare the enrollment in the two studies, because one was one country or one nation and the other is a global study.

[Boris Peaker:]

And then, yes, baseline characteristics of the patient so far in TRYbeCA 1 which is the Phase 2 trial.

[Iman El-Hariry:]

That’s so far – it’s not so far, it’s in - the patient characteristics in TRYbeCA 1 are very similar to the same patient characteristics in the Phase 2 trial. We had the similar inclusion exclusion criteria and we approved every single patient coming to the trial. So, that’s the plan and that’s what we are implementing at this stage.

[Boris Peaker:]

Great. And my last question on the Phase 2 IST in second-line ALL, which we expect results by year end. So if the study is positive, what is the commercial implication or regulatory implication? What are you going to do with that positive data?

[Iman El-Hariry:]

You take it, right.

[Gil Beyen:]

No, no, no. I think it’s a 50 patient study in an indication where there is this unmet need, it’s patients allergic to on Oncaspar given the complexities around Erwinase and there – we believe there is an unmet need to where this product could fill a niche, but obviously this will require further, first of all, the data and also dialogue with the agencies whether indeed there could be a path forward based on these data. Iman, sorry, go ahead if you want to complete this.

[Iman El-Hariry:]

No, this is – that’s what I would have said here also. The only one – I would like to add that, because this study is currently conducted in several Nordic sites that special investigator of the study is extremely interested.Should they really like that it means, they continue to compare it with every needs and that is exactly also why they have asked us to increase the study from a 30 to 50 patients, so. And they believe that there is a true unmet medical need for future considerations.

[Boris Peaker:]

Great. Thank you very much for taking my questions.

[Gil Beyen:]

Thank you.

[Operator:]

Thank you. Our next question comes from the line of Philippa Gardner with Jefferies. Your line is now open.

[Philippa Gardner:]

Oh, hi. I’ve got a couple of questions if I could please. So firstly, can you just provide an update – I think you said on the last call, that you are expecting to open all of the sites that you plan to open in the U.S. by the end of the first quarter. So, can you just confirm, how many sites you have opened in the U.S. and aim forward to the sites that you intend to open are now open?And then secondly, just coming back to COVID-19 and I appreciate there is a lots of uncertainty here, but in terms of some of the challenges that you are potentially facing, do you think these are more from patients not being willing to come to hospitals? Or do you think there is any risk that you won’t be able to secure in the blood? Or is there any sort of risk to the patient follow-up? So, any sort of detail that you can give there that would be helpful. Thank you.

[Gil Beyen:]

Iman, I think both questions for you.

[Iman El-Hariry:]

Absolutely. Thank you. Good morning Philippa. Regarding the first question on the U.S. activation, we are almost we could do this – I do think initiating what we have to do, as far as in the U.S. We expect to complete all the sites activation just a little towards the end of March or maybe the first couple of weeks in April.But additionally, if you remember we had the ASCO GI two months ago and during that time, we received a lot of interest from additional sites in the U.S. So we are also going through additional sites selection and executing these sites. I think that’s also nice to get as many sites in the United States to have to experience and exposure to treatment with Eryaspase. So overall, we are really on target as we have guided in the last call.And on the COVID-19, we are monitoring the situation on every single French and if I can just summarize it on in few buckets that the French bucket is the patient as Gil mentioned, the second bucket is the personnel at the sites level and of course, every state personnel and then the logistics and the supply.Patients so far we have not seen and this has started much in Canadian, Italy and then thus it affect European countries. We have not seen an impact in terms of patients being able to go their respective sites and receive treatment.Similarly, we have not seen an impact in terms of the hospital study team personnel. And of course, each study or each site has a principal investigator, sub-investigators and coordinators. It’s a whole number of personnel. So we have not seen an impact. It is all we know that at least one site, the principal investigator has been hit by COVID. So, that has not had an impact at all.In terms of the logistics, again, so far we have been able, as you mentioned early to continue our supply to different countries, both in Europe, as well as in the U.S. And I can mention one ad hoc example here, we have one site that has been hit by COVID. We have actually two such. One of them has been hit by COVID.We had a patient randomized a week ago and then a day later, we were told that they were hit by the virus. But then interesting enough this study site has screened another patient yesterday. So you can see that the sites are trying to do their best - the impact for these patients.From our end, we don’t have an impact. So far, we are following very closely with the Red Cross, as well as with the French Blood Bank. We don’t have any impact in terms of the sourcing of the results and our labs both in Lyon or in manufacturing sites both in Lyon, as well as here in Princeton are fully operating and providing the demands on – of any expenses to the sites.The impact – the potential impact is around the zero is syncing the monitors to look at the data, verify the data. So that is the potential impact, because again that has restrictions. So, it is not – it’s – relates to anything for the data cleaning, but it is not necessary for patients enrollment and patient follow-up. So I hope this answers your questions.

[Philippa Gardner:]

That’s great. Thank you.

[Operator:]

Thank you. [Operator Instructions] And we currently have no further calls and back to you.

[Gil Beyen:]

Okay. Then, thank you all for your attention, for your questions. We will keep you posted particularly in the special days where indeed, we – as things go, we continue to work on providing the progress on the trials as you heard. So have a good day and good afternoon and speak soon. Thank you.

[Operator:]

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