ERYTECH Pharma S.A.
Q4 2020 Earnings Call Transcript

Published: 9 Mar 2021

[Gil Beyen:]

Good morning. Good afternoon. I hope you’re all well and safe and thanks for joining us for our Full Year 2020 Earnings Call. We announced our business and financial update yesterday evening and I hope you can find the press release and our earnings presentation on the Investor Relations page of our website. With me on this call today are Dr. Iman El-Hariry, our Chief Medical Officer; and Eric Soyer, our Chief Financial and Chief Operating Officer. Before starting, I would like to draw your attention to the disclaimer on Slide 2 to remind you that today’s call includes forward-looking statements such as relating to the company’s operations, anticipated timelines, and financials. As you know, they all involve risks and uncertainties that could cause actual timings and results to differ materially.

[Iman El-Hariry:]

Thank you, Gil. Good morning, United States. Good afternoon, Europe. So I’ll give you a quick update where we are in our clinical development program. So I’ll just start with the Slide number 8 and this is a gentle reminder of the study design. This is such a big on a strategy, which is a planned in second-line advanced pancreatic cancer. And it’s enrolled patients over 18 years of age Stage III or Stage IV disease with good performance status. The study was randomized to receive the standard of care chemotherapy with or without eryaspase. The standard of care chemo was a menu of two either gemcitabine abraxane or irinotecan-based chemotherapy, which could be the generic irinotecan come to As this is a pivotal trial, the primary endpoint is naturally overall survival. And you have all the usual suspects secondary end points including progression, free survival, response rate, disease control rate, safety, of course, and quality of life. We are also collecting extensive biomarker liquid biopsies and tissues for subsequent biomarker analysis. So the two primary we have the PIs and the studies are Pascal Hammel in Europe for the European component of the study and Professor, Manuel Hidalgo for the United States. Switching to Slide number 9, we actually, and I think I’ve been doing clinical development for almost 20 years, probably this is one of the best recruitment graphs I have ever seen in previous trials. So we were – we really met our goals almost week on week in during the life of this trial. So we’ve made a huge progress over the past few months for sure. We completed enrollment back in December of last year and we over-enrolled this slightly to the trial target size was 482 patients and we enrolled a total of 512 patients.

[Eric Soyer:]

Thank you. Thank you, Iman. Good morning, everyone. And we are now switching to Slide number 17, reviewing the financial highlights for the full year 2020. And we’re starting with the key items of P&L information. Showing that the net loss for the full year 2020 was €73.3 million, that was up €10.6 million or plus 17% year-over-year, with €4.8 million increase, that’s plus 7% in operating loss and the €5.9 million decrease in financial results. The €4.8 million increase in operating loss was attributable to the €5.4 million increase in preclinical and clinical development expenses. That was obviously mostly related to the expenses for the company’s Phase 3 clinical trial in pancreatic cancer. We also had €2.2 million decrease in G&A, which was related to the end of expenses that was related to the establishment of the manufacturing capacity in the U.S. mostly – and that was mostly incurred in 2019. And finally, €1.6 million decrease in other income, of which €0.5 million were related to the decrease in R&D tax credits and €0.9 million consisted in the upfront payments from the June 2019 license agreement with SQZ Biotechnologies that did not recur in 2020. Finishing with a €5.9 million decrease in financial results and that reflected the €1.1 million decrease in foreign exchange swap gains, a €3.8 million negative dollar to euro foreign exchange impact and a €1 million euro net expense, due to the IFRS accounting of the convertible notes. Before moving on to cash, I would like to take a few minutes to remind our financing initiatives over the recent month, and we’re moving to the next slide. That’s Slide number 18. First, recalling that we signed an agreement in June last year with Alpha Blue Ocean for the issuance of a zero coupon convertible notes with severance attached for a maximum financing of €60 million and that is in 20 tranches of €3 million. This is currently subject to regulatory limits of 20% dilution unless further authorized. To date, the company is called five tranches in 2020, which have been fully converted and the sixth tranche since the beginning of this year. We’ve also implemented an at-the-market or ATM program, which allows us or discretion to response the potential reverse inquiries with a solution to issue and sell ordinary shares in the form of American depository shares to eligible investors at prevailing marketplace. This is also subject to the same 20% dilution limits as for the ABO convertible notes. To-date, we’ve made one placement of US$8 million with a U.S. investor and that was earlier this year in January. And finally, we received a €10 million non-dilutive financing in the form of a state-guaranteed loan, this is called in France, a PGE loan, and that was designed and granted in the context of the COVID pandemic. The loan is actually provided by two banks, Bpifrance and Société Générale, €5 million each. And the French government guarantees 90% of the amount. With that, we can then move to the next Slide number 19 on cash. At the end of December 2020 last year, ERYTECH’s cash and cash equivalents totaling €44.4 million, that’s approximately US$54.4 million. And that’s compared with €73.2 million on December 31, 2019. So that’s a €28.7 million decrease in cash position during the 12 months of 2020 and that was the result of a €53.2 million net cash utilization in operating and investing activities and €25.4 million generated in financing activities, while the depreciation over the period of the U.S. dollar against the euro led to a €1 million negative currency exchange impact. The €25.4 million generated in financing activities included the five tranches called in 2020 on the convertible notes, the €10 million PGE loan and also €3 million in loan milestone payment from Bpifrance on the pre-existing research program. Since the beginning of 2021, ERYTECH has called sixth tranche of convertible loan for net proceeds of €2.9 million and has made a placement and there is ATM equity financing program for net proceeds of €6.4 million. With that, the company believes that its current cash position can fund its planned operating expenses and current programs into the fourth quarter of 2021, and together with the remaining option of potential proceeds available under the current financing agreements into the first quarter of 2022. Finally, a quick wrap-up of our upcoming key milestones, this is the next slide, Slide number 20. Gil has said it already, we had a few years of dedicated execution and obviously legal news flow, but 2021 now announces to be a year with multiple important catalyst. Starting with one of our major catalyst TRYbeCA-1, our Phase 3 trial in second line pancreatic cancer. As already mentioned by Gil and Iman, we expect the final results of the study in Q4 this year. Another key catalyst for ERYTECH is the potential regulatory developments in ALL, more specifically hypersensitive ALL. As already explained by Iman, we have two time points here. In the first half of this year, we expect to be able to provide an update on the potential regulatory path forward for an approval in this indication. And if this potential is confirmed, we expect to prepare for BLA submission with the FDA in the second half of this year. Again, there’s two first items or key catalyst for the company, because as Gil has already mentioned, if everything goes well, we may be preparing for an entering in the registration tracks in the next 12 months in these two indications. Finally, we also expect news flows in the other two indications currently in clinical programs, we expect the first results in TRYbeCA-2 Phase 2 trial in TNBC before the end of the year and in the Phase 1 trial conducted by Dr. Noel in Georgetown, in first-line pancreatic cancer, that study is named rESPECT. We expect to determine the maximum tolerated dose also in the second half of this year. With that, I would like to thank you already for your attention. We’ll open the call for any questions you may have. As always, if any of you would like to ask question in French, you’re of course, very welcome to do so. Operator, it’s now over to you for the Q&A session.

[Operator:]

Our first question comes from Philippa Gardner with Jefferies. You may proceed with your question.

[Philippa Gardner:]

Hi. Good afternoon. I will stick to asking in English, please. So a couple of questions, if I could please. So first of all, just in terms of, sort of timings for the BLA filings and sort of thinking about ALL as well. I mean, I’m just wondering, if you were able to file in ALL in the U.S. and potentially in Europe. Does that then help you with tool that the pancreatic cancer filing in the future, in terms of perhaps any sort of inspections that might need to get done or other sort of any implications of having another indication on the review in each of those geographies when it comes to pancreatic cancer. My second question was then on the most recent interim analysis, I know obviously this was looking for the superiority or continuation only, but would it be fair to assume that the data safety monitoring board would also look at futility? And if there was a risk that the drug was doing harm that that would have been caused the trial to stop. And then just finally on the financial side, perhaps a question for Eric, I was just wondering if you can help me sort of think about sort of R&D spend for this year, when you think about your current cash and how much you spent on – how much you used it in operations last year and how we should think about that given what you’ve said about your cash flow and way excluding any of the financing agreements that you have in place. Thank you.

[Gil Beyen:]

Thank you, Philippa. I’ll take the first. I’ll pass on the second to Iman and indeed the third to Eric. So, yes, in fact, the main synergy between the two potential filings is obviously related to the preclinical dose is roughly the same. And so we can – they already – as we’ve been doing this since a long time, the CMC part is, I would say, 95% the same. So basically, it’s the same product. There are some, the ALL part goes a little bit further back into history, so needs a bit further also going back to the original data of manufacturing, et cetera, but basically the same module. So long answer to say, yes, it’s – there is clear synergy. And so being able to file early will be not only a dry run, but we’ll also be worried that will not have to be done anymore further for the pancreatic. So that’s I think on third question…

[Philippa Gardner:]

Gil, can I just follow-up on that. I guess, can I just ask precise for example, you were to file in ALL in Europe. And if that’s under review at the time, is that still under review at the time you plan to file in pancreatic cancer? I mean, are you able to file at that stage or do you have to – does that – how does that work in terms of filing in another indication, if you’ve already got another indication under review?

[Gil Beyen:]

It doesn’t impact your own. So obviously, I think it will be mainly the case in U.S. as we will do ALL first in the U.S., but yes, I think it’s different – it’s two different INDs, yes, but it’s the same product and it can – we can file first on ALL and then during this process file in the other indication.

[Iman El-Hariry:]

So, Philippa, I’ll take the second part of that question. So this is around the interim analysis and yes, your assumption is correct. While there was no formal futility analysis planned in the trial. The IDMC has the obligation to look at the data in totality and see, if the trials continued and could be a potential detriment to the patients. They would have made that recommendation to us as a sponsor, so that’s correct.

[Gil Beyen:]

Then the third part for Eric.

[Eric Soyer:]

I’ll take the last one. Indeed, on cash burn, I would say that 2020 last year was probably a good indicator of our recurrent cash burn, at least for the first half of this year. We still have all these ongoing trials in place. Obviously, our Phase 3 is – we’ll start to wind down and we would somewhat expect a reduction in cash utilization towards the second half of this year. We’re guiding with the cash we have enhanced. We’re guiding on the cash runway into Q4, mid-Q4 this year, which somehow should coincide with the final results of the Phase 3. In the meantime, we’ll have the other catalyst on ALL as we just discussed. Given the situation we are managing our cash very carefully, obviously on the expense side, we have – we are prioritizing our key programs and making sure that we spend cash wisely, but also on the financing side. And as you noted, we have some financing tools enhanced. We may be using – we’ve been using that already, and we may be further use that just to bridge us a bit after the clinical results, but during what’s necessary and look more.

[Philippa Gardner:]

That’s great. Thank you very much.

[Gil Beyen:]

Thank you, Philippa.

[Operator:]

Thank you. Our next question comes from Ren Benjamin with JMP Securities. You may proceed with your question.

[Ren Benjamin:]

Good morning, guys. Thanks for taking the questions. Maybe just starting off with TRYBeCA-1, can you talk a little bit about and based on this enrollment curve, that it seems like about 160 patients or so more enrolled from, when March 20 of – March of last year, when we really started going under lockdowns and the like. So can you talk a little bit about any sort of an impact that might’ve occurred to those patients, especially, in terms of intended courses of treatments? Do you have a sense as to how the follow-up has been and what the – if you had to exclude, I guess, some of those patients. Are you still adequately powered to detect the difference in overall survival? And then I have a couple of follow-ups.

[Iman El-Hariry:]

Hi. I take this question. Overall, we actually have a minimal impact of COVID on the conduct and the follow-up of the patients in TRYBeCA-1. At the time and the heat of that, the lookdown back in March, we immediately made some critical measures to prioritize, most importantly, the patient treatment critical pull up aspects, but then deprioritize some of the – what we call nice to have, for example, some lab tests, some not key for the trial outcome, and this has the size. We’ve been almost on the road “virtually” with every single investigator, every single site to make sure that every patient plan for treatment, which of course we know about, because of this – the manufacturer of eryaspase as an off-shelf drug. We were able to make sure that we plan very carefully with the site staff and that the drug is manufactured. And there were even instances where, because of some flight delays that actually the drug was taken on the road to side. So we have done in fact and I think this is what, as Gil mentioned earlier, we agree job in intuiting the supply and the treatment were in time. So we have, I would say, virtually minimal, if not impact whatsoever from a treatment perspective and follow-up perspective. We will not exclude patients with COVID, however, given the guidance from both FDA, as well as EMA, we stated a lot of COVID measures immediately in terms of that case report forms, in terms of our statistical analysis plans, we mentioned all the potential measures and – but in our – which is still in review with the FDA. We are not planning to exclude patients who might have some impact latest related to COVID for instance. And finally, we’ve done an extensive risk analysis, which is also required by every single health authority. And this was an extensive exercise that we’ve done and created an extensive document that we shared with the agencies. And in that risk assessment, we actually showed that there was not impact of COVID. So we’ve done a lot of measures actually, and I think this is why we are successful. I don’t expect that patients, the final – which is based on ITT, as you know, this is the primary analysis. So even hypothetically, if there is a COVID impact, we cannot afford because of them, the intent to treat principal will have to include all patients in the overall survival analysis. And also in the papers of course we will not – and this is at least our current plan will not exclude those patients. So I expect if there is any, it would be maybe less than, I don’t want to give a number, but it’s not going to be – it’s almost, I would say it’s non-existent.

[Ren Benjamin:]

Got it. Okay. Thank you very much for that. And then switching gears just very quickly to ALL, Gil maybe you can remind me, I’m forgetting why pursue the U.S. regulatory strategy, when the trials were done broad. It seems like this would be kind of perfectly in line to start off with – a discussion with the CHMP before coming to the U.S. FDA. I guess if you can just remind us as to why we’re pursuing a potential regulatory path U.S. first, then the EU second would be great. Gil, what’s been the tenure of discussions with the FDA so far. Is this the first time they’re going to be hearing about this application or have they already – have you already had some sort of preliminary discussions and they’ve kind of told you kind of giving you the wink-wink nudge-nudge to move forward with that and go ahead and submit.

[Gil Beyen:]

Thanks, Ren, and good questions. So it is related to different aspects and indeed, we – the main reason why we started the dialogue in the U.S. is driven by effectively ongoing dialogue we already had even before, because you may remember we had a Phase 1 trial in U.S., it’s a while ago in the meantime, we were discussing also, we knew that the unmet needs related to arginase is essentially in the U.S., because it’s really there where the arginase is used. Most there is used in Europe also, but at least the market is here. We already had interactions with the FDA what pointed us at this indication sort of this unmet need already, I look at in the couple of years ago, sort of saying this really – this allergic patients is because you – they remember we were – we have done a lot of work in ALL, and we had an small, but randomized Phase 2/3 trial in relapse refractory. And there the FDA told us literally the unmet need is disappearing here and this was asparaginase is CAR T blinatumomab, so but they pointed us at this hypersensitive patients already as – yes, a key lead. The trial was indeed done in Europe. And but basically we thought it’s probably best given also the history that to start to continue with dialogue in U.S. And so on the second part of your question, clearly it is a dialogue. There have been different interactions. We have for example met on paper, it was in spring summer last year, where we already based on interim data from this NOPHO trial. We asked the question about unmet medical needs. No surprise was confirmed, but also on the path forward and it – they’re asking the question, could this trial Phase 2 IST in Europe be the basis for an approval in U.S.? And obviously the FDA does not answer yes, but did not answer no. And told us the different – guidance at the different things we would need to show to make this trial or for them to consider this trial as eligible for U.S., it has to do with GCP. It has to do with validation of assays. It has to do with re-consenting of patients. And so we’re now putting all these pieces of the puzzle together and continuing the dialogue. And so we hope indeed and sort of almost there, but we – it will take a couple more weeks, maybe months before we can really make our own conviction of this potential. And if yes, then we will indeed go to the next steps first U.S., but then also re- initiate a dialogue in Europe.

[Ren Benjamin:]

Got it. Okay. Thank you for that reminder. And then just one final one for me on the IST and first-line pancreatic, do you have a sense as to, I guess what doses are asparaginase of area space that is are you evaluating right now? When do you predict, I guess, would be the therapeutic or maximum tolerated dose? And I know that you’re expecting to reach that by the end of the year. Do you think we could also have efficacy data by the end of the year as well, or do you really think that’s more of a 2022 event?

[Gil Beyen:]

I’ll leave this question for Iman.

[Iman El-Hariry:]

Sure. So the way we design that trial with clearly with the PI, we started – Gil, let me just start by saying that our recommended dose for all our indications is a 100 units per kilogram, given that our extensive experience with the drug in different indications. And it’s really the very well-tolerated. We decided to have a minus one dose level, which is 75 units per kilogram, and that was the starting dose. And we believe that was a good reason, good rationale, because if it is – if we see some toxicity, we could go further down. If not, then we’ll go up and cleanly with that dose level so far, it sees that would be on the path can move to the next dose level, which is the 100, which is the recommended dose. So we will not go beyond 100 if we achieve that, that would be that tolerate the recommended Phase 2, which would be great for us, because again, it would be in line with the phase with the recommended dose for all other indications. So we – I think it’s critical that at least we get first six patients treated and at that dose cohorts would plan with the PI or the PI plan to do a dose accord extension to generate some additional safety and efficacy data. The question really is difficult in terms of the rationale, the timing, and the validity of a small cohort and looking at efficacy, let us see, in a 15/20 patients in that cohort in a single arm. So certainly that’s part of the objectives. These are all secondary objectives listed in the protocol. But we’ll see how it goes with the trial and whether the PI is keen for instance to modify the study to generate additional good safety efficacy data, maybe they would like to do maybe a randomized component, maybe not. So we are open for further discussion with the PI, but if that is the case, yes, we might be. I mean not if that’s going to start soon, we might be able to get some initial efficacy data before end of the year, unless the PI has different source, depending on his own experience with the drug and the patients.

[Ren Benjamin:]

Got it. Terrific. Thanks for taking the questions and good luck on an eventful year.

[Gil Beyen:]

Thank you, Ren.

[Operator:]

Thank you. Our next question comes from Fred Gomez with Pharmium Securities. You may proceed with your question.

[Fred Gomez:]

Yes. Thank you for taking my questions. I have two on the TNBC. Can you give us the exact status of the recruitment in the trial, because that’s not clear to me if the recruitment of older patients is completed? And can you also clarify maybe a little bit the kind of data you’re going to show at the end of the year, because my understanding is that you would assess the response rate at one year after the final patient has been retreated. So given the size of the samples and you are the comparator, so what kind of expectations we should put on the data and especially on the complete response here, so the partial response that you could show potentially. Thank you.

[Iman El-Hariry:]

Hi, good morning – good afternoon, Frederic. Okay. I’ll take that question. So we are approximately one-third through the recruitment in the trial. We – again, since we focus our resources on TRYbeCA-1, we didn’t have a lot of sites. We have a really limited number of sites participating in this study. The study actually the primary endpoint is objective response, which is complete or partial response is not at one year. So that would be the overall rate in the study. At the moment, what we’re trying to, yes, we are hoping to have our first results by end of the year. So but at the same time, and that would be around the objective response, and of course also disease control rate, which would be an important component and the safety. As you knew, the standard of care has changed and continuously changed and that brings another challenge for us because it’s really important to generate the signal of activity with eryaspase in this setting. And so we are really at this stage, seriously contemplating the second-line setting, which is considered still to be unmet medical need. And hopefully that will not only post the enrollment, but strategically, which is even more important than enrollment. It opens still the window for eryaspase in triple-negative breast cancer. So that’s the – this is the current plan, we’ll still hope to present the efficacy data towards the end of the year. But at the same time, we are looking at the changes again to have a viable option is strategically for this indication or for this disease rather.

[Fred Gomez:]

Okay. Thank you.

[Operator:]

Thank you. Our next question comes from Boris Peaker with Cowen. Please proceed with your question.

[Cynthia Cintron:]

Hi, this is Cynthia on for Boris. Just one for me, looking forward given that you might launch eryaspase and pancreatic cancer shortly after ALL and how are you thinking about pricing between the two indications?

[Gil Beyen:]

Hi Cynthia, good question. I think it’s almost strategically launching ALL before pancreatic makes sense in terms of pricing also, because in ALL, there is a very clear pricing reference, which is arginase and as you know probably arginase is very expensive, probably one of the most expensive cancer drugs with a €100,000 to €200,000 per month given the many doses that are needed. So we have not decided anything on price levels yet, but we know that in ALL there is this clear reference. In pancreatic more challenging because in pancreatic, in terms of innovation, there has been very, very little, there are no clear references for similar type of drugs. So the strategy indeed ALL, we cannot yet count on it. But it would be good if indeed we could even small launch first in ALL set a reference about this product category, which is so novel also. And then from there, take it to pancreatic also.

[Cynthia Cintron:]

Great. Thanks.

[Operator:]

Thank you. And then I’m not showing any further questions at this time. I’d now like to turn the call back over to the company for any further remarks.

[Gil Beyen:]

So thank you all. Thanks for again for your participation or your continued support for your interest. We will – as always we’ll keep you update on the progress and we already look forward to our next call. In the meantime, we’ll obviously if anything news comes up, we’ll let you know and stay tuned. Thanks again for joining and wish you a great day.