ERYTECH Pharma S.A.
Q2 2018 Earnings Call Transcript

Published: 11 Sep 2018

[Operator:]

Greetings, and welcome to the ERYTECH Pharma host Second Quarter 2018 Conference Call and Business Update. As a reminder, this conference is being recorded. I’d now like to turn the call over to Gil Beyen, Chief Executive Officer. Please go ahead.

[Gil Beyen:]

Thank you. Good afternoon for the people in Europe. Good morning in U.S. Thank you for joining us for our second quarter first-half 2018 earnings call. I’m here with Dr. Iman El-Hariry, our Chief Medical Officer; and Eric Soyer, our Chief Financial and Chief Operating Officer. We announced Q2 financial results and business update yesterday evening, and you can access the press release and also the presentation on the Investor Relations page of our website. I hope, you have all accessed to the presentation. Moving to the Slide 2 on the presentation, draw the attention to the disclaimer and read at your base. And then on Slide 3, the agenda, following our quarterly routine, I will start with providing the business update, focusing on the key highlights for the year-to-date, then Eric will take over to present the financial results and – or the financial highlights. And he will also summarize the major expected milestone for the remainder of the year. All three of us will thereafter be available to respond to your questions. Before – and now moving to Slide 4. Before I dive into the update, I wanted to remind you of the essentials of our company. So, as you know, ERYTECH is headquartered in Europe, but growing in U.S. and Cambridge and in Princeton clinical-stage biopharma company with past experience in the RBC therapeutics based on our ERYCAPS propriety technology. We are, based on this technology, developing a growth pipeline, focused on cancer metabolism, as you know, specifically targeting on solid tumors with high unmet medical need pancreatic cancer, triple-negative breast cancers and other pancreatic and other solid tumor settings under review. Late stage, we had positive Phase 2 data in last year and now Phase 3 launched, opened for patient enrollment in – since and shortly and also preparing the launch of the Phase 2 clinical trial in TNBC. We won’t have enough time to – but also there – there’s a lot of other things we can do with RBC technology and ERYCAPS, so there’s a lot of potential in the pipeline. So essentially on Slide 4 still, it’s the same profile as our last update. There is one big difference and we see there’s no ALL anymore. I’ll come back to that briefly, because indeed, we have in the first-half of this year fully completed our strategic shift to solid tumor indications. And that is also reflected in our pipeline chart. Eryaspase, the asparagines encapsulated lead product, focused on pancreatic cancer Phase 3 trial in the – in the making and the next one TNBC Phase 2 and then indeed other solid tumors. We’ll touch upon the timing, gamma-lyase product, erymethionase, because that’s one that is increasingly be getting visibility. We’re moving this now, advancing this into the Phase 1 clinical study, and then I’ll touch upon the ERYMMUNE and the ERYZYME preclinical platforms. Coming now Slide 6 to the highlights of the first-half of the year, or I’d say that year-to-date. The strategic shift to solid tumors fully confirms this was the decision, as you know before the summer, we decided to stop our further development acute lymphoblastic leukemia and to allocate all resources to almost all solid tumors. And clear here, it’s a completion of a strategic shift, because that shift really already started in 2017, when we obtained our positive Phase 2 data in – with GRASPA over eryaspase in second line pancreatic cancer. These data indeed were game changing, were the first-time ever and asparagine product showed a positive result in solid tumor indication. And so this has been the basis to further pursue development there. With this positive Phase 2 data, we have been – the whole year and even already end of last year been very focused and dedicated on launching a large Phase 3 study. We’re very pleased to communicate today here that the launch is on track and that study is opened for patient enrollments, more to come on next slide. The next solid tumor indication is triple-negative breast cancer. The launch is on track and also here we expect first patient soon before the end of this year. Then the next highlight here is that, these are indeed much bigger indications than we originally anticipated within leukemia. So we are in due of the – having sufficient supply for our clinical trials, but also anticipating very early commercial production, we are expanding manufacturing capacity both in United States and in Europe, I’ll come back to this also. And obviously, this all requires money. Cash balance is strong, but I’ll let Eric comment on this in more detail. So bottom line and slide – the next slide, the next 2018. Clearly, it’s a year of strategic refocusing and really a year of relentless execution. [Foreign Language] as the French will say sort of refocused on executing the late-stage programs. Then I move to Slide 7, the pancreatic cancer, the lead program. So the Phase 2 data, I don’t need to recall them year-over-year, most clear was the overall survival benefit quite a strong, asset ratio, significance and also the PFS fully in line, based on which we went to [see conditions] [ph] FDA, EMA with the proposal of a Phase 3 study and this Phase 3 study is not fully obviously designed. We have named it TRYbeCA1. That’s a trial for eryaspase in cancer. We will also have additional other TRYbeCA studies. It’s a randomized study, 500 patients, it is chemotherapy, which is in two strata gemcitabine/abraxane or irinotecan-based chemotherapy regimen plus or without eryaspase overall survival end point. And there is a – an interim analysis foreseen when we have – we’ll have about two-thirds of the events reached. We have now received clinical trial authorizations and ethical committee approvals in different European countries and the first clinical sites has been opened. And so enrollment of first patient is imminent, I would say, any day and we expect before the end of the quarter. We’re also obviously very focused on this study, but we’re planning the broadening to other pancreatic settings, pancreatic cancer settings and in particular, the first line setting. And moving to Slide 8, next indication. You may remember for the ones who followed us that indeed, we have done quite some work based on positive Phase 2 data in pancreatic cancer on where – which are the other solid tumors where we could find a similar benefit of the eryaspase product. Key criteria are metabolic activity, metastatic activity and obviously high unmet medical need. And based on which we have developed a short list of indications, top of the list was triple-negative breast cancer exactly for these reasons. And based on that, we then designed a Phase 2 study. The design is now fully final. It’s in proof-of-concept Phase 2 study. Similar, it’s a randomized study. It’s chemotherapy, which in this case is gem/carbo, where we add on eryaspase versus gem/carbo alone, about 65 patients Europe, U.S. First line, here, the primary endpoint is objective response rate, but we’ll have the full battery of other endpoints. And here set up activities are also fully ongoing with patient enrollment expected around year-end. This study is called TRYbeCA2, so that’s the next one in the line. And we don’t forget the other solid tumor indications. It’s – we’re exploring the other indications we have further short list. But I think given that we already have quite a lot on the plate and also in view of derisking probably wise to see what happens [get] [ph] first in this additional view on what happens in TNBC before committing to larger studies in other solid tumor indications. Moving to Slide 9. I mentioned it in the introduction. This all requires increased manufacturing capacity. We are establishing a new site in Princeton. Just for reminders, we have a new site in [indiscernible]. But in Philadelphia, we have a small site for clinical production at the American Red Cross premises, where we produced for our Phase 1 clinical study, where we can also produce initial lead in our new clinical trials. But in view of the full roll out of the studies, we will require our Princeton facility. Second, the building is there and we are building the clean rooms inside an existing room. Also in Lyon, we are enlarging the manufacturing capacity/. That whole building is not manufacturing. I reassure you, it’s only to date one floor or half a floor, but we’re adding – we’re, in fact, doubling the capacity by building additional ERYCAPS clean rooms above the ones we have to date. So all of this to make sure that we have enough for the clinical trials, but also for early commercial needs. And then all of this, while still being very much also dedicated to further advancing the platform, leveraging the platform, preclinical programs moving advancing. And the next product candidate clearly is our erymethionase, it’s methionine-gamma-lyase encapsulated in red blood cells, one of the cancer metabolism targeting enzymes. Very potent molecule probably more potent than the asparaginase. The timing is in central amino acids, so it’s also meaning to be prudent there. But what we have now, we’ve already had seen very promising preclinical results. You see here the graph of on gastric cancer. I think these are speaking in terms of the effect on tumor growth and tumor shrinkage. So clearly a strong signal we have there. We now have also and it’s important to note, we have now completed recently the preclinical docs work. We still have work to do on CMC. It’s quite different here than with GRASPA. GRASPA, we can buy the asparagine of the shelf. Here, we are developing. We’re having produced our own enzyme for this study. So that makes it a bit more difficult, but still we’re advancing and so all in view of launching a Phase 1 study in the course of, yes, first-half of next year. So that’s the next product candidate. The – we then also have – won’t have much time here, but updates will come. ERYZYME, this is our program outside of oncology, where we are encapsulating enzymes that are used in – enzyme therapies mainly in metabolic diseases, and then we have our ERYMMUNE, which is our immuno-oncology platform encapsulating antigens to target dendritic cells in the spleen and have a potent CD8, mainly CD4 T cell activation. I said, these programs are progressing and we anticipate to have a preclinical update. We’re still planning today. We’re thinking of an Investor Day, maybe still this year or early next year. So that’s preclinical asset, this all costs money. And I think this is the time to hand over to Eric to present the financial results and financial update.

[Eric Soyer:]

Thank you, Gil, and good morning. Good afternoon, everyone. I will now review the key financial highlights for the second quarter and the first-half of 2018. We’re now turning to Slide 11 with a summarized P&L information for the period. So we can see that net loss for the first-half of 2018 was €19 million, which is compared to €14.1 million in the same period of last year. This was driven by the €8.2 million increase of total operating expenses at €24.1 million. And that increase was primarily attributable to an increase in R&D expenses by €4.7 million, which was mostly related to the company’s intensified clinical and regulatory activities, and that accounts for approximately €2.9 million, and as well as the continued decrease for approximately €1.7 million in preclinical research activities. We also had an increase in G&A expenses by €3.5 million, which were approximately €2.5 million reflected the continued restructuring of the company in line with all the developments that Gil has expected – has described. And we will also include cost associated with the necessary adjustments to becoming a public company in the U.S. As you remember, that, that happens last year in November and now they account for approximately €1 million, again, when compared to the first-half of last year. Finally, we’re just through a €2.9 million financial income, which was mostly attributable through the favorable dollar euro currency translation in the first-half of each year period. So basically and to summarize an increase in operating expenses and net loss, that reflects as expected the execution of our development plan. That translates, of course, in cash utilization and I’m now turning to the next slide, that’s Slide #12 to see that the total cash utilization for the first-half of each year was €20.1 million, or US$23.3, thus leading to total cash position on June 30 of €165.4 million, or US$192 million. The €20.1 million cash utilization was made of cash utilization for operating investing and financial activities of €22.5 million, and we had as already mentioned, a €2.4 million favorable currency translation impact on our cash position, which was denominated in U.S. dollars. Here also and in line with our plans, I should mention that we expect in the second-half of the year an increase in cash utilization, as we further roll out the execution of our clinical strategy and also with the related manufacturing capacity investment. One would still invest, Slide #12, on the geography of our capital structure, which is globally unchanged since the IPO in the U.S. last year, with approximately 45% to 50% of institutional holding in the U.S., 45% to 50% of additional holdings in EU, and approximately 10% to 15% of retail holdings and that is mostly in Europe. We’re finishing this presentation with a recap on our key milestones on Slide #13, next slide. First of all, we expect the first patient in the TRYbeCA1 study, which is the pivotal Phase 3 clinical trial in second line pancreatic cancer and that is in Europe and in the United States. As you already mentioned, the study is now opened for enrollment in Europe and will expand first patients soon. We are also on track to enroll the first patient in the Phase 2 proof-of-concept clinical trial in triple-negative breast cancer, TNBC, that towards the end of the year and the study is in TRYbeCA2. And on the front of our second product candidate, erymethionase, we expect the full completion of CMC activities, which will then enable us to prepare this Phase 1 clinical trial that will be a first-in-men trial. Finally, we should expect an update, Gil just mentioned on the clinical – preclinical pipeline program that includes the ERYZYME and ERYMMUNE programs. That now concludes the presentation. I’d like to thank you very much. And I will now turn the call over to the operator. He will open the call for any questions you may have. Operator?

[Operator:]

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

[Boris Peaker:]

Hello, and good morning. I guess, good afternoon depending when you’re – where you’re located.

[Gil Beyen:]

Good morning, Boris.

[Boris Peaker:]

My question is, maybe I’ll start with pancreatic study. I’m just curious, I mean, what can you do to make the study as close repeating the prior Phase 2 results as possible, whether it’s in patient selection or standardization of follow-up therapy or any kind of mitigation of side effects or anything of that nature that can be done to really try to repeat the prior experience?

[Gil Beyen:]

I hand over to Iman to answer this question.

[Iman El-Hariry:]

Good morning, Boris. Can you hear me first, okay?

[Boris Peaker:]

Yes, I do.

[Iman El-Hariry:]

Perfect. The design of the Phase 3 trial is more or less very similar to the Phase 2 in terms of

[Boris Peaker:]

Got you. And then my last question, maybe on the – just in general on GRASPA. Do you have any plans of running any kind of checkpoint inhibitor or other immune agent combination studies?

[Gil Beyen:]

Good question, Boris. We are currently looking into GRASPA in combination with different modalities, including checkpoint inhibitors. Still, preclinical work ongoing. Preclinical may not be the right model that we know, so that has its limitations. But yes, the answer we are – if we can find sufficient [signal] [ph] though, the idea is just to look further into combination as we get requests also from clinicians on ISDs for combination work. So that’s, yes, in the making.

[Boris Peaker:]

Got you. Thank you very much for taking my questions.

[Operator:]

Thank you. And our next question comes from the line of Lucy Codrington of Jefferies. Your line is now open.

[Lucy Codrington:]

Thanks for taking my questions. I just have a couple. The first being, is there any reasons for the delay in the start of recruiting U.S. patients versus the European patients for the TRYbeCA1 study? And then my second question just relates to the first line pancreatic trial that had previously been discussed. Might we still expect is in the – in kind of around first-half 2019, or is this being delayed further? And then finally, just to confirm, when the plan for other solid tumor indications is now going to wait the data from the triple negative breast cancer studies, which could suggest, I guess, [indiscernible] for at least 12 months? Thanks.

[Gil Beyen:]

Thank you, Lucy. I’ll hand the first two questions at least to Iman, and I’ll come – I’ll address the question on this other solid tumors.

[Iman El-Hariry:]

Okay. Hi. So the first question around the delay in patient enrollment in the United States. This is really related to two main work stream. So one is around that [big transfer] [ph] from one of our sites, particularly from the Lyon site to the new Princeton site. And then the second work stream is around older CMC activities that needs to be in place for submitting our IND. This CMC activities are really based on the discussion that we have had with the FDA back in October 2017. So we’re still really on track to have our – the sites open and patients enrollment again around year-end. So that’s the first question. On the second question around first line setting. We are, as Gil mentioned, we’re still committed to the first line study. We are still in planning to have our study [indiscernible] launched in the first-half of 2019. Do you want the third question?

[Gil Beyen:]

No, no. I think, why we’re not mentioning much on this first line study? Right now, there has been some changes or there are ongoing changes in the standard of care in first line for FIRINOX, you’ve seen it in locally-advanced, but also in first line pancreatic in the U.S. is gaining ground. And so there is still some work ongoing on all – the original plan was to design a first line study with gem abraxane as backbone only. But the plan is increasingly that we also [indiscernible] FIRINOX.

[Lucy Codrington:]

Okay.

[Gil Beyen:]

And then – so okay. And maybe on the first point, yes, the U.S. is behind. It’s not really a delay. This was the original planning that we needed more CMC work in the U.S., but so the sites would open first in Europe and then U.S. And then other solid tumors, yes, you heard it right. So there’s – we know clearly, which ones we would like to go after, but it’s true that A, it’s a lot on the plate; and B, if you were also that this is a feedback we have received also from some of the investor base sort of – it’s a lot on GRASPA. And so and before we –and obviously, pancreatic and TNBC are both of them already obviously difficult indications. So before we venture in a another big study, it might be wise to see signals from the other studies, which doesn’t exclude doing smaller work. And then even we’re more and more taking in the direction of maybe like ISPs for basket trials in smaller subsets of other solid tumor indications.

[Lucy Codrington:]

That made sense. Thank you.

[Gil Beyen:]

Thank you.

[Operator:]

Thank you. And our next question comes from the line of Konstantinos Aprilakis of JMP Securities. Your line is now open.

[Konstantinos Aprilakis:]

Hi. Thanks very much for taking my question. So regarding TRYbeCA1, what is the plan breakdown between sites in the U.S. versus Europe of the 120 to 130 sites that you’re targeting? And how long do you expect to take in order to achieve target enrollment of 500 patients? Thanks.

[Iman El-Hariry:]

Okay. I’ll take this question. Right now, the split is around 60/40, 60 in Europe, 40 in the U.S. However, at the end of the day, enrollment is always competitive enrollment. So we could end up more or less in a similar balance between the two regions. The target enrollment is expected to complete in around 18 months period.

[Konstantinos Aprilakis:]

Great. Thank you.

[Operator:]

Thank you. Our next question comes from the line of Anastasia Karpova of Kempen. Your line is now open.

[Anastasia Karpova:]

Good afternoon, and three questions. You mentioned on your slides that you’re considering other pancreatic cancer settings in relation to the first line. Can you elaborate a little bit further on that? Second, the PEGylated [indiscernible] showed quite a compelling efficacy and overall survival in the second pancreatic cancer according to the data presented at ASCO. And I believe their Phase 3 trial is going to readout by the end of 2019. Should that trial be successful and if do you have – do you consider that product as a threat to your development plans? And do you have flexibility to add additional therapies as a background therapies to your Phase 3 trial? And finally, with IND in the U.S. approaching, do you still plan to file for a breakthrough therapy designation? And do you think you are eligible for that designation in pancreatic cancer? Thanks.

[Gil Beyen:]

Thank you Anastasia. I think first, I think most of them for Iman.

[Iman El-Hariry:]

Okay. Let me try. So on other settings in pancreatic cancer, so now we have second line first line, which we said we are committed to. And the one other setting, which is also getting a lot of interest is locally advanced setting. Locally advanced setting – this is now again, thanks to the advanced in the closing patients more and more and need. So there is an interest to offset GRASPA in combination with chemotherapy in that setting. So we are looking at that setting. And there are some potential interested investigators, who would like to do trials in difficult situation we believe. For instance, full performance status patients. Thanks to the accelerability of GRASPA. Most of the chemotherapy or standard of care in pancreatic cancer is getting to patients with good performance status zero or 1 and produce, I believe that maybe also to study the effect of GRASPA in full performance detail. So there are lots of ideas. But the frontrunners are first lines, which we’re committed to and the locally advanced setting. On your next question. We have authorized is, we have met with the FDA. We have met with CHMP. Right now, we have – the trail is planned in combination with the current standard of care. So we don’t see an immediate risk to our trial. I think, with our aggressive plans to ensure enrollment completed an interim analysis around the completion of enrollment, I think, it still puts us in advantage position. On your third question, the IND, yes. We are planning to file for breakthrough that will be also at the same time with IND do believe that we are eligible for breakthrough. The main criteria for breakthrough designation is showing an advantage – direct advantage over existing therapies. And with our Phase 2 trial, where we have shown a direct advantage in all effects indicators over the existing therapy, that actually give us the strong justification that we apply for the breakthrough designation. Anything else you would like to add, Gil?

[Gil Beyen:]

You answered.

[Anastasia Karpova:]

Thanks. That’s all.

[Gil Beyen:]

Sure.

[Operator:]

Thank you. [Operator Instructions]. Our next question comes from the line of Frederick Gomez of Pharmium Securities. Your line is now open.

[Frederick Gomez:]

Yes. Thank you for taking my questions. 200, the pancreatic cancer first. Can you give us maybe to further quick update on the Europe, because you reached the green light from the Swedish agency and the Spanish agency. It seems that the first patient will come from Spain, where you have seven sites and two sites in Sweden. I was wondering, do you plan to open more sites in more countries before the end of the year? Because this will influence the speed of enrollment. And as you mentioned, but it’s processed against the U.S. So can we expect more countries to be opened before the end of the year? The second one on the pancreatic cancer is regarding this interim and now you’ve just started [the third of event] [ph]. Can we expect, in case of positive outcome, let’s say [indiscernible] to repeat the Phase 2b data? If you have strong P value, can you – can we meet that on the signing with FDA, which could show earlier compared to the 2020 expectation, because it won’t be ethical to treat the patients with the chemo and the other arms is the GRASPA combination provide Medicare benefit? And my last question is on the triple-negative. One reason you used to explain the discontinuation of the program in leukemia, one of the competitive environment that you should be kept – trying to get is Roche is currently within seven Phase 3 with – they are in the therapy or just I’m thinking in triple-negative. There are a lot of chaos in this indication. So I’m just curious, why you pick this one, given also the competitive landscape? Thanks. ‘

[Iman El-Hariry:]

Hello, Frederick. I will start and I’ll ask Gil to add if needed. So the first question on TRYbeCA or TRYbeCA1. It is very true. I’m impressed that you have the update on the slides. But it is very true that the same is our first country to start opening sites and enroll in-patients. We would – we are actually expecting several countries to start the sites initiations before end of the year. This will include, so we have spin. We expect also United Kingdom for in a sense. We expect also some – one of the Scandinavian countries. So I think we’re on track. Now one thing just to add. Based on the centers of the patient enrollment pattern, we will be opened and we’ll assist this during the ramp-up phase in the first quarter of next year, whether actually we expand the number of sites in some of those countries, where they have the patients to come to the trial. And I think that with the aim for us as a company is to ensure aggressive enrollment to reach our good – and have a longer time for follow-up. So that is the first question. On the second question around positive outcome. The current – the trial is planned. The interim analysis is a superiority interim analysis. And so this would allow us if we achieve positive results of the interim. And particularly since the enrollment, we’ll be almost complete, if not already completed at the time of the interim, we – that should allow us to approach the CHMP and FDA and find this on the positive response from the interim analysis. So that is your second question. Your third question around the competitive landscape into TNBC. It is very true when you look the ALL and TNBC team, which is becoming very common this year [indiscernible]. This is why we’re just re-choosing our sites in U.S. and in Europe to be able to make sure that we enroll the patients on time, as well as the right caliber of patients. But one of the other reasons that we actually – there are differences between the TNBC and ALL is that asparaginase. Asparaginase is a standard of care in ALL. So if we were to continue with GRASPA in or as far as in ALL, it is a third asparaginase. Here we have even an advantage. It’s considered to be – it’s a metabolic, I don’t think advanced, which has its effectiveness in triple-negative breast cancer. And this is exactly what is towards manifested in our one-to-one course with every single site that we would like to bring onboard. So there are differences. I hope, we’re definitely choosing which sites and hopefully that will not impact our developed program in TNBC. And I think, we have some opportunities that we’re already contemplating. Anything to add, Gil?

[Operator:]

Thank you. Ladies and gentlemen, we have reached the end of our – the question-and-answer session. I’d like to turn the call back to Gil Beyen, for closing remarks.

[Gil Beyen:]

So great. Thank you, all. Thanks, everybody, for your participation, your attention, your questions and your continued support. As always, we will keep you updated on the progress remainder of the year. And so thanks, again. Thanks for joining, and wish you a great day.

[Operator:]

Ladies and gentlemen, thank you for participating in today’s conference. This concludes today’s program. You may all disconnect. Everyone, have a great day.