ERYTECH Pharma S.A.
Q3 2018 Earnings Call Transcript

Published: 13 Nov 2018

[Operator:]

Good day, ladies and gentlemen. And welcome to the ERYTECH Pharma Third Quarter 2018 Conference Call and Business Update. [Operator Instructions] As a reminder, today's conference may be recorded. And I’d now like to turn the call over to Gil Beyen, Chief Executive Officer. You may begin.

[Gil Beyen:]

Thank you. Good afternoon in Europe. Good morning in U.S. Thank you for joining us for our third quarter earnings call. And we announced our Q3 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 if you don't have it yet. With me here in Lyon is Eric Soyer, our Chief Financial and Chief Operating Officer; and connected from London is Dr. Iman El-Hariry, our Chief Medical Officer. I switch to Slide 2 and draw your attention to the disclaimer page then we'll go on to agenda Slide 3. So as good practice following our quarterly routine, I will start with the business update, and following the highlights of the year-to-date, and then Eric will take over to present the financial highlights of the third quarter and year-to-date. And then he will also summarize the key milestone for the remainder of the year. And then the three of us will be available afterwards to respond to your questions. On Slide 4, summary page. I think it's good practice to start with a short recap of the company. Slide 4 says it all. Leader in red blood cell-based cancer therapeutics with our ERYCAPS platform, as you know, focused on cancer that's specifically within caner metabolic pathways targeting immuno acid pathways with potential interaction with immune pathways clearly. Late stage development, we've treated more than 320 patients that should increase this number further of Phase 3 in second line metastatic pancreatic cancer is enrolling patient has started, and the Phase 2 in TNBC is about to start. We expect first patients before the end of the year. A lot of attention on our industrialized and scalable production, so we do our own manufacturing. We have our facility here in France. It's a full scale facility. We have a small scale version of it in Philadelphia, and we're building a large facility in Princeton in New Jersey. And we have established partnerships with blood banks in France and in the US to source our red blood cell material. Next to the lead program late stage Phase3, Phase 2, we have platform of possibilities with the ERYCAPS technology. Our next product candidate we'll touch upon briefly is Erymethionase has now completed preclinical development and we're gearing up for a Phase 1 study. And then we have preclinical programs in immunoncology and one also outside oncology space in metabolic diseases. This is reflected in the pipeline and covered it most maybe just draw your attention on the two programs will focus on the TRYbeCA1 and TRYbeCA2. TRYbeCA1 is our Phase 3 in second line pancreatic cancer and TRYbeCA2 is the Phase 2 in first-line TNBC. We are exploring other opportunities with the Graspa or eryaspase product in other pancreatic settings and other solid tumors. The time is moving to Phase 1 and then the pipeline program order, the preclinical programs that will also briefly touch upon later in this presentation. What are the highlights for Q3 and year-to-date? First of all, Phase 3 in so TRYbeCA1 enrolling patients, patient enrollment started in mid-September and is well on track. Phase 2 in triple negative breast cancer also on track. So we have our first clinical trial authorizations and we are expecting the first patients before the end of the year. We had and some of you have attended it and actually attended Key Opinion Leader event with three KOL, pancreatic cancer and triple negative breast cancer showing as the unmet-- the continued unmet medical need and indeed potential to work on cancer metabolism and specifically a product like Graspa. I will touch upon the manufacturing facilities briefly upon the preclinical programs, and then indeed the cash position and the financials, I will let Eric comment on these. So on the first one pancreatic cancer, I'm now on Slide 7, TRYbeCA1, quick reminders, it's in second line metastatic pancreatic cancer, and it's a study in Europe and in the US targeting about 500 patients to be enrolled. It's a randomized control study chemotherapy in two regiments gemcitabine/paclitaxel or irinotecan-based with or without the area space product. Primary endpoint is oral survival like our phase 2 was. We foresee an interim analysis at two-thirds of the events, and as I said just earlier, we have received clinical trial authorizations in fact in almost all of the countries we are targeting, we're targeting 13 countries. I think we have now nine or ten clinical trial authorizations and almost as many ethical committee approvals and patient enrollment started mid-September and is nicely progressing in Europe. In the US, we anticipate the start in the first quarter of next year after the year, so we still have the IND approval to come. We are exploring other pancreatic settings especially the first-line pancreatic setting is of interest. Clearly, there is quite some things happening there but the idea is to most likely to also effect through a phase one study in the first line and combination with [Feronox] to advance into the --to really make sure that we can be in both main strata in the front line being the gemcitabine, gemma vaccine based and the Feronox based treatment regimens. So that's TRYbeCA1 pancreatic cancer. Moving to Slide 8, the next big indication for us, triple negative breast cancer. You may remind me, we chose this indication as next entry into solid tumors pancreatic. We were the first Asparaginase to have positive clinical results with an asparagine product but we know that this many-- that the mode of action is and this was also confirmed at the key opinion leader event, asparagine quite universal mode of action. The next indication TNBC chosen for the fact that it's also like pancreatic cancer, a very aggressive, high proliferation type of tumor that needs a lot of amino acids, high metastatic activity and high unmet medical needs. So here we are preparing a proof-of-concept the phase 2 study, more than preparing in fact we have initiated its first clinical trial authorizations as I said have come in. So it's a randomized study about 65 patients in Europe and US, and so it's first line here. Same idea chemotherapy in this case gemcitabine and carboplatin with or without the area space product with here in objective response primary endpoint but all the other PFS and others as secondary endpoint. So also I repeat myself but we expect first patients to come in by year end. Switching to Slide 9, mentioned some of you attend the meeting it was last week, Pascal Hammel spoke about pancreatic cancer. We would have had Manuel Hidalgo from MGH but unfortunately family emergency made it impossible for him to come. So Pascal Hammel discussed first, the second line and the first line pancreatic setting, get comments on the phase 2 studies, phase 2b study. So he highlighted the real there and then focused on the unmet needs and the potential for Graspa. And the two other speakers were focused on TNBC; Javier Cortes spoke more in general about the indication and the importance of the metabolic activity as a pathway to target and professor Awada is our PI in the study and he commented more specifically about the product and design of the study after also having given an overview of what the disease and the unmet need is. So it's an interesting meeting and I think we got a lot of, I hope you all lot of sort of learnings from that. Further zooming through the highlights of the quarter. I think we have to mention the progress on the supply on the manufacturing side. In order to be successful on our two main studies, we have to have additional supply because these studies are larger than what we had before. So we maybe just to say we have in the US, we have the Philadelphia facility so the supply is not on the manufacturing sites are not on the critical path as such because we can, as soon as we have the IND we can start enrolling patients in the US, but to really ramp up the study we need additional facility and that is the role, initial role of the Princeton site, it were building you see small picture, inside it's one big construction work. It's about 30,000 square foot facility, 3,000 square meter and fully on track for the supplier ramped up in the clinical trials. So really operational by end Q1 early Q2 next year. And here in Lyon, we have current capacity also that we're doubling it, in fact, almost quadrupling it, doubling in size but also adding us additional shifts. We-- the trial is on --the production for the trial are happening as we speak here in Lyon, but as this trial and so the additional capacity will come on stream when we need it for the further ramp of the study. A quick word on preclinical because it's not only the Graspa or eryaspase products. We have really three preclinical programs in the prime focus, the Erymethionase is the next product candidate, it's methionine-gamma-lyase in red blood cells, similar to asparagine, similar mode of action depleting or lowering levels of amino acids, in this case methionine and homocysteine. We've seen some exciting preclinical results. You see here one this is gastric cancer where we clearly see an impact with five injections of the methionase and with vitamin b6 added as important for the cofactor of the methionase we see here complete disappearance of the tumors where that control arm continues to --the tumors continue to grow as you see. So here we are-- we've completed the preclinical talks. We're still working on the CMC activities. So ensuring that we have enough supply of the drug to start a significant phase 1 study. It's on track and we hope and anticipate that the trial we will be able to start in -- so next year of 2019. The two other programs are the ERYZYME which is again in the field of enzymes and encapsulating enzymes but here outside oncology, focusing metabolic diseases we have three proofs of principal preclinical studies ongoing with results already partially coming in and more to come. And then we have the ERYMMUNE which is encapsulating antigens and here to target, in fact to target the immune cells particularly in the spleen for cancer immunotherapy approach. Also here we expect the data to come in --some data have come in, some data more to come in next quarter. So what we are planning to do is to group all of these, all the preclinical results that come in and as we did last week for the clinical programs is to do a certain R&D date towards the end of Q1 next year. So more to come. And now I leave -- switch to Slide 12 where we start on the financials. So I leave it to Eric to comment on the Q3 financials.

[Eric Soyer:]

Thank you, Gil. Good morning, everybody. I will now touch upon the key financial figures for the first nine months of 2018. I'm indeed on page 12 starting with the several information on the P&L for the first nine months of the year, showing a net loss for the first nine month of €30.2 million which is compared to €20.8 million in the same period of 2017. And this is a €9.4 million increase. That increase was mostly driven by the increase in total operating expenses. We had total operating expenses at the end of the period of €36.8 million which is an increase of €12.8 million. And this is driven by an increase mostly in research and development expenses by €8 million. This is mostly related to the company's increased clinical and regulatory activities by approximately €5.6 million. And also with the continued increase in preclinical research activities. This is an increase of approximately €2.4 million. In the same time, we also had an increase in the G&A expenses by €4.8 million and this is reflecting the continued structuring of the company, as well as the increased cost associated with becoming a public company. You may have noticed that we've rang the bell to celebrate the first year anniversary of our NASDAQ SBO that was in November last year. And finally on this P&L you can see financial income of €4 million and that financial income includes a €3.1 million currency translation impact and this is on the dollar to Euro translation of the portion of cash which is held in US dollar. I'm now turning to page 13 to briefly comment on the cash position. At the end of the period September 30, we had a total net cash position of €146.9. This is approximately US$170 million, and you may remember that the cash position starting the year 2018 was €185 million. So the total cash utilization in the nine-month period was €38.6 million, €18.5 million for the third quarter only. And that total cash utilization of €38.6 million for the first nine months was including again €3.1 million favorable currency translation impact on the US dollar cash positions. A brief word on the shoulder structure which remains overall the same since the IPO, the same split EU and US with approximately 45% to 50% of institutional holders in Europe. The same 45% to 50% of institutional holders in the US, and a retail position of approximately 10%. I am switching to Slide 14 just to wrap up the key milestones of the year, and I'm mostly touching the key messages that Gil has developed a few minutes ago .The first key milestones of the year is the check mark here with the first patient enrolled in the TRYbeCA1 study which is the pivotal phase 3 clinical trial in second line pancreatic cancer. Soon to come, we should be able to enroll the first patient in the TRYbeCA2 study which is the Phase 2 proof -of-concept clinical trial in first line triple negative breast cancer. And Gil mentioned that we expect the US arm of TRYbeCA1, the clinical study in pancreatic cancer to start in the US around Q1 next year 2019. And during the year of 2019, we should be switching to clinical activity on the Erymethionase product candidates. We have completed CMC activities and now preparing for the launch of the phase 1 trial, and that is --that will be in the year 2019. And finally Gil has mentioned an update on preclinical pipeline programs. ERYZYME, ERYMMUNE and that should be towards the end of Q1, 2018, most likely around the ACR Congress Conference. With that we'll turn the call over to the operator to open the Q&A session. For those of you who would like to ask question in French, please feel free to do so. [Foreign Language] Operator, please go ahead.

[Operator:]

[Operator Instructions] Our first question comes to line of Konstantinos Aprilakis from JMP Securities. You may begin.

[Konstantinos Aprilakis:]

Hey, guys. Thanks very much for taking my question. So I was wondering if you might provide some more color on the progress opening clinical sites in the US for the TRYbeCA1 trial and pancreatic cancer. I think I heard you say in the prepared remarks it's going to be a 1Q, 2019 initiation. I think that's a little bit of a delay. I think last we heard it was 4Q, 2018 and just a little color there on what's going out with the IND. Is the plan still supposed to be 60/40 split between the EU and the US? And is the BTD application still expected to be submitted along with the IND? Thanks.

[Gil Beyen:]

Thank you, Konstantinos. I think this is one for Iman, so Iman can you take this question?

[Iman El Hariry:]

Yes, absolutely. So Konstantinos what we --the delay currently is related to additional or completing the work on the -- from Lyon to the US has taken a little longer than expected. So we expect to submit our IND before end of the year and hopefully we will have sites -- we get the IND at the beginning of 2019 with sites are starting to just get in and enroll patients. So that is the first point. On the second point is the breakthrough, once we obtain the IND we'll be able to file for our breakthrough designation.

[Konstantinos Aprilakis:]

Okay, thanks very much, that's helpful. And then just a bit more color on the manufacturing facilities that you're planning for in the US and in New Jersey. Sort of when do you expect the financial impact of the opening of those facilities to hit the income statement?

[Gil Beyen:]

Eric?

[Eric Soyer:]

The financial impact has hit the cash utilization already in 2018, but that's really CapEx that will hit the income statements mostly in the course of next year. As Gil mentioned, this Princeton facility is scheduled to be up and running for the ramp up of the clinical trial in the US which Iman just commented. And so that's --

[Operator:]

And our next question comes from the line of Lucy Codrington from Jefferies. You may begin.

[Lucy Codrington:]

Hi, thanks for taking my question. Yesterday Jes Pharma has reported low sales for their ALL due to supply shortage which actually appears to be worsening -- and potential that this could lead to you to reconsider your position in ALL. Thank you.

[Gil Beyen:]

Good question. For the time being indeed we --our focus is on solid tumors, but you may remember that we still have a study on going in ALL which is in the Nordic countries of Europe. It's a study the NOFA study we call it, it's an IST so an investigator initiated study and this is exactly in the urban age population. These are patients that have --sort of had developed allergies after [Indiscernible] treatments this study is progressing. I think we're about 30 patients study; it's about half enrolled and treated. And, yes, I think we feel more --it's always --we feel quite some clinicians who regret that we have sort of de-prioritized ALL. And so never say never I think indeed it could be an opportunity the two things combined organized difficulties. Also not only the shortage I think [Indiscernible] is also seen as a very difficult product needing 12 injections per month, and being very expensive. And indeed the opportunity of our product line like ours but it's a bit too early to comment more on it.

[Iman El Hariry:]

If I just -- to just comment. I mean we also continue clearly to focus on the other patients and we continue to entertain nominated patient news, so we have been entertaining this in the past few months and either as I think in IND or in Europe again nominated patient news where every news is needed and cannot be afforded.

[Operator:]

Our next question comes from the line of Frederick Gomez from Pharmium Securities. You may begin.

[Frederick Gomez:]

Yes. Thank you for taking my questions. I have two; first on you talk a little bit about the site in the US. Can you maybe give us more color about the number of sites which are currently active in Europe? I know apparently that there are three countries, Sweden, Spain and Austria but how many sites are open and maybe can you give us sort of range of patients currently randomized? And I'm quite curious if we look at the data with Abraxane in combination with a gemcitabine and also your data previously disclosed there is an impact on the number of metastatic sites at baseline in patients. Clearly, if the number is above two --the survivor is true it was exactly the same with Roxanne maybe why you didn't include this number of metastatic sites as an exclusion trial to make sure that the preparation would be a homogenous at the end and you will have either may be less severe patients to treat. Thank you.

[Gil Beyen:]

Thank you, Frederick. I think both questions for Iman again.

[Iman El Hariry:]

Okay. Hello, Frederick. So in the US, we are targeting actually quite high number of sites. And if you remember from our guidance in the past looking at more or less generally more or less equally split or maybe a little bit more than equally split between Europe and the US. Overall, we are targeting approximately 100 and such sites and it is very true that we have currently a two active countries Spain and France with several sites that are currently enrolling patients. In terms of the enrollment activities, we actually have not given guidance on that, but what I can say that and Gil mentioned this early, almost all countries in Europe have either consent authority and/ or ethics committee approval, not only these two countries several sites are enrolling patience but also there is a high level of enthusiasm and interest to consider almost every single patient coming through the door to our trial which reflects the interest in new drugs, new mechanism of action and clearly they need to improve the outcome of those patients. So that's the first question. On the second question around the number of metastatic sites et cetera, you are absolutely right they did our data and previously data and the common sense just as patients with a high number of metastatic sites and we have --we could have slightly different outcome. It's very difficult to in a clinical trial setting to exclude those patients in any clinical trial setting. But what we do typically is with the current certification that we have in which we are specifically certifying patients with progression less or more than six months from the diagnosis of metastatic disease that will help cleaning out also this subset of patients to be equally distributed across the two treatment arm. So in other words we have certification criteria that will help also and providing some reasonable balance between the two treatments and which you always see in such a high number of studies over 500 patients would expect that will not be in imbalance with that. But it is very difficult to hold to actually cherry pick from first lot that doubles patients who would or would not be responding, it's a difference --is the interpretation the first -- making sure that we have consistency of the treatment which we do by the way in all patients.

[Gil Beyen:]

Right. If I can add to this, we --when we now forced blocked indeed when we did the analysis of separate sort of the patients with less than three so maximum two metastatic sites versus the others, it was predominant as we had almost all of them were in the less than three but the hazard ratio is identical to say in the two sub groups if you want,. 0.6.

[Operator:]

And I'm showing no questions at this time. I'd like to turn the call back to the speakers for closing remarks.

[Gil Beyen:]

So thank you all for your attendance, for your questions and for your continued support to Erytech. We will as always keep you updated news evolves and wish you all that a great day. Thank you.

[Operator:]

Ladies and gentlemen, thank you for participating today's conference. This does conclude the program. And you may all disconnect. Everyone have a great day.