ERYTECH Pharma S.A.
Q4 2018 Earnings Call Transcript

Published: 12 Mar 2019

[Operator:]

Good day, ladies and gentlemen. And welcome to the ERYTECH Fourth Quarter and Full Year 2018 Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] As a reminder, today's conference is being recorded. I would now like to turn the call over to Gil Beyen, CEO. Sir, please begin.

[Gil Beyen:]

Thank you. Good morning everybody in this side, as we are in Boston right now, so this side of the ocean good afternoon in Europe. Welcome to our update call, earnings call full-year and also fourth quarter last year, full year 2018. I will – Slide 2, let you read the disclaimer at your convenience and move to the agenda on Slide 3. So, as usual, we will start with a business update. I will do that, Eric will go over the financial results of the full year and address briefly the news flow and upcoming milestones and we’ll open up for Q&A. I am here with Eric Soyer, our CFO and COO; and Dr. Iman El-Hariry, our Chief Medical Officer. We’re all three of us here for the Q&A section. So, basically on the next slide, Slide 4 you will – I think you all know this by now, this is our one page summary of the company, leader in red blood cell-based cancer therapeutics based on our ERYCAPS platform, increasing the focus on, we have this already, but on targeting altered metabolic pathways in cancer first with asparaginase, increasingly also working on methionase and even arginase, but the lead product clearly is our eryaspase product it is the asparaginase in red blood cells, and the key topic also for today is indeed lead clinical programs, Phase 3 in second line metastatic pancreatic cancer is enrolling well, I can say, and the Phase 2 clinical trial in Triple negative breast cancer has been launched. The first sites are open and enrolment to start soon. The big part also is making sure we can produce this product. We have around GMP facility in France. See, now we’re expanding it and we have a new facility in final stages of construction in the U.S. and we source our red blood cells from blood banks in Europe and France and in the U.S. We won’t have much update on this today, but it’s true that we have next to our eryaspase we have a platform of opportunities with our ERYCAPS technology [we presume in] on the methionase the next public candidate that we’re bringing into Phase 1. The pipeline, I think that one need to summarize that this is indeed what I just put forward, maybe just the names of the trials will come back. The Phase 3 in second line pancreatic cancer, TRYbeCA1 the Phase 2 in first line triple negative breast cancer TNBC TRYbeCA2. We have and it’s a bit shaded, but maybe we will not discuss it as it’s nicely progressing, but there is an IST, an Investor Sponsored Trial in parallel in second line after [indiscernible] ongoing in the Nordic countries in Europe will have an update, I think shortly on interim results that will lead probably for the next call and the rest of the pipeline, and you can see here. And now coming to the topic of the day, the highlights, the business update for the year 2018 and year to date. So, the TRYbeCA 1, the Phase 3 in second-line pancreatic cancer is now launched throughout Europe in all European countries. It is 11 or 12 European countries we have the national approvals. Their enrolling in three of these countries and enrolling well in-line with plan. We’ll come back to it. We are also – now the U.S. should – there has been some delays, but we’re filing the IND in the coming weeks. The Phase 2 in triple negative breast cancer is launched also. We have approvals in four countries and first sites are open for patient enrolment. We are waiting for the first patient to come in. Briefly come back, most of you may have already attended this or noticed, but we had a good – we all attended key opinion leader event in New York in November was an interesting event where we were the key pin leaders both in pancreatic cancer and TNBC highlighted the medical need and the opportunity for our eryaspase based product expansion of the manufacturing [ph] – we will come back to the manufacturing. We will come back to the Phase 1 preparations from methionase and then Eric will zoom in on, not only the cash position, but also the financials of the year. So, TRYbeCA 1 just reminders Phase 3 study, about 500 patients to be enrolled and randomized. Its standard of care chemotherapy in let’s say to [focus] the gemcitabine/nab-paclitaxel as a standard of care regimen and then irinotecan-based regimens. We add on our eryaspase product to half of the patients in both regimens and this overall survival and remember we have an interim analysis foreseen at approximately two-thirds of the events. So, we have the clinical trial authorizations in, I would say, not different, but all European countries participating. And patient enrollment started mid-September in Spain, and the study is now actively recruiting in several European countries, in fact, in three or four countries. Iman will provide more update there and in Q&A. And so, the IND is planned to be submitted in the coming weeks. We were ready in the end of last year, beginning of this year. The shutdown has caused some delays there, but now it's all ready to go. And so, this is our second line metastatic pancreatic cancer. We are now also in continuing the preparations to a first line setting and it will be an IST study, so an investigator sponsored study in the United States in front-line pancreatic cancer in combination with FOLFIRINOX, which is now in the planning phase. So, that’s on pancreatic cancer. On TNBC, triple-negative breast cancer, not too much to add, compared to last time. So, it’s a study – proof-of-concept study in Europe. It's approximately 65 patients to be enrolled. It’s also chemotherapy, plus or minus GRASPA with an objective response rate endpoint. So, we have clinical trial authorizations in four countries in Europe, and we have sites – different sites – first sites initiated, and now we expect patient enrollment to start imminently. So, that’s the second program. Briefly coming back on the Key Opinion Leader event, as we already showed at the update in November, so Professor Hammel, the PI of the Phase 2 study presented there. We had also Javier Cortes, who is co-PI in the TNBC study with Professor Awada. Both discussed the unmet medical need and confirmed the unmet medical need in pancreatic cancer and in TNBC, highly metabolically active indications. We’re indeed altering – we’re targeting the altered metabolism pathways. Indeed, they confirmed that this is an important treatment modality that is gaining importance, and so, specifically also the asparaginase targeting with GRASPA. They confirmed that this a – that it can be an important potential contribution. And specifically, also with the ALL set is, yes, there's a lot of targeted therapies coming especially in TNBC, but the need for a sort of, I would almost call it a broad-spectrum treatment modality by targeting metabolism as a sort of complementary approach to vary the therapies was really appreciated and welcomed by the different speakers. The presentations are on our website still for – if somebody wants to go more in detail on the content of this event. Manufacturing capacity, we have – so the sites in Princeton is almost ready for – so we have a new manufacturing site. That is about 30,000 square feet in total. We’ll be able to serve 40 different clinical trials, but also early commercial production. So, the construction work is at the end, validation about to start, and so production of GMP at just by the end of the second quarter according to plan. And in Lyon, we have doubled the capacity already by adding a second shift, and we are building a next – a floor – the floor above the current facility, we’re doubling that current capacity first with one shift, and also here construction almost ready. You’ll see a little picture here that it's almost ready and the facility there. And so, now validation to start for GMP batches by the end of the second quarter. So, that’s – and maybe just to add also still on manufacturing that is the timing of the upcoming on stream of the manufacturing sites fits nicely with the enrollment of the clinical trials. Moving to Slide 11, preclinical programs, in fact, I’m zooming in on the methionase, that’s the next product candidate erymethionase methionine-gamma-lyase in red blood cells. We have shown this at different occasions. We had very promising preclinical results in different indications. We will now also – and just a heads-up here, at AACR, we will have a poster presentation with further results, in fact, further results on one hand the methionase on its own, but also in combination with checkpoint inhibitors. We have in 2018 completed preclinical tox work. And so, now it’s mainly CMC and clinical preparations to get this trial initiated. Initiation, we hope CTA approval by the end of this year and first patients in Q1 of next year. And I’ll just put a little sentence here because you may have seen it; we had a poster presentation yesterday on red blood cells at the red blood cell conference. We've done extensive work with blood specialists in the fields on really even further – if we want to be leader in red blood cells, we need to make sure that we really have this fully [indiscernible]. So, here we presented proteomic analysis, which was very interesting because it confirmed our ERYCAPS technology does not alter the – does not significantly alter the properties of red blood cells, the proteome remains almost identically the same. The only big difference is obviously that the asparaginase is added to the product indicates of our eryaspase. So, invite you, if you have not seen it, the read abstract and the post is also now on our website, poster that was presented yesterday. To hear the business update, I’m back for questions, but first I want to pass on to Eric, Slide 12, to present you to financial – full year financials 2018.

[Eric Soyer:]

Thank you, Gil. Good morning everybody [indiscernible]. Indeed taking a few minutes to commence on the full-year financial results. I’m on Slide number 12 for a summary information of our P&L, and last year, 2018, we’ve had a net loss of EUR38.2 million, which is an increase over the previous year by EUR4.7 million, and that increase is obviously linked with the increase in operating expenses year-over-year, EUR13.8 million increase, which is related to the initiation of the new trials Gil mentioned, TRYbeCA1 in pancreatic cancer of Phase 3, the TRYbeCA2, in TNBC the Phase 2. In addition to that, we had sustained preclinical activity and mostly for the developments of our next product candidate, erymethionase. And finally, the strengthening of our EU and U.S. operations. Gil also mentioned the work which has currently gone through have the Princeton facility up and running very soon and the expansion of the production capacity in Lyon. With this increase in operating expenses, we had, in the same time, an increase – an EUR8 million variation in financial income. Financial income of EUR5.4 million in 2018, which includes a EUR4 million impact – a favorable impact of the foreign exchange translation of our USD positions into the consolidated position in Europe. So that’s the key highlights of P&L information. That activity then translates into cash and cash flow information. We’re on the next Slide, number 13. We had, at the end of 2018, a total cash position of EUR134.4 million, which is approximately $154 million. That's a cash variation year-over-year of 51.1 million. Taken into account in net cash variation again the EUR4 million currency exchange variation on the USD positions, which means that the true net cash utilization for the year 2018 was 55.1 million, and that net cash utilization was made of the net cash flow from operating activities of approximately EUR39 million. And then in addition to that, we had investing activities, CapEx of approximately EUR15 million, which is obviously linked with the construction works, which is still ongoing in Princeton and in Lyon; and a little bit of financing activities, which is the small repayments of the loan which is still being repaid. So all-in-all, a net cash variation, excluding the foreign exchange impact of EUR55.1 million for the year 2018. We expect this cash utilization to further increase in the 2019, this year, with the peak of the clinical activities on the TRYbeCA1and the TRYbeCA2 trials, and the completion of the building works and validation and starting works of the Princeton facility and the Lyon facility. Then words – the next Slide, number 14, a word on our shareholder base. Globally, the shareholder base is stable in terms of EU/US proportions with still approximately 10% to 15% of retail ownership, and then institutional ownership, which is split evenly between Europe [54% to 50%] and the US again, [54% to 50%]. And then, keeping in mind that all our largest shareholders are now and still US based, with biotech value funds, BVF, the prominent biotech funds based in California, with approximately 25% of our share ownership and RA capital, based in Boston, with approximately 11% of our share ownership. A quick wrap up, which translate into key milestone and useful for the next 12-month. Very soon the first patient to be dosed in TNBC Phase 2 trial, TRYbeCA2, as Gil mentioned that already. And then, the start of our GMP production in the U.S. at the new Princeton facility, same time for the start of the GMP production at the Lyon extension. And also, to be expected very soon the first U.S. patient to be dosed in the pancreatic trial, the Phase 3, the TRYbeCA1 trial. And finally, later in the year or early next year, the initiation of the Phase 1 trial with the next product candidate erymethionase. These are the key and useful for – and milestones for the year over the next 12 months. With that, I will turn over the call to the operator. We will now open the question-and-answer session. Operator?

[Operator:]

Yes sir. [Operator Instructions] Our first question comes from the line of Dylan van Haaften of NIBC. Your line is now open.

[Dylan van Haaften:]

Yes, good morning. I have three questions. First on the BTD, is the idea to bundle up with the IND? And that’s my first question. And the second question is, given sort of minor timeline slippage, are you guys still confident that you'll meet the first half 2020 interim readout for two-thirds of patients results? And then the third one is, could you guide if capacity has ever been a limiting factor in BD discussion so far? And would it be a stretch to expect activity in this arena to increase after our capacity expansions and tech transfer are complete? Thank you.

[Gil Beyen:]

Thank you, Dylan. I’ll pass the first two questions to Iman and then I’ll come back to the capacity.

[Iman El Hariry:]

Yes, hi. Thank you. For the BTD, we will file this once we obtain the IND, so that is typically the process with the FDA. On the second question, yes, we are generally giving the guidance that the interim analysis would be in the first half of 2020. And one of the things that we are very pleased with is the enrollment in Europe is actually going above the expectation after our current projection. So, we are confident about meeting our projected plan.

[Gil Beyen:]

Maybe Eric, you’re even better placed for the question.

[Eric Soyer:]

Well, yes, indeed the capacities which are about to start very soon now, both in Lyon and in the U.S. are not only to address the clinical needs and the early commercial needs hopefully both in EU and the U.S., but also to, especially the Princeton facility is also [indiscernible] demonstration that we are now moving to commercial scale and that this is obviously a very important information for potential [indiscernible] who would like to work with us.

[Gil Beyen:]

Yes. To add on this, we have indeed we have Princeton facility as a showcase – not at that major [indiscernible] we are making it huge or so, but it is a facility that can be visited and that indeed can show the modularity of the approach and control of the manufacturing. So, yes, I think indeed that it’s an important element in the partnering discussions.

[Eric Soyer:]

Yes, it has not been a limiting factor. However, it is definitely you are right an important element in potential [indiscernible] discussions.

[Dylan van Haaften:]

Right. Thank you very much. Have a good day.

[Operator:]

[Operator Instructions] And I’m not showing any further questions at this time. I would now like to turn the call back to Gil Beyen for closing remarks.

[Gil Beyen:]

So, it means that we have been very clear. So, thank you all for attending. So, you will be – it has been a year of, 2018, a lot of execution going well. 2019 still mainly execution, but as Eric mentioned the importance of developments and [indiscernible] so we will keep you posted on all of this and look forward to meeting and seeing you and/or at the next call, which will be in May. So, thank you all. Have a nice day.

[Operator:]

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