Evelo Biosciences, Inc.
Q4 2020 Earnings Call Transcript

Published: 9 Mar 2021

[Operator:]

Welcome to the Evelo Biosciences Conference Call to discuss the Fourth Quarter and Full Year 2020 Financial Results and Business highlights. At this time all participants are in listen-only mode..Please be advised this call is being recorded at the company’s request. At this time, I'd like to turn it over to Jessica Cotrone of Evelo. Please proceed.

[Jessica Cotrone:]

Thank you. This morning, we issued a press release that outlines the topics we plan to discuss today. This release is available at www.evelobio.com under the Investors tab.

[Balkrishan Gill:]

Thank you Jessica. Good morning everyone and thanks for joining. Over the last four years, we generated preclinical and clinical data which showed the effects of our small intestinal axis or SINTAX medicines investigational medicines designed to work within the small intestine the change inclination and immunity throughout the body. SINTAX medicines have the potential to be not only effective, but easy to take, safe and well tolerated and with the ability to be manufactured over large scale and low cost. And over the last 18 months, we have reported a series of clinical successes with EDP1815, our lead anti-inflammatory medicine candidate. EDP1815 has shown clinical effects on Th1, Th2 and Th17 driven biology, the three major drivers of inflammatory disease. Supporting the potential of EDP1815 is a broadly acting well tolerated oral medicine that may result inflammation without immunosuppression. Most recently in December and January, we presented positive results from a cohort of patients with Atopic dermatitis in our Phase 1b clinical trial. And today, we are reporting a fifth set of positive clinical data with EDP1815.

[Mark Bodmer:]

Thank you. As Simba said we've tested EDP1816 in humans at a higher concentration, at a higher dose, a higher concentration of the drug in each capsule. The data show that a higher concentration formulation have a greater effect than the same dose in a less concentrated formulation. This is a key advance in our understanding of how to get more effect from SINTAX medicines.

[Jonathan Zung:]

Thank you, Mark. And good morning, everyone. I'm Jonathan Zung Chief Development Officer at Evelo. I'm excited to join Evelo as we move to later stage drug development and closer to bringing a new and potentially transformative modality of medicine to patients around the world. Over the last decade, I've had the privilege to lead the clinical operations organizations at Bristol Myers Squibb, UCB and Covance. Through these roles I've worked across various disease areas and all stages of development. As Mark and Simba mentioned, we have a catalyst rich 18 months ahead of us. For EDP1815, our focus is on setting the stage for Phase 3 programs in psoriasis and Atopic dermatitis. This means ensuring we have identified the appropriate formulation and doses that will be used in the registrational studies. Let me first discuss EDP1815 in psoriasis. Our Phase 2 dose ranging trial on psoriasis has completed enrolment ahead of schedule. This is quite remarkable given the COVID challenges. Given the speed of recruitment, we will forego the interim readout and report top line data for the full cohort of patients in the third quarter of this year. As a reminder, this is a 16-week trial evaluating three doses of the A Prime EDP1815 in capsules, versus placebo in approximately 225 patients with mild-to-moderate psoriasis. The primary endpoint is the mean percentage change in PASI score at 16 weeks. Secondary endpoints include a range of scores of clinical efficacy, and psoriasis, both physician and patient reported outcomes. We will also be evaluating tablet and capsule formulations using the higher concentration A2 EDP1815 in three cohorts of patients with mild-to-moderate psoriasis, and an extension of our Phase 1b trial. The purpose of these three cohorts is to select the most appropriate formulation either tablets or capsules for the Phase 3 program. The data will also allow us to further characterize the effect of the more concentrated A2 and to determine any potential benefits of using tablet versus a capsule formulation.

[Balkrishan Gill:]

Thanks, Jonathan. I wanted to conclude by reminding everyone that SINTAX is not just another biotech platform, and EDP1815 is not just another biotech product candidate. We believe that SINTAX based medicines have the potential to completely transform medicines globally. And that EDP1815 has the potential to be one of the world's most important medicines. We've already shown that EDP1815 has the efficacy and profile to become a major medicine for unmet needs of patients with Atopic dermatitis and psoriasis. Our expectations for the psoriasis Phase 2 study, based on the Phase 1b data are unchanged. And we remain on course to start the Phase 3 program in 2022 with an optimized dose and formulation of EDP1815. Today's results elevate its potential efficacy even further. This will apply both to skin diseases and much more broadly in inflammation. To reinforce what Mark told you, the strides we are making with EDP1815 will apply to the whole Evelo platform across our wide portfolio and range of clinical applications. And we continue to expand our portfolio with a new anti-inflammatory EDP1867 and with our bacterial extracellular vesicle programs, EDP1908, for oncology, and EDP2939 for inflammation. What we've highlighted today is possible because of the exceptional work of the team at Evelo, and our external partners. Thanks to all of you. We have a data rich 18 months ahead of us and look forward to updating you as our programs progress during the year. We'll now open the call to take questions.

[Operator:]

Thank you. Our first question comes from the line of Chris Howerton with Jefferies. Your line is open.

[Chris Howerton:]

Excellent. Good morning, and thanks so much for taking the questions and congratulations on the very broad progress.

[Balkrishan Gill:]

Thanks, Chris. Appreciate it.

[Chris Howerton:]

Of course, yes. So I guess, the first one perhaps is a question for Mark, with respect to the skin inflammation experimentation that you done? I think, as I recall, correctly, if I recall correctly, excuse me. This was a model that your team had had developed. Has this ever been published? And I guess I'm in particularly interested in any kind of human exposure to this experimental design, if that's been published at all. And a second question that I would have is that, with respect to the drug product and formulation work that you're doing recently, in terms of the higher concentration and the different levels of efficacy that you're observing, how is it that you're thinking about these learnings more broadly, in terms of, what is that target product profile with respect to formulation? Is it a bacterial cell, is an extracellular vesicle? Is it you know, a gamma, radiated organism? What is kind of the ideal form factor that you're aiming for? And I think that's probably good out there.

[Balkrishan Gill:]

Mark, do you want to take the first question and I’ll take the second?

[Mark Bodmer:]

Okay, yes, very good. So, the human DTH skin model was developed at the Center for Human Drug Research in Leiden in the Netherlands where our collaborators are doing these experiments where they have used a number of other agents in and there have been publications in posters and the old thing you could dig around on websites. But there hasn't been a formal publication of this. We will be publishing with them on this. And they may well be publishing with some of the other partners that they've that they've worked on it. But it's the delayed hypersensitivity in humans. Of course, there's not there's not new this particular protocol, we're to look at unifying that was one that they develop precisely to do this kind of experimental medicine testing.

[Balkrishan Gill:]

Okay, let me take the first question, Chris. So and the most important thing is that we have with EDP1815, with the current formulation, something that we're very confident in as a product will take forward. So and we said we're going full speed ahead with intention to move into the Phase 3 side of things. Next year, we'll get the Phase 2 data and psoriasis very soon now on the fourth study, and we're feeling very confident in that, in that lead product. Today's announcement, obviously gives him the ability to very easily further improve the activity and efficacy beyond the great results we've seen already, without meaningfully impacting Phase 3 results. So the core point there, Chris is we should see 1815 in its current form as a very exciting product. And we intend to move that forward. From a longer term perspective, what we've always said is that this is very similar to the experience Mark and I have had since the beginning of antibodies. As you know, Mark and I were both involved first -- plus years ago, we also scratch their heads about that, in the beginning of the monoclonal antibody world. And we're both so old, that when we started working together, we will work your mouse antibodies, which was kind of cutting edge Mark’s team at Celtek was one of the first groups in the world to come up with kinetic antibodies. And then we moved the CDR grafted antibodies, and we moved to our fragment again, Mark seemed a lot of work. And if you continue, as you know, Chris, so we have uncovered with the small intestinal axis, a fundamental area of biology is a whole new target for medicines. It's never existed before. So there's going to be continual evolution and innovation and improvement. What we said when we started the company, was that we wanted to go far beyond Genentech. So getting to $100 billion valuation, if you want to use those crude terms is good, but actually it’s the first company in the world to open up the small intestinal axis. We want to make sure we're always the leaders and we capture the breadth of the opportunity. So in that context, we're going to continue to invest, Chris. We expect that there is a possibility, whether it's from EVs or other things that we can get antibody like efficacy, ultimately. And that would obviously be a pretty remarkable result that goes far above and beyond what we need to do to have a very important product in 1815. And we'll certainly work towards that as an ultimate goal, which would be an oral, very safe, well tolerated, highly effective drugs that was affordable. And that's always been our goal to get to that point, Chris, that'll take a bit of time, but in the interim, we've got a great product in the 1815.

[Chris Howerton:]

Okay. All right. Well, that's, that's very fair. And I'll, I'll hop back in the queue. Thanks so much.

[Balkrishan Gill:]

Thanks so much, Chris.

[Operator:]

Our next question comes from the line of Matthew Luchini with BMO Capital. Your line is open.

[Matthew Luchini:]

Hi, good morning. Thanks for the question. So I guess also on the formulation, the model data that you presented today certainly looks compelling. And I guess I just like to understand how we should think about the relative what your expectation are for the relative benefit that you'd expect to see in such that you would advance A2 over A Prime? In other words, what would cause you to not advance A2 over A Prime? And then secondarily, just curious on Atopic dermatitis, not so mistaken the inclusion of severe patients is something new for Evelo as the focus has previously been on more mild, moderate patients and both inflammatory diseases. So it’s hard to get a little sense as to what the thinking is there why, sort of move into this new patient population where there's certainly a good amount of entrenched competition? Thank you.

[Balkrishan Gill:]

Thanks, Matt. Mark, if you want to take the first question, and then you ….

[Mark Bodmer:]

Yes, I will. So, Matt, yes that's very important question. It's the same drug, active drug material in the concentrated for we're moving forward with the A2 material. It's very clear. That's the right thing to do. And as I said in the comments in the formal part of the call, this concentration resulted from improvements in processes we scaled up to Phase 3 in commercial scale, as a result of reducing the rate ratio of active drug to accept the interactive drug in the capsules. So, it's absolutely clear that we're going to move forward with this. And actually the studies that Jonathan was telling you about, that we're doing in the future, to look at capsules and tablets, and they're going into the phase 2 Atopic dermatitis study will all be done with the A2 material.

[Balkrishan Gill:]

Thanks, Mark. And Jonathan, you want to talk about Matt's question on moving into the more severe Atopic dermatitis patient segment.

[Jonathan Zung:]

Sure, sure. So Matt, for the logic behind exploring that in the Phase 2 study is in the Phase 1 study, we looked at mild to moderate participants, obviously, we saw good efficacy in that population. In the Phase 2 trial, we're really going to be exploring primarily moderate patients, but we want to have also exposure to those more severe patients so we can understand the true potential of 1815. So we'll likely look at 15%, 20% of the patients in the Phase 2 study will be severe. We'll look at some on the mild side, but most of those participants will be moderate patients, and it's really to better understand the profile of 1815.

[Matthew Luchini:]

Okay, fair enough. Thank you, and congrats on the quarter.

[Jonathan Zung:]

Thanks a lot Matt.

[Operator:]

Thank you. Our next question comes from the line of Matthew Harrison with Morgan Stanley. Your line is open.

[Matthew Harrison:]

Hi, great, good morning. Thanks for taking the questions. I guess. I guess two parts for me, one Simba could you just clarify a comment that you made earlier. It sounds like which, which of these different I guess formulations are you going to move ahead with psoriasis and it sounds like you're going to just continue to move ahead with A prime and not A2. So maybe you could just clarify that for me. I was unclear on the comment you made. And then I guess the second question, which is similar to the last question is just about now that you have a higher potency formulation, are there other diseases that you might think about now that you maybe previously didn't in terms of indications? Thanks.

[Balkrishan Gill:]

Thanks Matt. Let me take them in reverse order. Matthew. So what we started the company on and in terms of looking at the inflammatory space was the idea that we might, through the small intestinal axis, open up a completely new profile of medicine, in which we had something that was pleiotropic. I guess with poly pharmacology, so something that acted on multiple different cytokine pathways to drive inflammation resolution, without shutting down immunity. And from that, given that we have something that was oral, something that we believe would be very safe and well tolerated. And something that could be developed and manufactured on a very affordable basis, our goal was always to see if we could capture the breath of inflammatory disease in a state manner. We started in dermatology because of the rapid readouts, the rapid faster approval and the fact as you know, Matthew, there's an enormous unmet need, particularly in the moderate and milder forms of those diseases. But our goal has always been to go broad across all of inflammation. The new data obviously gives us even more confident that we have something with the desired profile, even better than what we've seen already. And so it actually doesn't change our plans. Matthew, I think gives us even more confidence that we have something that should be a very attractive, broad inflammation resolving agent. So we'd anticipate that in due course, we'll look to expand into the arthritis, obviously, the biology and stepwise we'd anticipate, for example, syrup, psoriatic arthritis, and rheumatoid arthritis xbar on that part of the axis, we're already planning to look at asthma in terms of Atopic disease, and then we'll continue to expand to that full breadth of introduction. But definitely today's result gives us that next level of confidence that we've got something consistent with the profile we see Matthew. I think on the first question, so we expect we will move forward with the H2 manufacturing process. That's what Mark said just given today's result. And we'll see what results we get in Q3 with tablet versus capsule. So in Q3, we'll get a next wave of data, which Jonathan's driving forward in addition to the Phase 2 study in psoriasis, which will get data on that full study in Q3. We'll also get additional data on tablets versus capsules, in psoriasis patients and then we'll make the decision, they driven as to which exact formulation we take forward into the Phase 3 study. And we'll get all of that relevant data in Q3. We certainly see a possibility to get even further improvement with the tablet formulation. We don't have that data yet, Matthew. So we'll see what the data reveals. And we're in a position to take whichever formulation looks best into the Phase 3 studies as we go forward. Thanks very helpful, Matthew.

[Matthew Harrison:]

Thanks. That's perfect. Thanks. Simba.

[Operator:]

Thank you. Our next question comes from the line of Peyton Bohnsack with Cowen. Your line is open.

[Peyton Bohnsack:]

Hey, guys. This is Peyton on for Joe. Thanks for taking my question and congratulations on a really successful quarter. So I was wondering if you could elaborate a little more on the decision not to show interim data and also what change in PASI you are targeting in the Phase 2 EDP1815 study? And then the second question is kind of more on the Atopic dermatitis program. Since you're enrolling more severe patients, do you really plan to see any change in endpoint or like what your what endpoint you're evaluating? Like what percentage change you'd like to see? Thank you.

[Balkrishan Gill:]

Hi, Peyton. Thanks for the question. So on the first question on PASI, what we've said historically, that is still consistent with the way we look at the current situation. So first target for us is that dread and milder population in psoriasis where, as you know, the only available oral therapy is at Tesla, which is doing quite well from a commercial perspective and will target is to be similar from a PASI perspective to a Tesla in terms of difference in PASI scores versus placebo, that's the critical thing to look at. And the other factor is obviously safety tolerability where to date, we have a remarkably attractive profile on safety, tolerability side of things, we're not seeing any differences from placebo at all so far, which is not the case for Tesla, which I'm sure you know, maybe has significant tolerability issues and a significant percentage of patients. So with within the broad range of a Tesla efficacy with a safety profile we have, then we have something that would be very happy with. So that that broadly translates to something around 20% to 30%, improvement in PASI versus placebo, after 16 weeks of treatment, something in that range. And we'd be very happy and obviously anything better than that. Whatever is better than happy or very confused as the state we'd be in thinking basically. And then on your question on the interim, it's really straightforward. So just a reminder that, we kicked off these studies, in the midst of the pandemic. In terms of the Phase 2 study at the beginning of the pandemic, we like everybody, we're very concerned about impact on recruitment, we were eager for both internal reasons, as well as in terms of giving Wall Street guidance to make sure we could get data as early as possible. And so as a, as a hedge, if you want, we basically put in place a potential interim read out, which would have been 12 weeks and 50% of the patients, because it wasn't clear to us that we would be able to recruit from plan in the midst of COVID. It turns out, as Jonathan said, quite remarkably, and credit to Jonathan, Duncan and the clinical teams we've recruited. And so given that we can have the fourth in Q3, which is obviously a fantastic place to be so given that, it was an easy decision, let's get the full study data that's coming up soon in Q3, and no need for the intro. That was the logic.

[Peyton Bohnsack:]

Okay, cool. And on the Atopic dermatitis program. We see any differences in baseline though?

[Balkrishan Gill:]

Yes, apology, Peyton. So, so actually, no changes. As Jonathan said, we want to have a look at what we're doing in the severe population, but the core initial target remains in Atopic dermatitis, also the moderate and mild space and that is even more wide open in Atopic dermatitis than one of the psoriasis situation. So as you know Peyton, it's an enormous market in terms of number of patients, the majority of them have to take topicals because there are no effective oral agents in that space. It's one of the things that we talk about a lot, but patients don't want topicals they hate them because they have to take them. They often require a lot of time to apply to the body. They often have, unpleasant sticky side effects, some of them can be stinging. And so what everybody has been looking for in the Atopic dermatitis is an effective, safe, well tolerated, oral maximum. And that's what we have. And there's nothing else with that type of profile in that in that huge Atopic dermatitis moderate and mild. So, the nearest competitor into the things that have recently been approved, would be something like, like Chris , you have we had efficacy that was similar to something like Prozac or better, which is what we would expect. Again, given that we have something that was very well tolerated and safe, we have, again, something we see as having great potential. So it's, we are confident we're going to get that type of effects. And if you look at our Atopic dermatitis data that we released in January in December, it's looking extremely encouraging, as you know, from that perspective, so I think it is likely based on the data right now that we're above that target. And again, there is no competition in terms of effective oral and safe and well tolerated inflammation, resolving drugs for the Atopic dermatitis moderate and mild space to wide open, which we're very happy about.

[Peyton Bohnsack:]

Cool, thank you very much. And I'll jump back in the queue.

[Operator:]

Thank you. Our next question comes from the line of Gobind Singh with JMP. Your line is open.

[Gobind Singh:]

Hi, thanks for taking the questions. And good morning to everyone. I guess, wanted to dig in a little bit more on the new results. And am I correct that this is a one times 10 to the 11 cells in terms of the concentration being used here. And if you could talk a little bit more about where any of these results is significant? How should we be understanding basel flow here as opposed to the previous results that you guys showed are there any similarities? Did you learn anything new? And there's some the new factors here that are showing like flair and redness? How? How should we understand these kind of results in the context of Atopic dermatitis and Psoriasis? Thank you.

[Balkrishan Gill:]

Thanks. Hi Govind. We guess that you would want to appreciate the fact that that that is the level of understanding that you try and push towards gaming. So thanks for that, Govind. Mark, do you want to take those questions?

[Mark Bodmer:]

Sure. Yes. So the cell number was the equivalent to the hydro cell number we used before, it's roughly tentatively 11. Split amongst the capsules. And there was an A, for a number of capsules, would be A2 material because it was more concentrated. And so I think that's I think that's a fairly straightforward answer to that question, it was 8 by 10 to the 11 per day, in all subjects, which will be EDP1815 because the different number of capsules gives a different concentration. So we are reported here, a much fuller set of data. This is an on-going study Govind. And so we've been taking data out from the on-going studies, probably, we were considering going for the cohorts, we probably won't, so we'll probably finish it here, because we probably needed from it, which was, first of all evidence of efficacy of EDP1815, which we reported previously. And that was with the A prime version. And now this comparative study, which we did originally just to confirm that the A2 material and the revised process was still active, but with the interest in knowing whether the higher concentration would give more activity, which actually was what we suspected might happen based on preclinical data and some of the things we've seen clinically as well. So we've reported a broader range of endpoints, all the endpoints that were measured in this study. They are the actual basel flow score looks slightly different here because it's a medium score rather than a mean score. But it's the same data for the A prime material that you saw previously. As I said on the call, what's new is the comparison with a more concentrated A2 material. Does that help?

[Gobind Singh:]

Yes, very nice. Thank you. And the fuller data was a skin color and average redness. These are that seems to be more different with A Prime and A2 and I know you guys talking about the ratio. Is there any other comments you can add to, I don't know if this ratio differences as about extracellular vesicle functional differences, it just seems like the, there's there's a meaningful difference from these other factors. But that's, that's….

[Balkrishan Gill:]

Yes, we should probably have a separate call on this Gobind, if you want to go into it in, in detail, there are various interesting things here. So the notion that a higher concentration of drug drives a higher force on the system, at the level of target engagement is not new. But there's a particular characteristics of delivering multiple capsules, through the pyloric sphincter from the stomach into the small intestine, which have met new thinking in terms of how PKPD relationships work in this kind of system. And the higher concentration, which normally, if you've got an injected drug, you'll get twice as much, you get twice the concentration. Here, it doesn't quite work that way, because there's a gradual emptying, as I said earlier, from the stomach, into the small intestine. So I like this too. You need to do as much work as you like, try to lift an object, if you don't apply enough force at a particular time, you'll never move it. And so there's a sort of relationship with Newton's second law on mechanics here, which does, so it fits with basic principles of PKPD, that our thinking has been adapted to how to work with these particular types of delivery kinetics.

[Gobind Singh:]

Fair enough, thank you.

[Operator:]

Thank you. I’m not showing any further questions. I would now like to turn the call back over to Simba for closing remarks.

[Balkrishan Gill:]

Thanks very much. So want to thank everyone for continued interest in Evelo, with an incredibly exciting period. We obviously began the year with positive data in Atopic dermatitis. And we've now added to that, and have something that increasingly looks to some of the questions that are asked on the call, as if it's going to be a foundational treatment for broad inflammation with a unique profile, something that's not just efficacious, efficacious, but also safe, well tolerated, already delivered. And that's the profile we'd hoped to have. So lots of clinical data coming up between now and the end of this year. We didn't talk about our COVID data in any detail that's coming up over the next quarter, and then we have a lot of data in Q3, and that just continues. So look forward to keeping everybody very much updated as we move towards potential Phase 3 trials in 2022. Thanks very much, everyone.

[Operator:]

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