Selecta Biosciences, Inc.
Q1 2021 Earnings Call Transcript

Published: 13 May 2021

[Operator:]

Good morning, and welcome to the Selecta Biosciences First Quarter 2021 Financial Results and Corporate Update Conference Call. Currently, all participants are in a listen-only mode. This call is being webcast live on the Investors & Media section of Selecta's website at www.selectabio.com and it is being recorded. For opening remarks, I would like to introduce, Brad Dahms, Chief Financial Officer of Selecta. Please go ahead.

[Brad Dahms:]

Thank you, operator and good morning. Welcome to our first quarter 2021 financial results and corporate update conference call. The press release reporting our financial results is available on the Investors & Media section of our website www.selectabio.com. And our quarterly report on Form 10-Q ended March 31, 2020 which was filed with the SEC.

[Carsten Brunn:]

Thank you, Brad. Good morning. I appreciate you joining us today. The outset of 2021 was marked with several strategic and financial milestones, as well as substantial pipe and progress, particularly in our gene therapy business that continue to advance our clinically validated ImmTOR platform across enzyme therapies, gene therapies and autoimmune diseases. I’ll start with our Enzyme therapies programs. Our SEL-212 program, which was licensed to Sobi is comprised of ImmTOR court ministers that are proprietary uricase pegadricase. We've continued to make progress in getting SEL-212 approved to treat patients with chronic refractory gout, which is a significant unmet need. As a reminder, our DISSOLVE clinical program kicked off in the third quarter of 2020 and consists of two double-blinded placebo controlled trials of SEL-212. In September, the first patient DISSOLVE I was dosed. DISSOLVE II was initiated in December 2020. In both trials SEL-212 will be evaluated as two doses of ImmTOR, 0.1 milligrams per kilogram and 0.15 milligrams per kilogram and one dose of the pegadricase 0.2 milligrams per kilogram. Each trial aims to enroll 105 patients with 35 at each dose and 35 on placebo. Both trials have a 6 months primary endpoint of serum uric acid levels below 6 milligrams per deciliter at the six months time points, and only DISSOLVE I will have a six months extension for safety. Secondary endpoints include gout flare incidents, tender and swollen joint counts, and tophus burden, patient reported outcomes of activity limitation and quality of life. We're pleased with the pace of enrollment, which is progressing on schedule, as we have put into place several procedures to proactively minimize the potential impact of the ongoing COVID pandemic. Top line data from the DISSOLVE program are expected in the second half of 2022.

[Brad Dahms:]

Thanks Carsten. We remain well capitalized. We had a 149.2 million of liquidity as of March 31, 2021, which compares liquidity of 140.1 million as of December 31, 2020. We believe our liquidity position will be sufficient to meet our operating requirements into the second quarter of 2023. Net cash used in operating activities was 12.1 million for the first quarter of 2021, as compared to 11.7 million for the same period in 2020. Revenue recognized for the first quarter of 2021 was 11.1 million, compared to no revenue recognition for the same period in 2020. Revenue was recognized under the license agreement with Sobi, which began in July 2020, resulting from the shipment of clinical supply and the reimbursement of costs incurred for the phase 3 DISSOLVE clinical program. Research and development expenses for the first quarter 2021 were 13 million, compared to 14.7 million for the same period in 2020. During the quarter ended March 31, 2021, there was a reduction in expenses for the SEL-212 clinical program and for the AskBio Collaboration, offset by an increase of expense for discovery and preclinical programs. General and administrative expenses for the first quarter 2021 were 5.2 million, which compares with 4.1 million for the same period in 2020. The quarterly increase in expense was the result of expenses for consulting and professional fees and salaries offset by reduced travel expenses. For the first quarter 2021, we reported a net loss of 24.6 million, or $0.22 a share, compared to a net loss of 19.6 million, or $0.21 a share for the same period in 2020. I'll now hand the call back over to Carsten. Carsten?

[Carsten Brunn:]

Thank you, Brad. We have a few corporate updates to share. We're excited to announce the addition of Kristen Baldwin as Chief People Officer. She brings 20 years of human resources and consulting experience to company. Most recently, she served in dual capacity as the Chief People Officer for the LIVEKINDLY Collective, a high growth plant-based foods company, and as a Senior Partner at CEO.works. Kristen has also held senior HR roles at Bayer and Otsuka Pharmaceuticals. We're also pleased to announce the addition of Dr. Satish Tripathi to Selecta as Vice President of Regulatory Affairs. Satish was most recently Vice President of Global Regulatory Affairs for AveXis which as you know became Novartis Gene Therapies. He led the regulatory strategy and implementation for the gene therapy product AVXS-101 for Spinal Muscular Atrophy including simultaneous submissions of AVXS-101 in 2018 for global registration, which has been approved as Zolgensma for SMA in U.S., Europe, Japan, Canada, and Brazil. He is a fantastic addition to the team, to support the gene therapy business as we advance multiple programs in gene therapy.

[Operator:]

And the first question comes from Kristen Kluska with Cantor Fitzgerald. Please go ahead.

[Kristen Kluska:]

Good morning, everybody. Thanks for taking the questions and Brad best wishes to you in your new endeavor. The first question I had was, there was a study published in genetics in medicine recently, which was based on a breath test to determine severity of disease in MMA by measuring exhaled carbon dioxide which the authors noted could be useful to see if there might be candidates for surgery or for gene therapy approach as the case with most rare diseases, where researchers are of course, still learning more about the indication, I wanted to ask if you've thought about some of the ways you could evaluate clinical outcomes for this indication?

[Brad Dahms:]

Yeah, thanks, Kris, that's a great question. We haven't guided in detail on the clinical trial, but I'll have Peter share at least our initial thoughts, and maybe you can also comment specifically on this study, which we're well aware of. Peter?

[Peter Traber:]

Yes. Thank you, Kristen, for that question. In fact, the, the primary authors of that study and who performed that study are our collaborators at the NIH on our MMA program. As you know, our MMA program, although we haven't guided on the exact structure of the clinical trial, will be done at the NIH with Chuck, Dr. Chuck Venditti and Dr. Irini Manoli, who is the first author on that paper. That analysis of propionic acid, propionaldehyde oxidation with a breath test will be a part of the biomarkers that we evaluate in the clinical trial.

[Kristen Kluska:]

Thank you. And then I had a question, which was actually asked during Vivet’s presentation at ASGCT this week, where they were looking at VTX-803 and ImmTOR, as you along with your collaborators have now evaluated the potential of ImmTOR with the gene therapy across a few different indications now, I wanted to ask how you think the data could help inform thoughts around starting doses and when to potentially consider the re-dosing, especially as in some of these indications, like Vivet noted, the therapeutic window might be very narrow in terms of when to initially intervene?

[Carsten Brunn:]

Yeah, I'll let the Kei answer specifically to that study, but obviously, that data kind of, you know, reconfirms the need for re-dosing in especially pediatric disorders. And we really see this data set confirming what we've seen in previous data. I’ll let Kei, specifically comment on that data set.

[Takashi Kishimoto:]

Sure. Thank you, Carsten. Yeah, I thought that this was actually one of the best examples of using ImmTOR to enable re-dosing because clearly, an initial dose of the vector in the juvenile animal wasn't sufficient. And it was only with repeat dosing that was enabled by ImmTOR where they saw a correction of the underlying metabolic defect in those animals. With respect to the question of timing, I think that will vary somewhat between different diseases and the severity of the diseases as to when you would initially want to go in, but again, for many metabolic diseases, you want to be able to treat children when they're young.

[Kristen Kluska:]

Great, thank you.

[Operator:]

The next question comes from Raju Prasad with William Blair. Please go ahead.

[Raju Prasad:]

Thanks for taking the question. I wanted to know if you could provide any more clarity on the studies that you received the milestone payment from Sarepta for, where they disease specific models? Was it using ImmTOR? And are you able to kind of utilize the data from that collaboration to, kind of guide your understanding of ImmTOR as it relates to neuromuscular disorders? And I have a follow-up. Thanks.

[Carsten Brunn:]

Yeah, Raju, good question. Yes, we received a milestone payment of 3 million for a preclinical study, unfortunately we can be details on this, but I can confirm it is in a neuromuscular disease model. And it is with ImmTOR and obviously, we will also learn from the data set, but unfortunately, we can’t share details or a detailed data set, Raju, but it's definitely very encouraging what we observed.

[Raju Prasad:]

Great, thanks. And then to kind of maybe follow-on the question asked earlier, can you maybe talk a little bit about the potential for ImmTOR to be re-dosed, you know, sequentially every five or, you know, X amount of years, given some of the nuances related to pediatric disorders or just in general, obviously, it's important, I think you've shown it's important to dose ImmTOR with AAV initially to mitigate neutralizing antibodies. But I'm just trying to understand, you know, what – where you see the therapeutic kind of paradigm on multiple re-doses kind of over the course of, you know, let's say, MMA, and OTC just because those are the lead candidates, but kind of hearing your thoughts there. Thank you.

[Carsten Brunn:]

Yeah. That's a great question. Obviously, we see an unmet need, really across AAV gene therapy, right. I mean, while every dosing might be years apart on the adult indications, and we always refer to the data, we see the immediate need, obviously in pediatric liver based diseases where we know that, you know, the younger the kids get treated, the liver obviously grows up to 40-fold from birth to adulthood. So, there's a high, you know, need to redoes and potentially multiple times, but also in neuromuscular disorders like DMD, we know those poised to DMD, their muscle tissue grows and they need to be re-dosed as well. So, I think as Kei said earlier, it really depends on the disease and severity of the disease. What the timing is between dosing and the frequency, but we definitely see the need across the field. And, you know, select as a company we're pursuing specifically, liver based pediatric diseases with MMA and OTC.

[Operator:]

The next question comes from John Newman with Canaccord. Please go ahead.

[John Newman:]

Hi guys. Good morning. Thanks for taking my question. Just had a question on the SEL-399 program, what should we be looking for in those top line data to confirm success? Also wondered if you'll learn anything from that study regarding potentially using a lower dose of gene therapy compared to what has been done with other approaches due to ImmTOR? And just wondered if you could comment a bit on the third-party gene related manufacturing delay for MMA, just curious if you could just give us a little bit more color there? Thanks.

[Carsten Brunn:]

Thanks, John. So, we haven't guided in detail on the OTC deficiency program, but I think it's fair to say, it's obviously a phase 1/2 study we're looking at biomarkers of the disease, but mainly looking at safety and tolerability. But I’ll let Kei or Peter maybe talk a bit more on what some of the biomarkers are off the disease.

[Peter Traber:]

John, this is Peter. Were you referring to the 313 program, which is the OTCD in that question, or the 399 program, which is the empty capsule? I might have missed that.

[John Newman:]

Sure, sorry about that. I was actually just referring to the empty capsid study, just kind of what the takeaways should be, what the focus should be from that study?

[Peter Traber:]

Sure. Well, as you know, the empty capsule study is a dose of empty capsid, with escalating doses of ImmTOR in order to identify the best dose of ImmTOR for inhibition of anti- AAV8 antibodies, both neutralizing and otherwise. So, it's a study where we will be identifying the increase in antibodies over a period of time of three months or plus to try and see whether in humans we see the same effects as we've seen in animals and non-human primates on the antibody production. So, that's the primary goal. With regard to your question about whether we would be able to identify a reduction in the dosing of the gene therapy vector potentially, as we think is a potential for ImmTOR, that's really not relevant because there's not a transgene in the empty capsid. So, we really can't assess transduction of the transgene in the empty capsid program. So, the primary goal will be to look at neutralizing antibodies to AAV8 and as we know, that is a very good surrogate for being able to redoes gene therapy, because if you inhibit AAV8 neutralizing antibodies, then that's a criteria for being able to redoes AAV8 gene therapy.

[Takashi Kishimoto:]

Yeah, thanks, Peter. And apologies John, if I misunderstood your question, got the program's messed up here. Just on the manufacturing issue. You know, I think there's not a lot more to share than the fact that the issue is related to a component at source from a third-party and obviously not related to ImmTOR, you know, we believe we can file the IND by the end of the year. And obviously, you know, progressing with the work on filing the IND and working with the NIH to get the trial started early next year. So, we believe that, you know, we're on track for a filing by the end of the year.

[John Newman:]

Great, thank you.

[Operator:]

The next question comes from Difei Yang with Mizuho Securities. Please go ahead.

[Difei Yang:]

Hi, good morning, and thanks for taking our question. So, we have two. The first one is on ImmTOR, so just on the very high level, do you think ImmTOR is really only for liver directed gene therapy, AAV gene therapy or do they have the capability to go beyond liver directed gene therapy? Question number two is around the manufacturing for gene therapy, now that you have a fully-owned asset would you consider at some point to bring the entire AAV vector manufacturing in-house? Thank you.

[Carsten Brunn:]

Thanks, Difei. Good question. Yeah. So, as you know Difei, all the work that we have done to date has been in liver directed gene therapy. And obviously, as you also know, ImmTOR accumulates in the liver, so there's this good proximity. But as we have, you know, unfortunate, we can’t disclose details. We're also exploring other modalities, like in neuromuscular disorders, where we progressing nicely as well. We don't see a limitation only to liver based diseases. But we believe, you know, with all the data we have so far, we want to start with, we have the strongest evidence, which is in liver based diseases, but there's no reason why it should be limited to the liver only. Obviously, you know, we induce any specific that migrate, you know, through the entire body. So, it does also, you know, a good theoretical, you know, approach that this could work on other diseases, such as neuromuscular disorders, but all the evidence that we have generated so far is in liver based diseases, but, as you know, we, you know, we are strategically pursuing partnerships, like with Sarepta to explore other modalities, and what we've seen so far is very encouraging.

[Difei Yang:]

Thank you.

[Carsten Brunn:]

And the second question, yeah. The second question is, you know, we have been very specific that, you know, we don't see ourselves as a gene therapy manufacturing company, you know, our strength is we do the manufacturing of ImmTOR and the immune tolerance biology. So, at this point, we don't have plans to bring manufacturing in-house. Since this requires, you know, significant capital to set this up, we don't have currently plans to bring the manufacturing in-house.

[Difei Yang:]

Thank you, very helpful.

[Operator:]

The next question will come from Chad Messer with Needham & Company. Please go ahead.

[Chad Messer:]

Right, thanks. Good morning. Thanks for taking my question. And let me add my best wishes to Brad in his future endeavor. Just on the gene therapy program, so for 399 we're doing this empty capsid study, which I think is, you know, a clever way to get some data that's, you know, both useful and, sort of principle establishing, just wondering for the other two gene therapy programs going into the clinic 101 and 313, if you have any idea how much dose finding work might have to be done at the beginning? I mean, are we going to learn a lot from 399 that can be applied or, you know any sense of how much integration you need to do for those when you get in the clinic?

[Carsten Brunn:]

Yeah, I'll start and I'll let Peter answer as well. Obviously, we're excited about the empty capsid study, but you know, it is somewhat limited, since we're only giving one dose and there's no transgene. So, it definitely will not help, it will help with dose finding for ImmTOR, but not necessarily for the gene therapy products. So, I think that's something that obviously we have to establish for each disease model. And, you know, as you see, we have so far seen two benefits of ImmTOR. One is the prevention of neutralizing antibodies, that's where we're looking at the empty capsid study. The second is, first dose benefit, where we see a higher expression of the transgene, obviously, that we will not see in the empty capsid study. That's something we'll be looking for, obviously in the MMA and OTC program. So, but I think to answer your question, we'll have to do a dose finding in both those indications to get to a therapeutic dose of the gene therapy product.

[Chad Messer:]

Right. And then maybe just to follow-up a little bit on an earlier question on the empty capsid program, you know, obviously they were looking to see prevention of antibody formation. Is there anything – is it – I don't even know if we know enough, I'm asking, is there a reduction that we should be looking for? I mean, should we be keeping these below detection level or is it just a statistically significant reduction to eat? Do we know enough to know what a important and meaningful reduction an antibody formation looks like?

[Carsten Brunn:]

Yeah, I mean, that's a good question, obviously. And if you look at our non-human primate data, I think there’s kind of a good indication what the efficacy could look like. Obviously, what we’d like to see is, is very low titers. Like we have seen in the non-human primate study with three monthly doses of ImmTOR, we saw very low titers often as antibodies in most animals below one to five. So, I mean, these are levels you want to see. And then in the control animals, we saw very high titers, kind of in the 1000, 3000, up to over 1000. And in some of the animals, that we only got one dose of ImmTOR, the titers were in the hundreds, which is still a success, because, you know, you don't have to redoes immediately so the titers will go down over time. And there’s other technologies you can also use at those titers in the hundreds like , for example, that gets you to lower levels. So, I think that's kind of obviously we're hoping to see, you know, really low titers, but it might be more differentiated, you know, a picture that we see that’s similarly to what we’ve seen in the non-human primate data.

[Chad Messer:]

Okay. Maybe hundreds are lower, and certainly, you know, this sort of order of magnitude differences sounds like more or less what we're looking for.

[Carsten Brunn:]

Yeah, exactly.

[Chad Messer:]

Thank you.

[Operator:]

The next question comes from Ram Selvaraju with H.C. Wainwright. Please go ahead.

[Boobalan Pachaiyappan:]

Hi, this is Boobalan dialing in for Ram Selvaraju, and thanks for taking my question. So, I just wanted to follow-up on the manufacturing issue that was highlighted in your prepared remarks. So, is there any connection between AskBio’s desire not to proceed with MMA program and the manufacturing issue that you face for MMA-101? I'm just wondering?

[Carsten Brunn:]

Yeah, that's a fair question. And they're not related with the – obviously acquisition of AskBio by Bayer. They conducted a strategic review and decided not to pursue MMA. You know, it's not a strategic focus, but it's independent of the manufacturing issue. What's important to note is the relationship is unchanged. We still, you know, have two relationships. One is a licensing agreement for the lead program in Pompe disease and obviously the strategic collaboration where we still have a number of undisclosed indications that we plan to pursue together. And obviously, we're conducting the empty capsid study together at the moment.

[Boobalan Pachaiyappan:]

Understood. So, assuming you're on track for MMA-101 IND by the end of 2021, so when do you expect the pre-IND meeting with the FDA to happen? And what key elements will take center stage during that discussion?

[Carsten Brunn:]

Yeah. So, we haven't guided really in detail, but maybe Peter can share, kind of the process that we have planned now to file the IND. Peter?

[Peter Traber:]

Yes, just to clarify, this is on the OTCD program?

[Boobalan Pachaiyappan:]

No, this is for the MMA-101, IND’s plan for the – by the end of 2021.

[Peter Traber:]

Oh, I see. I understand. I'm sorry. First of all, the IND enabling studies have been conducted and analyzed. And so, we're really in the process of putting together the IND, you know, with the additional information now of the manufacturing timeline. And so, we feel very confident that we'll be able to submit the IND by the end of this year by the fourth quarter.

[Boobalan Pachaiyappan:]

Understood. One final from me. So, could you provide additional color on how the enrollment is progressing for the DISSOLVE trial of SEL-212? Are these issues due to ongoing persistence of the COVID pandemic?

[Carsten Brunn:]

I think we're happy – Peter, go ahead, yeah.

[Peter Traber:]

Yeah. I missed the last part. You broke up a little bit. But you were asking about the progress of the enrollment of the DISSOLVE trials. As Carsten mentioned, we started enrollment of the DISSOLVE I by September and DISSOLVE II in the beginning of this year. They are progressing very well. And in terms of enrollment on schedule for being able to report top line results in the second half of 2022.

[Boobalan Pachaiyappan:]

Okay, that's it from me. Thanks so much.

[Operator:]

The next question comes from Derek Archila with Stifel. Please go ahead.

[Ben Porter:]

Hey, thanks, guys. This is Ben on for Derek. Thanks for taking my call. Most of my questions have been asked, but I guess, just one left. And sorry if I missed this, but have you thought about how you're going to present the data for 399?

[Carsten Brunn:]

Yeah, so we – the data will be available in the fourth quarter. And primarily, I mean, we'll be looking at levels of antibodies at day 30, 60, and 90. I mean, that's really the focus. And then we have a number of other markers we're looking at, but I think that's really primarily what we're going to show in the fourth quarter. And I think what’s important as well. I mean, obviously, we don't really see this, kind of as a binary study. I mean, it's kind of adding to the evidence around what's the right dose of ImmTOR in gene therapy, but I think what's important to know, these are healthy adult volunteers. And we're going to go into the clinic basically in the pediatric indications. So, obviously, we're excited about the learning’s from the study, but we don't think this is going to be necessarily a binary study, but there'll be important learning’s of course.

[Ben Porter:]

Okay. And have you guys thought if you're going to, you know, present at a conference or just issue a PR or something like that?

[Brad Dahms:]

Yeah. I mean, as to be bound to a , of course, we will present the detailed data at a medical conference, but we'll likely, you know, issue a press release and potentially have a call around as well to give some color on the data in the past.

[Ben Porter:]

Okay, awesome. That's it for us. Thanks for taking the question, guys.

[Brad Dahms:]

Thanks .

[Operator:]

As we have no further questions, this concludes our question-and-answer session. I would now like to turn the conference back over to Carsten Brunn, Selecta’s CEO for any closing remarks. Carsten?

[Carsten Brunn:]

Yeah. Thank you, operator and thank you to everyone who joined us this morning for the many questions. Please stay safe and healthy. And this concludes today's call. Thank you.

[Operator:]

The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.