Selecta Biosciences, Inc.
Q1 2020 Earnings Call Transcript

Published: 9 May 2020

[Operator:]

Good morning, and welcome to the Selecta Biosciences First Quarter 2020 Financial Results Conference Call. [Operator Instructions]. This call is being live on the -- webcast live on the Investors and Media section of Selecta's website at www.selectabio.com, and it is being recorded.For opening remarks, I'd like to introduce Elona Kogan, General Counsel of Selecta. Please go ahead.

[Elona Kogan:]

Thank you, and good morning, everyone. Welcome to our first quarter 2020 financial results and corporate update conference call. The press release reporting our financial results is available in the Investors and Media section of our website, www.selectabio.com. And our quarterly report on Form 10-Q for the quarter ended March 31, 2020, will be filed later today with the SEC.Joining me today is Carsten Brunn, our President and Chief Executive Officer; and Brad Dahms, our Chief Financial Officer. In addition, Kei Kishimoto, our Chief Scientific Officer, will be available for the Q&A portion of the call.As a reminder, during today's call, we will be making certain forward-looking statements, including, without limitation, statements about the potential safety, efficacy, and regulatory and clinical progress of our product candidates, financial projections and our future expectations, plans and prospects. These statements are subject to various risks including those related to the COVID-19 outbreak that are described in our filings made with the Securities and Exchange Commission, including our most recent quarterly report on Form 10-Q, which will be filed with the SEC later today. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, May 7, 2020. And Selecta disclaims any intention to update such statements even if management's views change.I would now like to turn the call over to Carsten Brunn, our President and CEO. Carsten?

[Carsten Brunn:]

Thank you, Elona. Good morning. I appreciate you joining us today. While the first quarter of 2020 presented challenges due to the COVID-19 pandemic, Selecta has been able to navigate these obstacles while continually prioritizing the health and safety of our patients and health care providers to ensure that any risk from COVID-19 is properly mitigated to the best of our ability.The ongoing head-to-head compare clinical trial of SEL-212 in chronic refractory gout is still on schedule, and we plan to announce top line data in the third quarter of this year. To date, we have not seen a material impact on this study. However, we continue to recognize that there is inherent unpredictability associated with this ongoing situation. We continue to work real-time with our CRO, investigators and with the clinical sites in this trial to ensure that patients are treated and measured in a safe manner.As a reminder, the COMPARE study is evaluating Selecta's lead product candidate SEL-212, which is a combination of ImmTOR and pegadricase in comparison to pegloticase. In the COMPARE study, a once-monthly dose of SEL-212 is being compared to biweekly doses of pegloticase. With the primary endpoint of the maintenance of serum uric acid levels of less than 6 milligrams per deciliter at 3 and 6 months. The trial completed enrollment in December 2019 and as of April 2020, half of the patients had completed the study, and all patients had reached 3 months of treatment.We're also pleased to announce that our preparations for the commencement of the Phase III program of SEL-212 remain on schedule, and we plan to initiate this study in the second half of 2020, barring any unforeseen impact due to COVID-19. We have also taken several measures from a manufacturing perspective to ensure we have enough supply of SEL-212 to complete the planned Phase III clinical program.Our gene therapy program remains a key priority for Selecta. In collaboration with our partner AskBio, we are jointly developing a broad portfolio of next-generation AAV gene therapies. This partnership will leverage the unique proprietary technology platforms of both companies with a human proof-of-concept trial to validate this portfolio of products and their potential for redosing in patients which could represent a significant advancement in the gene therapy field. Selecta and AskBio intends to enter the clinic with this program by the end of 2020. Additionally, we plan to provide further details of the initial proof-of-concept study in the second half of the year. Finally, Selecta continues to advance its proprietary program in ornithine transcarbamylase deficiency.We're also excited to announce the appointment of Dr. Goran Ando to our Board of Directors. Dr. Ando brings a wealth of experience and is a proven pharmaceutical executive with a track record of execution, in both product development and commercialization. His support will further enable the advancement of ImmTOR, and we're excited for him to be part of the journey.I'd also like to thank Amir Nashat, who Dr. Ando is replacing for his long-term support. He was with Selecta from the beginning, and we thank him for helping put Selecta where we are today.I will now turn the call over to our Chief Financial Officer, Brad Dahms. Brad?

[Bradford Dahms:]

Thank you, Carsten. Our detailed financials are laid out in our earnings press release, which we filed this morning and will be further outlined in our 10-Q. So I'll just highlight a few key items here. We ended the quarter with $74.3 million in cash, cash equivalents and restricted cash. Net cash used in operating activities was $11.7 million as compared to $20.2 million for the same period in 2019.Net cash used in operating activities for the quarter includes a $5 million receivable from AskBio related to the license agreement we signed with them in December 2019 for their Pompe Disease program. $2 million of the $7 million was received in 2019, and the remainder was received in January. As a reminder, Selecta is eligible to receive up to $237 million in development and commercial milestones, plus royalties on net sales. We believe our current cash position will provide us runway into the first quarter of 2021, and this guidance includes the commencement of our Phase III clinical program of SEL-212.R&D expenses for the first quarter were $14.7 million, which compares with $7.4 million for the same period in 2019. The quarterly increase reflects additional costs incurred specific to our head-to-head COMPARE clinical trial of SEL-212 and for our gene therapy program in collaboration with AskBio.G&A expenses for the first quarter were $4.1 million, which compares with $4.5 million for the same period in 2019. The reduction in costs was the result of reduced salaries, consulting and professional fees, partially offset by increased stock comp expense.For the first quarter, we reported a net loss of $19.6 million or $0.21 per share, which compares with a net loss of $12.1 million or $0.31 per share for the same period in 2019.I'll now hand the call back over to Carsten for closing remarks. Carsten?

[Carsten Brunn:]

Thank you, Brad. As mentioned earlier, the first quarter posed unexpected and unprecedented challenges for us, as it did for most companies. I'm proud of our team and I'm grateful for their flexibility, dedication and unwavering commitment to ensure that our clinical trials and development programs continue to progress. I'm further pleased that as a result of their efforts, as of today, we are on schedule for a key milestones this year. The announcement of top line data from the COMPARE trial in Q3, the initiation of the Phase III study of SEL-212 in the second half of the year and the entry of our gene therapy program into the clinic by Q4.Our commitment to pursuing new breakthroughs in treating diseases that can benefit from redosing of gene therapy remains strong, and we look forward to generating additional value from our ImmTOR platform.I'd like to conclude by reiterating our gratitude to the many people who have been supportive along the way, including our patients and their families, our investigators, helping us with COMPARE and our great team at Selecta.With that, we're happy to take questions.

[Operator:]

[Operator Instructions]. We have a first question from the line of Ellie Merle from Cantor Fitzgerald.

[Ellie Merle:]

Just in terms of the COVID impact on the COMPARE study, can you give us just a little bit more color on what proportion of doses, if any, have been missed due to any COVID-related disruptions. Just if you could give us a little bit more color in terms of anything you saw in terms of missed doses far, if at all? And then just in terms of contingency planning, I guess, if there were to be a disruption, can you remind us from a SARS perspective, sort of how you would treat this and potential sort of contingencies if there were to be disruption in terms of the data collection and/or missed doses. And then my final question is just on the gene therapy front. As you guys are moving towards the clinic and potentially dosing patients. Can you tell us a little bit about what would constitute a proof-of-concept from your perspective in terms of demonstrating the ability to do redosing and what you'd be looking for in terms of, I guess, immunogenicity and any sort of antibody titers?

[Carsten Brunn:]

Great. Great question, Ellie. Thank you. So in terms of COVID impact, I think what's important, and I think we mentioned this in previous discussion we had that it's important to note that the drugs are administered in dedicated infusion centers as part of rheumatology practices. They also administer life-saving drugs. So all the centers will basically remain open throughout the COVID crisis. We had a number of sites went offline for 2 weeks at a time due to either a patient, not necessarily from our trial or a health care provider diagnosed with COVID. But we have not -- this doesn't have an impact on the study. Patients got redirected to alternative sites and all the sites actually are up and running. So I think that's important to note in terms of the infusions. Overall, both the PIs and patients are extremely motivated. It obviously shows how severe the disease is. So to date, we have not seen a material impact, actually. And obviously, there are safety measures that are taken by the sites, and we are closely working with the sites. A lot of the consultations are done via telemedicine. They reduce the number of patients actually come to the infusion centers. After infusion, all the infusion suites are sterilized before the next patient, and disinfected. So I think all those are changed from operational perspective. But so far, we did not have a material impact.So in terms of contingency plan to get to your second question, so we're pleased that we have half of the patients completed the study, and all patients completed 3 months, right? So -- and I would kind of call that the dataset pre-COVID. We're obviously working on a potential contingency plan to make potentially changes to the SAP to account for potential dropouts, and there's various approaches we could take. And I mean even in a worst-case scenario, what you could do is you could do a patient analysis and project out missing data for those patients between months 3 and 6 that have not completed the study. So we're working through that, and we'll keep you updated around this.In terms of gene therapy, I think that's a great question as well. And I think what we're really trying to do here with ImmTOR and gene therapy is to prevent the formation of neutralizing antibodies. And in terms of proof-of-concept, we believe that it's a fairly simple measure that we would administer at a gene therapy together with ImmTOR, and we would check for the presence of neutralizing antibodies within a certain time frame, 30 to 60 days after administration and would obviously look for prevention of the formation of antibodies, which is a good indicator that we're able to retreat and give a second dose.

[Operator:]

We have next question from the line of Raju Prasad from William Blair.

[Raju Prasad:]

I just was curious to know, in the pivotal trial -- potential pivotal trial, do you intend on or could you enroll kind of kidney transplant patients as well as Krystexxa experienced patients? Or would likely be naive-uncontrolled gout patients? And then I have a couple of follow-ups.

[Carsten Brunn:]

Raj, good questions. So yes, I mean we would exclude patients with a kidney transplant. And we would also exclude patients have been treated with Krystexxa prior. So we're looking to recruit naive patients to the pivotal study.

[Raju Prasad:]

Great. And then thinking about the COVID-19 situation from a different angle. Have you spoken with rheumatologists that would -- that have said anything regarding the benefits of, obviously, increased durability or increased frequency of dosing. Is there any anecdotal information you're hearing?

[Carsten Brunn:]

In regards to SEL-212 specifically or...?

[Raju Prasad:]

Yes.

[Carsten Brunn:]

Yes. I think, I mean, obviously, one of the advantages of SEL-212 potentially is that we're only dosed once a month, which is a big convenience factor, but also especially in light of COVID it's only one visit basically per month. So it's definitely seen as a positive. I mean, even pre-COVID is seen as a positive, but also now, obviously, there's fewer interactions with the sites, the patient only has to come in for one infusion per month. I think the other important piece is that rheumatologists are still very dedicated to treat patients with chronic refractory gout. As -- if they would be taken off therapy, there is a risk of decompensation, which means they could have severe gout flares, which would oftentimes lead them to go to the emergency room, which is probably not the best place to be at the moment given COVID-19. And the other consideration is oftentimes gout flares are treated with very high doses of steroids, which are immune suppressants, which is also something that rheumatologists try to avoid at the moment as well.

[Raju Prasad:]

Great. And then on the gene therapy platform. So there's been a couple of presentations at ASGCT. Is there anything that you're kind of learning from the increased datasets as far as treatment paradigm of ImmTOR with AAV. And then it looked like from the abstract in the MMA presentation that you saw maternal neutralizing antibodies were didn't matter in treating juvenile mice. Anything you can -- any further color that you can provide there? Or will there be significant color in the poster on that?

[Carsten Brunn:]

Yes. We'll provide additional color with the poster, but I'll hand those questions to Kei to give a bit more color at this point.

[Kei Kishimoto:]

Yes. So it was actually a very interesting observation. So we were looking at the pups born to mice that had preexisting antibodies to the MUT transgene. And what we observed was that when we gave ImmTOR together with the AAV vector, we had much better survival even in the presence of those maternally transferred antibodies. And this allows for redosing. And eventually, we were able to rescue all of those mice. So it's a very interesting study and encourage you to kind of tune into that.

[Operator:]

We have next question from the line of Yun Zhong from Janney.

[Yun Zhong:]

So a follow-up question on the COVID-19 impact. It's good to know that the top line data is still on track, no material impact. But I wonder how much flexibility do you have in terms of timing of dosing, if, say, a patient is not available to go to the infusion center on a specific day. Is that -- is it acceptable if he goes there in an alternative day? And how much room do you have in terms of the flexibility?

[Carsten Brunn:]

Yes, that's a great question. Yes, you do have indeed some flexibilities around the dosing, it's kind of plus/minus 5 days. So in case you do miss a dose, you are able to be rescheduled. Or we had this previously, which I mentioned. If a site was to shut down, there is obviously the opportunity to go to an alternative side to get the infusion. So yes, there is flexibility around the dosing. I think the other piece that is important are the blood draws. And I think the protocol also allows for flexibility. The patients don't have to go back to their initial site, they can go to alternative sites or alternative labs closer to their home. We've also explored potential home nursing visits for blood draws. So we're also providing flexibility in terms of the blood draw as well.

[Yun Zhong:]

Okay. And then on the gene therapy program, I wanted to confirm that the first program to enter the clinic is going to be the MMA. And will the main objective be looking at redosing or dosing patients that have preexisting antibodies or both? And for the OTC program, are you going to wait for initial proof-of-concept data from the MMA program to start the OTC -- to move the OTC program into the clinic?

[Carsten Brunn:]

Yes. So I think we have a discussion in the past. So MMA was our program that we put into the partnership with AskBio. We haven't guided which program will be the first to go into the clinic. So as mentioned earlier, we'll guide throughout the year, which the first indication will be, but MMA is part of the collaboration with AskBio. In terms of OTC, we're still working through the plans, but we plan to continue with our efforts around OTC. And just kind of go back to the initial question, what are we trying to demonstrate? Obviously, ultimately, we want to demonstrate that we are able to successfully redose in MMA but the initial early read, we believe, which will be quite impactful, if we can show after the first dose, we can prevent the formation of neutralizing antibodies. I mean that would enable the second dose, basically.

[Operator:]

[Operator Instructions]. We have the next question from the line of John Newman from Canaccord.

[John Newman:]

And congrats on all the process -- progress given COVID. So my question is, you gave us some interesting data at the end of 2019, regarding the initial dropout rate for the two different groups in the study in a period that the active control group dropout number was higher. Just wondering what your opinion is on what we might expect during the COVID crisis, given that the active control arm is dosed twice a week. Is it feasible to expect that there would be more patients potentially dropping out or missing infusions because they have to go into the center more often than your drug, which is given monthly.

[Carsten Brunn:]

Yes, that's a good question, John. And I don't want to speculate on the data. I think it is fair to say that the patients and the PIs are motivated in the study in both arms. But I think there's definitely a benefit with or without COVID to only have to come in once a month. But I don't expect any actual data, but we definitely feel very strongly as a key differentiator of SEL-212 is the monthly dosing regimen.

[John Newman:]

Okay. Great. And if I may ask one more question. In the earlier data that have been presented for 212, the gout flares have been quite low. And I'm just curious as to how you plan to analyze the gout flares in the COMPARE study. Just curious as to what types of analyses, in general, that you'll look to do between the 2 arms?

[Carsten Brunn:]

Yes. And that's a great question. And as you know, John, gout flares is a secondary endpoint in the study. So we will be looking at the number of gout flares. So that's built into the analysis. But I think there's also -- there's other analysis we can do as well. For example, we can look at the use of -- the concomitant use of steroids, for example, throughout the study, which is a good indicator as well in terms of the patients who experience gout flares. And obviously, there's a clear trend in the treatment of chronic refractory gout, where physicians try to reduce the use of steroids. I think that's even more acute now with the COVID crisis, where rheumatologists are quite nervous around administering high doses of steroids, which are immune suppressive.

[Operator:]

We have next question from the line of Difei Yang from Mizuho Securities.

[Difei Yang:]

So just a couple. Would we expect a permanent CMO to be on board before initiation of the pivotal trials for 212?

[Carsten Brunn:]

Yes, that's a good question, Difei. We were very pleased to have Peter Traber as our acting CMO. Peter brings a lot of experience, both from academic medicine and big pharma and biotech. And we might potentially start a search, but for now, Peter's overseeing the COMPARE trial and also the preparation for Phase III. So -- and what's important to note as well, we have a very strong team below Peter, the project -- program manager has been on SEL-212 since the beginning. So we have a very experienced team below him as well.

[Difei Yang:]

Then turning to just the SEL-212 program. It seems like there is a protocol amendment lately that inclusion criteria has been broadened. A little going from your uric acid level of 8 down to 7. And -- would you help us to understand what's the implication of that change? And then if you could remind us on the statistical plan for the data analysis out of COMPARE, just so we can be ready for the Q3 readout.

[Carsten Brunn:]

Yes. So we actually changed the inclusion criteria pretty early on to help with the speed of recruitment. Obviously, by definition, patients with sUA levels above 6.8 are considered chronic refractory. They have previously failed on serum uric lowering compounds like allopurinol, for example, and had at least 1 tophi present. So it is still a very severe patient population. So we don't think there's a key difference here. The key driver was here speed of recruitment.In terms of statistical plan, I think we have this discussed previously. We have not guided to that in detail. But important to note that the study is powered to show statistical superiority in terms of sUA control.

[Operator:]

[Operator Instructions]. We have next question from the line of Ram Salad from Ram Selvaraju from H.C. Wainwright.

[Boobalan P.:]

This is Boobalan dialing in for Ram Selvaraju. So about SEL-212, assuming that you'll run the trial sometime in 2020, how long would you expect the trial to run? Is there any interim analysis planned? If so, what items will be investigated at what time point? Then, are you planning to run only 1 Phase III trial to get an FDA approval for 212?

[Carsten Brunn:]

Yes. Nice to meet you. And thanks for your question around the Phase III. So as we have guided previously, we plan to do -- to run 2 Phase III studies. They are two 6 months placebo-controlled studies with 1 study having a 6 months safety extension. So that 1 study, obviously, will be the key driver in terms of timing. We plan to start the Phase III in the second half of this year, and we feel we're still on track for that. We have not guided to speed of recruitment. But once we complete recruitment, it's basically, we'll have a readout of the 6-month study, and then we'll have another readout after 12 months.

[Boobalan P.:]

And next question, we see that your direct competitor, Horizon, is pursuing additional discovery programs in the Gulf space to maintain its leadership. So do you have any similar plans to strengthen your gout franchise?

[Carsten Brunn:]

Yes, that's a great question. I mean, at this point, we're strongly focused on SEL-212 and bring it into Phase III in the second half of this year. And I think that's our key focus at the moment.

[Boobalan P.:]

Okay. And this would be my final question. So I understand the 313 and 302, which are slated to enter into the clinic this year, maybe if you can talk about, especially about the AskBio collaboration. What are the remaining gating items to be completed from your end? And what are the items that AskBio has to do in order to facilitate the entry?

[Carsten Brunn:]

Yes, that's a good question. So I think, first of all, we have not guided to the specific indication, but it's important that we bring both the MMA program into collaboration, and obviously, ImmTOR. We are responsible for the manufacturing of ImmTOR and AskBio is responsible for the manufacturing of the AAV capsid. And we're currently focused on those things, and we jointly decide on the indications that we're going to move forward with.

[Operator:]

[Operator Instructions]. Thank you. This concludes the question-and-answer portion of the call. I will now like to turn back over to Selecta's CEO, Carsten Brunn for closing remarks, Carsten?

[Carsten Brunn:]

Yes. Thank you, operator, and thank you to everyone who joined us this morning. We're extremely excited about the upcoming milestones in 2020 and the continued growth of our company and our platform. We look forward to sharing further updates about the broad potential of the ImmTOR platform throughout the year. That concludes today's call. Thank you.

[Operator:]

Thank you very much. Ladies and gentlemen, that concludes this conference call. Thank you for joining with us, and you may now disconnect your lines.