Selecta Biosciences, Inc.
Q1 2019 Earnings Call Transcript

Published: 15 May 2019

[Operator:]

Thank you for holding. Welcome to the Selecta Biosciences First Quarter Financial Results Conference Call. [Operator Instructions] This call is being 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 would now like to turn the call over to Elona. Please go ahead.

[Elona Kogan:]

Thank you, and good morning, everyone. Earlier today, we issued a press release containing our first quarter 2019 financial results and other corporate updates, and we filed our 10-Q. This release and the 10-Q can be accessed by visiting our website at www.selectabio.com. I'm joined today by Carsten Brunn, our CEO; and Stephen Smolinski, our CCO. Before we get started, we would like to advise that certain remarks that are made during this call, including, without limitations, statements about the company's future expectations, plans and prospects, the potential of our ImmTOR platform, the anticipated timing of planned trial, related data readouts and ability of results to inform future trials, our collaboration with CureCN, a market potential for our product, the sufficiency of the company's cash, cash equivalents and short-term investments constitute forward-looking statements for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of Selecta's most recent quarterly report on Form 10-Q filed with the SEC, which can be accessed at www.selectabio.com. In addition, any forward-looking statements represent the company's views only as of today, May 9, 2019, and should not be relied upon as representing the company's views as of any subsequent date. While Selecta may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligation to do so, even if management's views change. And now let me introduce Carsten, who will kick things off today.

[Carsten Brunn:]

Thank you, Elona, and good morning, everyone. We made strong progress as we continuously developed our ImmTOR platform, laying the groundwork for the upcoming milestones that are anticipated later this year. In late March, we announced initiation of our 6-month head-to-head COMPARE trial designed to evaluate our lead product candidate SEL-212 compared to Krystexxa in adult patients with chronic refractory gout. Patient enrollment is ongoing and if successful, this trial will give us an opportunity to demonstrate the superiority of SEL-212. Beyond the lead program in gout, we believe that there is vast potential for ImmTOR platform technology and are encouraged by its ability to induce tolerance. We believe ImmTOR can potentially allow for the full benefit of biologics, in particular, in the redosing of AAV gene therapy. We believe that when an AAV-based vector is administered in combination with ImmTOR, there's potential to induce immune tolerance through the vector enabling redosing to provide sustained therapeutic efficacy over time. We recently validated this approach with new preclinical data presented at the ASGCT 22nd Annual Meeting in April. Additionally, the ability to redose has potential to increase the proportion of patients able to achieve therapeutic levels of the transgene expression and is particularly important in young-patient populations, while at the same time, also avoiding potential toxicities associated with large vector doses. Also for gene therapy program last year, we announced a collaboration with a European consortium, CureCN, for the use of our ImmTOR technology in combination with their AAV gene therapy in Crigler-Najjar syndrome, a rare genetic disorder characterized by inability to properly convert and clear bilirubin from the body. The work on this program continues to progress. And before I hand it over to Stephen to go into more detail on our gout program, I'd like to highlight some recent corporate updates. In March, we strengthened our management and clinical team with the appointment of Elona Kogan as General Counsel and Corporate Secretary and Horacio Plotkin as Head of Clinical Development. Both Elona and Horacio have already made important contributions to the company, and I'm thrilled to have them part of the team. With that, I'd like to hand over the call to Stephen.

[Stephen Smolinski:]

Thank you, Carsten. As Carsten mentioned, we believe that the SEL-212 has the potential to address several unmet needs in chronic refractory gout, including sustained serum uric acid reduction, reduce painful flares and more convenient once-monthly dosing. As a reminder, SEL-212 is a combination of ImmTOR, our novel immune tolerance technology and pegadricase, our proprietary pegylated uricase. In March, we announced the initiation of our 6-month head-to-head COMPARE clinical trial against the current FDA-approved uricase therapy, Krystexxa, which is designed to compare the efficacy and safety of SEL-212 to Krystexxa in adult patients with chronic refractory gout. Patient enrollment in the trial is ongoing, and we expect to enroll 150 patients. The primary endpoint is the maintenance of serum uric acid levels of less than 6 milligrams per deciliter at 6 months. We anticipate providing an interim 6-month data readout in the fourth quarter of this year and plan to announce a full statistical superiority data analysis in the first quarter of 2020. The interim results of the COMPARE trial are expected to inform the design of the planned Phase III clinical trial, which we plan to initiate in the fourth quarter of this year. In terms of the market potential, there are roughly 160,000 patients in U.S. with chronic refractory gout and only a small percentage are currently being treated by rheumatologist. As we develop SEL-212, we are looking for consistent sUA control over 6 months, low flare rates and more convenient monthly dosing. Our product has the potential to address currently identified unmet need in this patient population and represents over a $1 billion market opportunity. With that, let me turn the call over to Carsten to discuss our first quarter 2019 financial results.

[Carsten Brunn:]

Thank you, Stephen. Revenue recognized for the first quarter of 2019 was less than $0.1 million and was for shipment order under our collaboration agreement with Spark, which compares to no revenue recognized for the first quarter of 2018. Research and development expenses for the first quarter of 2019 were $7.4 million, which compares to $11.1 million for the same period in 2018. The decrease was driven by reduced salaries and benefits as a result of our headcount reduction at the beginning of the first quarter of 2019 combined with expenses incurred for both our Phase II and Phase III clinical programs for SEL-212. General administrative expenses for the first quarter of 2019 were $4.5 million, which compares with $4.7 million for the same period in 2018. The reduction in cost was primarily the result of reduced consulting fees. For the first quarter of 2019, Selecta reported a net loss of $12.1 million or $0.31 per share compared to a net loss of $15.9 million or $0.71 per share for the same period in 2018. As of March 31, 2019, we had approximately $48.7 million in cash, cash equivalents, short-term deposits, investments and restricted cash. We continue to expect that our cash balance is sufficient to fund operations into the first quarter of 2020. In summary, we're really excited about our unique platform, which has broad potential. Based on our data and feedback from physicians, we are particularly excited about our late-stage asset for chronic gout and looking forward to announcing the interim COMPARE data in the fourth quarter. And additionally, we are eager to unlock the value of our technology with a potential to redose in AAV gene therapy. That concludes our formal remarks. Now we'll open the line for your questions. Operator?

[Operator:]

[Operator Instructions] Our first question comes from Difei Yang with Mizuho Securities.

[Difei Yang:]

So a quick one, we just came back from ASGCT with regards to potential retreatment of gene therapy. Carsten, would you tell us a little bit of the difference between using naked rapamycin and nanoparticle encapsulated rapamycin. How would they behave different in gene therapy...

[Carsten Brunn:]

That's a great question, and thanks for the question. I think the fundamental difference is actually the mode of action. So the encapsulated rapamycin is taken up through the spleen and selectively induces T vector cells, which works in our gout program. We have seen this in the clinic, and we hope to see the same for our gene therapy program as well. So is it different mechanism of actions or it's tolerogenic versus free rapamycin which is immunosuppressive.

[Difei Yang:]

And one -- another question related to Krystexxa. I think in your earlier presentation, you talked about, during the first month of 212 injections, there was roughly 32% of the patient flares, and do you have the apple-to-apple number for Krystexxa?

[Carsten Brunn:]

So I don't know the apple-to-apple numbers top of mind, but you can see in the Krystexxa PI, what we actually -- the overall gout flares are, which are in the high 70s.

[Unidentified Company Representative:]

Right. And again, most flares among Krystexxa are seen during that first month and into the second month of treatment. And, again, when you look at our data, Difei, you see the same thing, what you should see that 33% during month 1 and then it tapers off as you get further into the treatment.

[Carsten Brunn:]

And I think just to add, we think it's just a major differentiator that reduce glout flares because they often times lead to hospitalization, actually, of patients. So I think that's something we're going to highlight further down the road as well. So thanks for your question.

[Operator:]

Our next question comes from Derek Archila with Stifel.

[Derek Archila:]

Congrats on the progress. Carsten, just two questions for me. Maybe you can just give us a little bit of color on where we stand as -- from an enrollment standpoint for the COMPARE study? And then just kind of thoughts on the appetite among strategics, potentially partnering with you on the ImmTOR platform?

[Carsten Brunn:]

Thanks, Derek, and thanks for your questions. In terms of enrollment, we're pleased with the progress. As we mentioned, we started the trial late March, and we're on track, both opening sites but also between patients. And I think what makes this trial unique is that we have 2 active arms. So I think there's a benefit for patients going into this trial. So we're positive and we're on track in terms of recruitments. And in terms of partnering, so we -- I don't want to comment on ongoing discussions, but I can tell you there is continued interest from partners and I think what makes us unique that we are a platform. We have applications both on the gout program in gene therapy, I think there is a lot of interest but -- around their data that we presented in D.C. recently. But I think we'll update you at a later stage when we have something specific to talk about. But there is continued interest in our ImmTOR platform.

[Operator:]

This concludes our question-and-answer session. I would now like to turn the call back over to Carsten Brunn for any closing remarks.

[Carsten Brunn:]

Thanks so much. Thanks, again, for joining us today. And I just want to reiterate our excitement around our ImmTOR platforms, which we think has unique potential and we look forward to your continued interest. Thanks so much.

[Operator:]

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