Selecta Biosciences, Inc.
Q3 2019 Earnings Call Transcript

Published: 11 Nov 2019

[Operator:]

Good morning and welcome to the Selecta Biosciences' third quarter 2019 financial results conference call. At this time, all participants are in a listen-only mode. 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 like to introduce Elona Kogan, General Counsel of Selecta. Please go ahead.

[Elona Kogan:]

Thank you and good morning everyone. Welcome to our third quarter 2019 financial results and corporate update conference call. The press release reporting our financial results and the 10-Q, which we filed, is available in the press release section of our website, www.selectabio.com. Joining me for today's call is Carsten Brunn, our President and Chief Executive Officer, Dr. Alison Schecter, our Chief Medical Officer and Brad Dahms, our Chief Financial Officer.As a reminder, 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 trials, related data readouts and ability of results to inform future trials, our collaboration with AskBio, the development and 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, November 8, 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 intention to do so, even if management's views change.I would now like to turn over the call to Carsten Brunn, our President and CEO. Carsten?

[Carsten Brunn:]

Thank you Elona and good morning everyone. I appreciate you joining us today. It was an important quarter for Selecta as we announced several key achievements demonstrating the advancements of both our gene therapy and chronic refractory gout programs. We presented new data at the recent European Society of Gene and Cell Therapy Annual Congress, which demonstrated the ability of ImmTOR to address key challenges in gene therapy, specifically the potential for re-dosing. Currently, it is not possible to re-dose AAV gene therapy treatments due to the development of neutralizing antibodies against the AAV capsid. Our Chief Medical Officer, Dr. Alison Schecter will provide more details on this compelling data in a few minutes.In August, we announced a strategic alliance with AskBio, a proven leader in next-generation gene therapies to jointly develop, manufacture and commercialize a broad portfolio of life-changing AAV gene therapies. This is a key milestone for Selecta and we are thrilled to partner with them to move this effort forward and we anticipate entering the clinic in 2020. We will provide further details around initial indications and timing soon.Our development program in chronic refractory gout continues to make significant progress. We anticipate completing enrollment of COMPARE, the head-to-head trial of our lead product candidate SEL-212 by the end of 2019 announcing interim data during the first quarter of 2020 and announcing topline statistical superiority data expected by mid-2020. We are also pleased that we have confirmed a meeting with the FDA to be held in January 2020 regarding the Phase 3 clinical development plan for SEL-212. We are excited about the potential for SEL-212 to help patients because chronic refractory gout represents the most severely affected subpopulation of people with gout impacting approximately 160,000 patients in the U.S. Based on our data and quantitative market research with 100 rheumatologists, we believe SEL-212 has the potential to address many significant unmet needs in this debilitating condition and represents over $1 billion market opportunity.We closed a $5.7 million financing in the third quarter that consisted primarily of the management team and Board of Directors, which was done at market price. In addition to extending our runway, this financing demonstrates the continued confidence in the broad applicability of the ImmTOR platform. We have also made important advancement as a business, strengthening the company's executive management team with the addition of Dr. Alison Schecter as Chief Medical Officer and Brad Dahms as our Chief Financial Officer.Alison is a physician scientist with unique experience in both early and late stage development and translation medicine and has led several assets through FDA and DMA approval. Brad brings deep financial and strategic expertise from his experience as an investment banker for life sciences companies.I will now turn the call over to Allison to provide some more color on our gene therapies and chronic refractory gout programs. Allison?

[Alison Schecter:]

Thank you Carsten. As Carsten previously mentioned, in October we presented new data from four preclinical studies at the ESGCT which demonstrated the ability ImmTOR to address key challenges in gene therapy, specifically the re-dosing limitation which stem from adaptive immune responses against the AAV capsid. These data demonstrate that ImmTOR enables repeat dosing and enhances first dose transgene expression up to fourfold compared to gene therapy with AAV vector alone. We look forward to the clinical development of our lead gene therapy programs in MMA and OTC deficiency and we will provide further update as these programs move forward.In terms of our partnership with AskBio, this alliance 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 re-dosing in patients. Currently, the ability to re-dose is systemic AAV gene therapy is limited by neutralizing antibodies against the AAV capsid. We believe that our platform has the potential to increase the proportion of patients who achieve and maintain therapeutic benefit. AskBio's robust pipeline of potentially curative gene therapy, their extensive capsid library and scaled manufacturing capabilities will accelerate the development of these gene therapies. As Carsten mentioned, we and AskBio anticipate entering the clinic in 2020.Moving on to our chronic refractory gout program. We look forward to the presentation of three abstracts of additional encouraging data from our Phase 2 dose ranging study of SEL-212 at the American College of Rheumatology's Annual Meeting on November 11. A press release detailing the results of these studies will be issued following the meeting's embargo lift.Turning to the head-to-head COMPARE clinical trial. We continue to advance the six month study which is evaluating SEL-212 against the pegloticase, the current FDA approved uricase. The trial compares the efficacy and safety of a once-monthly dosing of SEL-212, which is a combination of ImmTOR plus our proprietary pegylated uricase plus pegloticase compared to that of pegloticase. The primary endpoint of COMPARE is maintenance of serum uric acid or SUA levels of less than 6 mg/dL at six months. This trial is built upon Phase 2 dose-ranging study which showed that in the five monthly dose cohorts, SEL-212 maintained SUA levels below 6mg/dL in 66% of evaluable patients and that only 35% of patients in these cohorts experienced flares in the first month of treatment. The COMPARE trial will enroll approximately 150 patients and we expect enrollment to be completed by the end of 2019. We plan to report interim data in the first quarter of 2020 and report topline statistical superiority data in mid-2020. Finally, we look forward to receiving guidance in our meeting with the FDA in January 2020 on our Phase 3 clinical development plan.I will now turn the call over to our Chief Financial Officer, Brad Dahms.

[Brad Dahms:]

Thank you Allison and good morning everyone. The detailed financials are laid out in our earnings press release and will be filed in our 10-Q. So I will just highlight a few key items here. We ended the third quarter with $35.9 million in cash, cash equivalents, restricted cash and short-term investments which compares to $42 million as of June 30, 2019. We believe our cash, cash equivalents and restricted cash will be sufficient to meet our operating requirements through the first quarter of 2020.As Carsten noted, we completed a private financing with participation primarily from the Board and management team this quarter which resulted in net proceeds of $5.7 million. The transaction consists of approximately 3.2 million shares issued at a price of $1.81, the market close price at the time of the transaction.R&D expenses for the quarter ended September 30, 2019 were $8.1 million, which compares with $11.9 million for the same period of 2018. The decrease reflects the timing of expense recognized for our head-to-head COMPARE study in addition to reduced salaries and benefits resulting from the headcount reduction in early 2019 and the completion of prior work programs.General and administrative expenses for the quarter ended September 30, 2019 were $3.7 million, which compares with $4.1 million for the third quarter of 2018. The reduction in cost was primarily the result of reduced legal fees and professional fees.For the quarter ended September 30, 2019, we reported a net loss of $12 million or $0.26 per share compared with a net loss of $16 million or $0. 71 per share for the same period in 2018.I will now hand the call back over to Carsten for closing remarks. Carsten?

[Carsten Brunn:]

Thank you Brad. As mentioned earlier, we had an important and exciting third quarter. I would like to reiterate that our teams focused on two priorities in the near-term, executing on our head-to-head COMPARE study in chronic refractory gout and advancing our gene therapy pipeline. We are pleased to announce that we expect to complete enrollment in the COMPARE study by the end of this year and expect to have guidance from the FDA on the Phase 3 clinical development plan in January 2020. We will provide interim data in Q1 2020 and topline statistical superiority data by mid-2020.With regards to our gene therapy program, the preclinical data presented at ESGCT show that our technology potentially enables repeat dosing of therapeutic AAV vectors which currently is not feasible. Our partnership with AskBio will allow us to move into the clinic in 2020 and we could not have a better partner to drive this effort forward.I would like to conclude by reiterating our gratitude for 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 are happy to take questions.

[Operator:]

[Operator Instructions]. And our first question comes from Chad Messer of Needham & Company. Please go ahead.

[Chad Messer:]

Great. Thanks. Good morning and thanks for taking my questions. Just to start off regarding of this update at College of Rheumatology in a few days, is it possible to discuss just how much more data might be in there? For example, how much more follow-up time we have had? Is that something you can tell us?

[Carsten Brunn:]

Thanks for the question Chad. So as we mentioned, we will have three posters there and it is more detailed data than we have shown. I think, specifically what is new is a specific analysis on the gout flares where we see that patients in one month had 35% of gout flares and there were no new initial flare after month two.

[Chad Messer:]

Okay. All right. So these are more new deeper analysis. All right.

[Carsten Brunn:]

Yes, exactly. It's a deep analysis. There is a deeper analysis on the correlation as well between SUA control and using antibodies. So that's the information we show here. So it's more detailed information on data we have presented in the past.

[Chad Messer:]

Okay. All right. Thanks for that. And then just wondering if there's any update on your collaboration with CureCN? And have they released any data about how their single agent gene therapy study is proceeding? They have been dosing for a while now.

[Carsten Brunn:]

Yes. To my understanding, they have not disclosed. And so you will see in our Q that our guidance remains unchanged, waiting to get guidance from the German authorities. As there was no real update, so we kind of took it out of this earnings call. But we are still on track as guided last quarter. Obviously, we are very excited about the partnership with AskBio and obviously shifting towards that.

[Chad Messer:]

Yes. No, understood and we are eagerly awaiting what move you could be able to say more about that. Thanks and congrats on all the progress.

[Carsten Brunn:]

Thank you Chad.

[Operator:]

Our next question comes from Derek Archila of Stifel. Please go ahead.

[Bill Grau:]

Hi. Bill, on for Derek. Thanks for taking our question. Just on the AskBio partnership, can you give us a little more insight into what you are thinking for the human proof of concept? Sort of the size and length of that study might be? And then timing and kind of what you think the phasing of your R&D expense might look like as you complete enrollment of COMPARE and think about the Phase 3 study and then obviously the study with Ask? Thanks.

[Carsten Brunn:]

Yes. So thanks for the question and excellent question. And we definitely will guide more details in the future. I think for now, as we guided today, we plan to be in the clinic with AskBio in 2020. We have guided in the past that one of the programs will be one of our own programs. It will be MMA. And I think what we are looking at primarily is, can we prevent the formation of neutralizing antibodies? Because we think that fast endpoint and that's something you can measure after 30 to 60 days of giving a dose of the AAV capsid together with ImmTOR. So that's definitely going to be one of the endpoints that we are going to look at. But as mentioned in the call, we will give more detailed guidance. We are obviously working at high-speed right now and full steam ahead with AskBio to finalize both indications and the clinical development plan. So stay tuned.

[Bill Grau:]

So if I can just --

[Carsten Brunn:]

It's going to be around the -- yes. Go ahead.

[Bill Grau:]

So you may not actually need to do a couple of re-doses in that study. You think just showing the NAB should be enough?

[Carsten Brunn:]

So obviously the ultimate proof will be the ability to re-dose and express transgene, of course. But we think from the studies we have done so far, a good marker is actually developing or can prevent the formation of neutralizing antibodies. So we think that's the fact is readout to have because the re-treatment will take longer.

[Bill Grau:]

That makes sense. Thanks.

[Carsten Brunn:]

Just on the R&D expense as well to follow-up, obviously once we complete COMPARE, the expense will go down significantly. We have not guided on the Phase 3 expenses yet and obviously we have also not guided around the expenses in gene therapy. I think the one important note is, these are much smaller trials.

[Bill Grau:]

Yes. No, that makes sense. Thank you.

[Carsten Brunn:]

Thank you.

[Operator:]

Our next question comes from John Newman of Canaccord. Please go ahead.

[Chris French:]

Hi. Thanks for taking my question. This is Chris, for John Newman. Per the last ImmTOR poster that you guys had, one thing that was mentioned was that you can overcome low levels of pre-existing antibodies. I was just wondering if that also meant that if someone was dosed with an AAV and they had a low level of antibodies, let's say, you could still use this product to kind of circumvent that? Or if it meant something else?

[Carsten Brunn:]

So thanks for the question, Chris. I think I would say, at this point, that speculation I think we have shown this in animal experiments that you actually can overcome lower levels of mutant antibodies. We will have to see how this translates into human studies obviously. Yes, I think that's as far as we can say right now.

[Chris French:]

Got it. And I just wanted to get the gene therapy programs in a row. So kind of could you talk about the timing of the gene therapy programs? And when they are going to be going to the clinic from first to last, just so I can get the timing straight and yes?

[Carsten Brunn:]

Yes. So we have, as you heard on the call, we do have 2 programs in MMA and OTC. We previously guided that MMA will be part of the collaboration with AskBio. Around OTC, we are still in the pre-clinical phase and have not guided when we are going to the clinic. So as I said, we plan to take MMA to the clinic. But there's other indications in the collaboration which we have not disclosed yet and haven't guided to. And as I mentioned earlier, once we have more clarity on which indication to move forward at what time, we will guide that.

[Chris French:]

Got it. And just for the last question on SEL-212. For the interim readout in first quarter 2020, is there anything more specific you could tell us about what data we will see? Will it be for example SUA gout flares and other things?

[Carsten Brunn:]

Yes. That's a good question. We have not guided in detail and the question comes up, of course. I think what I can say is that we are going to look at numerical difference between SEL-212 and pegloticase at month three and month six. I think that's as far as we have guided and so we will provide more of an update once we are closer to the data readout. And for now, we are happy that we are able to announce that we plan to complete enrollment by the end of this year.

[Chris French:]

Got it. Thank you.

[Carsten Brunn:]

Thank you Chris.

[Operator:]

Our next question comes from Difei Yang of Mizuho. Please go ahead.

[Alex Lim:]

Hi. Good morning guys. This is Alex, on for Difei. I guess I was just wondering if you could comment a little bit on the COMPARE trial in terms of the shift in the timeline there?

[Carsten Brunn:]

Yes. Thanks for the question Alex. So as you recall, we guided last quarter that we have a quarter delay, which is driven by the fact that we had extremely aggressive timelines to recruit 150 patients in an orphan disease with completely new sites. So it's just taking longer to get those sites up and running. We are very pleased with the recruitment rates we are seeing right now. So we are not guiding to different times of the readout. We are just looking at, obviously, to provide investors and all of you a meaningful interim readout. You used a certain number of patients for that. That's why we kind of moved this into Q1 next year. But otherwise than that, the timeline has not shifted or changed and we are guiding that we are going to complete enrollment by the end of this year.

[Alex Lim:]

Okay. Thank you. And then on the gene therapy front, I was wondering if you had an update on the collaboration with Spark? And then opting into additional indications?

[Carsten Brunn:]

Yes. So around the Spark collaboration, as you recall, Spark licensed ImmTOR for the treatment in combination of hemophilia A. And we have the additional right to opt into four additional indications by the end of this year. And we will hear and we will guide to this towards the end of the year once we hear from them.

[Alex Lim:]

Okay. Thank you.

[Carsten Brunn:]

Thanks.

[Operator:]

Our next question comes from Yun Zhong of Janney. Please go ahead.

[Yun Zhong:]

Hi. Thanks for taking the question. So on the meeting with the FDA in January, I guess, most likely you will not be able to have the interim data before the meeting when you meet with the FDA. And if I remember correctly have you ever had another Phase 2 meeting with the FDA? And if that's the case, what will be different information that you will be able to provide to the agency?

[Carsten Brunn:]

Yes. Good question. Just to remind you, we had an end of Phase 2 meeting in December of last year and we obviously are not disclosing our private discussions with the FDA. But I think what is important is that the COMPARE trial is independent from the Phase 3. I think that is very important. And what we plan is, as Allison mentions, to get final guidance on the Phase 3.

[Yun Zhong:]

Okay. Thank you.

[Operator:]

This concludes our question-and-answer portion of the call. I will now turn the call back over to the Selecta's CEO, Carsten Brunn, for closing remarks.

[Carsten Brunn:]

Thank you operator and thank you to everyone who joined us this morning. We have made significant progress this quarter as we have achieved critical benchmarks in advancing the ImmTOR platform across chronic refractory gout and gene therapy. We are extremely excited about the continued growth of our company and the technology and we forward to continuing developments to unlock the broad potential of the ImmTOR platform. That concludes today's call. Thank you.

[Operator:]

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