Selecta Biosciences, Inc.
Q1 2018 Earnings Call Transcript

Published: 9 May 2018

[Operator:]

Welcome to the Selecta Biosciences First Quarter 2018 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 John Leaman, Selecta's Chief Financial Officer and Head of Corporate Strategy. Please go ahead.

[John Leaman:]

Thank you, and good morning, everyone. Earlier today, we issued a press release containing our first quarter 2018 financial results and other corporate updates, and we filed our 10-Q. The release in 10-Q can be accessed by visiting our website at www.selectabio.com. I'm joined today by Werner Cautreels, our CEO, and other members of the management will be joining us for the Q&A portion of the call. Before we get started, we would like to advise that certain remarks that are made during this call about the company's future expectations, plans and prospects constitute forward-looking statements for the 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 the Selecta's most recent quarterly report on Form 10-Q filed with the SEC, which can be accessed by selectabio.com. In addition, any forward-looking statements represent the company's views only as of today May 9, 2018, 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. Now let me introduce Werner, who will kick things off.

[Werner Cautreels:]

Thank you, John, and good morning, everyone. I'm proud to say that 2018 is off to a strong start. We recently presented 3-month Phase II data at the Pan-American League of Associations for Rheumatology or PANLAR and 2018 Congress for our lead product candidate SEL-212 for the treatment of chronic severe gout. Those data indicates that our product profile may provide better and more sustained serum uric acid level control over time, fewer gout flares and convenient monthly dosing compared with recent data reported for the current FDA-approved uric acid therapy. We also outlined our plans for 2 additional data readouts from this ongoing trial

[John Leaman:]

Thank you, Werner. Selecta reported no revenue for the first quarter of 2018, which is down from approximately $100,000 in the comparable quarter of last year. The decline is the result of the reduced revenue recognized from the company’s grants and collaborations. Research and development expenses for the first quarter of 2018 were $11.1 million, which is relatively unchanged from $11 million for the same quarter last year. General and administrative expenses for the first quarter of 2018 were $4.7 million, which compares with $3.9 million for the first quarter of 2017. The increase is primarily the result of greater headcount and related salaries needed to support a maturing clinical-stage public company. For the first quarter of 2018, we recorded a net loss attributable to common stockholders of $15.9 million or $0.71 per share. This compares to a net loss of $15.1 million or $0.82 per share for the same period in 2017. As of March 31, 2018, we had approximately $83.5 million in cash, cash equivalents, short-term deposits, investments and restricted cash. This is down from approximately $97 million at December 31, 2017. We expect that our cash balance is sufficient to fund operations into mid2019. Note, the guideline excludes any additional payments that we might receive from Spark or other potential collaborations. That concludes our formal remarks. Now we will open up the line for questions. Operator?

[Operator:]

[Operator Instructions] Our first question comes from Carter Gould of UBS. Please go ahead.

[Jeff Hung:]

Thanks for taking my question. This is Jeff in for Carter. From your point of view, what are the key points of discussion for the end-of-phase II meeting?

[Werner Cautreels:]

Good morning. This is Werner. It will be the conventional questions about the design of the trials, of course, for the pivotal trials. It’s pretty clear, I believe, what the endpoints are. And then, of course, we have to think about the power of the trial, not just only for efficacy but also for exposure in terms of safety and then in terms of the design placebo controls and all of that. So the critical items will be the ones that you normally address in an end-of-phase II meeting.

[Jeff Hung:]

Great. And then, how and when will takeaways from that meeting will be communicated?

[Werner Cautreels:]

We haven’t provided guidance when we do that. As soon as we have that information, of course, we will then come back with the guidance to the street.

[Jeff Hung:]

Great. And then, KRYSTEXXA is looking to be a roughly $206 million product right now. I guess, just curious on your latest thoughts on the size of the commercial opportunity of gout?

[Werner Cautreels:]

Well, again, we think KRYSTEXXA – we fully support their efforts to continue to help patients with chronic severe gout. And as you may look and know, we feel like they’ve penetrated a very small amount of the marketplace. So we think there is a great potential for a therapy that is more efficacious and can be given for a longer treatment period to greatly expand this marketplace. As you’re probably aware, they have also expanded their guidance to peak year sales of something like $750 million. And we believe based upon our market research that the market is at least that, if not much greater.

[Jeff Hung:]

Great thank you.

[Operator:]

The next question is from Difei Yang of Mizuho Securities.

[Difei Yang:]

So just a couple. For the 5–dose combo – for the 5 combo dose, could you talk to us why you picked the 1.2 mg per kilo and those not a 0.4.

[Werner Cautreels:]

Difei, from the data – from the ongoing Phase II data, we had to make a decision on that dose. And it looks like 0.2 would be sufficient to cover a 30–day window. And so we went therefore with that dose in these cohorts.

[Difei Yang:]

Okay. And then maybe a very generic question that – let’s say, for – KRYSTEXXA is the competitor. What if KRYSTEXXA add on to immunosuppressant in their dosing regimen, would that be – how would SEL–212 be differentiated in that case?

[Werner Cautreels:]

John, you want to take that question?

[John Leaman:]

Sure. So Difei, I think we’ve spoken about it and we often get the question, are we immunosuppressive? And we would argue, we are not. We are immunotolerant. And we believe that our SVP–Rapamycin platform basically produces T regulatory cells, which allows for the tolerance for highly immunogenic drugs. So – I think, I would differentiate ourselves that way that we’re immune tolerant, not immunosuppressive. I think the other question that will come up and obviously, we’ll have to look at the data as it goes forward, is that they are talking about some pretty – the drugs themselves – the immunosuppressants are not without significant side effects. And so I think, to be giving two weeks of an immunosuppressive therapy, then three months of it in correlation with KRYSTEXXA with the idea that you might be able to lengthen the treatment period, we think it will be an interesting proposition as we take a look at side effect profile and efficacy going forward.

[Difei Yang:]

Thank you for the explanation.

[Operator:]

The next question is from Alex Schwartz of Stifel. Please go ahead.

[Alex Schwartz:]

First off, in your full 5–month SVP–Rapamycin plus pegsiticase combo trial data release, how many patients are you testing? And then a slightly different question, can you give us a sense of how many patients will have completed the full five months of the regimen at that time when you released the data? Do you have good visibility into that right now or is it too early?

[Werner Cautreels:]

John, will you take that?

[John Leaman:]

Sure. So Alex, I think guiding on how many patients that we’ll be displaying in that Q3, sort of, medical meeting, I think, is difficult because I think it’s obviously an open- label trial, but we’ll have to find the appropriate meeting and we certainly want to bring enough data, so that it’s meaty for you all to take a look at. So I think that’s number one. I think when we’re talking about the number of patients within the various cohorts, I think what we’ve guided to is that we’re looking at cohorts – potentially multiple cohorts between 0.15 and 0.1 milligrams per kilogram of SVP-Rapamycin. Within those cohorts, we have the ability to enroll up to 20 patients. And so as we think about it, I think there will be at least as large as the cohorts that you’ve been seeing previously in Phase II. But several of the cohorts, specifically, potentially around cohorts that we think may be are dosed might have larger numbers of patients just to give statistically a better chance for you to evaluate. So I think that’s what we’ve guided and we’ll give more guidance as we get closer to when we’re going to actually present the data.

[Alex Schwartz:]

Okay, that’s great, thank you for taking my question. Thanks for that’s on progress.

[Operator:]

The next question is from John Newman of Canaccord. Please go ahead.

[John Newman:]

Hi, good morning guys, congrats and continue progress, and thanks for taking my question. So I’m curious, you – in your press release this morning, you talk about some additional data that you’ll be presenting in terms of the expansion cohorts. I’m just wondering if you can talk a little bit more about what that might look like, the data that you referred to at EULAR? Thanks.

[Werner Cautreels:]

Okay, good morning. John. Sure, so at the PANLAR conference only a few weeks ago, which we also I think webcasted, a number of patients had not reached month 3, 4, 5 in those cohorts. And so we expect that we will present those data at the EULAR conference, so that you will have a much more complete picture of these different patients in those cohorts.

[John Newman:]

Great. And then one additional question, if I may. In your prepared comments, you mentioned that you are still considering, at this point, head-to-head study with KRYSTEXXA. I’m just curious, conceptually, what that study might look like if it would need to be a large study, if it could be a small study? If that’s something that you could run in conjunction with your Phase III program, if you would wait until after that completed? Thanks.

[Werner Cautreels:]

Sure. No, absolutely, we plan to do that in parallel with the Phase III pivotal trials and those will be most likely placebo-controlled, that will be important. Then head-to-head study will not need to be that large because of the clinical endpoints measured and the significance of that. And so that will be a smaller study. We haven’t completed the design of that. But clearly, that will be conducted in parallel and maybe even a bit faster than the pivotal program.

[John Newman:]

Okay, great thank you.

[Operator:]

[Operator Instructions] There are no other questions at this time. This concludes our question-and-answer session. I would like to turn the conference back over to Werner Cautreels for closing remarks.

[Werner Cautreels:]

Thanks, Kate. And again, thanks everybody for your interest this morning. We – Selecta, we will be attending and presenting at two upcoming conferences that will be the UBS conference and the Jefferies conference, both in New York. And then, again, in the next month, as we will give an update at EULAR about the SEL-212, you will have the opportunity to listen in again. So thanks again, and maybe we see each other at one of these conferences soon in New York. Thank you.

[Operator:]

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