Selecta Biosciences, Inc.
Q2 2018 Earnings Call Transcript

Published: 11 Aug 2018

[Operator:]

Welcome to the Selecta Biosciences Second Quarter 2018 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 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, Steven. And good morning, everyone. Earlier today, we issued a press release containing our second quarter 2018 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 Werner Cautreels, our CEO, and other members of the management will be joining us for the Q&A portion of this call. Before we get started, we would like to advise that certain remarks that are being 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 Selecta's most recent quarterly report on Form 10-Q filed with the SEC, which can be accessed at selectabio.com. In addition, any forward-looking statements represent the company's views only as of today August 8, 2018, and should not be relied upon as representing the company's views as of any other 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 Werner, who will kick things off.

[Werner Cautreels:]

Thank you, John. And good morning, everyone. 2018 has proven to be an important year at Selecta as the data from the Phase 2 clinical trial of our lead program SEL-212 for the treatment of chronic severe gout patients continued to show improvement in clinical activity, thus providing us the appropriate guidance as we make plans for our first two program that we expect to begin in the fourth quarter of this year. I will start today by summarizing briefly the expanded three-month data we recently presented for SEL-212 at the European League Against Rheumatism our EULAR Annual European Congress in June and then I will comment on our timeline of anticipated upcoming milestones, including the plan presentation of the five-monthly dose data at the upcoming American College of Rheumatology or ACR Annual Meeting to be held October 19 to 24. I wanted to start with our pivotal Phase 2 program and planned head-to-head trial against Krystexxa, which we plan to initiate in parallel with our pivotal Phase 3 program. Just quickly and for brief background, we are currently conducting a comprehensive dose ranging Phase 2 trial with our lead product candidate for chronic severe gout. SEL-212 is a combination of SVP-Rapamycin, our novel immune tolerant technology and pegsiticase, our proprietary pegylated uricase and it was designed to be the first non-immunogenic version of uricase, which would allow for the effective and safe administration of multiple doses with concurrent mitigation of anti-drug antibodies against the enzyme. In June 2018, we presented a new three-month expansion data from patients receiving SEL-212 at the EULAR Congress in Amsterdam. The data was from patients receiving three-monthly doses of SEL-212 with up to 0.15 milligram per kilogram of SVP-Rapamycin in combination with 0.2 or 0.4 milligram per kilogram of pegsiticase, followed by two-monthly doses of pegsiticase alone. Approximately 80% of evaluable patients had serum uric acid control below 6 milligrams per deciliter at week 12. By comparison, in a separately conducted and designed study of the only FDA-approved uricase therapy, with Krystexxa tripe study, 44% of evaluable patients had serum uric acid control below 6 milligrams per deciliter at week 16 as reported also last November at ACR. Additionally, 33% of the patient population represented by our EULAR data, and only 27% of all current patients in the SEL-212 Phase 2 trial, experienced gout flares during the first month after treatment with continued reduction of gout flare rates over months two to five. This reduced rate of gout flares appears to be substantially lower than the incidence of gout flares reported in clinical trials involving the current FDA-approved uricase and also other uric acid lowering therapies. And now as we push to the finish line for the Phase 2 trial, we expect to present data from new cohorts of patients who are receiving five-monthly doses of SVP-Rapamycin in combination with pegsiticase at the upcoming ACR Meeting and that would be in October 19 to 24 of this year. These patients are receiving regimens with SVP-Rapamycin doses ranging from 0.1 to 0.15 milligrams per kilogram in combination with 0.2 milligram per kilogram of pegsiticase. We expect the data from our comprehensive Phase 2 trial will provide appropriate guidance for the selection of the dose regimen that will be taken into new Phase 2 program. SEL-212’s emerging product profile has indicated that SEL-212 may provide better and more sustained serum uric acid control, fewer flares and with a convenient once monthly-dosing versus the current approved uricase which is diluted. We believe SEL-212 has the potential to truly change the treatment paradigm for severe gout patients and we are working to get this product to those patients as rapidly as possible. We’re actively engaged in preparations for the start of the Phase 3 program and plan to initiate patient enrollment in the fourth quarter of this year in a couple of clinical trial sites. Preparations include planning a Phase 2 meeting with FDA. Our plan for patients in the two pivotal placebo-controlled Phase 2 trials will be to dose monthly with a combination therapy for the entire six month period. We anticipate enrolling about a 150 vital patients in each of the two pivotal trials and expect that the primary clinical end point will be serum uric acid control below 6 milligrams per deciliter and that measured at months two and six. This can be achieved rapidly upon dosing, it’s easy to measure and it remains strongly correlated with low or negative anti-drug and antibody targets. We expect to report top-line data from these two Phase 2 trials in 2020. Beyond these two placebo-controlled pivotal Phase 2 trials, we are also planning to initiate in parallel a head-to-head trial versus the current FDA-approved uricase and that is Krystexxa. That study will be designed to have the potential to demonstrate superiority. We plan to report data from this head-to-head trial at the three-months and the six-months time points and expect this to happen in 2019. Further market research based on the anticipated product profile derived from our Phase 2 clinical data both in terms of clinical activity and safety continues to point to the $1 billion potential of SEL-212. And this has similarly brought applicability of our proprietary SVP-Rapamycin technology platform which we believe has the ability to unlock the full potential of biologic therapies by mitigating unwanted immunogenisity. We have several promising pipeline programs and many more potential applications in the future. Specifically, our second product candidate SEL-403 is a combination of SVP-Rapamycin technology in the clinical stage oncology assets called LMB-100 that we in-licensed from the National Cancer Institute or NCI which is part of the National Institute of Health. Patient dosing is ongoing in the Phase 1 clinical trial for the treatment of patients with malignant pleural or peritoneal mesothelioma, who have undergone at least one regimen of chemotherapy. This open-label dose escalation Phase 1 trial is being conducted under the Cooperative Research and Development Agreement that’s CRADA with the NCI and it is expected to enroll at least 18 patients. The trial is evaluating the safety and tolerability of this treatment and we will provide data on pharmacokinetics, anti-drug antibody levels as well as on objective of response rate assessment. We will provide further guidance about data disclosure at a future time point. The company is also working with investigators at the NCI to potentially conduct a Phase 1 study of SEL-403 in patients with pancreatic cancer and we are further exploring additional studies in other cancer. In the field of gene therapy, we have previously presented data from the 2017 Annual Meetings of the American Society of Gene & Cell Therapy, ASGCT and the European Society of Gene & Cell therapy also. That data provided evidence of the potential of SVP-Rapamycin to unlock the full potential of this novel modality. The company continues to engage in preclinical work focused on its proprietary product candidate for the treatment of methylmalonic acidemia, as well as in support of its collaboration with Spark Therapeutics As you can see, there is strong momentum across our organization and pipeline and we very much look forward to our next data results at ACR in October for SEL-212. Finally, also I wanted to let you know that the work process to replace me post my retirement later this year is progressing and we expect to update you on that in the near future. With that, let me turn the call over to John to discuss our second quarter financial results. John?

[John Leaman:]

Thank you, Werner. For the second quarter of 2018, the company recognized no revenue which compares to less than $0.1 million for the second quarter of 2017. The decline is the result of reduced revenue recognized from the company’s grants and collaborations. Research and development expenses for the second quarter of 2018 were $14.4 million, which compares to $11 million for the second quarter of 2017. The increase is primarily the result of higher clinical costs related to the company’s Phase 2 trial of SEL-212, preparation for the start of the SEL-212 Phase 3 program and incremental headcount-related expenses. General and administrative expenses for the second quarter of 2018 were $4.4 million, which compares with $4.9 million for the second quarter of 2017. The reduction in costs is primarily the result of reduced patent related costs and contract license fees associated with collaborations. For the second quarter of 2018, Selecta reported a net loss of $18.8 million, or $0.84 per share, compared to a net loss of $16.0 million, or $0.85 per share, for the same period in 2017. Selecta had $66.2 million in cash, cash equivalents, short-term deposits and investments as of June 30, 2018, which compares with a balance of $83.1 million at March 31, 2018. Selecta expects that its cash, cash equivalents, short-term deposits and investments will be sufficient to fund the company’s operating expenses and capital expenditure requirements through the end of the third quarter of 2019. The current operating plan accounts for funding in preparation for the planned Phase 3 clinical trial for SEL-212 and initial patient enrollment in a couple of the Phase 3 clinical trial sites, but the company will require an additional equity offering or other external sources of capital to expand enrollment in the Phase 3 trial and to conduct the planned head-to-head trial against Krystexxa. Finally, tomorrow August 9th, we will be at the Canaccord Genuity Annual Growth Conference in Boston and at the Janney Montgomery Scott Healthcare Conference in New York City on September 17th. We hope to see many of you there. That includes our formal remarks. Now, we’ll open the line up for questions. Operator?

[Operator:]

Thank you. We’ll we will now begin the question-and-answer session. [Operator Instructions]. Our first question comes from Chad Messer with Needham and Company. Please go ahead.

[Chad Messer:]

Could you just start out with the five dose combination data that we’re waiting for in October? Could you maybe give us some context on where this fits in the planning for the Phase 3, is it safe to say that 0.1 and 0.15 mgs per kg are the two most likely doses under consideration for pivotal?

[Werner Cautreels:]

Thanks, Chad. This is Werner. Yes, absolutely. I think what you’ll see at ACRs is the five-monthly doses of the combination and dose ranges that will be shown is from 0.1 to 0.15 and that with a 0.2 of the [endpoint]. So I think it’s a fair assumption that, that will be in the dose regimen that we will take into Phase 2.

[Chad Messer:]

And then just on the Phase 3 program, another study you’ve contemplated including in the future is also Krystexxa failures, didn't hear any mention in -- of that in your plans today. Is that off the table?

[Werner Cautreels:]

No, we maintain that idea. We have to do the appropriate preclinical work before we can engage in that, and that is certainly something that’s still in our plans.

[Operator:]

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

[Difei Yang:]

So just a couple. The first one is on Krystexxa head-to-head study. W0ould you give us a little bit more detail on how many patients will the trial include and what -- other than uric acid controls, what other measurements you’re hoping to help to differentiate your product versus Krystexxa?

[Werner Cautreels:]

Thanks, Difei. John, will you take that?

[John Leaman:]

Difei, good morning. So I think as we’ve described previously a lot will have to do a little bit with the efficacy difference that we continue to see between ourselves and Krystexxa. I think we’ve guided -- and again we haven’t set a number in the Krystexxa trial but right around a 100 patients sounds right, equal parts in both Krystexxa and SEL-212 for head-to-head. I think we powered it through statisticians, we will finally do that as we head the final Phase 2 data and decide on what doses will look at in the head-to-head. I think as we took a look at basically what measures we look at, obviously serum uric acid is going the be the primary endpoint and I think very similarly to what we would see in the Phase 3 would also probably look at gout flares as another objective as we look between the two.

[Difei Yang:]

Okay. Thank you.

[John Leaman:]

And -- yes, and we might also look at tophi as well. But I think that's again something that we’re contemplating.

[Difei Yang:]

Okay. And so how important is it for the rate of patients who has anaphylaxis reaction to the injection or to the infusion?

[John Leaman:]

It’s a great question Difei. I think as we’ve shown and we’ve previously sort of mentioned, I think our rate -- and I think we’ve only looked at -- we had over 380 doses of our product and only eight sort of anaphylactic reactions. So I think when you look at our rate of anaphylaxis, we feel pretty good about that, and especially as you look at the comparison on the label versus our competitors. So I think it's important but I think we've obviously -- and I think both now in the Phase 3 we can show, we feel very good about our infusion reaction and anaphylactic rate as we go forward.

[Operator:]

Our next question comes from Carter Gould with UBS. Please go ahead.

[Carter Gould:]

Great. Thanks guys for taking the question. Just wanted to dig in a little bit more into the upcoming readout and maybe if you could just set a little bit of expectations on in terms of the number of patients we will see, any commentary that you definitely have sort of adequate follow up? And then obviously you posted pretty good data, and what we saw at EULAR, how should we think about the upcoming readouts relative to the benchmarks that EULAR data set? And then I have a follow up.

[Werner Cautreels:]

Thanks, Carter. This is Werner. So, by the time we will show the data, I think there would be between 30 and 40 patients that are dosed in these five-monthly doses that at least at the second dose range. And so you can expect that we will present those data there. In terms of going back to EULAR, we expect that the data that we will share will be in that area of data that we have shown at EULAR.

[Carter Gould:]

Okay, great. And then as far as the end of Phase 2 meeting with FDA, has that already been scheduled and are there any other sort of inputs or other work that needs to be done besides sort of getting the upcoming data meeting with FDA before you can move into Phase 3?

[Werner Cautreels:]

We are very actively preparing for all of the above. That includes by the way not only just internal processes but also has included extensive consultation with key opinion leaders that will eventually become also our investigators. So everything that you can think of that needs to be put in place to start of a Phase 3 in terms of supply, materials, all of that is actively involved.

[Carter Gould:]

And just last question from me. Your competitor in the space has been very vocal on the opportunity in the nephrology segment. Can you maybe talk about how that kind of fits into your $1 billion commercial potential that you kind of put out there for 212?

[Werner Cautreels:]

Okay, thanks. I will -- Stephen, who is our Chief Commercial Officer will address the question.

[Stephen Smolinski:]

Right now I think our main focus would go into commercializing, this would be focused on the rheumatologists who currently are treating the majority of these -- in the severe gout patients. I think in nephrology, it's an interesting preposition but probably comes with its own challenges, again I think making sure those patients are actually furthered to rheumatologist for treatment is in my opinion is the best strategy to move forward with.

[Operator:]

[Operator Instructions]. And our next question comes from Yun Zhong with Janney.

[Yun Zhong:]

So first one on the head-to-head study with Krystexxa. I wanted to know your thinking behind conducting the study in parallel with your Phase 3 program instead of waiting for the Phase 3 program to proceed first, then to initiate next study. Do you expect to the study to have any impact on patient enrollment and I'm assuming that all studies will probably target same patient populations?

[Werner Cautreels:]

So we continue to plan to -- continue to conduct these trials simultaneously. We have to be careful of how to plan for patient inclusion. But as far as we know, there shouldn’t be any interference in terms of the placebo studies versus the active study. So we will be careful to make sure that it doesn’t happen. John, anything else?

[John Leaman:]

Yes, and I would just add, I think you ask about the strategy of doing the head-to-head versus waiting for the Phase 3 trial, I think it's twofold. One is, I think we have an opportunity based on the efficacy difference that we see between Krystexxa and SEL-212, I think to do a robust study that we are very confident in. I think the fact we’re doing a head-to-head shows our confidence in our drug. I think secondarily, it allows basically as we proceed through the Phase 3 programs for data points in 2019, as we are going to be showing both three-months and six-months superiority which we feel again very confident about. And then lastly -- and -- we had Stephen over here our Chief Commercial Officer, by doing this study in the same way as we will be doing the Phase 3, even though it's not pivotal, it will allow that for marketing that Stephen can use at the salesforce and others to show patients how good SEL-212 I think can be for them in their treatment of chronic and severe gout. So that is the rationale for doing all of that.

[Yun Zhong:]

And so about the end of Phase 2 meeting which the FDA I believe you said that the two Phase 3 studies will have 150 patients in each. So besides the does, anything else that you needed to finalize with the FDA regarding the design of the study?

[Werner Cautreels:]

No. We have been working with our statisticians and our clinicians to -- with dose designs together and the whole purpose of the end of Phase 2 meeting is indeed to present dose studies and dose designs and I think they’re important.

[Operator:]

I'm showing no further questions. This concludes our question-and-answer session. I'd like to turn the conference back over to management for any closing remarks.

[Werner Cautreels:]

Thanks, Stephen. And thanks everyone again for your attendance and for your questions. And we look forward to meet you maybe at one of the upcoming healthcare conferences tomorrow at Canaccord and in September at the Janney Montgomery Scott Healthcare Conference. Thanks again.

[Operator:]

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