Earnings Transcript for CYT - Q4 Fiscal Year 2021

Operator: Good morning and welcome to Cyteir’s Fourth Quarter and Full Year 2021 Earnings Call. At this time, all participants are in a listen-only mode. There will be a question-and-answer session at the end. Please be advised that this call is being recorded at Cyteir’s request. I would now like to turn the call over to Lisa Hayes, Vice President of Investor Relations and Corporate Communications.

Lisa Hayes: Good afternoon and welcome to Cyteir’s conference call that will focus on fourth quarter and full year 2021 financial and operational results and discuss our objectives for 2022. With me on the call today with prepared remarks are Dr. Markus Renschler, our President and Chief Executive Officer; and Dave Gaiero, our Vice President of Finance. Andrew Gengos, our Chief Business Officer; and Paul Secrist, our Chief Scientific Officer will join for Q&A. I would like to remind everyone that some of the statements we make on this call will include forward-looking statements. Actual events or results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties and other factors, including those set forth in our most recent filings with the SEC, and any other future filings that we may make with the SEC. With that, I’ll turn the call over to Markus.

Dr. Markus Renschler: Thanks Lisa. 2021 was an exciting year for Cyteir with solid execution and advancement of our lead program CYT-0851 as we met key clinical objectives discussed during our IPO in June. Importantly, we entered the next stages of clinical development, Phase 2 monotherapy and Phase 1 in combination with chemotherapy. We have strengthened our management, clinical and research teams, which positions us well to achieve multiple key milestones in 2022, including reporting data from the monotherapy and combination studies with CYT-0851. But, before I preview 2022 in more detail, let me summarize the accomplishments we’ve made over the past year. As a reminder, our lead product candidate, the CYT-0851, which is designed to inhibit DNA repair, this novel and patented drug is in a Phase 1 study in combination and a Phase 2 study as monotherapy in patients with relapsed or refractory hematologic malignancies and solid tumors. As is typical of set studies, we are evaluating the safety of CYT-0851 in patients who have failed multiple cancer therapies and have exhausted all available therapeutic options while exploring early signs of efficacy. These patients have progressive tumors and need an effective treatment. If CYT-0851 is shown to be safe and efficacious in these heavily pretreated patients with poor prognosis, we’ll look for opportunities to bring CYT-0851 into earlier lines of therapy. Over the past year, for CYT-0851, we completed the Phase 1 portion of our trial and determined the recommended Phase 2 dose. In this dose escalation portion of the first-in-human trial of CYT-0851, we escalated the dose 40-fold in 12 cohorts and determined the maximum tolerated dose of 600 milligrams per day and a recommended Phase 2 dose of 400 milligrams per day taken orally once a day. We are pleased with this dose recommendation. This dose level, if proven effective, should be straightforward for patients to manage as a once daily medication schedule is convenient and easy to follow. And interim analysis of our ongoing Phase 1/2 study of CYT-0851 as presented previously, showed that CYT-0851 provided disease control in 20 of 46 response evaluable patients, including three responses in non-Hodgkin lymphoma and soft tissue sarcoma. On a standalone basis, this data is encouraging. It is further encouraging, considering the high unmet need and patients so heavily pretreated prior to their participation in our study. Furthermore, the safety profile shown in these patients is quite encouraging. CYT-0851 has been well tolerated today which differentiates it from other Phase 1 drugs, given the level of activity we are observing. Of the 73 patients enrolled in the study, 58% reported at least one treatment-related adverse event and only 16% of patients reported at least one grade 3/4 for treatment-related adverse event. Importantly, across all dose levels, 42% of patients had no treatment-related adverse events. Most importantly, we’ve not observed any clinically significant myelosuppression, neuropathy, vomiting or diarrhea, which are some of the most common adverse events that pose challenges in drug development. The adverse events reported at the recommended Phase 2 dose are primarily low grade. The three most common treatment-related adverse events were fatigue, reported by 21% of patients; hyperuricemia, reported by 11% of patients; and nausea, reported by 11% of patients. No patient at or below the recommended Phase 2 dose discontinued treatment for treatment-related adverse events. In short, in 2021, we demonstrated CYT-0851 clinical proof of concept with disease control and radiologic responses with a safety profile consisting primarily of mild grade 1 and 2 treatment-related adverse events. Now, while we’re encouraged by these data, we recognize that the study of CYT-0851 remains early. We’re eager to see further clinical results from our CYT-0851 studies. The Phase 1/2 study of CYT-0851 as a monotherapy continues. Before the end of ‘22, we’re anticipating reporting additional data from this study. At the start of 2022, we were ready to initiate six Phase 2 monotherapy expansion cohorts in solid tumors and hematologic malignancies as part of our ongoing first Phase 1/2 trial. The first patient was enrolled in January 2022. Before the end of this year, we anticipate data from these expansion cohorts. Preclinical in vitro and in vivo data demonstrates synergy or additivity when certain chemotherapy drugs were combined with CYT-0851. Once we established that CYT-0851 did not cause significant my suppression in humans, it allowed us to begin the evaluation of CYT-0851 in combination with standard-of-care anticancer therapies with the first patient enrolled in December. Similar to our monotherapy expansion cohorts discussed earlier, we anticipate reporting data before the end of 2022. I will further describe these combination studies in a moment. It is not only CYT-0851, which has us encouraged, from our discovery platform in 2021, we advanced two additional targets in distinct DNA damage response pathways denomination and have moved those into high throughput screening to identify lead compounds. The first of these undisclosed targets, or Target 2, plays a key role in Non-Homologous End Joining or NHEJ and the second Target 3 in Microhomology-Mediated End Joining, both of them are DNA repair pathways. For both targeted drug discovery projects, we have identified subsets of cancer patients that we believe uniquely depend on the target of interest for their survival, and we are working to identify patient selection biomarkers to identify these cancer subsets for use in drug candidate development. Both undisclosed target projects are currently in lead generation and will enter the lead optimization stage in 2022. For these targets, rather than use a phenotypic screen as we did for CYT-0851 and 1853, we are using a more traditional drug discovery approach, by first identifying the molecular target of interest, then developing assays to measure the inhibition of its function and screening for molecules and inhibited protein from carrying out DNA repair functions. Both undisclosed target projects are in preclinical stage, and we anticipate reaching the drug candidate nomination stage in 2023. CYT-1853 was developed as a next-generation drug to be more potent than CYT-0851 that potentially could be used to treat cancers not treated well with CYT-0851 or that have become resistant to it. In 2021, we advanced CYT-1853 towards an IND. And by the end of ‘22, we should be able to define the development path for this product candidate. We are completing IND-enabling toxicology studies with 1853 in the first half of ‘22. And if the data supports an overall risk benefit improvement and differentiation from CYCT-0851, we plan to file an IND by year and ‘22. In addition to our progress in advancing our multiple product candidates, other notable highlights for 2021 include

Dave Gaiero: Thanks Markus. Our full year and fourth quarter 2021 financial results can be found in the press release we issued this afternoon. Additional detail can also be found in our annual report on Form 10-K, the filing of which is now available in the Investor Relations section of the Cyteir website. Research and development expenses were $8.3 million for the fourth quarter of 2021 compared to $3.9 million for the same period in 2020 and $31 million for the full year 2021 compared to $16.8 million for the full year 2020. The year-over-year increase in R&D spending in the comparative periods was primarily due to increased research activity, clinical trial expenses and headcount. General and administrative expenses were $3.6 million for the fourth quarter of 2021, compared to $1.5 million for the same period in 2020 and $11.3 million for the full year 2021, compared to $4.2 million for the full year 2020. The year-over-year increase in G&A expenses in the comparative periods was primarily due to employee-related costs as well as other administrative expenses associated with company growth and operating as a public company. Net loss was $11.8 million or $0.34 per share, in the fourth quarter of 2021, compared to $5.4 million or $2.92 per share for the same period in 2020. For the full year 2021 net loss was $42.1 million, or $2.16 per share, compared to $20.8 million or $13.60 per share for the full year 2020. During 2021, our net cash used in operating activities was $36 million. We expect this level of cash burn to increase, as we continue to advance our clinical trials, progress our pre-clinical activities and operate as a public company for the full year. Due to the nature and timing of drug development, we anticipate that our cash spending will be variable from quarter-to-quarter. We ended 2021 with cash and cash equivalents of $189.7 million. Based on our current plans, we expect our current capital resources to fund our operations into 2024. I’d now like to hand the call back to Markus for closing remarks.

Dr. Markus Renschler: Thanks, Dave. In summary, we believe that CYT-0851 has the potential to achieve blockbuster status across hematologic malignancies and solid tumors as a monotherapy or in combination with standard-of-care chemotherapy agents. The clinical milestones we expect to achieve in 2022 are expected to support the initiation of one or more potential registration trials, expected to begin in 2023. In addition, we are building a pipeline of novel synthetic lethal DDR drug candidates with two new targets nominated in 2021. Our rapid pace of progress is supported by a team of veteran industry experienced drug discoverers and developers that know what to do. While much of our current work is ongoing, we anticipate multiple opportunities in 2022, be the medical conferences or R&D conference calls, where we will have the opportunity to report results. I want to thank the patients and investigators for supporting the CYT-0851 clinical study and the employees of Cyteir for the tireless dedication. With that operator, please open the line for questions.

Operator: Thank you. We have our first question on the phone line from Anupam Rama of JP Morgan. Anupam, please go ahead.

Anupam Rama: Hey, guys. Thanks so much for taking the question. I just had a clarification on sort of data readout timelines. So, the monotherapy dose escalation data you said is potentially in June, and then potentially some monotherapy expansion data in the second half of this year, right, but focused on safety only with the potential for efficacy, and then combination data in the second half of the year, right, focused mostly on safety. Just wanted to clarify if I have all that right.

Dr. Markus Renschler: Yes. Thanks, Anupam. Exactly, as you said, so we have submitted an abstract for potential presentation in June. We’ll know very soon whether that’s been accepted. And that would be an update on the Phase 1 data, as you recall the last cut, we took and that’s in the 10-K is from November 15th. So that will be updated in the presentation if it gets selected. And then, we are actively enrolling in nine cohorts, six monotherapy cohorts. These are final 2 stage and we expect interim analyses to be done this year towards -- in the second half. And then, we can either use academic meetings, scientific meetings, to present the interim results or do R&D days or other activities that would allow us to share top-line interim data with the public. And that’s true for the monotherapy cohorts, as well as the Phase 1 safety readouts in combination with the three different chemotherapy regimens. So, those are actively enrolling. We are starting a dose of 100 milligrams with 851. So, they’re only up to four cohorts that we could potentially do. So, we’re very confident that we can enroll those this year and report the results. Now, these are typical Phase 1 designs. They’re designed to elucidate the safety. But, of course, if we’re starting to see responses that might get interesting, you might expect a response or two from the chemo agents themselves, but especially with the capecitabine and gemcitabine response rates expected are in the single digits. And so, after a couple of responses, it might get very interesting. With bendamustine and rituximab that’s more difficult, of course, as the response rate there is substantial. And we’ll probably not know until we have a randomized trial, or of course, unless the patient responses and fails bendamustine and rituximab. So yes, the timeline is exactly as you said.

Operator: We now have our next question on line from Jeff Hung with Morgan Stanley.

Jeff Hung: You mentioned that the CR is still ongoing. Can you provide an update on the other two responses, like how the patients doing and do they remain on drug?

Dr. Markus Renschler: Yes. So, I think, we responded to the DLBCL partial response that was elderly patient with more than 100 metastasis was doing well through month six and then developed the CNS lesion. As you may recall 851 does not cross the blood brain barrier. And in patients with extranodal disease of diffuse large B-cell lymphoma, about 15%, up to 20% will develop CNS disease. So, they’re at a higher risk of that. That patient still has complete control of the other bony metastases, nodal metastases, liver metastases, but did succumb I think at about around month eight from the CNS metastasis, and the stable disease is still ongoing as well.

Jeff Hung: And then for your DDR platform, I know the two targets are not yet disclosed. But could you just talk generally about the subset of cancers that depend on the targets of interest and what you estimate to be the size of the addressable market? Thanks.

Unidentified Company Representative: So, we’re really focusing on DNA damage repair, double strand, break repair, and the major repair pathways there. So, the two targets we have are in different major DNA repair pathways. We’re still understanding the patient populations. We’ve got subsets of a few different solid tumor indications that we think there’s a synthetic lethal relationship with preexisting condition in those cancer types that we’re going to continue to pursue as we move forward with this.

Dr. Markus Renschler: Actually validating that biomarker then I think we’ll have a better handle on the size but potentially for Target 2, it’s substantial, it is a very common biomarker.

Operator: We now have our next question from Tazeen Ahmad of Bank of America.

Tazeen Ahmad: For 851, for the data that you have asked to present at ASCO, in total, how many patients would that be? Just to be clear. And then, the data cutoff was November 15th, but would you be able to update that data to recent, if that presentation does get accepted for the June conference? And then separately for 1853, your plan is to file the IND by year-end ‘22. And you talked about things that need to be completed. But, what is the biggest gating factor right now? Thank you.

Dr. Markus Renschler: Yes. Tazeen, thanks for the question. So, with respect to the potential upcoming presentation, note that the abstract was based on the same data cut that was used for the JP Morgan presentation. So, the numbers will look identical. But, there will be a data cut that has not been made yet that is on April look at the data which will have more than 80 patients. And we’ll have a follow-up all the way through then. So, it will be quite different from the abstract. And then, with respect to 1853 -- yes, 1853. So, the IND-enabling GLP tox studies will be wrapped up in the second quarter. And what’s still ongoing are, number one manufacturing; number two, our studies really looking at the in vivo efficacy, head to head with 851. And there, we really need to establish that the risk-benefit profile is substantially differentiated from 851. And also waiting for us to see what the results are for 851 because it’s these expansion cohorts or the combination with chemo is looking very exciting, then 1853 would be a distraction, and we better off spending our energy on 851. So, those are the gating items. In either case, if it’s a go, we will be ready to file the IND by the end of the year.

Operator: We now have the next question on the phone line from Robert Driscoll of Wedbush Securities.

Robert Driscoll: Great. Guys, thanks for taking the questions. First, I just wondered if we could talk a little more on the preclinical experience you have with 0851 and some of the combinations, particularly with regards to safety. And then, secondly, if you’re able to talk a little bit more about the work you’re doing to elucidate the precise mechanism of 0851, and whether you might expect 1853 to act similarly on a different molecular target to achieve…

Dr. Markus Renschler: So, maybe in reverse order, the mechanism of action of 1853 is very similar to 851. It really was designed to be a more potent compound. And so, the screening assay was identical. And so, we expect the MOA to be identical. Then with respect to that MOA question, we have made substantial progress and are going to update investors on that work, which would then speak about the MOA and also biomarker development later this year. And then, with respect to the in vivo studies and in vitro studies in chemo combinations, first of all, I can just comment on the safety and then Paul can talk about the efficacy. But, the combination with chemotherapy has been well tolerated in the animals treated, but of course, they are rodents. And so, they are hardy. But, based on the overall clinical profile, when you think of it, we -- even at 1200 milligrams, we had absolutely no myelosuppression to speak of. We have no vomiting. We have minimal nausea and minimal fatigue in a very small subset of patients, like only about 20% of patients have reported fatigue. So, we are very confident that in the clinic, we can combine 851 with chemotherapy. And I think Paul can speak to the preclinical efficacy side of the work we’ve done.

Paul Secrist: Yes. This is Paul. So, the preclinical, the approach we took here with combination was very broad. Understanding that we are impacting DNA damage repair, there were several logical combination agents to look at. I think we looked at over 20 different agents in more than a dozen different tumor types and really prioritized based on the activity that we saw. So, in some cases, we saw fairly decent synergistic effects, other cases, it was more additive, in many of the cases and what we ended up taking forward with the 5-fluorouracil gemcitabine, we saw a pretty dramatic effects in the deepening of kill. So, more tumor cells died at the same concentrations when you added the tolerated doses of 0851 in with the chemotherapy. And that was really kind of the driver between that and then, what were those tumor types where we may be seeing some activity and that we might want to move into that made the most sense.

Dr. Markus Renschler: Yes. And, and I think, what we have discussed previously is a combination with PARP inhibitors, but really when you think of commercially, the opportunity is much greater. So, with capecitabine, it could be applicable in ER positive breast cancer, metastatic capecitabine is often, first or second line for metastatic patients that have failed hormonal therapy, pancreatic cancer, as well as other GI malignancies colorectal cancer in particular. Those patient numbers get that get huge, very rapidly. Gemcitabine similarly could be for breast cancer, pancreatic cancer or ovarian cancer. And so, there, again, the numbers get large. And then lymphoma, that landscape is changing, but the treatment of DLBCL continues to be a combination therapy. So, there we went with bendamustine and rituximab. We do have preclinical enhancement of the bendamustine effect when we combine it with 851. And that, of course, could also be applicable to follicular lymphoma and mantle cell lymphoma. So, if we can do this safely, we will be differentiated from all the other DDR compounds, there are most of them primarily. And then, of course, if we see the enhancement of activity as we saw in the preclinical models that would be then very encouraging. So, primarily this year, you will see the safety and potentially we’ll have a glimpse of the efficacy.

Operator: We now have another question on the line from Tim Chiang of Northland Securities.

Tim Chiang: Hi. Thanks. Markus, is there any way you could provide an update on just how the expansion cohorts are enrolling? Obviously, you just initiated the studies, what, in January. But, I was just sort of wondering, are the enrollments starting to pick up, just because the Omicron variant has just sort of pulled back. I just wanted to get some comments from you on that.

Dr. Markus Renschler: We managed to do quite well during the pandemic. We enrolled 12 cohorts in 24 months. So, that’s two months a cohort, and the safety assessment alone is 28 days. So, basically, we managed to get that data in the database. And enrolled the patients two -- four months get in the database have a safety committee meeting and two months of cohort throughout the pandemic. Unfortunately, I think the beginning of this year was particularly hard for search centers, where they had staffing issues, patient issues. So, Omicron, I think hit all of us harder than the rest of the pandemic. So January, things were very slow. In mid-February, they started to pick up. And I think now in March, we are back on track. I’m hopeful that we can catch up with our enrollment goals for the rest of the year. So, yes, we’re actively enrolling and sites are actively screening again.

Tim Chiang: And Markus, so this expansion study is at 18 study sites, is that right?

Dr. Markus Renschler: Yes, correct. Yes. We have only U.S. sites. We have 18 sites open for enrollment. There are -- 15 of them are major academic centers throughout the country and then 3 community centers.

Operator: As we have no further questions registered, I would like to hand the call back to Markus Renschler for some closing remarks.

Dr. Markus Renschler: I thank all of you for joining us today for this first annual earnings call that we have as a public company. I think ‘21 has been a great year, and ‘21 -- ‘22 will be even better. Importantly, we have data readouts from six monotherapy Phase 2 cohorts. These will be interim analyses by the end of the year, as well as data readouts from the Phase 1 in combination with three different chemo regimens. Any one of these nine cohorts has the potential to lead to a registration trial. And so, by the end of the year, we could potentially have that registration strategy. We’re building a deep pipeline of novel synthetic DDR drugs. We have now the capabilities in-house to do that. And importantly, we have cash into 2024. So I think we’re well positioned. We’re going to focus on executing our research strategy and have significant milestones in this year. Thank you so much for your attention. Bye, bye.

Operator: Thank you for joining. That does conclude today’s call. You may now disconnect your line.