Earnings Transcript for ERYP - Q1 Fiscal Year 2022

Operator: Good day, and thank you for standing by. Welcome to ERYTECH Business Update and Full Highlights for the First Quarter of 2022 Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, [Operator Instructions]. Please be advised that today's conference is being recorded. If you require any further assistance, [Operator Instructions]. I would now like to hand the conference over to Gil Beyen, Chief Executive Officer. Mr. Beyen, please go ahead.

Gil Beyen: Thank you, Norma. Good afternoon. Good morning. Bonjour a tous. Thank you for joining this conference call to discuss the key business highlights year-to-date and the financials for the first three months of this year. We announced our business and financial update yesterday evening, and the press release and also the webcast presentation can be found on the Investor Relations page of our website. Joining me on the call today are Dr. Iman El-Hariry, our Chief Medical Officer; and Eric Soyer, our Chief Financial and Chief Operating Officer. Before starting on Slide 2, I'd like to draw your attention to the disclaimer reminding you that today's call includes forward-looking statements such as relating to the company's operations, timelines, and financial. And as you know, they all involve risks and uncertainties that could damage actual timings and results to the -- that could cause actual timings and results to differ materially. Switching to Slide 3, the agenda of the call. I will, as usual, start with a short introduction, present the key business highlights of the year-to-date, focusing on the more recent ones, the ones that occurred after our last call in March, which was not that long ago. Iman will then provide an update on the status and the progress of our clinical programs, after which Eric will present an update on the key financials, cash balance, and he will also summarize the strategic priorities and expected milestones for the year to come. After that, all three of us will be available for Q&A. Moving on to Slide 4, and this is really for anyone new to the company and for completeness, brief overview. So, ERYTECH is focused on the development of red blood cell-based cancer therapeutics with a lead product GRASPA or areas bias, which is Asparaginase loaded in red cells targeting the cancer cells, altered Asparaginase and glutamine metabolism. With GRASPA, we are now -- and for some time now in pre -regulatory phase in ALL, acute lymphoblastic leukemia, we're in the process of working towards the filing of our BLA in this indication. In parallel, we have a Phase 1 ongoing in first line pancreatic and Phase II in triple-negative breast cancer Iman will provide an update shortly then. Our product candidates are manufactured at two fully operational sites, one [Indiscernible] for Europe, and since very shortly l'll explain more, you've seen the news a few weeks ago that we sold our Princeton facility, the second is now through a supply agreement with Catlin's at our former manufacturing facility in Princeton, New Jersey for supply to the U.S. North America should say. So, and that's all indeed the highlights of the quarter, the year-to-date. Slide 5, you saw the -- probably the announcement, it was on April 25, the sale of our Princeton facility to Catalent. We sold the site for a consideration of $44.5 million.

Gil Beyen: In the meantime, already, our entire team, 40 people in total, transferred to Catalent 's and are working at the site for Catalent and also for us because we entered in a long-term supply agreement with Catalent for the manufacturing and the supply of our lead product. So on the one hand, it was with pain in heart to see us are beautiful site and our great team go to Catalent, but overall we we're very pleased to have been able to secured this deal long-term supply agreement with one of the leading CDMOs in the field and, obviously, significantly reducing the cash burn of the facility. The facility was way too big for us now, after the setback in the pancreatic cancer so think we found a very good solution here to secure supply all in reducing the cash burn and so, new cash, obviously, entering the company. And I want to take the occasion to thank our team for great efforts and contributions to ERYTECH and they made this site a real landmark site and that's also what would Catalent so and, obviously, we wish them all the best for their new future at -- in their new contacts and clearly we'll remain in close contact as they will continue to produce our GRASPA product for our ongoing trials, and hopefully also for the commercial supply in the not too far away future. The sale of the facility has increased our cash position to approximately £55 million, approximately $60 million, although the dollar is changing rapidly these days, which so Eric explain more, but indeed it has a combination with the reduction of the cost basis, extended to our cash horizon until approximately mid-2024, so a bit more than two years. And then the next question, you will see it in Slide 5, the questions screw what will be do with this money, and the answer is relatively simply we will continue to focus on the creep priorities we are working on, and the first one obviously is our attempt to get the BLA submitted for GRASPA, to get the approval for GRASPA in hypersensitive ALL patients in U.S. first. Iman will provide an update. The second is to continue what we've been doing, develop innovative medicines for difficult to treat diseases. And this leveraging our red blood cell encapsulation program or technology. We have, as I mentioned already, two clinical programs ongoing. Both of them expect to have results in the second half of this year. And we continue to work on a number of pre -clinical opportunities, because there are ERYCAPS technology is very versatile. Many types of molecules can be castrated many ways to use the red sales. And a new program that we're increasingly enthusiastic about, and we've recently presented results at the conference on the red blood cell society it was in Italy. Is to use the encapsulated threat cells to develop extra cellular physicals execorm light. We have seen some very interesting first results, ex - vivo results. We're continuing to work there and we hope that this indeed will build our next pillar to the pipeline of ERYTECH. And then the third priority is to continue to search for strategic options for ERYTECH, to complete the story that the Catalent deal, you followed it after the Phase three results in pancreatic cancer. We retained a specialized advisor, Terreia, to help us in looking for strategic options for the company. Catalent deal was a first step, I would say. We are now continuing to look at a series of value valuable options. They range from looking for commercial partner, for GRASPA, extending the pipeline by leveraging our development and manufacturing capability, to potentially broader strategic options. But much more we can say at this stage, obviously, but stay tuned to keep you posted on our progress. And I will stop here, and hand over to Iman, who will provide additional details on our clinical programs, and their milestones. After which Eric will come to present the financial and further milestones of the year. So Iman, floor is yours.

Dr. Iman El-Hariry: Thank you, Gil. Good morning. Good afternoon. Bonjour a tous. I have few slides to give regarding the clinical updates. So I will start with Slide number 8. I'm here to focus on the key project, the acute lymphoblastic leukemia. Here, I'm going to provide a quick update in terms of our progress towards the filing for approval in the hypersensitive patients. As you know, we have studies in [Indiscernible] trials and also studies which was reported back during ASH 2020 where eryaspase or GRASPA was given in patients who have developed hypersensitivity reactions to prior Asparaginase therapy, and in that study there was a sustained prolongation of Asparaginase activity, and patients were able to receive the intended courses of treatment. And with that, we actually made the decision to move forward seeking an approval for this indication in patients with hypersensitive disease. It's important to know that there is already an approved product in United States [Indiscernible], which was approved mid of last year. So moving to next Slide number 9, and where we are today on the BLA front. We'll continue to have the discussion and the dialogue with the agency and an [Indiscernible] 2020. You will recall that we have also our pre -BLA meeting last June and where we received -- was very collision meeting and we had a very constructive feedback on our plan and the structure for the BLA this year. Following that pre -BLA meeting, we were granted Fast Track designation, which we continue to increasingly like because it enables our continuous interaction and dialogue with the agency. Where we are today, we have -- it's still an ongoing discussion with the agency. They are continuing to review information as to your request on ongoing basis. And recently, we -- and particularly part of that submission, as you may know, [Indiscernible] or similar in Europe is we have to have a pediatric plan or pediatric waiver and so this pediatric plan is currently in the view. We have received the initial feedback from the agency and so we would be providing our revised application for the pediatric to be reviewed by the potential committee at the FDA front. With that once we have a green light from the agency, we will move towards our BLA submission. We'd like to take more of a staggered approach [Indiscernible] we file first in United States and then go back to Europe and start taking forward the potential for also filing and seeking similar indication. Moving to Slide number 10, I'll switch gears to other clinical programs, and I will start with Trybeca -1, which, as you know, is our pivotal trial in second-line pancreatic cancer. We have presented the key highlights from the study a few months ago at ASCO-GI, and in that study, we have also seen an interesting signal in the subgroup of patients based on the pre -planned analysis. We will continue to assess studies and work with our [Indiscernible] to see what merits further investigation in that disease. The rESPECT trial, which is the investigator-initiated trial led by [Indiscernible] continues to enroll patients, and we are really on target to expect results from the same time around the second half of this year. Lastly, but not least, the update on TRYbeCA-2, as you know, this was our proof-of-concept trial in triple negative breast cancer, where GRASPA was -- or combined with as Jim said, can be [Indiscernible] in metastatic disease. So given the TRYbeCA-1 results, we truncated the study and so we completed the enrollment, clears to four almost close to what would have expected for an interim analysis, just close to [Indiscernible] patient [Indiscernible]. And again, we are expecting the results during the Q3 of this year as we are currently doing a lot of data cleaning to be able to report the results of the study. So I think with this, I will stop here and then hand over to Eric for the remaining of the financial update on the strategic priorities. So Eric, it's over to you.

Eric Soyer: Thanks a lot Iman. Thank you. Good morning everyone [Foreign Language]. We're now reviewing the Financial Highlights for the first quarter of this year. We are on Slide 12 of the slide deck, and we are starting with P&L information. You can see that net loss for the first quarter of 2022 was €11.9 million and was stable year-over-year, with €0.7 million improvement. It was -5.5% in operating loss, and a €0.7 million decline in net financial income. The €0.7 million improvement in operating loss was attributable to the $2.4 million decrease in preclinical and clinical development expenses, and that was upset imports by the €0.9 million decrease in our income from R&D tax credits. But both reflecting the decrease in the Company's clinical development activities. In the same time, G&A expense is increased by €0.8 million and that was mostly related to legal and due diligence expenses for partnering activities. We are now moving to the next slide, Slide 13 for comments on cash. As of March 31st this year, ERYTECH had cash and cash equivalents totaling €25.1 million, and that was approximately $27.9 million, compared with €53.7 million as of December last year. The €8.6 million decrease in cash position during the first three months of this year, with the results of €10.7 million net cash utilization in operating and investing activities, and €1.8 million generated in financing activities. And that included a €2.3 million prepayments of a portion of the expected 2021 R&D tax credits. In the same time, the variation of us dollar against the euro led to €0.3 million positive currency exchange impact. Please note that the company investor also since a long ago, has not drawn any new charge on the convertible note facility. Actually, since August '21. And as of September '21, there were no outstanding an unconverted notes. And the company does not plan to draw any further caps and convertible notes trash, until the expiration of the financing facility next month. As already mentioned by Gil, the sale of the Princeton facility for $44.5 million, approximately €40 million to €41 million depending on the exchange rate, has brought ERYTECH cash and cash equivalents to approximately €55 million, which is about $60 million at closing of the transaction on April '22. With that and further to general cost-reduction efforts, which are already undertaken. And the reduction in yearly cash disbursements of approximately $7.5 million related to running costs of the Princeton facility. We believe that the company's current cash position can fund its current development programs and planned operating expenses to meet 2024. Now, and before we move to Q&A on Slide Number 14 of the presentation, for a quick summary of our key strategic priorities and upcoming related key milestones over the next 12 months. Already stated by [Indiscernible] the submission of [Indiscernible] eryaspase in hypersensitive ALL is still a key operational priority for the coming weeks and months. As explained, we look forward to being able to submit once the FDA has completed its review of the remaining information request and gives us the green light to file the application. We currently target submission by the end of the third quarter of this year. We also have two ongoing trials and our teams in the trial investigators are working on presenting data to date. Starting with the Phase 2 trial of eryaspase in TNBC, the trials name is TRYbeCA-2 where we expect to report data in the third quarter of this year. And the Phase 1 IST trial in the first line, of pancreatic cancer. The trials name is rESPECT with results also expected in the third quarter of this year. And of course, not but not least the ongoing strategic review and partnering process. The sale of the Princeton facility to Catalent was already a first step in that process, and that gives us the means now to pursue the GRASPA BLA, complete the ongoing trials, and pursue the most attractive pre - [Indiscernible] programs. And we are now looking at options for the further development and commercialization of eryaspase and for ways to leverage all clinical development and manufacturing capabilities, including broader strategic options. With that, I would like to thank you already for your attention and we'll now open the call for any questions you may have. Operator, Norma, over to you.

Operator: Thank you. [Operator Instructions]. Please standby while we compile the Q&A roster. Our first question comes from Boris Peaker with Cowen. Your line is now open.

Boris Peaker: Good morning and thanks for taking my questions. I guess maybe let's start with ALL. Assuming you get approval, can you comment on the commercial potential in hypersensitive ALL?

Gil Beyen: Hi, Boris. I'll take this question. Thanks for it. So hypersensitive ALL, it's the patients who develop hypersensitive due to in U.S. it's the pegylated asparaginase, which is the oncosphere or the oncology. It's roughly necessary but there are around 20% of the patients who develop these hypersensitive activities, leading to about a thousand patients in the U.S. every year. With these forms of hypersensitivity, or and which includes sort of silent in activation.

Boris Peaker: Got it and what do you think kind of a reasonable pricing is in those patients?

Gil Beyen: The price levels for Reily's are high. So Riley's is drug that needs 12 to 14 injections per month, up to five files each filed in the order of $4000. So you'll see price ranges from between sort of a little bit below a 100,000 and not to above 200,000 per month. So that's one of the more expensive oncology drugs. And advantage we would with every eryaspase has only -- instead of. In fact there's eryaspase we got a Monday, Wednesday, Friday injections, so it's 12 times per month. But we can have two times per month so that every other week, dosing foot with areas pumps.

Boris Peaker: Got it. And I thinking question on TRYbeCA-2, what do you need to see in that study to continue with triple-negative breast cancer?

Gil Beyen: I leave this question to Iman.

Dr. Iman El-Hariry: Boris, can you repeat, I didn't hear the first part on the Q2?

Boris Peaker: Yeah. I'm just talking about the TRYbeCA-2, the triple-negative breast cancer study that you guys are running. What do you need to show in this trial in order to justify further investment in breast cancer?

Dr. Iman El-Hariry: Okay. Sure. Because it was approved cons trial, the primary endpoint is disease control rate. And then we have a key secondary endpoint, which is objective response, as well as progression free survival. We would like to see really a difference -- it's a comparative trial, so we would like to see a difference. I think a case which I remember about 20% or 25% difference on the control arm to see that there is an encouraging signal of activities to take it further into a larger trial.

Boris Peaker: Got it. Thank you for taking my questions.

Operator: Thank you. Our next question comes from Jacob Mekhael with [Indiscernible] Your line is open.

Jacob Mekhael: Hi there and thanks for taking my question. I'm just curious if you can provide any external color on the kind of discussions you're still having with the FDA on the BLA for ALL,what additional information have they asked of you?

Gil Beyen: Thank you, Jacob. I'll -- I think, Iman, is best placed to answer these questions also.

Dr. Iman El-Hariry: Okay. Thank you, Jacob. So when we had -- actually there's a continuous discussion on a clinical front, as well as there are interacting each module. For example, on the CMC, there were a lot of information that they requested which they are still on the review and we get like every few weeks, we get a response on -- based on the accepted proposal, etc. On the non-clinical, it -- there was request to have a rationale for a development or why we're we should not be doing a development and toxicity study or provide the rationale. We've been waiting for examine that feedback and so forth. These are the things that when we provided our structure for the [Indiscernible], they subsequently ask some questions and information that they wanted to review prior to the actual VNE [Indiscernible] and that's exactly what is happening. I also alluded to the point that part of the submission is that you have to meet the requirements for pediatric plan or pediatric waiver. And since this indication is also including pediatric patients, we are not seeking a pediatric waiver so we've provided information on how we would address the hosting on the pediatric plan. And so these are, again, additional responses from the questions from the agency, where the words calling these, the next meeting for any sense for the pediatric committee is in July, which they will review or advise applications. You can see it's a very [Indiscernible] of process, more or less. We get question. We respond. We may get additional questions or the issue or the topic is closed and move to the next step, which is actually, by the way, very helpful. Because hopefully, when we reach the BLA fees, we know what the agency is requiring for PT. And so that entire process is also helping us to continue improving our overall does seems as of how to address these specific topics etc.

Jacob Mekhael: Okay. I see. Thank you. I also have another question. And besides the larger indication that require a lot of money to pursue, are there any smaller one [Indiscernible] indications that you could consider investigating with area space?

Dr. Iman El-Hariry: I would pick that question.

Gil Beyen: Yeah, just go ahead

Dr. Iman El-Hariry: The short answer is yes. The longer answer is that there are few activities that are dig. For instance, would like to see the completion under report of respect too, as well as our ongoing interrogation. Further of the TRYbeCA -1 one results. First to see whether or not we should continue investigating GRASPA in pancreatic cancer. Of course, the TRYbeCA -2 will also inform the decision. But more globally or more broadly, this is a drug that target metabolic, and just one of them metabolic pathways in cancer. And therefore, we have launched into life the full potential, of this drug and other tumor types. So as we continue looking at the two immediate clinical activities. And then in the bigger picture as Eric alluded to, the overall corporate and strategic plans that will give us a better informed insight and decision, which indication to go further to assist GRASPA. But the story's not yet finalized and it's not yet over with this drug. Gil?

Gil Beyen: I think that could answer Mikael. Maybe just to add, I think if you asked for smaller indications, but still where as the to cancer meta -- the asparagine glutamine metabolism is known to play a role is for example, NK/T cell lymphoma. And so obviously pending further progress with the ALL, but that clearly could be an indication to take the next step. In the haemo(ph) so we not mentioned the solid tumor indications that the haemo(ph) also we see opportunities.

Jacob Mekhael: Nice. Thank you. I have one more, if that's okay.

Gil Beyen: Sure.

Jacob Mekhael: Expand on what would be some of the applications of the red blood cell vesiculation technology that you would consider pursuing yourselves or is it something that you're considering to make fully available for partnering?

Gil Beyen: It's a really good question, and it's still early for us. But, for example, we have seen interesting application already in immuno-oncology, like for example, encapsulating STING agonist than vesiculating and releasing very good uptake by the macrophages, and obviously, still work to be done there. So that could be depending on how we progress, something we continue to do internally for our partner. With another application, we see clearly an increasing interest and also excited is if the red cells could be a very good -- the vesicles of red cells could be a very good vehicle to, for example, deliver RNA. So if we encapsulate RNA in the red cells and then vesiculate, this could be a way for example for RNA delivery ex - vivo or in - vivo -- in - vivo CAR type of approaches. Clearly, this is something we will not do alone. We don't have the competence, so we're indeed also looking there whether partnering would be an option to see the RNA spaces is helped, but I hope we can progress there.

Jacob Mekhael: Okay. Thank you very much for those answers.

Operator: And I'm showing no further questions at this time. I'd like to hand the conference back over to Mr. Gil Beyen for closing remarks.

Gil Beyen: Great. Thank you Norma. Just one to thank everyone for your participation, your interest, your attention today, and for your continued support of ERYTECH. I wish you a great rest of the day and I look forward to speaking again at the next occasion. Thank you.

Operator: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.