Earnings Transcript for ERYP - Q3 Fiscal Year 2021

Operator: Good day and thank you for standing by. Welcome to the ERYTECH Pharma Third Quarter 2021 Business Update Conference Call. At this time, all participant lines are in a listen-only mode. After the presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised today's conference may be recorded. [Operator Instructions] I'd now like to hand the conference over to your host today, Gil Beyen, Chief Executive Officer. Please go ahead.

Gil Beyen: Thank you. Good afternoon, good morning, [Foreign Language]. Thank you for joining us for our update call to discuss the key highlights and financials for the first nine months of this year. We issued our Q3 business and financial press release yesterday evening, should be able to find this together with the webcast presentation on the Investors sections of our website. Joining me on this call here today are Dr. Iman El-Hariry, our Chief Medical Officer, and Eric Soyer, our Chief Financial and Chief Operating Officer. Before starting I would like to draw your attention to the disclaimer on Slide 2 to remind you that today's calls includes forward-looking statements such as relating to the Company's operations, anticipated timelines, and financials. As you know, they all involve risks and uncertainties that could cause actual timings and results to differ materially. And now Slide 3, the agenda as usual, I'll start with a short introduction and present the key business highlights of the year-to-date, in fact focusing on the key developments since our last call in September. Iman will then provide an update on the status and the progress of our clinical and regulatory programs to date, after which Eric will present an update on our key financials, it is the cash. We will also summarize the strategic priorities forwards and expected milestones for the coming year before we open that up for a Q&A. All three of us will be available to answer your questions. And on Slide 4 for people new to the Company, a brief overview ERYTECH is all about red blood cells focused on the development of red blood cell-based cancer therapeutics, using its our ERYTECH technology that allows to encapsulate therapeutic compounds in red blood cells to improve therapeutic effects. Our report eryaspase which is surgeries, loaded in red cells is targeting cancer cells by depriving them of asparagine and glutamine to amino acids they need for their growth and survival. With eryaspase, we have now a very solid clinical experience base more than 10 files, 6 of them in ALL. And in ALL, we're going closer to the commercial stage, more in a couple of minutes. Also to reminder, we are producing our product candidates in to fully operational GMP facilities one for Europe and one in Princeton, New Jersey for U.S. But also U.S., Europe in terms of shareholder base with listing, both listing on Euronext and Nasdaq with roughly half of the shareholders on both sides of the ocean. So now coming into Slide 5, the key business highlights. Business highlights of the last month, it has been quite -- a lot has happened since our last call in September. The first one obviously TRYbeCA-1 is disappointing, our long awaited Phase 3 results in second-line pancreatic cancer, in which we have put so much time, energy even got sweat and tears, did not live up to what we have seen in the Phase 2 trial. And I'll come back again to the key findings in a minute. We are nevertheless encouraged by the single we saw in the subgroup of patients in the TRYbeCA-1 trial, the subgroup of patients treated with FOLFIRI, which is 5FU and irinotecan where we saw a survival benefit that is roughly of the order of magnitudes. The one we would want to have seen in the entire trial, 2.3 mOS survival -- median survival benefit. So, it's an interesting single especially since we saw a similar -- we saw an initial sign of this subgroup having a better response, this was in the Phase 2 to trial with FOLFOX and also gemcitabine currently that we're seeing in the ongoing Phase 1 trial where we are combining our area starts with FOLFIRINOX. It's all different variations on the same thing. The Phase 1 trial at the Georgetown Lombardi Center was able to determine the recommended Phase 2 dose with the MTD in the last month at the dose at which the TRYbeCA-1 trial was run. And it's actually already been interesting to see that in the first evaluate patients we saw an encouraging activity of clinical activity. We're also very focused now, at least now, on our progress in ALL. Thanks to the NOPHO trial, the NOPHO trial read out in December, positive data in CLL patients who developed hypersensitivities to pegylated asparaginase. This is a smaller indication than the pancreatic, but it's a high unmet medical need. It's an indication where the area as well as product clearly has advantages. And where we are now at a couple of months to submitting our DLA in the U.S. biologics license application, targeting and entering this around year-end, and we were very encouraged by the fact that we got this Fast-Track designation that was granted in July. Now, it knows the ALL is a smaller indication and clearly we're planning for success but also planning for the Plan B and the Plan B includes that in order to get the maximum value of our ALL activity and ALL market opportunity that we are looking for partnering future advance, partnering of advance is both from a development and the commercial side. So we launched a process with a strategic advisor to evaluate strategic options and really put all the options in a row and see how we can create and generate most value from the ALL and from our platform and manufacturing capability. Eric will also tell more about this. And at this stage, I think best to go to the next slide to pass mic to Iman to give an update on the clinical programs. Iman, floor is yours.

Dr. Iman El-Hariry: Thank you, Gil. Good morning, good afternoon. So we start with Slide number 7, TRYbeCA-1 pivotal Phase 3 trial in second-line pancreatic cancer, which was conducted in total of 512 patients in second-line setting, randomizing to either chemo with or without eryaspase. And again, you may recall that the key was mainly of two either abraxane or fluoropyrimidine which contain 5FU with either the generic irinotecan or Onivyde. The primary endpoint of that study was overall survival, looking at as a ratio of 0.725 or approximately 2.3 months from region survival of six months. So, two weeks ago, we have reported the unfortunate outcome of the study in which is Slide number 8 the primary endpoint overall survival was not met, so you can see the two graphs show just that a slide nominal increase in the median survival from 0.725 compared to 6.7 months from the control arm. But the Hazard ratio noted that what we're looking for 0.725 as a minimum and this, what we have seen for nine months. What we have not sure so far, but that will be presented in a medical conference that we looked at the baseline characteristics, we looked at subsequent strategies, we looked at fairs and flaws in terms of robustness of the treatment across the different known prognosis subgroups, and we have not found any confounding factors that could have affected the outcome, the primary outcome of that trial. Moving to Slide number 9, as part of our pre-planned analysis, we wanted to check the overall survival in the two treatment subgroups i.e. Belgium-based subgroup and irinotecan/ fluoropyrimidine based subgroup. Until a year what we have seen and you look at Kaplan Meier, there's an interesting nominal again improvement in patients who received irinotecan 5FU with eryaspase compared the 5FU irinotecan controlled arm. Again, you can see that the major survival was eight months, which is almost unprecedented in the second-line setting. The hazard ratio for that was 177 that means also that effect -- there was no effect in terms of any improvement or nominal improvement with additional eryaspase envisioned Abraxane subgroups. So, going to Slide number 10, what we clearly indicated, again, previously that we did not -- the strategy did not meet the primary endpoints. We saw a nominal improvement in the efficacy indicators with additional ADS side but not enough to make any subgroups statistically significant. We also have listed the subdivision characteristics, which were well balanced as well as the subsequence and see clearly can actually bias out of survivors. So, importantly also, the treatment was generally well tolerated, and we did not see that ADS bands enhanced toxicity of the backbone chemotherapy. So, we'll be presenting the data in a medical conference. So, going to Slide number 11. We have, in addition to publically communicated the results we have had series of communications with key opinion leaders with investigators on the trial. And it's so hard, it's been the feedbacks been very encouraging in the sense that the consistency factor essentially the nominal improvements, and the trends in the survival in the irinotecan/leucovorin based approve. It seems to be really picking attention of GI oncologist and uncertainly that decide to look at subsequent options for those patients. And again, just looking at overall in the study, this was become a critical analysis of settings, you need a benchmark of what would be expected in second-line setting. So, there will be certainly additional groups that we need to look into in the future. For instance, biomarkers understand the level of activity and of course, we are currently looking at the full output which could potentially give us an additional insight on the results of the trial. So, this is all about the typical ones. And so, switching gears to expect to study Slide number 12, again just a recap here was communicated this before. This is the investigator initiated trial in first line setting. The investigator already identified that a maximum tolerated dose at goods is the seal dose as we are using in our eryaspase sponsored program. So that was good news for us. And the subject is currently enrolling patients to expand the system to up, it will this include in the study. So we, the original abstracts to be accepted for conferences [indiscernible] is general 2020 and that would be a poster presentation. So this is pancreatic cancer switching gear again to another disease threaten to be negative discuss on Slide number 14. As you know, this search is being ongoing recruiting patients in the background. Given what Gil mentioned just a few minutes ago about our own strategic options. We are now in the process of hosting recruiting additional patients in the trial. We will still, this is our plan to be able to report the outcome of deficits involved in that study so far at some time in the first half of 2022. So then last but not least switching gears to an important program, which is ALL program the hypothesis patient definition. And again, just throw that to what just defeated. This is the basis for us the NOPHO-sponsored try this data imitative trial. Efficiency will have developed purposes secure action to prior exposure to pegylated asparaginase, Oncaspar. So, we're looking at this patient population, which continues to be unmet medical needs. And so, we will hope to have this as a basis for our upcoming BLA analysis. You know already that there are two drugs approved the Erwinaze as well as which is always an ongoing through supply shortage. And, of course, the newly approved Rylaze, which was approved some time in a few months ago. So the study that also tried was presented, you may recall that ASH 2020 last year which was short be sustained asparaginase activity and go to durability. And that's why we also got very excited about this and its potential for our daily. So that brings me to my final Slide 15 given where we are working basically around the clock to get our submission client for the BLA. It would be based, as I mentioned on the NOPHO study supported by our sponsor programs. We have several trials already at ALL, as well as other trials that the agency would like to see. We have started our communication with the agency since last year, and we continue to have the communication including our pre-billing meeting which took place in end of this year. There sequentially we had the Fast-Track trial designation. So, if everything goes well hopefully we can get -- we would hope to have our approval sometime in 2022 for this indication. The proposed -- our proposal will be in patients who in areas wise in combination with chemotherapy in patients who have developed hypersensitivities access to pegylated asparaginase. Of course, this is our proposal always up to the agency to decide when release to clinical stage. We are still having several communications with the agencies. So once we got the clearance from the FDA for the additional information that they had, hopefully we'll be able to press the button for that BLA. So, I'll stop here and I'll transfer now to our Chief Financial Operating Officer, Soyer.

Eric Soyer: Thank you, and good morning/good afternoon, everyone. I'm starting these updates on financial results for the third quarter of '21 by explaining that we will not be presenting a simplified P&L for Q3 this year. The reason is that the release a few weeks ago of the TRYbeCA-1 Phase 3 in pancreatic cancer because it did not meet its primary endpoint, it's considered a triggering event for what is called an impairment analysis. That means that the Company will need to test tangible and intangible assets for possible impairments in light of the new business growth prospects. And until current uncertainties on business assumptions, also resize and particularly on partnership initiatives, we will not be in a position to announce full financial results for the third quarter of this year. In the next few months, we will, of course, conduct an impairment analysis in light of the new business situation and this is for the year-end closing and that may potentially lead to an impairment of some of the Company's assets. But again, too soon to tell and we'll see in the light of the Company's upcoming strategic developments. Therefore, we're focusing today the financial comments for this quarter, specifically on cash, which is anyway the most relevant financial information at this stage. Our Slide 17 of the presentation, as of September this year, ERYTECH has cash and cash equivalents totaling €38 million or approximately $43.9 million, compared with €44.4 million as of December 31, last year, and €46.3 million as of June 30 this year. The 6.5 million decrease in cash position during the first nine months of '21 was result of a 46.5 million net cash utilization in operating and investing activities, and 38.8 million generated in financing activities, while the valuation of the U.S. dollar against the euro led to a €1.2 trillion positive currency tangent. Note that financing activities in the first nine months of this year included $8 million placements in the U.S. to the companies at the market. It's called the ATM equity financing program for net proceeds of €6.4 million. It is $30 million which is the direct offering for net proceeds of €22.4 million and the drawdown in '21 to-date of four tranches under the convertible notes, the cap stock financing agreements for net proceeds of €11.4 million. We believe that the Company's current cash position can fund its plant operating expenses and current program into the second quarter of 2022. Further, we have already engaged in cash reservation measures, which together with a potential further utilization of the OCABSA agreements, of course subject to the regulatory limits of 20% position could extend the Company's cash horizon into the third quarter of 2022. And finally, we are currently exploring financing and/or partnering options with a goal to possibly further extend the cash horizon in 2022 beyond key development basis. Now before reminding these key upcoming milestones, I'd like to take a minute to summarize our key strategic priorities going forward. And we're on Slide number 18. Number one priority I'm sure was already commented on this the new situation since the disappointing results of TRYbeCA-1 is leading us now to focus our efforts on the ALL business opportunity. This is for taking value opportunities in the short-term. The teams are indeed working around the clock to prepare and finalize our BLAs already and we expect to file our first BLA with the FDA around year-end and need of course to be a bit presence on the timeline here as always. It is subject to our interactions with the FDA and the completion of the remaining works to finalize the dosing. This is a short-term value opportunity as was granted in Fast-Track designation investigation, and we therefore could potentially get approval in the second half of next year. There is a high unmet medical need here, and we believe it really adds to the safety and efficacy profile can have an important role to play in this indication. At this time already, this is first in the U.S., where we are more advanced, and where the major parts of the business opportunity is at this moment. And we will also take initiatives to consider the business opportunity in Europe, which however, will be subject to the success of at least the first next steps in the U.S. The second priority is to advance or partnering initiatives, given the new situation with our platform, no focus on ALL as our main short-term business opportunity. Given also cash resources, we believe it makes better sense to join forces with a partner from the industry, especially to advance substantial commercial launch in ALL. The process have already started to reveal strategic options reveal is already leading initial discussions with first contacts, and a specialist advisor has been appointed already to assists and induce the process. We expect these discussions will develop in the next few weeks and months and we will provide on the progress of dates in due course. And third, preserving and possibly extending a bit for cash runway. Immediately after the top-line results of TRYbeCA-1, we've taken first cost prediction and cash preservation measures by focusing our resources on immediate and key priorities only. Strict budget discipline is key here and all precautionary measures have been taken. We will explore also options for additional yet limited financing could also be with a partner to bridge or cash flow rates are expected key milestone in 2022, and more particularly again, potential BLA approval in ALL in the second half of next year. Now, and finally and before we move to Q&A, a quick summary of our upcoming key milestones, this is Slide number 19 of the presentation. Starting of course with the BLA submission of eryaspase in hypersensitive ALL began around year-end '21 this year. And this submission could then lead to a potential approval of eryaspase in hypersensitive ALL in the second half of next year. Then the presentation of the full benefits of TRYbeCA-1 at the medical meeting not decided yet that should be in the first half of next year. Top-line results have been released a couple of weeks ago. And as explained by Iman, we're now working on the detailed analysis of the full results. Also the results of the Phase 1 trial is an IST called respecting first time pancreatic cancer also expected in the first half of next year. The MTD has already been determined in dose escalation study. And as explained this based on trial isn't a similar subgroup of patients. As a one we had an interesting signal with industry to go study so certainly worth exploring further at more than cost. Also data from the randomized Phase 2 trial in TNBC even explained that patient enrollment in this trial for those cash preservation measures, which we should be able to report data from the first patients in the first half of next year. And finally, the update on partnering process again, it's an ongoing process, and we will provide an update as soon as appropriate. With that, I would like to thank you already for your attention. We will now open the call for any questions you may have, as always, questions in French are welcome [Foreign Language]. Operator, please, over to you.

Operator: [Operator Instructions] Our first question comes from Boris Peaker with Cowen.

Boris Peaker: I just want to focus on the ALL market. And I just want to get a sense of what do you see as the commercial opportunity for eryaspase in U.S. and in Europe? And how do you think your pricing would compare to some of the other asparaginase out there?

Gil Beyen: Boris, I'll take that question. So, the opportunity we see an hypersensitive ALL for the patients who develop hypersensitivities to E. Coli asparaginase, it's roughly 1,000 patients incidences new patients per year in the U.S. and equivalent in Europe, a little bit higher in number of patients in Europe, just bring through the population. In terms of opportunity, so in fact, in this indication, until very recently, there was one product approved in [O&S]. In [O&S] active peek sales before shortages started to come in, it was roughly 200 million, which was I would think 80%, 85% maybe even more in the U.S. and the rest in the world. Now the market clearly could have been larger if there would not have been the supply constraints. So, [O&S] is now is no longer licensed in the U.S., but there is no [Riley's], [Riley's] products that will have similar mark substantive will be more expensive, mainly because it needs more injections then the [O&S]. So basically we're seeing here markets yes, 200 million, sort of a basis, but we think it can grow. Thanks for the new release and shortage of supply. Maybe thanks to us because our product profile may allow us to grow the new medication to patients that for example, like the adults, where it's been very difficult to go for the nomenclature in common. And also we have, by the way, we're going to have cash flow have a poster on the double allergic patients for patients that are allergic to both the E. coli and the pegylated asparaginase which could further the small indication that it will further increase market opportunity. Our area house has the TV shown in the different trials that we have good safety profile, good activity profile. We don't have it presented here but on the website you'll find sort of an infertile comparison where we show that yes, we have really very comparable if not better results there. We also have the advantage of leading only one injection every two weeks where the origination violators every two or three days. So, we think a market share, obviously, we believe that the O&S started to violate will probably maintain the dominant asparaginase in that segment, but still the market share of 25%, 30% would lead to an opportunity in the $7,200, maybe more million. And what is important here is that the pricing is relatively well established for the [O&S] and [Riley's]. With a high price point in the market effective a lot of treatments with the [Riley's] we estimate to costs. This is over $100,000 could be much more for larger patients. It's sort of for about 100,000 per month. So which since we need two injections per month you can sort of see what could be a potential pricing for us in that indication.

Operator: [Operator Instructions] I'm not showing any further questions in queue at this time. I'd like to kind of call back to Gil Beyen for closing remarks.

Gil Beyen: Thank you. It was really with one question, but thank you all, thanks for your participation for your attention today. And obviously for your continued support of ERYTECH. And as always, we'll keep you posted on the progress and show the milestones are important catalysts to come to deposit on the progress on all of these catalysts. So, this great rest of the day and look forward to speak you soon.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.