Earnings Transcript for ERYP - Q4 Fiscal Year 2021

Operator: Good day and thank you for standing by. Welcome to the ERYTECH Business Update and Financial Highlights for the Fourth Quarter and Full Year 2021 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I'd now like to hand the conference over to your host today, CEO, Gil Beyen. Please go ahead.

Gil Beyen: Thank you, Michelle. Good afternoon, good morning. Thank you for joining us for our business and financial update for the fourth quarter and full year 2021 with key highlights and key financials for the year '21. We announced our business and financial update on Friday evening and the press release and the webcast presentation can be found on the Investors Relations page of our website. Joining me on the call here today are Dr. Iman El-Hariry, our Chief Medical Officer, and Eric Soyer, our Chief Financial and Chief Operating Officer. Before starting and I'm on Slide 2 of the deck, I would like to draw your attention to a disclaimer to remind 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 involve risks and uncertainties that could cause actual timings and results to differ materially. And now, switching to Slide 3, the agenda for the call. I will as usual start with a short introduction and present the key highlights of the year. Will be focusing on the more recent ones, the ones that occurred after our last call in November. Iman, will then provide an update on the status and the progress of our clinical programs, after which Eric will come and will present an update on our key financials and cash balance. He will also summarize the strategic priorities and the expected timelines for the year to come. And all three of us will then be available to answer questions in the Q&A session. Now, moving to Slide 4, for anyone new to the company, this is a brief overview of ERYTECH focused on -- obviously, ERYTECH is focused on the development of red blood cell-based cancer therapeutics as you know. Our lead product GRASPA or eryaspase, it's asparaginase loaded in red blood cells is targeting the cancer cells altered asparagine and glutamine metabolism, it’s a cancer metabolism agent. Current -- the GRASPA is currently in pre-regulatory phase in ALL, so we're close to submitting our BLA, our file for approval. We have a Phase 1 ongoing in first line pancreatic cancer and Phase 2 in triple-negative breast cancer. Iman will tell more. So, we have also two manufacturing operations, two fully operational facilities, one in Lyon to serve the European clinical trials and potential future market later. And the second in Princeton, New Jersey for the U.S. And also we are very balanced in terms of shareholder base as a Euronext and NASDAQ listed company with roughly half 50-50 of the shareholders in Europe and in the U.S. Now shifting to the highlights of the year with focus on the fourth quarter on Slide 5. And -- so '21 has really been an -- very special year, on the one hand, the year of tremendous execution working, I would say, day and night towards the results of the TRYbeCA-1 and the other clinical trials. TRYbeCA-1 is that was our Phase 2 -- Phase 3 trial in second line pancreatic cancer, and really in a race to get all our data out on time as we announced them in October. Notwithstanding the severe impact of the of the COVID pandemic they were indeed reported, as we had planned in October. '21 was also a year of great deception when the trial did not meet its primary endpoint in October last year. Now '21 was also the year of very good progress. In fact, the year in which we moved on the front of ALL from considering the potential to seek approval for GRASPA in ALL patients in hypersensitive ALL patients to now being almost ready to file a BLA in this indication. We had in '21 multiple interactions with the FDA, including a pre-BLA meeting, and we were granted Fast Track designation. The FDA still evaluating certain elements of our file and we expect -- in fact we are almost ready with the dossier, so expect we will be able to file quickly once the FDA has finished their evaluation of the outstanding information requests. On the next topic, TRYbeCA-1, indeed was a setback. But not all hope is gone for GRASPA for eryaspase in pancreatic cancer. In the TRYbeCA-1 trial, we noted an interesting OS improvement in a subgroup of patients. The subgroup treated with fluoropyrimidine & irinotecan-based chemotherapy. It's the FOLFIRI regimen. And this regimen represented approximately 40% of the patients in the trial. We have a Phase 1 ongoing. In fact, Georgetown, it's an investigator sponsored trial at Georgetown University. There is a Phase 1 ongoing evaluating GRASPA in combination now, not with FOLFIRI, but will FOLFIRINOX. And also -- it's also a fluoropyrimidine & irinotecan-based chemotherapy. What we've seen over the areas and indeed the safety profile also looks good, and we see encouraging clinical activity in the trial. Iman will explain more. And then the last item here on the highlights, clearly, we announced it at -- after the Phase 3 results, strategic evaluation and search for partnering options. We are now evaluating valuable options at this stage. Not more we can say at this stage, but we hope to be back with more news in a month or two from now. So here I'll hand over to Iman to provide additional detail on our clinical programs and expected timelines. And thereafter, as mentioned to Eric, for the financials and the key milestones. Iman, the floor is yours.

Dr. Iman El-Hariry: Okay. Thank you, Gil. Good morning. Good afternoon, everyone. I hope you are all doing fine. So, I will just start with Slide #7. Again, just a quick reminder about the TRYbeCA-1 study. This was the Phase 3 pivotal trial that we reported back in October last year. Unfortunately, we reported that the study did not meet the primary endpoint, which was an overall survival comparing any asparagine with chemotherapy versus chemotherapy alone in second line pancreatic cancer. However, what we also have said last year is that although there was a numerical difference on all efficacy indicators, including, of course, overall survival, PFS and disease control rate, and we specifically saw an interesting trend in one of the treatment groups where eryaspase is combined with irinotecan 5FU leucovorin chemotherapy. We continue to interrogate and dissect the data to get a better insight on the outcome of the study. Of course, beyond the obvious reason, as we reported last year in terms of very well-balanced treatment groups and subgroups, subsequent anti-cancer therapy, et cetera. There isn't really much we have seen to make us more intelligent on the outcome of the trial. And we actually had that study presented by Pascal Hammel at ASCO GI at the beginning of this year, it was well received and there was some interesting conclusions, particularly from the discussion during the meeting. We also continued to look at our search for the reasons we have had an Advisory Board again in January. And for two reasons to see whether there is obvious reasons that we are not aware of our second lead, is there any path forward in pancreatic cancer. And again, with a group of the key opinion leaders, the interest continued to be there in pancreatic cancer and with some interesting ideas how to take this further into this indication. So, moving to Slide #8, I will switch gears now to ALL, and it's specifically an indication in patients who develop hypersensitive actions to other asparaginase formulations. And so, as you again remember, we have had a meeting with pre-BLA meeting with the FDA last year and basically to discuss potential for a path forward seeking an indication based on [indiscernible] study, which is an investigator-initiated trial, and looked at the effects of GRASPA in these patients who received [indiscernible] and developed hypersensitive action or [indiscernible]. The study was presented by -- in 2020 during ASH meeting, and it showed that not only GRASPA demonstrated sustained and improved asparaginase activity in this patient population, sort of 55 patients, but also treatment was very well tolerated. So, moving to Slide #9, and again I just touch base -- as we are, as Gil mentioned, we are almost ready to submit our application to the FDA. We have had constant interaction with the agency. They have followed the pre-BLA meeting, there were lots of requests on all accounts on the clinical and the non-clinical [indiscernible] and we are working with the agencies to address those requests. And we're waiting for the remaining feedback and that will enable us hopefully, we get the acceptance to find them hopefully we'll be ready to find imminently. Of course, we are not just -- submit in -- here in United States, but we also subsequently would like to look for a path forward in Europe. So, moving to Slide #11. Switching gears back to pancreatic cancer. And here this is the investigator-initiated trial led by Dr. Marcus Noel in Georgetown University. And this is [indiscernible] of GRASPA in combination with modified FOLFIRINOX which is very much the standard of care in first line pancreatic cancer. The study actually already reported that the first two dose is identified and it is 100 units per kilogram, which is the symbol that we have used also in TRYbeCA-1 study and also in TRYbeCA-2 trial. Again, some encouraging signal of activities and that was presented also during ASCO GI this year. The full results would be expected towards the second half of this year. One more time switching gears to this time to triple-negative breast cancer. As you know, we have had a proof-of-concept trial Phase 2 study combining GRASPA with a gem-carboplatin in a randomized setting with a small trial, 65 patients in total. And that was in patients who received at least one prior therapy in [indiscernible]. The study actually following the outcome of TRYbeCA-1, we opted to stop further enrollment of patients in the study. However, we continue to follow-up the patients who are already enrolled in the trial. And we do expect to provide results on those patients again by the third quarter of this year. And so, with that, I switch gears now and hand over to Eric Soyer, our Chief Financial and Chief Operating Officer for the updates and strategic priorities. Over to you Eric.

Eric Soyer: Thank you. Thank you, Iman. Good morning, everyone. As you see I will focus this financial update for the fourth quarter of '21, mainly on cash. And we are on Slide 13 of the presentation. As of December 31, 2021, ERYTECH had cash and cash equivalents totaling €33.7 million and that's approximately $58.1 million, and that's compared with €44.4 million as of December 31 last year 2020, which means that we've managed to limit the net cash utilization in 2021 to €10.7 million. The net cash utilization in operating activities and investing activities was €57.1 million, while at the same time financing activities in 2021 generated €44.7 million, that included €34.6 million in combined net proceeds from the at-the-market, ATM equity financing program that was $8 million in February, two Registered Direct offerings, one in April $30 million and one in December, $7.85 million, and a total of €11.4 million from the drawdown of four tranches of convertible notes. While in the same time, the variation of the U.S. dollar against the euro led to a €1.7 million positive currency exchange impact. With that, we believe that ERYTECH's current cash position can fund planned operating expenses and current programs well into the third quarter of 2022. And that is of course without considering the potential future proceeds from potential strategic and partnering options, which are ongoing as explained by Gil. Given these discussions, or advanced stage, the company will likely need per market regulation to present pro forma 2021 accounts to reflect the impact of a potential transaction on its operations. And consequently, and given the time needed to prepare all this and review pro forma accounts with market regulator, we are postponing the reporting of a full year 2021 financial results to a later date, and that will be in April. Now, and before we move to Q&A, a quick summary of our key strategic priorities for the coming month and upcoming key milestones. And this is Slide 14 of the presentation. As explained by Gil and Iman, the submission of our BLA dossier for eryaspase in hypersensitive ALL has been a key operational priority in the recent months and still is. The dossier is no close to be ready and 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. And we believe that should be in the second quarter of this year. We also have two ongoing trials and our teams and the trial investigators are working on presenting data later this year. That's the Phase 2 trial of eryaspase in TNBC triple-negative breast cancer. The trial name is TRYbeCA-2 and we expect to report data from the first patient in the third quarter of this year. And Phase 1 IST in first line pancreatic cancer, the trial name is rESPECT with results expected in the second half of this year. And of course, and last but not least the ongoing strategic review and partnering process for which we are target an update in the first half of this year. With that, I would like to thank you already for your attention. And we will now open the call for any questions you may have. Like always questions from the French speakers all welcome. Although I've not had much success in the past. Operator, Michelle, back over to you.

Operator: [Operator Instructions] And our first question comes from the line of Boris Peaker with Cowen. Your line is open. Please go ahead.

Boris Peaker: Good morning or afternoon, I guess. Thanks for taking my question. I just want to understand for GRASPA and ALL, what is your commercial strategy? Can you talk about how much you plan to invest in commercialization? And how do you see commercialization playing out?

Gil Beyen: Hi, Boris, and its actually morning, we're -- all three of us in Boston. But -- so, one of the big reasons for the strategic partnering process that we announced after the TRYbeCA-1 setback is really that with a positive TRYbeCA-1, clearly, we would have been -- the focus would have been on a go alone strategy in combination with external vendors for back office, et cetera. But now clearly ALL which is significant, but smaller indication, the focus for us is in the strategic partnering exercises of these needle. So not only, but also commercial partnership, and so the most likely path forward will be that we -- commercial lies with a partner.

Boris Peaker: Got it. So just to clarify, you have no plans to build a commercial organization on your own?

Gil Beyen: We have a plan. We have a plan that is on our own, but with support of external vendors, specialized vendors, so -- but the priority now at least has, or at least we're evaluating I think we split in the corporate deck, we're evaluating partnering options in parallel to further development of the go alone plan.

Boris Peaker: Got it. All right. Thank you. Thanks for taking my question.

Gil Beyen: Thank you, Boris.

Operator: Thank you. And our next question comes from the line of Lucy Codrington with Jefferies. Your line is open. Please go ahead.

Lucy Codrington: Hi. Thanks for taking my question. Just one, please. Just in terms of the path forward in pancreatic cancer, how much of that is contingent on the outcome of the first line data in the second half? And is there something -- is there a kind of threshold that you're looking for? I mean, we've obviously seen the data to date with the 50% response rate. Is there a particular bar that you're looking to meet in that trial? Or is it too small? And it's -- so therefore, what do we need to see in that data to give you confidence in that indication? Thank you.

Gil Beyen: Thank you, Lucy. I will hand this question to Iman.

Dr. Iman El-Hariry: Okay. Thank you, Lucy, for the question. So, it's a couple of things. Number one is, in the first line pancreatic cancer, the rESPECT study, as you know, it's dose escalation trial is just one number of patients. So, the OS signal looks interesting compared to perhaps to what you would expect with the FOLFIRINOX alone. I think we need to be cautious because it is, again, a small number of patients. But the most important point here is that, really the consistency of the encouraging evidence. So not only from the rESPECT trial, but also TRYbeCA-1 study, we'll see that the combination with irinotecan and 5FU seems to be really a logical next step. And that was also the sentiment that shared by almost -- unanimously by all our key opinion leaders. So next step here really and we looked at different options whether to go into first line would be a good option whether to go into a second or third line, and [indiscernible] maybe future study should be a smaller trial. It doesn't make much sense for us to repeat a larger trial after a bigger one, for instance, was one trial. And therefore, indications like for instance, [indiscernible] setting, or indications, for instance, poor performance status patients, which we actually don't see to be differentiated, whether it is good performance, or poor performance from all our trials. So, these are some logical options that were basically flagged by our key opinion leaders. And so, to your point, if you go to any of these indications, of course, we will have to look the problem will not be a survival study, but will be to your point a response trial, or progression free survival may be added one year or two a year, or six months to one year. So, these are the options. I think once we settle on one of these options, the first thing we have to do is to go and seek scientific advice with FDA to see whether a surrogate endpoint would be potentially approval endpoint for an accelerated approval. So, there is certainly some work to be done. One of the things that we are currently doing and I'm sorry for the lengthy response is that we were looking at some potential either it may be preclinical, and looking also in a biomarker to further understand the signal that we have seen in TRYbeCA-1. Does this answer your question, Lucy?

Lucy Codrington: So can I just confirm you said [indiscernible] patients is one of the potential options. Okay. Great. Thank you.

Operator: Thank you. [Operator Instructions] And I'm showing no further questions at this time. And I would like to turn the conference back over to Gil Beyen for any further remarks.

Gil Beyen: Thank you, Michelle. Thank you all. Thank you for your participation and attention and for your continued support of ERYTECH. As always, we'll keep you posted on further development and we look forward to speaking soon in the next call in -- yes, in May. Thank you all. Have a great day

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