Prothena's (PRTA) CEO Dale Schenk on Bank of America Merrill Lynch 2014 Health Care Conference (Transcript)

| About: Prothena Corp (PRTA)

Prothena Corporation plc (NASDAQ:PRTA)

Bank of America Merrill Lynch 2014 Health Care Conference Call

May 13, 2014 12:20 PM ET


Dale Schenk – Chief Executive Officer

Gene Kinney – Chief Scientific Officer, Head of Research and Development


Steve Byrne – Bank of America Merrill Lynch

Steve Byrne – Bank of America Merrill Lynch

Good morning. My name is Steve Byrne. I cover biotech stocks for BofA Merrill. For me this morning it’s a pleasure to introduce the Prothena management team. We have Dale Schenk, CEO; we have Gene Kinney, CSO; and Tran Nguyen, CFO. So we got the whole team up here. Just a brief comment about Dale, Dale was a founding scientist at Athena Neurosciences, which was acquired by Elan and then that was eventually spun out as Prothena. So from Athena to Prothena.

So it’s all yours Dale. Thank you.

Dale Schenk

So, Steve, we’re going to get right into it here. Thank you to BofA for inviting us this meeting. We really appreciate it. I’m going to be making a few forward-looking statements. Just wanted to remind you of that and let’s get straight into it.

So who is Prothena? We work on antibodies. We develop antibodies for patients that have protein folding and cell adhesion disorders. A little bit about Prothena overview. As Steve mentioned, the team has a terrific track record of developing therapeutics over the years in biotech field, and as Steve mentioned, we were spun out from a lot.

There’s three programs that we’re working on at the moment. The primary lead one is a light-chain amyloidosis, which is the most common form of a peripheral amyloid. The antibody is really interesting for a number of reasons. One of them is its acute specificity for only misfolded light chain when it’s free, away from normal IgG. And so I’ll talk quite a bit about that antibody because we just presented interim Phase 1 data on it.

Our second program, PRX002 is to α-synuclein and that’s specifically for Parkinson’s disease. The idea there is that it’s disease modifying and that program is in collaboration with Roche on a worldwide basis and I’ll be talking a bit about that as well. It’s gone into patients.

And finally, PRX003, which is not a protein folding disorder, but it’s targeting that MCAM for cell adhesion diseases, specifically inflammatory diseases and cancers and they target TH17 cells, MCAM on TH17 cells and we’ll talk some about that as well.

Just on the financial side briefly, we reported at the end of first quarter $195 million in cash and additionally $15 million in clinical milestones second quarter 2014 from Roche.

Okay. The next slide shows some of the affiliations of the various senior management folks, but I’ll also remind you – because Steve gave a nice introduction to us, also remind you that the Board is the very experienced and Lars Ekman is our Chairman and you can see some of the other folks in there, lots of experience as well as on the right, a number of the therapeutic products that we’ve put in the marketplace.

So to just talk a little bit about progress this year thus far and what we also anticipate to accomplish over the rest of the year. For light chain amyloidosis, NEOD001, as I mentioned, Dr. Liedtke recently presented encouraging biomarker data on NT-proBNP, responses and stabilization of some of those patients and that was done at the International Society of Amyloidosis recently.

Looking forward on NEOD001, we will also be presenting additional Phase 1 data updates expected later in this year because that was an interim analysis. And then finally, we also plan to initiate a Phase 2, Phase 2/3 with this antibody for patients who have light-chain amyloidosis and are suffering from cardiac involvement.

With regard to 2014 progress on PRX002, as I’ve already mentioned that’s for Parkinson's disease, and I’ve also mentioned that we had initiated the Phase 1 single ascending dose study in healthy volunteers and that’s generated a milestone for us both financially, and importantly, this program is near and dear to us. We started this a number of years ago, and it’s fantastic to see it go into the clinic, it has potential for producing these modifications in Parkinson's disease where nothing currently exists today.

And finally too, we also plan later in the year to initiate a Phase 1 multiple ascending dose study inpatients.

And then finally on that PRX003, this year we plan to announce our initial indication or indications and also complete our IND-enabling toxicity study.

So the next slide will show you an overview of our portfolio just a little bit of forward-looking thoughts on it. NEOD001 is an orphan area, an orphan indication as very few centers worldwide, they are tertiary centers that we believe that we can develop this and potentially even ultimately commercialized market it ourselves.

With regard to PRX002, it’s a different dynamic in the sense that there is many millions of Parkinson's patients worldwide. We’ve made the decision and I think it’s a good one to work with Roche in a worldwide partnership way. It will probably be a relatively long development timetable, but worthy of huge rewards, with the hope that it succeeds.

And then finally on PRX003, it offers both the opportunity for us to do it ourselves as well as consider other options that would depend on the indication since it’s a very broad inflammation and cancer and total of course is a very broad area.

Okay, let’s talk a little bit about NEOD001 and I’ll hit some of the high points of the recent data that we talked about. First, let’s talk about the disease is, well it’s basically the plasma cells that have gone wrong so to speak and are over producing light-chain to the extend that ultimately that light-chain becomes very high concentration in plasma and misfold start to aggregate and ultimately deposits in tissues. And most common two tissues is renal and cardiac in both cases it causes failures of those organs ultimately.

And there is about 15,000 patients between the U.S. and Europe. And there is no current treatment, all that can be done right now, there is nothing approved vis-à-vis label. All that can be done right now is to use agents that use multiple myeloma, obviously there the problem similar in that it’s massive accumulation of plasma cells, the multiple myeloma the differentiation is that there it’s the cells that are the problem and AL amyloidosis problem is the actual protein.

So this chemotherapeutic agents of course, the multiple myeloma and other agents that can shutdown production of light-chain while that helpful to AL amyloidosis patients, it doesn’t solve or directly treat their organs, which usually continue to decline.

A little bit about peripheral amyloidosis, I always joke that we’ve been doing amyloid before it was cool. We’ve been doing it for 20 years. Peripheral amyloidosis are overall relatively rare, but the most common form as I mentioned is light-chain amyloidosis, it’s certainly over half of all peripheral amyloidosis are light-chain.

It’s the most common of the three common ones, which include strength by return and AA. On the right, you can see a little bit of a cartoon which I think helps in the sense that you can that the light-chain by itself is a single entity does not interact with NEOD001, it has to misfold and aggregate then the antibody will buying and neutralize it. Keep that in mind a little bit and then also I go to some of the other clinical studies ongoing with the other off-label agents but obviously those agents ultimately become on-label which should be helpful for patients.

The other mechanism I’ve already talked about the first mechanism misfolded aggregates. The other mechanisms is important, the antibodies will actually directly target the amyloid itself sales and they do some extremely efficiently, as total as 1 to 100 ratio of antibody to fibril entity, we’ll clear it and it’s because the monocyte get engaged and clear.

To keep both those mechanisms in mind the top mechanism requires relatively little antibody and can happen very fast the bottom mechanism takes longer and generally more antibody for a longer period of time is better that will come into play when we talk about some of the recent data.

So now let’s get right into some of the highlights of the recent data that we’ve been talking about with the interim analysis of the Phase 1 of NEOD001. I already talked about the fact that there remains an unmet need for residual organ damage following the plasma cell dyscrasia treatments, in this disease. Currently even with reduction of light-chain only a small fraction of cardiac patients will improve typically somewhere, between 15% to 25%, the other 75% to 85% continue to worsen.

What are you going to see from the data? We present just at the top level is that NEOD001 so far from the interim analysis appeared to be safe well tolerated with the PK consistent dosing every 28 days. No, hypersensitivity or development of anti-drug antibodies. Also 18 patients and six dosing cohorts have received 106 cycles of NEOD001, which is show that it is extremely well tolerated.

Top line or bottom line of the data on the exploratory endpoint was that we looked at pro and terminal BNP and of the nine patients we could evaluate, in other words it had high cardiac proBNP levels, five actually reduce based on pre-specified analysis, three were stable and one progressed, which is obviously different than what you normally expect to see.

And probably this of course going on to a Phase 2, Phase 2/3 analysis. So let’s go to some of the data, I’ll just remind you again before we go into a bit of the data of the primary goal, this was to look at safety tolerability of NEOD001. The other primary objective was to figure out the maximal tolerated dose, and that’s how the study was designed, that was the whole purpose of it. As a secondary objective we want to look at the PK pharmacokinetics of NEOD001, we wanted to know whether or not about the antibody would move into the tissues with amyloid relatively fast, we are going to assess immunogenicity And then as I already mentioned exploratory endpoint was to look at biomarkers.

Let’s go straight, sorry to jump around a little bit. Let’s go straight to the safety since it is so critical. First half there were no related serious adverse events, which is key. There were no dose-limiting toxicity, so it have been absorbed, thus far and there’s been no anti-drug antibody deducted. And if you look at the safety profile you can see – in fact it’s quite interesting to see shortness of breath and fatigue is one of the two top ones there, we’ll keep remind these patients have cardiac involvement, so that’s exactly you would expect to in this patient population.

Secondly, let’s talk about the pharmacokinetics a bit, I told you we came to see what happened here. It actually varies as part of our 28 day cycle across all dose levels and on the upper right overall you will see the levels are over time in the plasma. But in the upper right is blown up at the end of the nadir 28 days. You can see the low level is still there. Though the lowest level you can see there is over (indiscernible) which is a reasonable dose and the others of course are quite high. Importantly its additive and which means that it’s not accumulated, we don’t worry about multiple dosing. So this dose as I mentioned is a part of 28-day cycle which is nice.

And then finally on the exploratory side, as we talked about in the recent meetings. The NEOD001 treatment is associated with relatively high-rate of credit by a market response that was pre-specified and our stabilization. Just to walk you through the state of very quickly of the 18 patients that could be evaluated as of March 11, which was the cut-off 10 of – sorry 12 of those had cardiac involvement has deemed by the physician. Another way the physician said it looks like there is cardiac issues here.

Of the 12, 10 not the pre-specified elevation of N-Terminal-proBNP and of those 10, nine had a second data point taken. Obviously, this is something that has gone up and down, you need two data points, one of them didn’t have that. So we ended up with nine. So what happens to those nine patients that had elevated ProBNP. As we mentioned already five of them showed a response and reduced – three showed a stabilization, and finally one progressed.

And as I said already this is almost the opposite of what you would expect to see in this patient population group. So that‘s encouraging. Okay, so that’s what I had to say about the NEOD001. And now we are going to move onto our Parkinson’s program, relatively quickly. Let us just talk about the disease a little bit. In Parkinson’s disease, it’s the most second most common neurodegenerative disorder that exists. As many as 7 million to 10 million worldwide are though to have Parkinson’s disease.

And importantly, it’s a nucleon, which is the target of our antibody is shown to be both genetically and neuropathologically involved in the disorder. And so what we’ve done here is, we’ve given antibody to synuclein in the periphery. And look what happens centrally, and shown at the bottom here is the accumulation of something hopefully bad as where you accumulation of this protein.

Before we go into the program too much, just want to briefly mention, whatever he had. We have a very important collaboration with Roche. It’s been very good for us. It’s 30/70 in the U.S, meaning that we pay 30% of the cost but ultimately we share 30% of the profit, and across the Board. OUS, it’s a royalty basis and with milestones, what have you, total dealer, total milestone between 600 and you can see divided up there into various points, clinical regulatory is 380.

I won’t go into all the details, but it has been excellent for us because it allows us to jointly do this with Roche, increasing the ultimate likelihood of our success while still capturing some of the financial long-term upsides.

Let’s talk about how this works so, because we’ve always been asked even in scientific meetings how come an antibody dose in the periphery, help in the central compartment, when it’s inside of neuron. So basically what we believe to be happening and other groups have shown this by the way, it’s not just our laboratory, it’s this antibody will buy into aggregate that are moving between neurons – these are aggregates of synuclein. It’s high affect nucleon and it blocked it from progressing. And that’s what we believe PRX002 is doing.

Here you can see the reduction on the lower right of pathology after treating in the periphery with the antibody that is in the brain. You see reduction of synuclein accumulation. Here I won’t go into all the details, except to say that on the left it shows reduction. In this animal model if they ever produce synuclein it get reduced to synaptic connection. If you give the antibody, it restores or blocks that reduction. It saves synaptic connections from going away.

On the right it shows that positively these animals do much better. Again, if they overproduce synuclein, they have a deficit. If you give the antibody they don’t have the deficit and Morris Water Maze may also show that motor function is very similar as well. So pre-clinically it’s quite encouraging. As already mentioned, we’ve initiated the single ascending dose study and we are going to be moving at a multiple ascending dose study in patients part of the disease this year and finally we’ll be looking at both CNS and peripheral biomarkers and of course we’re very excited about this program. Our collaboration with Roche includes also synucleinopathies and various other antibodies as well. So it’s broad in that respect.

And then finally, PRX003, I’ll just say one or two words about that and basically as I said it targets MCAM, which happens to be very specific for TH17 cells and these cells of course have started to be very bad players in pro-inflammatory states. Importantly, unlike the anti-IL17 approaches, which are working very long some inflammatory disorders reflect the cells, not the single cytokine and at the bottom right you can see some of these cytokines that are co-produced with IL17, but it’s hard to be playing a role in these diseases. So it offers a unique approach to inflammatory disorders and also it’s used on cancer cells for metastasis.

I finally planned to initiate this 1st of May next year and as I already said, we’re going to announce our initial indications this year. And as you can expect, based on that timing we’re doing a lot of preclinical toxicology. At the moment we’ve selected the preclinical antibody and we’re doing CMC and all that good stuff.

And then finally, just real quickly, I already mentioned that as of the first quarter we posted $195 million in cash, shares outstanding just under 22 million. As of last year we had 39 employees. We’re hiring a few more key spots. Cash burn range $7 million to $12 million, net loss range $13 million to $18 million and our protected year-end cash position, the net of it is $167 million for the future.

And finally, I’ll just reiterate. This year – I won’t go through the milestones we’ve already achieved. We’ve been spot on thus far on our timings. As I already mentioned, we plan to initiate Phase 1 multiple ascending dose study on our Parkinson’s program. We also plan to communicate more data on the Phase 1 study that’s ongoing on NEOD001 as well as initiate Phase 2, Phase 2/3 on that program this year and then finally, as I said, next year moving to clinic on PRX003.

So I’m going to stop there, but thank you very much. I didn’t want to take too much. I’ll leave a little time for questions.

Question-and-Answer Session

Steve Byrne – Bank of America Merrill Lynch

Any questions for Prothena? Here we go. Go ahead.

Unidentified Analyst


Dale Schenk

Yes, it will happen in the tissue, the deposition, that’s right. The antibody bonds and then through the [F-Series] (ph) the monocyte bonds to it and then the monocyte relatively efficiently goes through a phagocytosis process, yes.

Unidentified Analyst

What’s the risk of causing some inflammatory response? And inside the cardiac tissue is that a risk of some adverse events from doing that?

Dale Schenk

Well ironically, and this is surprising, if you go through the immunology when monocytes or macrophages, go through phagocytosis process, they actually go into an anti-inflammatory, they then are going to M2. And so they actually will secrete anti-inflammatory cytokine. The only possible concern is not inflammatory reacts the – physical removal and what we’ve seen in other tissues when you do this is the tissue actually repairs and so it’s more about removing that mass. You have to think about as opposed to an inflammatory reaction.

Unidentified Analyst

And so when you look at Phase 2, Phase 3 and patient enrollment, is there a measuring of how big aggregate are in, obviously you can measure that cardiac involvement various markers. But how big those sort of aggregates might be, and whether there is some patient selection that maybe needs to…

Dale Schenk

I see. Yes and no, there is no good imaging methodology right now, particularly for cardiac amyloid. It’s pretty good imaging methodology for say, spleen or even liver with masses of giant cardiac is for some reasons more difficult, you can do things like echo and look at heart wall thickness and what have you, but it’s not direct. So it’s hard to do it in the quantitative way.

Unidentified Analyst

Could you convert your antibody into a diagnostic, if you conjugated it with something that for us or something that you could then pickup where the amyloid deposits are?

Dale Schenk

Yes, it’s begin the NEOD001 right?

Unidentified Analyst


Dale Schenk

Yes, theoretically you could, you would have to you are right, you would have to convert into an SAB because you want to – there you want really fast pathway. You want to clear of that, you want to buy anything clear that, you could see radically,

Unidentified Analyst

Yes, that it would pick-up the insoluble amyloid or given there is insoluble misfold light-chain throughout the body with it just going to show up every where?

Dale Schenk

The amount of insoluble, misfolded is relatively smaller, so let’s say, a pool of this, total free monumental light-chain right, so it’s big. The amount of misfolded aggregate is maybe just a tiny fraction of that 1% or something. So I wouldn’t be concerned about it, it’s going banging everywhere. But to your point the antibody would by into the fibril. So theoretically you would potentially image with it. It would take a lot of work obviously, and there is all kinds of parameters that would have to meet for that to workout, but it’s theoretically a possibility.

Steve Byrne – Bank of America Merrill Lynch

Question, back there.

Unidentified Analyst

The effective timing of Phase 2, Phase 3 of amyloid expecting to get approved?

Dale Schenk

We are designing it, as with any clinical study to learn more, and we’re going to power it so that we can have a body of data, in another words we are not going – let me answer it the other way round. We are not going to do it tiny Phase 2. Just to gain a little bit of information and then do another study, and do another study that sort of thing. So we’re going to power relatively large, I would never want to comment that it would. We could file on it, because that’s up to the regulatory bodies.

Unidentified Analyst

(Question Inaudible)

Dale Schenk

(indiscernible) end point we use, that’s a really important question. It’s either going to be and you can talk from today, it’s either going to be a biomarker endpoint which would be fantastic but that’s the toughness from a regulatory perspective, functional, cardiac functional or finally some sort of survival analysis.

The latter would be larger and longer, the functional would be intermediate. So I can’t answer the question until we define that because that would affect the total size. Yes.

Steve Byrne – Bank of America Merrill Lynch

Is there another approach you could take for assessing the clinical efficacy by measuring heart functions, some measure of strain or throughput that would assess a clinical improvement rather than or maybe in addition to the stressed biomarker that you’re using in NT-proBNP?

Dale Schenk

That’s for Gene.

Gene Kinney

Yes. So, there are some other things you can look at as Dale mentioned echocardiogram. So you can look at wall thickness. You can look at things like ejection fraction. So these are things that come along with like any of these things by themselves aren’t necessarily completely inductive of what’s going on, but I think as a package there are folks who look at this and talk about overall cardiac activity.

That said at least in our reading of the literature, NT-proBNP seems to be a very good cardiac biomarker with respect to ultimate clinical outcomes. So there are studies out there in literature suggesting that for NT-proBNP levels and diagnoses predict clinical outcome and even potentially change following an invention of NT-proBNP predict clinical outcomes. So, from a literature set it’s out there now, it appears the best one of the more predictive cardiac biomarkers. And that's first of all, we follow that as a primary cardiac biomarker in this study.

Steve Byrne – Bank of America Merrill Lynch

In the dose, you are going to go ahead with in the Phase 2/3 study.

Dale Schenk

Good question. Gene, do you want to get that right?

Gene Kinney

Yes. I mean, I think the question is a very good one. Its really comes down to dose or doses right, so is that next study a two-arm study or three-arm study. I don’t think we said definitively where we are on that hopping back to a slide that Dale showed earlier, which is the potential mechanisms of actions, right. One of which being more around valuable forms of the aggregate material, one around insoluble forms the aggregate material.

And I think, what Dale shared was that the expectation even before we saw data was that it maybe a more rapid asset, maybe even at lower doses to seen impact on those soluble forms or is it may take either higher doses or longer cycle times more treatments to impact the insoluble forms. So it may make sense in fact to think about a high low placebo type of study moving forward.

Steve Byrne – Bank of America Merrill Lynch

And is it your view that, that soluble fraction is the more toxic versus the insoluble fraction has more of a functional impact?

Gene Kinney

I think the both, it’s a real important question, Steve. No one knows the answer to it, that’s what I think we do know so far from the data. In fact, we’re seeing is a changeover into, is most likely due to neutralizing the soluble aggregates into that happens relatively fast and a low concentration.

So there has to be a role there, but there has actually been even debate in the field, which is the bad player. And usually the way we’ve come out on this both here and in other organs is (indiscernible). It’s hard to imagine that the structural accumulation foibles is benign. It is just hard to believe that it’s benign. Some people argue it is, I just don’t believe that, but I think both are ultimately important. It’s fortunate and encouraging that we’re seeing a potential effect with what looks like to be a rapid neutralization of the aggregates.

Steve Byrne – Bank of America Merrill Lynch

And that would arrest the current accumulation then of insoluble fraction.

Gene Kinney

Well theoretically talk about, I mean this is really forward-looking I would say. Let’s talk about several years from now, reduction of which you want to do, I think is both you do want to reduce, you do want to fix the hematologic issue right. You want to reduce free light chain but you also want to clear it and so the perfect situation is that you do both. And so, you find a way to reduce free light chain production in the plasma cell and hopefully, a number of these agents will get approved. They are in clinical trials right now for that. And then you have something like NEOD001, which improves the clearance. So you are hitting that from both angles.

Steve Byrne – Bank of America Merrill Lynch

You touched whether or not just the removal of the soluble fraction would then shift that equilibrium from the insoluble back into soluble, so that you so much you just keep mopping up the soluble fraction you would be – gradually, hope you eroding that the insoluble fraction?

Dale Schenk

There is actually data on that, so with both AA amyloid and AL. We’ve talked about it on rare occasion if you get rid of – if somebody has a really good response and the free light-chain goes away, they really have stem cells replacement therapy. Usually the organ don’t improve but on occasion they will and what you’ll see sometime particularly in AA.

But also AL is the amyloid will slowly dissolve very slowly dissolve and go away so it can do it, doesn’t way do it. But it can do that, so that is evidence in favor of what you just described. Now what we are doing should pacing that process dramatically.

Steve Byrne – Bank of America Merrill Lynch

And given that your Phase 1 study is kind of up into that dose range where are likely to see the most efficacy is you’d likely to have an extension phase at those higher doses, particularly picking a more patients that have elevated proBNP levels to start with?

Dale Schenk

Yes, good question. Gene?

Gene Kinney

So I think the data that Dale has gone through and the data that was presented recently was as of cut of date of March 11. At that point in time it was during the dose escalation part of the Phase 1 study we had enrolled six or seven planned dose level cohorts. So there is additional work on going one of which will be to complete the dose escalation phase and complete that seventh dose level cohort.

We’ll expand around Phase 2 recommended dose or doses, as we move forward or alternatively, if we hit a maximum tolerated dose would expand at the dose level below that cohort. And then as you are pointing out and this is publically all clinical trials that go we do have the option of moving into an expansion phase as well. I think, what you are alluding to is in the Phase 1 study it’s an all commerce study, it doesn’t require cardiac involvement, it can be any systemic organ involvement.

In the expansion phase, we do have the option of more specifically targeting single organ or different parameters as we choose to expand that cohort. So that’s something we are looking at and obviously that will be part of the communication moving forward as we talked about more Phase 1 data.

Steve Byrne – Bank of America Merrill Lynch


Dale Schenk

Thank you.

Steve Byrne – Bank of America Merrill Lynch

Thank you very much.

Dale Schenk

Thank you, Steve. Thank you everyone.

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