Benitec Biopharma Ltd. (NASDAQ:BNTC) Q3 2018 Results Conference Call May 31, 2018 5:00 PM ET
Greg West - CEO
David Suhy - Chief Scientific Officer
Georgina Kilfoil - Chief Development Officer
Thank you for standing by and welcome to the Benitec Biopharma Quarterly Corporate Update Conference Call.
If we make any forward-looking statements we know as that such statements involve risk and uncertainties relating to the difficulties in our plans to develop and commercialize our product candidates, the timing of the initiation and completion of preclinical and clinical trials, the timing of patient enrollment and dosing in clinical trials, the timing of expected regulatory filings, the clinical utility and potential attributes and benefits of ddRNAi and our products to candidates potential future out licenses and collaborations, our intellectual property position and the ability to procure it additional process of financing.
All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. [Operator Instructions]
I would now like to turn the floor over to your first speaker today Mr. Greg West, CEO. Please go ahead, Mr. West.
Thank you and good morning everyone, and thank you for attending our quarterly briefing. I will give a short overview and will then hand over to David Suhy, our Chief Scientific Officer, as well as Georgina Kilfoil, who is our Chief Development Officer to provide a brief update on our science and programs.
We expect today's call to take less than half an hour and I would point out that we recently completed and OPMD webinar, which I would encourage you to listen to. There was lot of valuable and detailed information provided in the webinar and we describe why we think this program can be successful. So I would encourage you to listen to that.
As many of you know, Benitec is focused on building a broad scientific pipeline of innovative therapeutics by harnessing the power of our DNA-directed RNA interference technology, known as ddRNAi. This unique platform technology combines gene therapy and gene silencing to change treatment paradigms of human disease.
We are translating our science into measurable clinical outcomes, which is successful in the clinic will have the potential to provide novel treatment options and hope to patients suffering from disease, as well as provide a significant value -- shareholder value for Benitec.
Our current pipeline is focused on four therapeutic areas to drive shareholder value. We have transitioned from a platform-based company into a business-driven by product developments with assets in oncology, re-genetic disorders, retinal disorders and infectious disease.
Our Phase II clinical study with our late oncology asset is now active and we hope to be enrolling our first patient soon. In addition, we anticipate having a unique silence and replace therapeutic designed to treat an orphan disease oculopharyngeal muscular dystrophy or OPMD entering the clinic early in 2019. And we have other programs targeting retinal disorders and infectious disease.
We had an active quarter with scientific advancements that include progressing our programs of head and neck squamous cell carcinoma into the clinic, completing a meeting with ANSM, the French regulatory agency to obtain scientific advice on our OPMD program.
We’ve completed manufacturing of high titer and highly active supplies of BB-301 at a 50L scale to support the ongoing toxicology studies. And we’ve completed -- we are completing a face-to-face meeting with our world-class group of leaders in swallowing and the treatment of OPMD to finalize the plans for the first clinical study with BB-301.
I’d like to talk now about our recent capital-raising activity and in particular the entitlement offer which just closed. Overall, we raised 8.8 million. The Company’s entitlement offer raised 6.2 million and with the institutional placement on the 30th of April 2018, we raised 2.6 million through a new investor, Highbridge Capital Management LLC.
A total of 36 million new shares were taken up under the entitlement offer representing 35% of total entitlements. The shareholding of that capital in the Company immediately following the completion of the entitlement offer will be approximately 34%. The Company is pleased with the strong uptake from a significant majority of the Company’s 400 larger shareholders and thanks to all shareholders for their continued support.
Turning to our earnings for the third fiscal quarter of 2018, Benitec reported a net loss of 8.6 million for the March quarter. That’s the third quarter of financial year of 2018, compared to a loss of 3.1 million in the March quarter of previous period 2017. The principal reason for the increase in the net loss of 5.5 million is due to a reduction in research and development grant income of 6.3 million offset by a decrease in R&D spend and other costs of about 0.8 million.
Since March 2017, the Company has recognized R&D grant revenue on a quarterly accrual basis in accordance with revised accounting sense. At the end of March 2018 quarter, Benitec had cash on hand of 10.5 million, a decrease of 6.8 million from the June 2017 quarter. The decrease is largely due to operating cash outflow of 11.2 million as a result of positioning the Company for A3 into our upcoming trials. The Company received 4.1 million of research and development grant cash in January 2018.
I’ll now hand over to Georgina and David to provide more color around their programs.
Thank you, Greg. Turning first to our oncology study with BB-401, this is a Phase 2 clinical study designed as an open-label study to explore the safety, tolerability and efficacy of BB-401 following intra-tumoral injections. BB-401 is intended to produce a single strand antisense RNA directed to inhibit the expression of the Epidermal Growth Factor Receptor or EGFR a protein when stimulated induces cell differentiation and proliferation and has been known to be significantly amplified in cancer cells.
BB-401 will be administered into the target lesion once a week for up to eight weeks, in up to 30 patients with squamous cell carcinoma of the head and neck known as HNSCC. These are patients who are refractory to all standard therapies such as surgery, chemotherapy and immunotherapy. We continue to make good progress in starting up the study. Our first site Chris O'Brien Lifehouse is active and we hope to have other sites active and our first patient enrolled in the near future.
In addition, we now have regulatory approval from the Ministry of Health in Russia and hope to have the Russian site active during the month of June. In total, we anticipate using five to eight clinical sites in Australia and Russia. The primary outcome of the trial will measure the size of the size of the lesion using techniques such as CT and MRI.
A positive response from BB-401 treatment is thus to reduce the overall size of the tumor or completely ablate the lesion. Additionally, we’ll be looking at secondary endpoints such as progression free survival, overall survival, duration of response, disease control rate, safety and tolerability.
In addition, we will be monitoring molecular markers and biobsolete lesions to monitor the presence of BB-401and the antisense RNA produced from the vector as well as the result of impacts on EGFR levels. This study has a two-stage design which allows the stopping the study based on either futility of success at the end of the first stage or after twelve patients have been enrolled, and monitored through the primary outcome measure assuming enrollment rates was expected the interim analysis is anticipated to occur around the end of this calendar year.
I’ll now touch on where we stand from a regulatory and clinical perspective with our program to treat oculopharyngeal muscular dystrophy or OPMD. We are developing BB-301 as a therapeutic to treat dysphagia associated with OPMD. The disease symptoms of OPMD varied depending on severity, rate of progression and pathophysiology. The current symptoms include ptosis, dysphagia and leg weakness.
It’s the dysphagia the impaired swallowing function that causes the majority of serious health problems to patients with OPMD. As the disease progresses, the incidences of hospitalization due to aspiration and the seriousness of the results of lung infections significantly decreased quality of life and can be life threatening in addition malnutrition also factored into the equation.
As currently written, the clinical study for BB-301 will be in patients clinically and genetically diagnosed with OPMD who have an impairment in swallowing function. Patients will receive a single intra-muscular dose of BB-301 into the cricopharyngeal muscle in the throat.
This clinical protocol is designed as a dose-escalation study. So we enroll patients at increasing doses with a time period between each cohort to ensure to stay before we proceed to the next dose. Once we reach the top dose, or define a dose that is the maximally effective dose, we’ll enroll an additional number of patients.
All patients will be following for a year on this study. The primary endpoint is safety and tolerability. However, because these are patients we will also be looking at quantitative clinical improvement in swallowing, as well as patient reported improvements in swallowing and quality of life.
We met last month face-to-face with our OPMD Clinical Advisory Board to update our clinical plans and finalize the clinical protocol design. This group is comprised with key opinion leaders and doctors to help manage treatment options for OPMD patients as well as a separate group of experts in the quantitative assessment of swallowing.
With their input, we are designing this first clinical study in such a way that we hope that we’ll maximize our opportunities to success and give us the positive time forward to approval.
Turning to regulatory advances on this program. It’s important, especially for gene therapy products and to this novel silence and replace approach, that we discussed our IND enabling studies and clinical plans with the regulatory agencies. This is to improve the likelihood that BB-301 will pass all the regulatory requirements to enter the clinic.
With this in mind, over the past two quarters, we have met and discussed our plans for BB-301 with the regulatory agencies in key OPMD countries such as the U.S., Canada, and in this last quarter, France. The BB-301 development plan was well received and there was a high level of enthusiasm for the ingenuity of a single vector approach that can silence disease causing genes and simultaneously express a novel healthy copy of the same gene.
The feedback from these meetings has been incorporated into the clinical study design, as well as the ongoing IND enabling work. We feel we are well positioned now to progress BB-301 into the clinic. The pathway has been set and it is now just the time it takes to complete the required toxicology and manufacturing work to support a high quality regulatory filing.
I’ll now turn over to David Suhy to describe the ongoing toxicology and manufacturing work with BB-301.
Thanks, Georgiana. We’ve talked about in past calls of conducting our IND enabling toxicology studies in sheep. And just as a reminder, the reason we selected this species is that the weight of the animal and the size of the key muscles in the upper digestive system are relatively consistent with human subjects. These key features are really key to using this model to support the lot of administration of a direct injection into the cricopharyngeal muscle, as well as in the surrounding muscles.
We are nearing the endpoint of an initial study, which has involved 19 sheep. Although the in life portion of this initial study is not totally complete, we have not observed any abnormal safety signal in the sheep dose to-date with the BB-301 compound. Molecular analyses of these tissues will include histology, as well as biodistribution studies to study the expressions of B shRNA as well as the codon-optimized PABPN1 protein as related to the levels of BB-301 that we administered to the throat muscles.
In addition, we are well positioned to initiate an expanded animal study in 54 sheep as a definitive regulatory and toxicology studies to support entry of BB-301 into the clinic. The in life portion for the reg tox studies will take approximately 90 days for each animal, once each animal has been treated with single doses of the drug.
Specifically, these studies are geared to identify any significant adverse related events to BB-301 dosing. That study will commence in mid-summer in a few months time.
Lastly, to support any human clinical trial towards clinical development, you need to have ability to produce the drug in sufficient quantities. For BB-301, we produce the material in a baculovirus-based system which is a suspension manufacturing system that allows for the manufacturer of viral-based products in exceptionally scalable quantities.
Traditionally gene therapy products using AAV or Adeno-associated viruses such as AAV-9 have not be readily produced using baculovirus system, particularly AAV-9. Benitec scientists have modified the AAV-9 capsid in order to produce materials that have exceptionally high titers and are highly active.
Using baculovirus-based manufacturing methods as Greg previously mentioned, materials can be scaled upwards of a 1000 liters or more. We currently have managed to manufacture three separate lots of BB-301 at the 50 liter scale in order to support all the aforementioned sheep studies. At that 50 liter scale, we have BB-301 protocols produced in excess of 1e14 vector genomes per liter which is excellent for this process.
The recovery yields in the final product range from 30% to 40% which is also quite outstanding for these types of processes. We are producing the GMP clinical-grade material at a leading contract manufacturing organization and over this summer, we will be specifically producing the clinical product at the 250 liter scale. If we assume scalability of this process is maintained, we’ll anticipate being able to produce upwards of 1e16 vector genome protocols within the 250 liters, which is far enough to support all of the patients in the Phase 1, 2 study, as well as have a large excess of vector to spare.
Back to you Greg.
Yes, thank you, David, and thank you, Georgiana. The continued steady progress we make with both the oncology program and the OPMD program will be the major catalysts for value creation and news flow in 2018. We believe that Benitec is uniquely positioned to develop therapeutic compounds with novel product profiles, coupled with a potential superior clinical activity in each of these disease areas.
The milestones we have achieved over this previous quarter speak to our strategy of becoming a multi-product clinical stage company and represent an opportunity for shareholder value.
I’ll now ask the operator for questions.
[Operator Instructions] There are no questions. I will now hand back to Mr. West for closing remarks.
What -- we have one or two questions that came through from our shareholders late yesterday. So, want to just refer to a couple of those. And Georgiana, do you want to?
Sure. The first question relates to the silence and replace approach. The question is, in talking about the silence and replace approach in other areas, can you expand n what you mean by this?
David, do you want to talk to that?
Yes, so I think one of the unique features of the Benitec technology in terms of treating molecular-based diseases is the fact that we use a mechanism of silencing called RNA interference. Most typically, these involve the short synthesis or the synthesis of short RNA strands to knock down specific target genes. In traditional gene therapy, you either replace proteins or you use technologies potentially such as genome editing, to be able to silence genes in the latter case.
With genome editing-based techniques often times you have to knock in large proteins to be able to impact or have that mechanism of action actually occur, and so, most of the times that vector is filled up by the presence of this large protein. Because RNA interference uses endogenous silent machinery in a short hairpin RNA that we produce take up so very little of that packaging capacity, we have the capability of doing other things with the excess space in these viral vectors.
In the case of BB-301, this means, we could use the short hairpin RNA to silence disease-causing genes, but in the same therapeutic vector express the form the best in protein. And so this is really quite to RNA interference technology delivered by gene therapy mechanisms. The ability to have a single vector system you need to only have to produce and manufacture one vector to be able to both silent disease-causing genes and replace them with healthy wild-type copies.
At Benitec, we’ve been looking to see how to expand into other potential pipeline programs which may have the ability to use the same silence and replace based technology. Again, we think that this is a feature which is unique to our technology and we look to capitalize on the ability to use this unique feature to stretch into other disease indications and you should probably be looking to hear about some of that at some point in the future.
Thank you, David. Georgiana there are a couple of other shareholder questions, but one on BB-301?
Yes, we do have one additional question, which is what will it take to get BB-301 to the market? And I am happy to talk a little bit about that one. BB-301 is a gene therapy and OPMD is an orphan disease with no current treatment available. So we don’t anticipate that we’ll have to take it through a traditional Phase 1, Phase 2, Phase 3 approach.
What -- in our meetings that I described earlier with the regulatory agencies, what we’ve been talking about is that, assuming no safety signals are seen in the first clinical study and that we see a pretty good indication of clinical efficacy. We would hopefully be moving from that study straight into a small Phase 3 study to support approval of BB-301.
Obviously, if there is something on what’s seen or we don’t find an effective dose, we would need to do more studies and likewise if we see really, really good efficacy, we would certainly be having discussions with the regulatory agencies about progressing even faster to the market. So, at the end of the day, it’s going to depend on the outcomes from that first study.
But as I said before, we are working to design that study in a way to maximize our opportunities to success. I’ll pass back to Greg to wrap up.
Thank you. In closing, I would encourage you to go back and listen to our OPMD webinar that was new material included in that presentation. And a lot of valuable and detailed information, and in particular it does describe why we think the program will be successful.
I would also just like to say that the efforts and strategies of recent years are now delivering with our oncology program in the clinic and the orphan program progressing towards the clinic. We are hopeful that this transition to becoming a clinical-stage company once again will result in significant patient benefit and shareholder value for Benitec.
Thank you to all our participants today and especially that our shareholders and analysts who contributed and listen to our earnings report. And thank all investors for their continued support. Thank you, operator.
That does conclude our conference for today. Thank you for participating. You may now disconnect.
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