Selecta Biosciences, Inc. (NASDAQ:SELB) Q4 2018 Results Earnings Conference Call March 15, 2019 8:30 AM ET
Carsten Brunn - President and Chief Executive Officer
John Leaman - Chief Financial Officer and Head of Corporate Strategy
Conference Call Participants
Chad Messer - Needham & Company
John Newman - Canaccord Genuity
Alexandre Bouilloux - Mizuho Securities USA, LLC
Yun Zhong - Janney Montgomery Scott, LLC
Welcome to the Selecta Biosciences Fourth Quarter and Full-Year 2018 Financial Results Conference Call. At this time, all participants are in a listen-only mode. This call is being webcast live on the Investors and Media section of Selecta's website at www.selectabio.com, and it is being recorded.
For opening remarks, I would now like to turn the call over to John Leaman, Selecta's Chief Financial Officer and Head of Corporate Strategy. Please go ahead, sir.
Thank you, Keith. And good morning, everyone. Earlier today, we issued a press release containing our fourth quarter and full-year 2018 financial results and other corporate updates. And we expect to file our 10-K post market this afternoon. This release and the 10-K when filed can be accessed by visiting our website at www.selectabio.com.
I'm joined today by Carsten Brunn, our CEO, and Stephen Smolinski, our CCO, who will be joining us for the Q&A portion of the call.
Before we get started, we'd like to advise that certain remarks that are made during this call including, without limitations, statements about the company's future expectations, plans and prospects, the anticipated timing of planned trials, related data readout and the ability of results to inform future trials, our collaboration with CureCN, the sufficiency of the company's cash, cash equivalents and short-term investments and projections surrounding our cash burn rate constitute forward-looking statements under the meaning of the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the Risk Factors section of Selecta's most recent quarterly report on Form 10-Q filed with the SEC, which can be accessed at selectabio.com, and our Form 10-K when its filed.
In addition, any forward-looking statements represent the company's views only as of today, March 15, 2019, and should not be relied upon as representing the company's views as of any subsequent date. While Selecta may elect to update these forward-looking statements at some point in the future, it specifically disclaims any obligations to do so, even if management's views change.
Now, let me introduce Carsten who will kick things off.
Thank you, John. And good morning, everyone. Selecta accomplished a lot in 2018 and I believe we successfully laid a strong foundation for a year of execution in 2019.
We're off to a solid start, kicking off this year with an equity fundraise of approximately $33 million in gross proceeds in January and we're in the final stages of preparing to start a six-month head-to-head COMPARE clinical trial that our lead candidate for the treatment of gout SEL-212 against Krystexxa later this month.
Although past and future efforts have centered on a mission here at Selecta to advance our differentiated pipeline of biologic therapeutic candidates that mitigate unwanted immunogenicity based on our immune tolerance technology, ImmTOR, which neutralizes antibody formation.
But we remain focused on our lead program in gout. We believe there's vast potential for our technology and our intent is to maximize its full potential, starting with gene therapy.
Before going into more detail on our pipeline, let me start by reviewing the corporate restructuring we announced in January. We streamlined our organization and reduced our budgeted workforce by 36%, which coupled with the reprioritization of our pipeline programs, is projected to reduce the yearly cash burn by 19%, leaving us in a strong position to advance our development programs.
Starting with our lead program, we continue to believe that, based on a robust clinical package, SEL-212 has potential to address several unmet needs in chronic refractory gout patients, including sustained serum acid reduction, reduction in painful flares and once monthly dosing.
Just as a reminder, SEL-212 is a combination of ImmTOR, our novel immune tolerance technology, and pegsiticase, our proprietary pegylated uricase.
In October 2018, we presented data from new cohorts of patients receiving five monthly combination doses of SEL-212 at ACR in Chicago. We subsequently reported data from all evaluable patients, including five patients who were controlled, but had not reached five months of treatment at ACR, showing that 66% maintained serum acid levels below 6, up to five once-monthly treatments of SEL-212 at doses of 0.1 or 0.15 mgs per kg of ImmTOR in combination with 0.2 mgs per kg of pegsiticase.
Furthermore, this data showed a reduction in total urate burden and lower flare rates and severity.
SEL-212 continued to be generally well tolerated.
We look forward to continuing to develop this program with the initiation of our head-to-head COMPARE clinical trial against the current FDA approved uricase therapy, Krystexxa this month.
We anticipate announcing an interim six-month data readout in the fourth quarter of this year and plan to announce full statistical superiority data analysis in the first quarter of 2020. The results of the COMPARE trial are expected to inform the design of the planned Phase III clinical trial which we plan to initiate in the fourth quarter of this year.
We believe that the head-to-head can potentially confirm SEL-212's ability to address several unmet needs for severe gout patients.
There are roughly 160,000 patients in the United States with chronic refractory gout and only a small percentage are currently being treated by the current FDA approved uricase.
As we develop SEL-212, we're aiming for consistent SUA control defined as SUA below 6 for six months, low flare rates and monthly dosing, which has potential to address currently identified unmet needs in this patient population and represents over $1 billion dollar market opportunity.
Now, turning to our other priorities for maximizing the potential of our proprietary technology platform, ImmTOR, we're encouraged by its ability to induce tolerance and differentiation from systemic immunosuppressive regimens that are not approved and yet to complete a well-controlled clinical trial.
We believe our technology can potentially allow for the full benefit of biologics, including the re-dosing of AAV gene therapy programs.
In September 2018, we announced a collaboration with the European consortium, CureCN for the use of our ImmTOR technology in combination with AAV gene therapy in Crigler-Najjar Syndrome, a rare genetic disorder characterized by an inability to properly convert and clear bilirubin from the body.
This collaboration builds upon the preclinical work that was published, together with Genethon in major communications in October 2018, suggesting the potential for re-dosing gene therapy products with our technology.
We look forward to dosing the first patient with this combination product candidate in the second half of this year.
Finally, we continue to be active in exploring potential additional collaborations with which to utilize our ImmTOR platform, both in gene therapy and other biologics with immunogenicity issues.
In conclusion, we believe 2019 will be a significant year of clinical results for our ImmTOR platform, with initial interim data from the head-to-head COMPARE trial expected in the fourth quarter of this year, with full statistical superiority data expected in Q1 of 2020.
Secondly, we plan to potentially dose ImmTOR with AAV gene therapy in the second half of 2019 through our collaboration with CureCN, which will be the first opportunity to potentially translate the preclinical data for re-dosing published in Nature in October 2018 to the clinic. We look forward to providing you with updates in the coming year.
With that, let me turn the call over to John to discuss our fourth quarter and full-year 2018 financial results.
Thank you, Carsten. For the fourth quarter of 2018, the company recognized $900,000 in revenue which compares to less than $100,000 for the fourth quarter of 2017. Increasing grant revenue was the sole result of the conclusion of our grant with NIDA.
Research and development expenses for the fourth quarter of 2018 were $10.3 million, which compares to $13.6 million for the fourth quarter of 2017. The decrease was driven by reduced expenditures for our preclinical product candidates combined with the winding down of the Phase II clinical trial of SEL-212 in the second half of 2018.
General and administrative expenses for the fourth quarter of 2018 were $5.1 million, which compares with $5.7 million for the fourth quarter of 2017. The reduction in costs was primarily the result of reduced consulting fees.
For the fourth quarter of 2018, Selecta reported a net loss of $14.7 million or $0.65 per share compared to a net loss of $19.5 million or $0.88 per share for the same period in 2017.
Selecta has $37.7 million in cash, cash equivalents and restricted cash as of December 31, 2018, which compares to cash, cash equivalents and short-term investments of $50.5 million at September 30, 2018.
The company currently has an expected cash runway into Q1 2020, which includes proceeds net of underwriting discounts and commissions of $31.3 million from the company's recent follow-on offering in January 2019.
That concludes our formal remarks. Now, we'll open the line for questions. Operator?
Yes, thank you. [Operator Instructions]. And this morning's first question comes from Chad Messer with Needham and Company.
Great. Good morning. And thank you for taking my questions. If we just start with the interim SEL-212 readout, can you kind of set our expectations? What triggers that readout? Is it a certain number of patients? How much data is coming with the interim?
Thanks, Chad. It's a great question. So, as we guided, we plan to do the readout in the later half of Q4 and we'll look at the patients who have completed six months basically. And, obviously, we're assuming rapid recruitment because it is a trial with two active arms. And to my understanding, it's one of the first actually head-to-head comparison. So, we expect interest from both the investigators and from patients who participate in this. So, that drives the interim readout.
Okay, great. Thanks. And is it possible to share sort of what you powered for? And if it's not, can you at least discuss what you guys would view a meaningful beat over Krystexxa to look like?
Yeah. So, we have not guided and don't plan to guide on that in detail. But I think if you look at the data we presented at ACR where we had 66% and the ulaR [ph] data where we're in the 80s, so we expect efficacy somewhere in the middle of this and then you can look at the label and the published data for Krystexxa in kind of to anticipate is spread we expect for this trial.
All right. Great, thank you.
Thank you. And the next question Derek Archila with Stifel.
Thanks. This is actually – I've been on the line for Derek. I guess, in light of the recent Spark deal, can we still expect to hear if they opt in, I think you said, by the end of, I think, this year? That's it. Thanks.
Yeah, Derek. Thank you for that. So, we have not had a chance to connect with Spark after the Roche acquisition. We, obviously, planned to do this. But there's no reason why this guidance would change. So, Spark/Roche have the opportunity to opt in until the end of this year. So, that remains unchanged to our knowledge at this point.
Thank you. And the next question comes from John Newman with Canaccord.
Guys, good morning. Thanks for taking my question. First question I had was just regarding the clinical design of head-to-head study. Just wondering if you could talk to us a bit about the number of sites that we'll be enrolling and the geography of those, if all of those sites will be in the United States? Thanks.
Good question, John. So, as we guided earlier, we are planning to use our Phase III sites for this. And we're looking at 40 to 50 sites throughout the United States for this trial. And then, we also guided 50 to 70 patients per arm. So, 40 to 50 sites to answer your question.
Great, thanks. And can you talk about what the overall length of follow-up is for this study? So, after you report the statistical results in early 2020, how long will you be able to follow these patients in the head-to-head study?
John, we actually are determining this right now, as we speak.
Okay, great. Excellent. Thanks, guys.
Thank you. And the next question comes from Difei Yang with Mizuho.
Hey, good morning, guys. This is Alex on for Difei. Thank you for taking the questions. Any additional color you can provide around what the gene therapy trial in in Crigler-Najjar would look like, any insights on how you're selecting the first two patients and are you going to be looking at liver function, for example? Any additional color around the design would be helpful? Thank you.
I think, Alex – this is John. Broadly, I think the way we're looking at it is we would use basically our ImmTOR platform post getting agreement from the regulatory agencies with their AAV gene therapy vector for Crigler-Najjar. And as you know, it's an enzyme that basically works on the metabolism of iron.
I think immediately what you'd have is you'd have antibody data to know whether we – ImmTOR actually didn't allow the patient to produce antibodies against the AAV vector. I think once you knew that, then depending on what the enzymatic levels were in that patient after they received their gene therapy, you'd have the ability to potentially re-dose that patient. And so, I think at a minimum, the data we'll be looking at is basically, did they produce antibodies against that AV vector, which would allow them the potential for the re-dosing.
And then, secondarily, as you've mentioned, we'd be looking at the enzymatic levels that the gene therapy was actually producing in that patient's liver to see whether that would give them enough of the metabolite to allow them to not have a liver transplant.
Okay, great. Thank you very much.
Thank you. And the question comes from Yun Zhong with Janney.
Good morning. Thanks for taking the question. So, first, a follow-up question on the patient enrollment in the head-to-head study. And I wanted to ask if you have any expectations in terms of the pace of patient enrollment, given that there are other studies ongoing where there's similar patient population?
Yes. As I mentioned, we believe we anticipate fast recruitment of this because you do have two active arms in this study. And that's also the feedback that we received from the sites, that there's interest to recruit rapidly here because patients will get an active drug on both arms.
Okay. And then, on the CureCN study, gene therapy study, have you guided on – provided guidance on when initial data will be available?
We have not. We have only guided that we are conducting the preclinical studies in the first half of this year and initiate the second half of this year the extra clinical trials. We have not guided on when we will get results.
Okay. And then, the last question, before you start Phase III study, do you plan – or is the requirement for you to meet with the FDA or no?
Yeah. At this time, we'll probably plan on another interaction with the FDA just to confirm the design of those Phase III programs as we move that forward.
That will be after the interim data from the head-to-head study?
We'll determine that in a bit. There's a lot of different time points when we can submit different data points down to them and seeking their guidance. So, again, as we move forward on that, we'll make sure we keep people informed as to the next steps.
Okay, thank you.
Thank you. And as there are no more questions at the present time, I would like to turn the floor to management for any closing comments.
Thank you very much for your attention. Thank you.
Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.