Lumos Pharma, Inc. (LUMO) CEO Rick Hawkins on Q1 2021 Results - Earnings Call Transcript

Lumos Pharma, Inc. (NASDAQ:LUMO) Q1 2021 Earnings Conference Call May 5, 2021 4:30 PM ET

Company Participants

Lisa Miller - Director-Investor Relations

Rick Hawkins - President, Chairman & Chief Executive Officer

John McKew - Chief Operating Officer & Chief Scientific Officer

Gene Kennedy - Chief Medical Officer

Carl Langren - Chief Financial Officer

Lori Lawley - Senior Vice President, Finance & Corporate Controller

Conference Call Participants

Charles Duncan - Cantor Fitzgerald

Lina Kaminski - JonesTrading

Jacques Villefranc - Stifel

Operator

Good afternoon, ladies and gentlemen, and welcome to Lumos Pharma's First Quarter 2021 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference call is being recorded.

I will now turn the call over to Lisa Miller, Senior Director of Investor Relations.

Lisa Miller

Thank you. Before we proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under U.S. Federal Securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports filed with the SEC. The forward-looking statements made during this call speak only as of the date hereof, and the company undertakes no obligation to update or revise these forward-looking statements. Information presented on this call is contained in the earnings release we issued this afternoon and in our Form 8-K, which may be accessed from the investor relations page of the company's website.

Joining me on today's call are Rick Hawkins, CEO, President and Chairman; John McKew, Chief Operating Officer and Chief Scientific Officer; Carl Langren, Chief Financial Officer; and Lori Lawley, Senior Vice President, Finance and Corporate Controller. Rick Hopkins will provide a corporate update, John McKew will review the company's lead therapeutic candidate and our clinical trials, and Lori Lawley will wrap up the call with a review of the first quarter 2021 financial results and an update of cash guidance. Following our prepared remarks, we will open the call to questions. I will now turn the call over to Rick.

Rick Hawkins

Thank you, Lisa, and good afternoon and thank you for joining us on today's call. After the market closed today, we issued a press release detailing our first quarter 2021 financial results and highlighting our recent clinical and corporate activity. I'm pleased to report that the quarter was a productive one, during which we saw a presentation and publication of new data and analyses supporting the differentiated mechanism of action of our novel oral therapeutic candidate LUM-201 for the treatment of pediatric growth hormone deficiency and patients identified by our predictive enrichment markers.

We also continue to advance our clinical programs for LUM-201, adding clinical sites for Phase 2B OraGrowtH210 trial and moving towards the initiation of our OraGrowtH212 trials during the second quarter. Finally, we completed the modernization of our Priority Review Voucher. Receiving in January the final $26 million tranche of the $60 million due to the company from this sale. With these resources in hand, we believe we are well-positioned to advance our LUM-201 programs and explore business development options to enhance our pipeline and deliver value to our investors.

And before turning the call over to John McKew for a deeper dive on progress in our clinical programs, I just want to highlight a few recent events. Last week, we held a key opinion leader forum featuring presentations by Dr. Bradley Miller of the University of Minnesota and Fernando Cassorla of the University of Chile. This was a well-attended and informative event where Dr. Miller and Dr. Cassorla provided an overview of the current treatment landscape in PGHD and outlined the unmet medical needs in this space.

As part of his presentation, Dr. Cassorla also presented newly released PK/PD data from a subgroup of the Merck 020 trial, evaluating LUM-201 and naive to treatment PGHD patients. These data were additive to the peer-reviewed data recently published in the Journal of Endocrine Society, demonstrating once again the potential of our predicament enrichment markers or PEMs of baseline IGF-1 levels and peak stimulated growth hormone levels after a single dose of LUM-201 to identify patients likely to respond to LUM-201 therapy.

Additional data were presented last month at the Endocrine Society 2021 Annual Meeting known as ENDO, further demonstrating LUM-201's unique potential to elicit therapeutic level response in PGH D patients and in differentiating this molecule from standard growth hormones secretagogue. These results add to the previously mentioned data, further supporting the approach we're using in our clinical trials. John McKew, our COO and Chief Scientific Officer will have more to say about these data in a moment.

So as I mentioned, or Phase 2B OraGrowtH210 [ph] and PGHD continues to enroll patients. Additional clinical sites have opened for enrollment with over 50% of our target number of sites now activated. Our OraGrowtH210 trial of PK/PD study in PGHD is expected to be initiated this quarter, with data from that trial anticipated to confirm prior data demonstrating the unique pulsatile of LUM-201.

We believe LUM-201 has the potential to disrupt the injectable therapeutic market for PGHD state. We also believe that LUM-201 is essentially a pipeline and a product with the potential to target up to 10 other indications for which growth hormone has been approved. We're focusing first on PGHD. And once we gather data from our current program, we plan to evaluate LUM-201 as subset of these other indications.

We're also pursuing business development opportunities to add other rare disease assets to expand our portfolio. We are excited about the progress we're making in our quarter clinical programs and with our solid balance sheet strengthened by the receipt of the final tranche of the $26 million from our PRV sale, we are in good position to advance our corporate strategy. So with that, I'm going to turn the call over to John to review our OraGrowtH hormone secretagogue LUM-201 and recently published data. John?

John McKew

Thank you, Rick, and good afternoon, everyone. As Rick mentioned, we had some very compelling data presented and published in recent weeks, some of which we highlighted on our last call, but are worth touching on again. Before getting into the details, I just want to remind everyone of the key differentiating factor in the LUM-201 mechanism of action. As you may recall, growth hormone deficiency can be defined by low to nearly absent secretion of growth hormone from the pituitary gland. Current therapies and those in development consists of the delivery by injection of a bolus of growth hormone, or long-acting derivative respectively to restore growth. LUM-201 on the other hand is not a growth hormone but is instead a growth hormone secreted out that acts within the body's natural endocrine pathways to stimulate the body's ability to release growth hormone at the same intervals and subject to the same endocrine feedback loops that occur naturally. Utilizing this endogenous release mechanism should enable the naturally occurring IGF-1 feedback loop to be preserved to help regulate the balance of growth hormone on IGF-1 levels in the body.

Given this endogenous nature of LUM-201, to benefit from LUM-201 therapy individuals must have a functioning though diminished HPG H [ph] axis. For this reason, our approach is to target the moderate PGHD population of patients who are able to produce some growth hormone naturally, but not in sufficient amounts to attain normal adult height. We believe these patients can be identified using our Predictive Enrichment Markers or PEMs to select the moderate PGHD patient group likely to respond to LUM-201 therapy. Our analysis of the large Genesis dataset published in the Journal of Endocrine Society suggest that approximately 60% of the total PGHD population would fall into this moderate category.

The new data highlighted by Dr. Cassorla during our Key Opinion Leader event last week supported this thesis, demonstrating that the specific PEMs of a baseline IGF-1 level greater than 30 nanograms per mil and a peak growth hormone level of greater than or equal to 5 nanograms per mil after a single dose of LUM-201 identify this moderate PGHD patient population likely to benefit from LUM-201. In his KOL event presentation, Dr. Cassorla discussed newly released data from Mercks 020 study as part of his overview of LUM-201's mechanism of action. The subgroup of the Merck 020 trials specifically examine the effect that LUM-201 has on the pulsatile secretion of growth hormone over 24 hours in patients with PGHD after six months of treatment with LUM-201, compared to each patient's baseline GH secretion.

As has been previously observed in adults, LUM-201 increase the pulsatile release of growth hormone for 24 hours in two PEM positive patients. Importantly, following six months of treatment with LUM-201, area under the curve analysis showed increases of growth hormone of less than twofold in these PEM positive patients that resulted in substantial increases in height philosophy. As expected, the one PEM negative patient showed no increase in growth hormone AUC over the 24-hour monitoring period and no increases in height velocity after six months of treatment with LUM-201, further supporting the ability of the selected Predictive Enrichment Markers to identify both those likely and those unlikely to respond to LUM-201.

We believe these data are important as they support preclinical data, which show that pulsatile delivery of growth hormone produces greater efficacy than continuous exposure to the same amount of growth hormone. Data presented at ENDO in March distinguished LUM-201 from standard growth hormone secretagogues. A poster entitled LUM-201 elicits greater growth hormone response than standard growth hormone secretagogues in pediatric growth or deficiency, supports other data suggesting that LUM-201 is unique in its ability among the secretagogues traditionally used to diagnose growth hormone deficiency.

The poster presented an analysis of data from a prior clinical study comparing the peak growth hormone responsive LUM-201 to that of standard growth hormone secretagogues in children naïve to treatment and previously diagnosed with growth hormone deficiency. The objective of the analysis was to determine whether LUM-201 stimulates growth hormone response uniquely compared to standard growth hormone secretagogues. The analysis demonstrated that in children with growth hormone deficiency, the growth hormone response to a single oral dose of LUM-201 greatly exceeds that observed with standard growth hormone stimulation agents.

The difference in growth hormone responses increases with higher baseline concentrations of IGF-1and higher growth hormone stimulation test results, as identified by our Predictive Enrichment Markers. The synergistic actions of LUM-201 on the physiological pathways regulating growth hormone release explained by growth hormone responses are greater in response to LUM-201 compared to traditional tests used to diagnose PGHD and indicate that the greatest difference may be found in children with more moderate degrees of growth hormone deficiency.

These results further support data analyses recently published in the Journal of the Endocrine Society demonstrating that LUM-201 has the potential to elicit a therapeutic response in pediatric patients with moderate growth hormone deficiency, or approximately 60% of the total PGHD population as identified by these specific PEMs and gives us greater confidence in the potential efficacy of LUM-201 in this patient population.

Collectively, these data support the importance of PEM selection and the mechanism of action of LUM-201 to identify patients likely to respond to LUM-201. Given its oral delivery and its mechanism of action that depends on the natural HP GH axis, we believe that LUM-201 may offer a preferred treatment option for approximately 60% of children suffering from growth hormone deficiency. We believe these data strongly support our clinical development strategy and PG HD and illustrate why these are the PEMs we are using in our Phase 2B OraGrowtH210 trial.

This trial is a global multi-site trial involving approximately 80 PGHD patients randomized into one of three dose levels of LUM-201 or a comparator arm of standard of care daily injectable growth hormone therapy. Only those PGHD patients determined to be PEM positive, as evaluated by the Predictive Enrichment Markers I described earlier, will be randomized in the study. During this Phase 2B study, the repeatability of the PEM classification will be evaluated during screening for randomization. Dosing will be administered over six months with annualized hype velocity as the key clinical outcome measure. The main objectives for the Phase 2B study are to prospectively confirm the utility of our Predictive Enrichment Marker strategy in selecting likely LUM-201 to ensure that the PEM classification is consistent and repeatable and to determine the optimal dose for Phase 3 registration trial.

The three dose levels of 0.8, 1.6 and 3.2 mg per kg of LUM-201were chosen based on supporting data from the Merck study in PGHD patient mentioned earlier as well as a prior PK/PD study of LUM-201 in healthy adults. A post talk analysis of the Merck study in PGHD showed no statistical difference in average height velocity. For pm positive patients, those with 0.8 mg per kg LUM-201 versus those doses with standard of care were common human growth hormone. The PK/D study in healthy adults showed that 0.8 mg kg pediatric equivalent dose is only approximately one-third of the way up the pharmacodynamic growth hormone dose response curve.

These data showed that administering increasing doses of limb to one and healthy adults up to 100 mg, the equivalent of 2.8 mg per kg in children result in higher plasma concentrations of growth hormone. The three doses chosen for our Phase 2B trial cover that full pharmacodynamic range and suggests the potential for greater growth hormone secretion and potential efficacy in the PGHD patients in our study. The trial opened to enrollment last quarter and we currently have over 50% of the sites activated with additional sites expected to open soon as we progress toward our goal of 40 to 50 trial sites in total. These sites were selected based on their prior history of enrolling PGHD patients in clinical trials, which should enhance the enrollment process and increase our confidence in our anticipated mid-2022 data readout.

We expect to initiate a second concurrent trial of LUM-201 for patients with PGHD shortly. The OraGrowtH212 trial is intended to further illustrate the mechanism of action of LUM-201 and amplifying the natural pulsatile secretion of growth hormone. The OraGrowtH212 trial will focus on pharmacodynamic endpoints at two different doses: 1.6 and 3.2 mg per kg in approximately 24 children with PGHD. The purpose of this study is to replicate in a larger cohort of PGHD patients the pulsatility data in adults and as a small subset of children for the Merck 020 trial reviewed by our KOL. We plan to conduct this trial at a single specialized pediatric center with the ability to perform the more frequent sample collection and monitoring required for these types of clinical trials.

The study will assess growth hormone levels over 24 hours at baseline and after six months on therapy to confirm LUM-201's amplification of pulse till secretion. Once initiated, the study will run in parallel with the Phase 2B OraGrowtH210 trial with the goal of providing supportive data in future regulatory filings and ultimately in any commercial marketing efforts. On our last call, we reported that a fire occurred at the San Borja Arriaran Hospital in Santiago, Chile, the planned clinical site for the OraGrowtH212 trial. Our investigator's clinic was not directly involved in the fire and access to the hospital has been restored and we anticipate initiating the OraGrowtH212 trial in the current quarter.

As we have previously stated, this trial is not on the critical path for regulatory approval of LUM-201 and we do not leave the brief interruption caused by fire will delay our timelines. Finally, as Rick mentioned, we believe that LUM-201 may serve as a platform therapy potentially applicable to other indications for which where common human growth hormone is approved. Pending results in from our concurrent OraGrowtH trials just discussed, we plan to evaluate LUM-201 and these other indications.

Beyond LUM-201, we continue to pursue business development opportunities to license or acquire other rare disease assets in order to expand our pipeline and our ability to provide innovative therapy to those suffering from rare diseases. Before we discuss our financial results, I will turn the call over to Rick to make a few comments about our announced CFO succession.

Rick Hawkins

Thank you, John, and before we proceed, I first want to say a few words about Carl's well-earned retirement. As we announced on April 20, after distinguished 40-year career as a financial executive, Carl will be retiring effective on July 4. We want to thank him for his service to Lumos Pharma and we want to congratulate Lori Lawley, currently, our Senior VP for Finance and Accounting, and Carl's very capable deputy, who will be succeeding Carl as a CFO upon his retirement.

So, I'm now returning the call over to Lori Lawley to discuss financial results for the first quarter of 2021. Lori?

Lori Lawley

Thanks, Rick. I look forward to working with the team and engaging with investors in my new role as Chief Financial Officer. We ended the first quarter with cash and cash equivalents totaling $114.1 million, compared to $98.7 million on December 31, 2020. As Rick mentioned earlier, our current cash position includes the receipt in January at the final $26 million tranche from the sale of our Priority Review Voucher.

We expect an average cash use of approximately $8 million to $9 million per quarter through 2021 and expect our current cash on hand to support operations through OraGrowtH210 readout and completion of the OraGrowtH212 trial. Net loss for the first quarter was $8.6 million, compared to a net income of $0.3 million for the same period in 2020.

Now, I would like to turn the call back over to Rick before we open up for questions. Rick?

Rick Hawkins

As you can tell, we're excited about our advancement over OraGrowtH trials and PGHD, and look forward to the initiation of our of our PK/PD OraGrowtH212 trial [ph]. We're on solid financial footing to execute on our strategy and believe that our clinical trials will confirm the potential for LUM-201 to disrupt the PGHD market. We look forward to continuing to provide updates as we progress.

And with that, we'll open the call for questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Your first question comes from the line of Charles Duncan from Cantor Fitzgerald. Your line is now open.

Charles Duncan

Hi. Yes, thanks for taking my question. I'm juggling lots of calls and thanks, John, for all the detailed information. I have a couple of quick questions. One is on the OraGrowtH210 trial. You said that about 50% of sites were activated. Can you give us a sense of enrollment activity and then perhaps screen to enrollment ratio? Any early perspectives on that?

Rick Hawkins

Charles, we haven't given any guidance to the market in terms of that update. You know these trials usually start at a certain pace. But as more patients are screened in some of the more active sites, and I say experienced sites, enrollment improved dramatically. And I think that we're in that stage now. But we haven't given any guidance as to the two questions you ask.

Charles Duncan

Okay. And then with regard to the PEM, there's a lot of good information that you presented here recently. But I'm wondering if you've had any feedback from the FDA on this strategy and if you can provide any color on that with regard to their, I guess, comfort level, with this forming the basis of even making an observation out of a Phase 2B?

Rick Hawkins

John, why don't you take that question?

John McKew

Yes, so we've engaged with the FDA from the beginning about this idea because it is really the basis for how we think this product is going to move forward. Right? Selecting the correct patients and giving them the correct doses, really how this molecule is going to show itself to be effective. So yes, we have engaged and I think we need to bring them the results from this trial where we're applying the PEMs prospectively to go any further with the idea that we brought to them.

Charles Duncan

Okay, that's helpful. And then one last question, then I'll hop back in the queue. [Indiscernible] pulsatile growth hormone release and the PEM strategy, do you think that that could go beyond -- call it a risk mitigator -- with regard to clinical trial conduct, but as a result in better outcomes or more effective gross stimulation, and perhaps even slower or shorter duration dosing? Given the mechanism with regard to stimulating release versus say, a bolus dose, do you think that the outcome measures could actually be better? What's the basis of that?

Rick Hawkins

Go ahead, John.

John McKew

So, there are some preclinical experiments that say, given the same amount of growth hormone in a fashion versus like continuous fashion so to [ph] grow better with pulsatile release, or administration of growth hormone. So, I think the potential is there for the importance of the peak to [indiscernible] of pulsatility in the release of growth hormone to really show its effect in this study. It's never really been looked at before, because there hasn't been a way to, pulse 23 to 25 pulses of growth hormone across a day at an individual child and then look at their growth in six months. But I think this study will really get at that in a group of patients that we think we've selected to be responsive. So, we'll have a lot of information. And I think there's a very good potential to show that this unique mechanism of action will give us quite a bit of growth while maintaining growth-oriented IGF-1 levels within the physiological ranges.

Charles Duncan

Thanks for the added color and thanks for providing all the information.

Rick Hawkins

Thank you, Chaz.

Operator

Your next question comes from the line of Lina Kaminski from JonesTrading. Your line is now open.

Lina Kaminski

Hi, good afternoon. Thank you for taking my question and congrats on the quarter. So, I guess you did previously mentioned and also in your prepared remarks that you you're looking to expand LUM-201 into additional indications. So, I was hoping maybe you can help us understand what proportion of patients for each of the indications you're looking for? Should be PEM positive and respond to LUM-201? Thank you.

Rick Hawkins

Well, we continue to engage the KOL community and the experts in each one of these diagnoses and we're in the process of determining just that type of question. John, do you want to add any additional color?

John McKew

Yes. All the data we have now on kids with growth hormone deficiency, or kids with pediatric growth hormone deficiency, we've done some thinking and extrapolation. But the data that we have points to the PGHD population and I think each one of the other indications has some unique facets to its etiology and where the defects are. Some were more a combination of several events; others are related to growth and deficiency pretty directly. So, it's going to depend on each different disease indications, and it will depend on us acquiring, a little bit more knowledge about our molecule and how it affects growth in this OraGrowtH210 trial before we really can put our put our hand down and understand broadly for some of these secondary indications how many responsive patients there may be.

Lina Kaminski

Got it. Just one follow up on this. Do you think you might need to adjust your PEM classification based on each indication? Based on the cut off for that?

Rick Hawkins

John, go ahead.

John McKew

We'll have to see, but I think in the end, this set of criteria is useful for identifying patients with a partially functioning access to produce growth hormone and that's kind of the first step in selecting patients that are going to be responsive to our molecule. Some of the other indications, you do have to think about whether some of the deficits are downstream of growth hormone production. Like some of them, you might have a deficit in growth hormone receptor interactions. So, we have to put all these pieces together and think through what's the best approach and what kind of dose range do we have access to in the information we get out of the growth hormone deficient -- that PGHD trial. So, I think there's a lot of really interesting data that's out there for these patients being treated with just for common human growth hormone or we can we can build on what's known about the etiology and find the best fit for our molecule to go after these secondary indications.

Lina Kaminski

Got it. Well, thank you so much and again, congrats on this quarter. And I'll jump back in this queue.

Rick Hawkins

Thank you.

Operator

Your next question comes from the line of Derek Arhila from Stifel. Your line is now open.

Jacques Villefranc

Hi, guys. Good afternoon. This is Jacques [ph], on for Derek. Thanks for fitting us in here and taking our questions. Zooming out, can you talk about how you view adherence for an oral secretagogue versus weekly growth hormone injections? What are some of the pros and cons there?

Rick Hawkins

Let me start with an answer. Jacques, there's so much data out there that any injectable product -- whether it be in PGHD or other indications. It's problematic in a pediatric population and terms of adherence. I think the longer I think [ph] products will improve that, but we've done some direct market research, which shows that if you want to ask both caregivers and clinicians which one they would prefer, that is a weekly injection or a once a day oral as our product is, they overwhelmingly choose an oral product. How that translates to compliance in real world is another question, I think we have to study some more. But we believe that it's definitely going to be a preferable treatment and we believe that there's enough attention by the parents that they're going to stay on their children and make sure that they take this once a day oral product as they should. John, do you have anything to add to that?

John McKew

No, that's perfect.

Jacques Villefranc

Thank you. Got it. That's helpful. And then if I may, on the BB [ph] front, can you speak to putative licensing opportunities? And how competitive that is right now to find an asset? What indications and modalities are you guys thinking about? Thanks.

Rick Hawkins

Good question, Jacques and I can tell you, we have a robust process that has been underway for quite some time that is led by Aaron Schuchart, our CBO. And Aaron has 25 or more years of experience as a Business Officer with both large companies and small companies in the rare disease space. In addition to that, I think we have collectively as a team, many decades of experience of operating in this rare disease space. And as a result, those contacts have been very productive in bringing forth a number of interesting opportunities that we are once again, just actively reviewing and making sure that we make the right choice here.

Jacques Villefranc

Great, that's very helpful. Thanks, and congrats on the quarter, guys.

Rick Hawkins

Thank you, Jacques.

Operator

Thank you. I'm showing no further questions in the queue at this time. I'll hand the call back to Mr. Hawkins for closing remarks.

Rick Hawkins

Okay. Well, we thank you for joining us today and we look forward to keeping everyone apprised of our program over the course of the year. Really appreciate your time today.

Operator

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