Nanobiotix S.A (NASDAQ:NBTX) Q2 2022 Earnings Conference Call September 29, 2022 8:00 AM ET
Laurent Levy - Co-Founder, CEO
Bart Van Rhijn - CFO
Kate McNeil - IR
Conference Call Participants
Jon Miller - Evercore
Suzanne van Voorthuizen - Kempen
Good afternoon and good morning. And welcome to Nanobiotix Conference Call to discuss our First Half 2022 Financial and Operational results. Joining me in the call today, are Laurent Levy, co-Founder and Chief Executive Officer and Bart Van Rhijn, Chief Financial Officer. As a reminder, today's call is being webcast and will be available on our website for replay.
I would like to remind you, that this call will include forward-looking statements, which may include statements regarding the progress, success and timing of our ongoing and planned clinical trials collaborations, regulatory filings, data presentation, and future research and development efforts, among other things. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change. They are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from our current expectations.
Accordingly, you are cautioned not to place undue reliance on forward-looking statements. This review the full description of risk factors that can be found in the documents we filed with the AMF in France and SEC in the United States, including the RFS and 6-K filed yesterday and our most recent URD and 20-F, each of which are available in the Investor Relations section of our website, along with a press release issued yesterday highlighting our corporate and financial results for the period.
In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, Nanobiotix undertakes no obligation to update them to reflect subsequent events or future circumstances.
With that said, I'd like to turn the call over to around the Laurent. Laurent, please go ahead.
Thank you, Kate. I would like to welcome everyone participating via conference call and webcast today. As Kate mentioned, we issued a press release yesterday, highlighting the company's operating activity, and financial results for the first half 2022. Before we open the call for Q&A, I would like to take a moment both to review our recent progress and outline how we plan to continue our advance development of NBTXR3 and drive shareholder value in the near term and long-term.
Since inception, we have generated a substantial body of evidence pointing to the novel potential of NBTXR3 to play a critical role in cancer care. Leveraging evidence of both local and distant to more control, we have focused our development efforts on the unmet need patient with local events, and treatment resistant recurrent and metastatic cancer.
With this focus, we believe we can build a comprehensive and an excellent child that could offer meaningful improvement to parents in the health care, both in terms of treatment and quality of life, and serve as a model to replicate it across additional solid tumor indication in the future.
During the first half of 2022, we made significant progress towards this goal. Year-to-date, the most defining moment in our clinical program as being the initiation of patient enrollment in NANORAY-312. Since then, with the support of our partner LianBio, we have activated approximately 50 sites across 13 country, including the initial site activation and first patient in LianBio's territory a few weeks ago.
Having also recently initiated clinical site activation in the U.S., I'm pleased to report that NANORAY-312 is now actively recruiting patients in each of the three core territory that will drive the study Europe, U.S. and Asia. These achievements reflect the hard work of our entire Nanobiotix team as well as our collaborator at LianBio, and the impressive support of investigators and patients.
This hard work has including nimble response in the face of multiple regional challenges. As we discussed in March, NANORAY-312 was initially intended to include certain sites in Russia and Ukraine. In light of the ongoing war in that region, the team set about rapidly assessing alternate strategy for achieving our patient enrollment goal and have already identified replacement sites in isolated country. Because of the swift action, we do not currently anticipate an impact on the overall study timeline. So, we need to see some shift in early enrollment curve as a result.
Further, why the world continue to make significant progress in battling the pandemic. The effect of COVID-19 continue to reveal themselves in different ways across different territories, including a recent surge in cases in China, continuing shortage of clinical research staffing, at the center in the U.S. While this process is not a simple one under the best of circumstances, I'm very proud of how our team has proven itself capable of rising to the challenges laid before them, united in a purpose for the patient we hope to serve.
With each of our key territory is now active in the city, we look forward not only to continuing to have new sites, but to beginning to capture data that we can use to validate and refine or underlining assumption about recruitment, enrollments and expected event rate in our target patient population. We anticipate that it will take approximately four to six months of global recruitment to provide data-driven validation of our anticipated study timelines, including our planned facility analysis, anticipated in mean '23 And our plan interim and security analysis that is anticipated in H2'24.
As we saw, NANORAY-312 kickoffs and ramp up during the first half of 2022, we were equally pleased to complete enrollments in the Study 102, a dose escalation and expansion study in a similar head and neck cancer population. This study has provided incredibly valuable information regarding the activity of NBTXR3 in head and neck cancer, and indeed, was a key driver in our decision to pursue registration in head and neck cancer as our first global registration pathway.
Having reported, median overall survival of 17.9 months in the alternative population and 23 months median survival in the available patient population as of February of this year. We made the decision to modify the protocol for this study to limit the required follow up to a minimum of 12 months.
Bed on deck of enrollment and decision impact the plan follow up for only four of the 74 patients enrolled in the study and now positioned us to report and measure and reduce final dataset from Study 102 in mid-'23 while reducing the overall expense of this trial.
The first half of 2022 has also seen significant progress in immunotherapy program. I'm very pleased to now, be able to say that what started as exploratory study evaluating radiotherapy activated and VGFR-3 in combination with anti-PD-1 immune Checkpoint inhibitor as lead to compelling evidence of activity and the identification of our certain planned registration program for patient with local regional recurrence or recurrent metastatic head and neck cancer that are resistant to PD-1 therapy.
As we reported two weeks ago, following enrollment of 29 patients across three quarters of patients with advanced metastatic disease, we have completed the dose escalation phase of the Study 1100 and determined the recommended Phase 2 dose to 33% of gross tumor volume for all patient cohorts. The dose will now be further evaluated in the dose expansion part Study 1100. As you will recall, in the first half of 2022, we modified the three expansion cohort in the study for more robust data collection in our target population of patients with head and neck cancer resistant to prior immunotherapy.
As we advanced dose expansion part of Study 1100, we're looking forward to providing everyone with an updated look at data from the dose escalation phase at a Medical Congress in the fourth quarter. Based on precious data generated by Study 1100, right we initiated discussion with FDA earlier this year, to better assess what a potential registration pathway for this patient population could look like.
This dialogue was very informative, and has put us in a strong position to develop the potential Phase 3 protocol that we intend to submit for agency review and comment by Q1 2023.
I would like now to turn the call over to Bart to briefly discuss our financial results for the period. Bart?
Bart Van Rhijn
Thank you, Laurent. The focus execution in our clinical development programs during the first half of 2022 are matched by a similar focus on strengthening our financial position and the success is equally apparent. This time last year, we reported that our capital resources were expected to fund operations into Q1 of 2023. Since that time, we have undertaken several initiatives intended to improve our financial flexibility and extend our operating runway.
First, we implemented cost control initiatives intended to drive a double-digit reduction in 2022 SG&A expenses. And in the second quarter of this year, we expanded on these initiatives by prioritizing R&D expense, supporting our late-stage development programs, and scaling back auto, clinical, preclinical and manufacturing expense, while reducing our infrastructure cost to achieve a target reduction in operating cost of approximately €12 million to €15 million SG&A included. These efforts, collectively added nearly two quarters to our anticipated operating runway.
Second, we announced our intention to restructure our existing debt obligations. And I'm pleased to report that earlier this month, we reached an agreement in principle to restructure €30.7 million euro in outstanding debt obligations related to the company's 2018 loan agreement with the European Investment Bank.
As detailed in our prior press release and findings yesterday, this restructuring aligns the repayment schedule with our anticipated commercial timelines, and the first the majority of our principal payments due in 2022, and 2023. We anticipate that this agreement will be finalized in the next several weeks, and result in an additional quarter of operating runway in 2023.
Finally, during the second quarter of 2022, we secured access to flexible equity financing line to Kepler Cheuvreux. Significantly, we are not committed to issue shares now or at anytime in the future, nor are we obligated to do so at any price. Through this structure, Nanobiotix has the full authority to activate or suspend access to capital through this facility at its full discretion.
However, it would ensure that Nanobiotix has guaranteed access to capital to extend its operating runway by approximately one quarter. These initiatives combined with a €63 million in cash and cash equivalents, reported as of Jun 30, 2022 are expected to support our planned clinical development programs into the first quarter of 2024.
As Kate mentioned, yesterday after the closure of the U.S. markets, Nanobiotix reported financial results for the six months ended June 30 2022. As both our release and associated filings with the SEC and AMF detailed financial results for the periods, I will refer you to these documents for a more complete breakdown of our financial results.
However, I will note that the operating costs for the period decreased from €31.1 million for the six months of 2021 to €27.2 million for the first six months of 2022. Operating costs for the period reflect an increase of approximately €1.1 million in R&D expense, primarily driven by costs associated with the initiation of our global Phase 3 study. The decrease of approximately €0.5 million in SG&A expense due to increased efficiencies, and a decrease of nearly €4.5 million in of our operating income and expenses related to the pharma PharmaEngine contract termination in 2021.
Net loss attributable to common shareholders for the first six months ended June 30, 2022 was €26.4 million or €1.76 per share, compared to a net loss of €30.4 million for the comparable period in 2021.
And now, I will turn the call back to Laurent. Laurent?
Thank you, Bart. To close out this call, I would like to reiterate how excited we are about our continued clinical and operational progress so far this year. This disciplined execution of our priority pathways and careful management of our resources has enabled us to continue to invest in our pipeline, drive value across our business and ultimately advance our goal of delivering significant innovation and improve outcome for patient with head and neck cancer. Looking ahead, NANORAY-312 remains a key operational priority, and we look forward to critical advancement in this study over the coming months.
Additionally path Study 1100 continues to offer validation of our IO combination strategy, we look forward to each step that moves us closer to our second Phase 3 registrational program. With those installation complete, we will now setup to have a dataset supporting or second targets the indication to the dose expansion phase of Study 1100 and leveraging our existing data to support development of the Phase 3 protocol submission to FDA by Q1 of next year. We look forward to keeping you updated on our programs evaluates.
This concludes our prepared remarks, we will now open the call for question. Operator?
We will now take the first question. The next question comes from the line of Michael DiFiore from Evercore. Please go ahead, your line is open.
Hi, guys. This is actually John Miller with Mike. I was going to ask about your efforts to extend cash runway. It seems like you've made a great deal of progress, extending cash runway potentially into 2024, but still not -- to potential data readouts for NANORAY-312. So I guess, in the interim, when -- as we're seeing more results from Study 1100, what additional levers are you going to have to pull to further extend that cash runway and get coverage for the pivotal trial?
Bart Van Rhijn
Hi, John. This is Bart. Thank you for your question. As you can tell, we're sensitive to the financing demands of the pipeline and the product that we have. We have undertaken numerous internal and external initiatives that have begun to reflect in the H1, 2022 financials. We'll see more of that in the second half of this year. We're very diligent in every opportunity to drive additional efficiency. And we're optimistic and we'll explore all options, including all the ways that biotechs would consider, including VD.
More specifically, we have a conference ahead of us with Citi, where we will do an update that I think will be of interest. In addition, we'll look forward to bring to the market results on the pancreatic study that is ongoing, as well as [indiscernible] early in 2023.
Great. That makes great sense. Can we focus then on what we could potentially see at SITC that'll be the dose escalation, I assume for most of the patients in that cohort. Can you confirm how many additional patients you will have there versus prior times you've shared that data?
Mike, good morning. So that's Laurent speaking. So for the SITC conference, what we do expect to present is the result of the escalation part of the Phase 1 we have completed. In total, there have been 28 patients injected and evaluable for safety, and feasibility, and there will be 10 patient evaluated for efficacy that will be presented. Also, now we started the recruitment and expansion phase, but it's too early to show the expansion phase as we speak.
Awesome, awesome. That makes sense. I guess, one final one for me. What is your pathway towards developing further indications? I know you've already mentioned pancreatic and esophageal and obviously you have an ongoing collaboration with MD Anderson. But given your bandwidth limitations, I'm wondering what the opportunity is to start expansion cohorts or start additional early cohorts in indications beyond head and neck.
So the good question. Right now that the company is really focused in this head and neck franchise, both with the Phase 3 that is ongoing across the world and also one, we are preparing in combination with IO in refractory patients. Now, as you may have noticed the collaboration with MD Anderson, including already five ongoing trials, and is still remaining space in this collaboration to go further, not only for Phase 1, but for also potential Phase 2 randomized trial. So here there is an opportunity at low cost to move forward into this program.
But I think as we continue to grow and bring new data to the market, we may have new opportunity rising to develop further indication. But right now, all the cash and the company is really focused on this head and neck franchise.
Great. Thanks so much for the color Laurent.
Thank you. [Operator Instructions] We will now take the next question. And next question comes from the line of Colin Bristow from UBS. Please go ahead. Your line is open.
Hi, this is Elliott Bosco [ph] on for Colin on UBS. Could you -- I just want to confirm some timelines here. So it sounds like an NBTXR3 might be on the market and 2025 following the completion of the interim analysis of NANORAY-312. Could you just give your thoughts on that? And then also, when might we expect a readout of the expansion phase of Study 1100? Thank you.
Thank you for the question. I think as far as the time to market is concerned, it's not something we did communicate, because that will involve multiple steps for that. What we think is that if the interim readout on the primary endpoint PFS is positive, and according to previous discussion we have had with the FDA, we may be eligible for an accelerated approval. So if we assume that H2'24 will be the readout for this interim, then we need to have the usual time for getting the data submission and getting approval through FDA. So that's a possibility, but now let's move forward into trial and get the results and see where they are to move forward into the next phase.
So that's for a head and neck Phase 3 trial ongoing. Now about your question on the 1100, as I just mentioned, we started recruitment in the expansion phase that will include three cohorts a little different from the three cohorts from the escalation phase. Because here, we want to look at a patient based on their need, for example, cohort number one being head and neck patient refractory to PD-1 that could have zero met or unmet or local relapse in the head and neck area. And this cohort is particularly important because it will pave the way to our pathway to registration with the same population. So now that will be an open label trial. So we will be able to give along the way some update, but we did not define yet, when will be the first one. But I think as soon as we get a good number of patient in one of the cohort or cohorts, then we will we will keep that update.
Thank you. That's all for me.
Thank you. We will now take the next question. One moment, please. And the next question comes from line of Suzanne van Voorthuizen from Kempen. Please go ahead. Your line is open.
Suzanne van Voorthuizen
Hi, good afternoon, guys. This is Susan from Kempen. Can you perhaps elaborate a bit more of a benchmark we should keep in mind for the Study 1100 data that we will be getting at Citi. I believe we saw some of higher response rate in treatment by recent previous preliminary data sets, although these was a small number of patients. So I'm wondering, should we be expecting different response rates between patients that have prior immune Checkpoint inhibition or those who are treating naive ? And then I have a follow up after that as well.
Thank you, Susan. And thanks for the question. So here in in the Phase 1 escalation part, there is a mixed population of patients. So it's not direct, when you want to make a comparison with what's happening in those patients, nevertheless. I think looking at what has been published in the IO world, and especially in the head and neck population could be a good basis to think about it. And we could have two different tasks for that.
The first one is, for example, KEYNOTE-048, which gives a reference in head and neck patient early line getting PD-1 where we see an overall response at the end the true responses around 16% So that could be a good baseline to look at for naive patients, meaning that there is around 85% of this patient that will not respond being either primary or secondary refractory patient.
Now looking at literature, when you look past-failure of PD-1 in this population as an example, we see a fairly low response of the patient, regardless of the treatment they will get, would it be chemo or other type of treatment, but I think we should assume something around 5% to 7%, maybe, but depending on the series. So let's say this could be some of the baseline for responder.
And from a more broader perspective, I think when you look at naïve patient versus refractory, you see patients that have different baseline not only being relapse refractory, but also in time of the disease progression. And obviously, we could legitimately think that we could have a greater effect for naive versus refractory, but for that, we need to wait and see due the data we have generated, that as we speak we are extracting at the moment to be ready for SITC.
Thank you. We will now take the next question. And the next question comes from the line of Arthur He [ph] from HCW. Please go ahead. Your line is open.
Hi, Laurent. This is Arthur on for Keith. I have two questions. One is regarding the NBTXR3 immunotherapy combination trial. So for the plan to submit to the FDA regarding the registration pathway, could you give us more color on that part? And, I assume that the supports from the PD-1 resistant patient population.
So where we are at the moment having been completely escalation path, we have our recommended Phase 2 dose. So we're able to complete and finalize our proposal to FDA for the protocol that we expect to submit the discussion, beginning of next year, let's say Q1, that's what our plan is.
And I'm sorry, I'm not sure I got the second part of your question.
The second part is the patient population for the potential registrational part is for the PD-1 resistant patient population or also including PD-1 naive?
Okay. So at this stage, what we want to achieve is to show a big delta in patients that are refractory to PD-1 that could include both primary or secondary resistant to PD-1. And this was in the head and neck metastatic setting or local regional resistance setting.
When you look into cohort, number one of our 1100 trial expansion seed, you should have a similar population.
Got it. Thanks for that. My second one is, I just curious are regarding the collaboration with MD Anderson for the pancreatic cancer patient. For those data by the end of this year, which value we could expect to from? And yeah, so that's it.
So what do we expect to get by the end of the year, is to get our P2D from the Phase 1 part and assuming the data are positive to be able to move in the expansion part of this trial. Just maybe as a reminder, the escalation path was on truly an affordable patient -- about pancreatic cancer patients. And if we think there is enough sign here, and a good safety and visibility, then we will move into the borderline affordable setting. So that's the information we should get by the end of this year then. MD Anderson based on that will decide when they present data in a medical congress. But at this stage, we don't have yet to date for that presentation.
Got you. So as of now these trials fully developed by MD Anderson.
Got you. Thanks. Thanks for taking my question.
Thank you. I will now take a written question. It will be read by Kate McNeil. Please go ahead.
Yeah. Hi, Bart and Laurent. I have a question that's come in from Clément Bassat at Portzamparc. Unfortunately, he's having a little bit of difficulty with his connection. So he asked that I share. His questions are on two fronts. The first relates to Study 312. And he is asking about some information about the progression of enrollment in 312, as well as what is the biggest location expected in the study the U.S., Europe or Asia?
The second questions relate to the anticipated phase three in immune-oncology, asking if we can please provide more information about the endpoints for the planned study, asking if we will watch the PFS like we do in 312 or the response rate? Also, will we have a control arm or do we plan to have a control arm in that study, as we do with 312?
Thank you, Kate. So maybe they start with the 312, which is our ongoing phase three recruiting. So to give you an overall view on where we are in the progress we've made, as you know, we've started injecting patients at the beginning of this year in Europe. And we've been pleased to also be able to treat the first patient in Asia few weeks ago. And now, U.S. have activated sites that are recruiting. So we see a very good progress in the number of open site. We mentioned 50 in our press release and as we speak, we even have more than 50 sites now. So we're happy about that.
Now, I think to get a good view on how fast we're going to recruit patient in this trial and to refine the readout timeline for interim our security, we will need I guess, around four to six months, full-sized recruiting to get a good view and especially of the number of patient that could be recruited per months per site.
So we're progressing. We're happy about the progress and in months, we will be able to give a bit more visibility on patients and in time to read out refine based on the actual life equipment.
So that's for the 312 part. On the IO front, what we expect, but of course, this is subject to final approval by FDA. Nevertheless, based on the previous discussion we have with them is that we may go for endpoint linked to overall response rate as one of the key endpoints along with at the end of our survival, which is one of the key thing. During our last call, we also mentioned that during the last interaction we have had with FDA on that matter, they told us that we could have the possibility to design a trial where a readout on overall response rate could be used for an accelerated approval. So that's along those lines that we are designing the trial.
And to your question about a control arm. Yes, this way we'll need a control arm. Knowing that in the head and neck metastatic refractory setting as an example, it's hard to find another standard of care. So, here we're looking at what could be done as a control arm, especially because we've seen in many clinical trial, our knowledge that is more there was another one that when you just choose radiation alone with Checkpoint inhibitor, anti-PD-1, we do not provide benefits for patients. So I think we'll be more -- along the more open control arm than just radiation plus PD-1.
Thank you. We'll now take the next question. One moment, please. And it's a follow up question from Susan from Cantor. Please go ahead. Your line is open.
Hi, thank you. Sorry, I got disconnected for a bit. So maybe you have touched upon it already, then I apologize. But I had a follow up regarding the Study 1100 upcoming data. There's a portion of patients that you are re-sensitizing to Checkpoint therapy. And I was wondering if there's data available or what is seen with pure anti-PD-1 retreatment? How would patients doing that? Thank you.
Bart Van Rhijn
It's Bart. Thank you for the question, Susan. And that's a very key question. It is hard to find a data but post-failure of patients that are continuing treatment under PD-1 alone. But we see and there was part of the answer as mentioned here is when you have patients refractory or non-refractory that you treat with radiation plus PD-1 you dose the adult of that, that's not bring a lot of value. All together patients that are refractory to PD-1 could get chemo, some of them will get continuation of PD-1 and some of them some other experimental treatments, but there's no predefined treatment for this patient. So it's coming more to a palliative seeing than any, any standard of care.
Got it. Thank you very much.
Bart Van Rhijn
Thank you. There are no more questions at this time. I would like to hang back over to the Laurent Levy for final remarks.
Thank you. This was a good call. Happy to have answer to your question and interacted with you. And we hope to see you soon during the different conferences or different calls or investor conference that we're planning to attend. On that note, I'm going to wish you an excellent day and a very good week. Thank you very much.