Syntara Ltd

ASX:SNT

Earnings Call Analysis

Earnings Call Transcript 2024-Q3

[Unknown Executive]

Thanks for standing by, and welcome to the Syntara Investor Webinar for the Quarter Ended March 2024. All participants are in a listen-only mode. [Operator Instructions] . On the webinar from Syntara today, we have CEO, Gary Phillips; and CFO, David McGarvey. The presentation will last for approximately 15 minutes, and then we'll take questions. Gary, I will hand it over to you.

[Gary Phillips, executive]

Thanks, Matt, and welcome, everybody. Thank you for sparing your time this morning. I know that this is the final day of reporting season. So thanks for sharing a few minutes with us . As Matt said, I'll run through the highlights of what we've done in the last quarter and look ahead to a very busy couple of quarters coming up in terms of news flow and try to orientate you in terms of the things that you should be looking for going forward. So clearly, the key investment for the company and the key asset and milestones that will drive an increasing value in the company is our lead asset, SNT-5505 and it's study in myelofibrosis. And as I've described in the quarterly update by editorial. There are things which drive value, and we need the cash to get to the point where we're delivering results on meaningful Phase II studies. The myelofibrosis Phase II study is meaningful. It's already gone past the FDA twice, once for the monotherapy study, which we've already reported on last year.

And now to get approval to start the study, which is a combination with the standard of care, ruxolitinib. We have 19 trial sites opened in this FDA IND-approved study in Australia, Korea, Taiwan and the U.S. And I'm really pleased to say that the study is recruiting well. As of the end of April, today we are 60% recruited, of the 15 patients that we're looking for, 9 have been recruited. And that means we're well on track to complete the recruitment by the middle of 2024.

Now that's important. It sets us up nicely for the largest hematology meeting globally, which happens every year, the American Society of Hematology, which is in the first week of December. So this study, to remind you, is an open label study. We're hoping to recruit all patients before the middle of the year. That means we will have 6-month data from many patients to report at the American Society of Hematology in the first week of December. That is a key milestone and deliverable and one thing that will drive value going forward. So that's a really exciting thing to look forward to in the year and one which the company is really executing at the moment on the plan that we have.

I was also delighted in this last quarter to announce that we have attracted a government grant from the Medical Research Future Fund, the MRFF, an Australian government brand to work alongside the University of Newcastle and the Australasian Leukemia and Lymphoma Group to deliver a study in myelodysplastic syndrome. Myelodysplastic syndrome is another hematological malignancy, a cancer. It's a disease which is -- sits well alongside myelofibrosis for 5505. It's a disease which the companies which are following us and tracking us in terms of results from the ongoing study at the moment, are also commercially extremely interested in, and it will add commercial value to the company as we start to recruit that study and look to produce results in the middle of 2025.

That study is due to start recruitment in the second half of 2024. It's going in as a first-line treatment on top of standard of care. So again, an exciting development and one which the shareholders of Syntara get for a very little investment. The grant from the government covers a lot of the costs -- Syntara costs of $700,000 over a period of 3 years. So a really good value for shareholders.

And then lastly, I think, we announced, obviously, in the last quarter that we were selling -- that had sold the mannitol business. And I just wanted to report back 1 quarter later that the cost reductions that we forecast of $14 million per annum are on track. Everything that we're seeing at the moment going through the accounts is quite a complicated business to separate the mannitol business from the rest of our business, but we've -- we're, if anything, ahead of schedule, full responsibility for all the costs of the mannitol business unit other than the lease we have on facility, have already been transferred to the acquirer of the mannitol business, Arna Pharma.

That facility lease is expected to transfer in the current quarter, which means that from the next quarter onwards, we will be fully separated. So the impact of those cost reductions is felt already. and I'll talk to the cash flow a little bit later in this presentation, but it sets us up well and gives us -- puts us in a strong position to deliver on the clinical trials that we're currently engaged with.

So for those of you that might be slightly new to the Syntara story, the lead asset, as I mentioned, SNT-5505 is a hematological malignancy of blood cancer called myelofibrosis. This is a fibrosis of the bone marrow. The bone marrow is the body's production unit for red cells and white cells and platelets. So when it becomes fibrotic, then that causes patients problems. The average life expectancy is around 5 years. The current standard of care is a JAK inhibitor. JAK inhibitors treat the symptoms of myelofibrosis, but they don't lead to any significant survival improvement. They are also very poorly tolerated drugs. 75% of patients come off of these drugs within that 5-year period. And once they come off, the median survival rate is only a -- just over a year.

So this is an area of very high unmet need, one where there's a great need for new products to work alongside JAK inhibitors. And one with a great deal of commercial interest as well. There have been several exits from companies developing drugs in myelofibrosis in the last 3 years. All of those exits with Phase IIb, Phase III data have been north of $1.5 billion a year -- $1.5 billion acquisition value. So this is an extremely valuable area and a disease area, which is attracting interest and one which we're focused on delivering the next big thing in this area.

So the study we've already reported on was in a monotherapy sense. So the FDA required us to show efficacy and safety in a monotherapy sense before we go out to combination therapy. Monotherapy patients are end of life. So they've got, as I said [indiscernible] 12 months to live when they come off of a JAK inhibitor. We reported on this study at the American Society of Hematology in December last year, and it was -- the drug was extremely well tolerated, which is unusual in myelofibrosis clinical development. And many of the drugs -- nearly all the drugs in development and ones on the market called cytopenia or low blood counts.

And this is why patients have to come off of them. So our drug doesn't do that. It rips in a completely different and novel mechanism than any other drug in this disease category. And not only was our drug safe but it also showed encouraging signs of clinical efficacy. Half the patients showed that we -- the patients' bone marrow fibrosis reduced. So that bone marrow is being replaced with normal functioning. Bone marrow, which is then reestablishing itself and producing red cells and platelets again. And indeed, we saw improvements in both symptom score and red cells and platelets for these patients that completed the study. So a really encouraging start.

That was the data we took back to the FDA in quarter 3 last year, and they then approved this study, which is ongoing at the moment, which is in 15 patients. These are patients who are on a stable dose of JAK inhibitor, ruxolitinib, the leading drug in this area with sales of more than $1 billion a year in myelofibrosis. We're looking at safety, but also the endpoints that we had in the first studies looking at platelet counts, red cell count, symptom scores, the amount of fibrosis in these patients.

These patients we're going to follow them for 12 months because we saw even at the end of the 6-month study in monotherapy that the patients were still improving. But the 6-month data is what the FDA are interested in, and it's a 6-month data that we will present at ASH in December this year and then the 12-month data by the middle of next year. That interim data, we expect to prompt a discussion with the FDA on the pivotal trial design for this drug to get into registration study. So a really important period for the company. We expect to be fully recruited by midyear and with data coming out in December.

So that -- just to summarize, I'm not going to go over the whole of the pipeline, but Syntara a company that's unusual in biotech circles in Australia in that we do have a pipeline. And investment in Syntara is not an investment in 1 asset, 1 clinical trial, we have a number of assets going forward and many of them in Phase II trials that are due to deliver results within the cash window that we have. So I've talked about the myelofibrosis study, the myelodysplastic study, which is start -- due to start recruiting towards the end of this year with some data coming from that we expect by the middle of next year within the cash window.

We have a scar prevention and scar treatment program ongoing with Fiona Wood -- Professor Fiona Wood at the University of Western Australia over in Perth. We've got a study at that point, which is open for recruitment, which is in patients with burns looking to prevent burn scars in patients with burns. And we're also in discussion with her about the topical treatment following on from the positive results we had from the study last year in looking at modifying existing scars in patients with a topical treatment delivered daily.

And finally, a study in neuro inflammation, where we have a drug again in Phase II, which is treating sleep disorder, which leads to Parkinson's. Most of these patients end up with Parkinson's. We are recruiting that study at the moment. The site in Australia is open and recruiting. We have 3 patients recruited. It's a double-blind, placebo-controlled study. The U.K. site is due to open this quarter, and we expect to see an acceleration in the recruitment rate from that study. And again, with data around middle of next year. So a really exciting period for the company.

I'd just take you back to the cash. So cash balance at the end of March was $7 million. However, we do -- we are expecting additional funds that come from the transition of the mannitol business and the returned security deposit when we give up the lease from the facility that we have, which will add a further $6 million to that cash balance and then also further R&D tax credit later in the year. That, together with the fact that I mentioned that we're on track of reducing the cash expenditures arising from the sale of the MBU which we forecast and now fully expect to be $14 million per annum means that we have cash that takes us through to the middle of 2025.

So off the back of the capital raise which we did in December last year, we have a really strong register that the investors that have taken a part in Syntara. Many of them are specialist health care investors, some of them with a history in myelofibrosis who made money from investing in companies in this disease before. So we're really delighted with the institutional register that we have. We recognize that the share price in the enterprise value at the moment is extremely low for a company with assets which are delivering Phase II trial data within a cash window that it's got. So we're looking forward to the next 6 to 12 months and looking at appreciation with several different shots on goal coming from the pipeline that Syntara has and the trials that it's running.

Just to finish on the news flow, I think whenever considering investment in biotech companies, in particular, where the product development time lines are quite long, the quality of the news flow is all important in terms of thinking of potential value appreciation in the coming period. So we expect within this quarter, still to be reporting a commencement for improvement in that study with Professor Wood in Perth for the prevention of scars coming from burn injuries. These are patients with -- that will have full thickness burns and having skin graft. We expect to report -- I think most importantly that we have completed recruitment of the myelofibrosis study in combination with ruxolitinib. That will put the company on a time clock to the reporting of the interim data with 6 months of data which we'll come to later in the news flow.

Also in the middle of '24, we expect to announce further expansion and talking about the clinical trial development program for our topical skin scarring product, followed by an update on the improvement in that sleep disorder, Parkinson's disease study that is fully funded by Parkinson's UK. And then in the second half of the year, we'll start commencing recruitment in that myelodysplastic syndrome [ 1 ] and that study which is have got great commercial value to potential acquirers of the asset once we have data from the myelofibrosis study. And then publication of the monotherapy data that we talked about at the American Society of Hematology last year.

And then most importantly, the data from the myelofibrosis combination study being presented for the first time at the American Society of Hematology in the first week of December. So news flow there and that last one, the study is open label, so we will have data there, providing our abstract as accepted. We will be presenting an update at that time in the first week of December. So you can count on that. So with that, I'd like to just finish my presentation, and I'm happy to take any questions.

[Unknown Executive]

Thanks, Gary. As you mentioned, we'll move on to Q&A. [Operator Instructions]. The first question is what's -- if you can provide the latest update with regards to the neuro inflammation study?

[Gary Phillips, executive]

So we you have an update on the neuro inflammation yes. So that's a really -- I don't get much time to talk about that study. Our focus is on the hematology, we're not a CNS company. So the neuro inflammation study comes from a drug, which the company already sold once. This is an asset which we sold to [ Boehringer ] in 2015, the company was paid $86 million over the time period that [ Boehringer ] went into Phase II studies of the liver disease -- fatty liver disease called NASH, Boehringer handed it back to us 3 years ago.

And they did so because the drug had an unexpected impact on an enzyme in the brain, which wasn't picked up in the Phase I studies. Now that made it unsuitable, not unsafe, but unsuitable, commercially unsuitable for development in liver disease. But when we showed that drug to the neurologists, they said, this off-target effect that you have on brain inflammation makes it almost a perfect neuro inflammation drug, and they were looking for something that could lead to slowing neurodegenerative diseases like Parkinson's, Alzheimer's disease, Huntington's disease.

Now these patients with iRBD, isolated REM behavior sleep disorder. These patients act out their dreams. They become very violent actually during their dreams. But probably more than 80% -- probably more than 90% of these patients go on to develop Parkinson's disease. So it's a disease which is a very strong indicator that you will have Parkinson's in the future. If we can treat the inflammation in these patients, not only do we have a commercial opportunity to treat patients with this sleep disorder. At the moment these patients only treated with melatonin or sedatives, a very unsatisfactory way of treating them. But these patients go on to develop Parkinson's. And if we can treat the inflammation, there's a chance of slowing down or stopping the progression of Parkinson's.

So this first study is a double-blind, placebo-controlled study, 2 sites, 1 in Australia, 1 in the U.K. It's fully funded by Parkinson's UK -- majority funded by Parkinson's UK. They invested AUD 5 million in this study. They do get a commercial return if the product is successful with a royalty on any income that we get up to a cap 4x the investment they make. So a very, very good deal for the company and its shareholders and one in which we hope to see data from -- by the middle of next year.

So again, quite a bit of interest from companies out there in CNS, sleep disorders and neurodegenerative diseases. We will wait to see some data within the cash window that we've got. So I get a chance to talk about it. It's a really well-developed drug. It's in a really nice indication with a very clear endpoints in the studies that we're doing, placebo-controlled study fully funded by somebody else outside of the shareholders. So it's a really good deal for Syntara shareholders and another strong [ goal.]

[Unknown Executive]

Thanks, Gary. And on a similar vein, can you provide an update on the status of the skin scarring study.

[Gary Phillips, executive]

Yes. So the study, which Professor Wood is really excited about, was the opportunity to treat the patients he sees a lot of, which is patients with burn injuries. And these patients have often 5% of their body surface area or more involved in the burn. They always have to have skin grafts and the scarring that comes from skin grafts. These are often frequently in these patients and leads to further problems down the track. They also need to have repeat surgeries. They often need laser therapy to improve the scarring process going on.

And in her words, finding something that these patients could take after the treatment -- after the burn surgery had healed to stop the scarring would be goal thus for her patients. So a study that's open at the moment is to treat those patients probably within a few weeks after their surgery has happened and the wound has had a chance to heal to be taking our antifibrotic at that time and then following these patients for 6 months and then assessing their scars at the end of that period. We have 2 sites, 1 of which is open in Perth and the other 1 in Brisbane, we expect to open in the next couple of months to recruit 60 patients in that study, and we'll enact more details on that study once the first patient is recruited and we have a chance to do a bit of a deeper dive on it. So that's the one aspect of the scarring program.

The other one is to build on the study that we reported last year, which is topical treatment of patients with existing scars. If you remember, those patients that we treated for 3 months with a topical LOX inhibitor saw a 30% reduction in the collagen in their scars. The patients had pretty old cars, an average age of 13 years to scar. So we felt that the -- whilst we made a really unprecedented change. Fiona Wood terms unprecedented change to the structure of the scar. We didn't see much change in the appearance of the scars. And we think that's standard patient selection.

So we're currently reviewing with Professor Wood and her colleagues, which is the right patient group to be using a topical scar treatment in probably in patients with younger scars with hypertrophic scars following surgery, but ones that we can accurately measure and quantify going forward either as a prevention or as a treatment for those scars. So that's something we'll update the market with again when we got more details on it probably in the middle of the year.

[Unknown Executive]

Thanks, Gary. And as a follow-up to that question, someone's asked around commencement? And does the patient criteria have a specific impact on the rate of enrollment [indiscernible]?

[Gary Phillips, executive]

Yes. So the patient -- the entry criteria into that study is that the patients have to have a burn that requires -- is a full-thickness burn that requires a skin graft that is over certain percentage of their body surface area. We've tried to define it within a certain age group as well. These patients, both Perth and Brisbane, see a lot of these patients each year. We're looking at the last few months of patients going through Perth to assess whether those entry criteria need to be widened to capture more of those patients. So that's an ongoing discussion that we have with Professor Wood and her colleagues.

[Unknown Executive]

Another question that's come through is just with regards to the cash window you mentioned and the results being delivered in that time. Can you just elaborate on that a bit in terms of has that been 9 months or what does the cash window, where does that take you to?

[Gary Phillips, executive]

So with the -- I think it's important to understand this, actually. So because if you look at the last couple of quarters of cash, it is a mixed picture with the separation of the mannitol business and the amount of cash that the company has paid on behalf of the new mannitol business that's currently being reimbursed and the impact of the cost reductions that we're making and dropping the lease as well.

So if we take into account the cash savings that we've made, which, as I said, is estimated it -- I forecast currently at $14 million per year. And we add that to the cash we already have and the additional cash that is still expected to come into the company. That takes us through to the middle of '25. So our cash burn is down to around about $1 million a month, we expect, which is covering -- I should add, all the expenses involved in all of those Phase II clinical studies that we've just talked about.

So it's a remarkably efficient company at the moment. We -- our staff numbers are down to below 25 now. The rent that the company is paying has dropped to from over $2 million to under $200,000 a year. All of these things have contributed to really making the cash that we have go a lot, lot farther and delivers us well beyond the December time point when we'll have interim data from that myelofibrosis study.

And after the middle of the next year, we're expecting to see the 12-month data from the MF study, interim data from the myelodysplastic syndrome data and some data also from the skin scaring study and the sleep disorder study as well. So a remarkably efficient engine producing data and news flow with cash to take us out to that middle of '25 point.

[Unknown Executive]

Thank you, Gary. I've got no further questions. So I'll just allow you to provide a concluding comment.

[Gary Phillips, executive]

I think in conclusion, it's been great to have the opportunity to update you on the last quarter. It's entirely reassuring, I believe, where we're delivering on the cost reductions that we said that we would do in a very major way. Syntara is a completely reengineered, restructured company with a very different business model from Pharmaxis and one with an incredibly rich pipeline, which is currently with its lead asset in myelofibrosis, doing what we said that we would do and it's well on the way to recruitment to be 60% recruited at this point, puts the company in a really strong position to complete recruitment by the middle of the year and deliver on significant data in that first week of December.

So I'm looking forward to that. And hopefully, the next quarterly update around the middle of the year, we'll be talking more about that recruitment rate than what we're seeing in the data.

[Unknown Executive]

Thanks, Gary, and thanks, everyone, for joining, and we look forward to updating you next time.

[Gary Phillips, executive]

Thanks very much.