Bergenbio ASA

OSE:BGBIO

Earnings Call Transcript 2021-Q4

[Martin Olin, Chief Executive Officer]

Good morning, and welcome to the BerGenBio Fourth Quarter 2022 -- 2021 report. Today, I will present the highlights and the financials for the fourth quarter of '21. With me today, I also have our CFO, Rune Skeie, and our Chief Scientific Officer, Nigel McCracken, who will be available in the Q&A session.Just to remind everyone about the formalities. So today's agenda is a short review of the fourth quarter and the recent highlights. The role of AXL, targeting AXL in serious diseases, our strategic priorities, which we describe as three shots on goal: First, the first-line STK11 mutated non-small cell lung cancer opportunity; the second-line relapsed AML opportunity; and the hospitalized COVID-19 opportunity within respiratory infections. We will then go through the finance report and then with the highlights and the outlook.So in the fourth quarter, we completed the strategic review, and define what we call three shots on goal for near-term clinical development opportunities of bemcentinib. Firstly, the first-line STK11 mutated opportunity in non-small cell lung cancer, the second-line opportunity in relapsed AML patients and the hospitalized COVID-19 patient opportunity. We further, to that end, strengthened the opportunity for bemcentinib in first-line non-small cell lung cancer patients harboring the STK11 opportunity by, one, obtaining an exclusive license to relevant IP from UT Southwestern Medical Center. And we also received a fast track designation from the FDA for bemcentinib as a treatment for patients harboring STK11 mutations in combination with PD-1 or PD-L1 therapy.And post period in January, we announced that we would be entering into the EU-SolidAct platform in hospitalized COVID-19 patients through a Phase IIb multicenter placebo-controlled trial. AXL is the core focus of BerGenBio. And why is that? It is because we know that AXL in a normal healthy situation, is very lowly expressed. But in serious diseases, it gets upregulated and plays a significant role in a number of serious diseases. In cancer, we know that AXL activation confers to cancer progression, immune evasion, drug resistance and metastasis. In respiratory infections, we know that AXL mediates cell -- viral entry into cell and dampen then the viral immune response.We have to that end, 2 first-in-class potent, highly selective AXL inhibitors in clinical development, which are both aiming at inhibiting the AXL pathway bemcentinib, a small molecule which is administrative in oral capsule once a day. We have an extensive clinical data set having treated more than 600 patients today. We believe that bemcentinib represents a favorable benefit risk profile. It combines very well with other drugs, and it's in Phase II in multiple indications.In addition to that, we also are developing tilvestamab, a functional fully-humanized monoclonal antibody that displaces the GAS6 pathway, and that's currently in the Phase Ib trial in ovarian cancer. What is really interesting is that we have seen that bemcentinib is well distributed in the tissue in general, but very interestingly and relevant for our strategic focus is that it accumulates in our targeted organs. In brain, we have seen a 26-fold increase in the accumulation. We know that bemcentinib crosses the blood brain barrier, which may be particularly important to treat metastases. In lung, we see a 48-fold increase over normal tissue, which is, of course, then relevant to both lung cancer and respiratory infections. And in bone marrow tissue, we see a 16-fold accumulation, which is relevant to the engagement in hematological diseases, including AML.BerGenBio has built a significant data set within oncology and respiratory infections. As shown on this slide, we have investigated bemcentinib in AML, MDS, second-line non-small cell lung cancer; tilvestamab in ovarian cancer in an ongoing Phase Ib study. We have our fully out-licensed monoclonal antibody licensed to ADC, which is currently in Phase I. And finally, we have bemcentinib being investigated in COVID-19 in the 2 Phase IIb studies that has been reported previously.Additionally, we also have a number of investigator-led trials that may expand the opportunities for our 2 compounds. As I said previously, the strategic focus has identified what we call three shots-on-goal for bemcentinib with a potential to unlock significant value. Firstly, we have the STK11 mutated non-small cell lung cancer opportunity. We believe it's a large opportunity. STK11 mutation represents about 20% of first-line non-small cell lung cancer patients with all seems to have a poor prognosis with no response to PD-1 or PD-L1 therapy.The second-line study that we have done in relapsed or refractory non-small cell lung cancer patients, our 008 study identified 4 patients, who actually had clinical benefit of being exposed to bemcentinib, and these all had STK11 mutation. In the second line, AML opportunity, we believe that despite the change in the standard of care of venetoclax entering the market and being the standard of care in first-line in combination with HMA therapy. Second line represents a significant unmet medical need. The immature data, we should say though, from our 003 study in relapsed AML patients, in our opinion, warrants further development. And finally, in COVID-19, will believe that there is a significant unmet medical need in hospitalized patients. We have encouraging data from our 2 Phase II studies, and we now have the opportunity to participate in the EU-SolidAct trial, which through an adaptive multicenter trial with up to 500 patients for hospitalized COVID-19 patients. And I will go through each of these opportunities in the following slides.So if we look at non-small cell lung cancer, we know that the mutation in the suppressor STK11 is associated with poor response to immune checkpoint inhibition. We also know that the STK11 non-small cell lung cancers lack T cells to respond to the checkpoint inhibition. And we have shown that AXL inhibition of bemcentinib increases the Type 1 interferon secretion from dendritic cells expanding T cells and restoring therapeutic response to PD-1. And this was reported at the SID conference in 2021. So if you look at the right-hand side of the slide, we saw that when we combine bemcentinib with pembrolizumab, we saw an increase in the CD8+ cells, which then on the left-hand side, resulted in a significant reduction in tumor volume. In addition to that, as I also stated before, we have seen in a retrospective way though by identifying the patients that were enrolled in our Phase II study in second-line non-small cell lung cancer, that we saw a clinical benefit of 4 patients that all had the STK11 mutation. And these are partial responses with a tumor reduction of more than 30%.Non-small cell lung cancer, will the treatment today is actually a decision of whether you have a molecular or a lack of a molecular driven situation. And the molecular driven situation is the particular interest of BerGenBio and of course with bemcentinib, about 20% of first-line non-small cell lung cancer patients harbor the STK11 mutation, it has been shown that, that mutation is a poor prognostic factor to PD-1 or PD-L1 therapy. And therefore, we believe that it represents a unique opportunity for bemcentinib to create a new market opportunity in first-line non-small cell lung cancer. It has been established by other compounds that once you identify a targeted or an actionable mutation like the ALK inhibitors, the MET inhibitor or the BRAF or EGFR inhibitors, you are looking at significant market opportunities. And currently, the STK11 mutation is an unactionable mutation, which is quite unique, of course, to BerGenBio.So in summary, non-small cell lung cancer treatment today is determined by the presence or the lack of molecular drivers, STK11 patients respond purely to anti-PD-1 or anti PD-L1 treatment. There are no approved molecular target treatments for this population. It represents a multibillion dollar opportunity with a favorable competitive position to BerGenBio. We have shown that bemcentinib restores the PD-1 blockade sensitivity of the STK11 mutation. Our 008 study, which was in second line, though indicates that these patients, although they are even in advanced lines of treatment, do respond to bemcentinib in the STK11 mutation situation. And the next step for BerGenBio will be to conduct a Phase Ib/II study, which we hope to be able to initiate in the first half of 2022. And I should mention that we have a Fast Track designation granted by the FDA.The second-line non-small cell lung cancer study, our 008 study is still not matured, and we still expect it to be matured in the first half of 2022, at which point we will come back to the market. In AML, we also know that AXL is overexpressed in AML tumor cell. We know that AXL signaling in macrophages, NK cell leads to suppression of the immune activity. And we have shown that blockade of the GAS6/AXL signaling axis by bemcentinib leads to re-sensitization of the AML blast to LDAC and apoptosis, initiate -- innate immune cell antigen presentation and T cell activation and finally, NK activation.Our Phase I/II data, which is the study that we have been conducting in several cohorts. The primary interest is the Cohort B2 and B5, which are patients who were treated with bemcentinib and LDAC, are the newly diagnosed or refractory relapsed AML patients, showed an encouraging median overall survival benefit of 13.3 months versus a historical control of less than 5 months. We should, of course, make a disclaimer here and say these are unmature data, but we still believe that it warrants further development.In particular in interest is the evolvement in the AML treatment landscape. So although that venetoclax plus HMA have become pretty much the standard of care in first line, we believe that second line -- the opportunity in second line is significant for a couple of reasons. First of all, the aging population, but also that the entry of a MET effects in first line will create more second-line relapsed patients, which is the target population that is of interest to BerGenBio, but also the premium price drugs that we are seeing entering this market creates a significant opportunity.So the estimate is that this will be about 10,000 patients in the 7 major markets on an annual basis. And although we have seen an improvement in first line, second line still represents a significant unmet medical need. There is no standard of care. Current therapies do not provide a lasting response. And interestingly enough, once you have been treated with venetoclax and HMA therapy in first line, once you relapse, the prognosis is actually pretty bad. So again, less than 5 months, and in some cases, all the way down to 3 months.So there is a profound unmet medical need in the relapsed unfit AML patients. When we say unfit, we mean unfit for intensive chemotherapy. We have shown that bemcentinib mediates the anti-AML immune response for the NK and T cell activation. Bemcentinib is well tolerated, both as mono- and combination therapy, and it accumulates very well in bone marrow tissue. We have encouraging non-matured median overall survival benefit in the targeted population, which is the relapsed second-line AML patients. We have been granted an Orphan Drug status and Fast Track by the U.S. -- by the U.S. FDA in this population. And the next step would be to conduct a Phase II study in the second half of 2022.If we then look at COVID-19, we know that AXL receptors contribute to the viral entry. It signals -- The AXL signaling suppresses the Type1 IFN response contributing to lung injury and prevention of healing. And we have seen that inhibition of AXL through bemcentinib increases the innate immune response to infection, and it also decreases inflammation and promotes normal healing.Although there has been a number of recent approvals for the treatment of COVID-19, we still believe that there is a significant market opportunity for hospitalized patients. So this will be the acute population. So although we have seen vaccines, which have reduced the number of hospitalizations, we are still at a pretty low rate in terms of the number of people who have been vaccinated, still only around 60% of the worldwide population has had more than 1 vaccine. And we also see that we're seeing breakthrough infections and the adversity continues actually in the population, and this continues to drive the hospitalization.The at-home treatments if we can call it that, has shown significant clinical benefit, but the issue with them is that it is for vulnerable patients only, and you actually have to treat the patients within 5 days of being positive. So this require a rapid testing environment, which we are currently not seeing being established in all relevant countries. For those people who eventually get hospitalized, the current treatments has a modest activity, and it does actually have an issue with the variant coverage, and we still see a death rate of around 10% for those patients who do get hospitalized.So going forward, we would expect that there will be a significant number of patients who will still be hospitalized and would be -- would gain benefit of being treated with bemcentinib. A very unique opportunity is the EU-SolidAct platform. As announced, we will participate in that and that will provide access to an established clinical protocol and infrastructure in Europe, assessing up to 100 sites across Europe. So this will be a multi-center randomized adaptive platform.We have agreed with the EU-SolidAct, we will treat up to 500 patients. So this will be a significant study. BerGenBio bar will provide the drug material and only the incremental costs related to the bemcentinib sub-protocol after master protocol. And this, in our mind, represents a unique opportunity for BerGenBio to confirm the previously encouraging clinical data.So in summary, in spite of the recent approvals, we believe that there is a high unmet medical need in patients who require oxygen, our 2 Phase II trials of bemcentinib in combination with standard of care has shown to reduce the acute COVID-19 sensors of being inflammation. And we've also enhanced the cellular repairing signaling. We have shown to be effective in variants of concern and irrespective of mutation in the spike protein which may actually be a unique feature of bemcentinib as we would expect the virus to continue to mutate. The inclusion of the EU-SolidAct is a unique opportunity to quickly study up to 500 patients. And we hope that further data will enable us to assess the potential of AXL inhibition throughout a broad range of respiratory infections.With this, I would like to give you a short review of the financial report. So if we look at the fourth quarter of 2021, we can see that the operational costs decreased to an average level after the peak of the enrollment in the first and second quarter of '21, mostly related to the COVID-19 trial. The year-on-year cost increased in line with our clinical trial activities. We do see an increased expense related to our headcount increase. We have a well-managed overhead cost, which means that 80% of our operating expenses in Q4 and also for the year in total is attributable to research and development activities.Our cash position at the end of the year was USD 49.5 million or NOK 436.6. And the cash burn in the fourth quarter was around NOK 80 million or USD 9.1 million, and the average burn is around just shy of $8 million or around NOK 65 million.With that, I would like to summarize the BerGenBio investment highlights. We have a pioneering biology. We consider ourselves to be the world leaders in understanding the AXL biology as a mediator of aggressive diseases, such as cancer and respiratory infections. We have 2 first-in-class selective AXL inhibitors, bemcentinib, small molecule, all the available tilvestamab, a functional blocking mAb -- monoclonal antibody. We have 3 shots on goal as defined within significant market opportunities, non-small cell lung cancer, AML and COVID with the potential to unlock significant value, primarily in the first-line STK11 mutated situation where there's no approved therapies; in the second line AML opportunity, which represent a high unmet medical need; and finally, the hospitalized COVID-19 patients, that still represents a higher medical needs once you are hospitalized and require oxygen. We believe we have a strong balance sheet and a fit-for-purpose organization with an experienced R&D team and industry and academic partnerships and collaboration relevant for the strategic priorities that we have defined. Thank you very much I think we will then open up for Q&As.

[Rune Skeie, Chief Financial Officer]

Yes, we have some questions. So the first 1 is if we can elaborate more on the FDA feedback on PK, PD dosing and safety in regards to the relapsed AML study?

[Martin Olin, Chief Executive Officer]

Yes.

[Nigel McCracken, Chief Scientific Officer]

No, thank you. It was a very good question. If you remember, back in June 2021, the FDA have -- certainly in oncology the OPTIMA program where they're actually asking pharma companies to really understand the dosing and specifically the PK/PD relationship previously. It was based on getting to an MTD or a maximum tolerated dose, which was based on safety. So now what the FDA have been asking pharma, including BerGenBio and this relates to the question around the AML was to really understand how we hit the biological target, which is AXL and to really understand the relationship between the concentration, the target as well as the efficacy and the safety. So where we are with respect to that? We've been doing a lot of modeling around the data with respect to the exposure within AML. And we understand what the relationship is with respect to the efficacy as well as the safety because every drug has some sort of safety concerns. So to the point we're planning to go back and have those discussions. And as part of that AML discussion that we're going to have with the FDA around the doors, we will present information around that relationship between the exposure and the response. And the response being the efficacy as well as the safety.

[Martin Olin, Chief Executive Officer]

We should say that we will not go back to the authorities of the FDA until we have the mature data set on the existing studies.

[Nigel McCracken, Chief Scientific Officer]

Because you can imagine, we're talking -- we're waiting for that mature data. It's obviously extremely important. When we look at that efficacy, we look at the actual -- the most up-to-date efficacy when we're looking at that response because the efficacy actually evolves and that's where we are at this moment in time.

[Rune Skeie, Chief Financial Officer]

A follow-up question on AML and our confirmatory study planned for the second half 2022. What does the company need to see before it's post trigger on initiating the study?

[Martin Olin, Chief Executive Officer]

So as I have said before, we need to see the full data set being matured, and we need to have the dialogue with the FDA in terms of defining what the clinical study will look like in terms of safety, but also efficacy.

[Rune Skeie, Chief Financial Officer]

And a question related to the Rigel agreement. With the initiation of the EU-SolidAct study or the confirmation to our relapsed AML study trigger, any milestones payment to Rigel?

[Nigel McCracken, Chief Scientific Officer]

No, it does not. So the Rigel agreement defines the milestone triggering of -- related to a pivotal or registration study, defined as a Phase III study.

[Rune Skeie, Chief Financial Officer]

Then question related to COVID. During or after the COVID-19 Phase IIb study, is it likely that bemcentinib will be given market approval from EMA. And if so, could you enlighten as which role you expect BerGenBio will have regarding sales and distribution?

[Martin Olin, Chief Executive Officer]

So of course, we hope that we can reproduce the data that we saw in our previous Phase IIb studies, but it's too early to jump on -- to jump to a conclusion. But in the event that we would meet the defined endpoints and the authorities would agree with us that bemcentinib should be approved. We will, of course, evaluate the opportunities in relation to the role of BerGenBio in the commercialization and marketing of bemcentinib in that situation. But no firm decisions have been made at this point.

[Rune Skeie, Chief Financial Officer]

Then it's a question about the lung study. It's about the second-line opportunity. Has the primary focus shifted to just solely pursuing the first-line STK11 mutation inflation? Or do we just have to wait for the data to mature on the 008 trial?

[Martin Olin, Chief Executive Officer]

It's a good question. We believe that we want the data to mature on 008 before we will make a formal decision, an informed decision as to how we will move forward potentially in second line, while also aggressively pursuing the STK11 opportunity, which we believe is significantly larger than the second-line opportunity in totality. So it is currently not an either or situation but more an aggressive persuasion of the STK11 opportunity as such. We should remember that STK11 may also be relevant in second-line non-small cell lung cancer.

[Rune Skeie, Chief Financial Officer]

Then we have a question about the EU-SolidAct platform trial. You mentioned the bemcentinib will then roll up to 500 patients. But can you provide any guidance on what type of time frame we can expect enrollment to occur over whatever it should we expect any interim analysis?

[Martin Olin, Chief Executive Officer]

It's too early to give guidance. But if we ask ourselves about the seasonal aspects of a pandemic like the COVID-19, we will probably see a lower case, a lower number of cases during the spring and then an increased amount of cases as we go into the fall of 2021. But it's too early to actually make any predictions of the enrollment and also in potential interim analysis.

[Rune Skeie, Chief Financial Officer]

And you mentioned that the EU-SolidAct will be a placebo-controlled trial. But presumably, both treatment and placebo will be on top of standard of care. So can you clarify what this will be for bolt-ons?

[Martin Olin, Chief Executive Officer]

Yes. The standard of care will be what has been normally used, obviously, within different countries, it's slightly different. And we experienced that within the 2 Phase II studies that we actually did, but certainly corticosteroids and/or IL-6. So there's a number of different standard of cares that are given. And we have, as I said, mentioned before, with the 2 previous trials that we did, we were in combination with all of those. So it will be very similar to what we would have had in combination before.

[Rune Skeie, Chief Financial Officer]

And then it's a question about a potential Phase III study. When do you expect BerGenBio to enter into your first Phase III study and which study is most likely to enter first?

[Martin Olin, Chief Executive Officer]

That's a really good question, but also a tough question. So I actually think that all the 3 priorities that we have defined here, the STK11, the AML and the COVID-19, could potentially all be candidates for entering a Phase III or registrational trial. And it all depends on the data that we can generate in terms of which 1 could be the first 1 to be in a pivotal setting.

[Rune Skeie, Chief Financial Officer]

Then it's a question about the new Chairman and his sign-on bonus purchased shares and why he haven't done that. I can probably answer that. That's an easy one. It's because we have been inside us and see started. So we will soon be able to buy the shares.Then we have a question about how bemcentinib different from Pfizer's new COVID treatment drug?

[Nigel McCracken, Chief Scientific Officer]

Yes. I mean -- so again, I think if you remember that Pfizer's drug has given, say, prophylactically. But again, if somebody experiences some sort of symptoms prior to -- then it would be given the drug. As Martin mentioned, what we are targeting is severe hospitalized. So somebody is been taken into a hospital either because they haven't received a vaccine or even if they have that are hospitalized, they're put on sort of oxygen where we believe certainly from the data from our Phase II studies that we would not -- that we -- we get a very good progress, not progressing on to mechanical ventilation, but also potentially be treating that -- those inflammatory problems that they actually have with that. So we do believe that we are very different from both Pfizer and any of the other drugs that are currently approved because there is nothing specifically to treat these patients who actually hospitalized and our own oxygen from progressive.

[Rune Skeie, Chief Financial Officer]

And it's a question about bemcentinib. If the research can be used in further trials in recovery of influenza and flu-like viruses?

[Martin Olin, Chief Executive Officer]

It's a really, really good question. And we do hope that the EU-SolidAct trial will give us more information from a clinical perspective, but we are also we can say that expanding and investing in additional research as to the mechanistic action of bemcentinib in other respiratory infections, which includes influenza.

[Rune Skeie, Chief Financial Officer]

One more question here. Can you elaborate around additional opportunities for the AXL inhibitors in oncology and non-oncology indications, mentioned in the last bullet point on Page 11 in the report? Very specific question.

[Martin Olin, Chief Executive Officer]

Yes. So if we -- I mean right now, the focus is the 3 indications that we have defined, and these will be the priorities in the short term. But of course, we are conducting research and we are collaborating with leading academic centers throughout the world to identify opportunities that are outside of these 3 focus areas. This could be MDS, for example, in hematological diseases in cancer; this could be GBM or glioblastoma, but we would really want to stick to what we have been reviewing our priorities on, which is a situation where we have a strong scientific rationale combined with convincing preclinical and clinical data. This will be how we will define our products also going forward.

[Rune Skeie, Chief Financial Officer]

That completes the Q&A session. Thank you. .

[Martin Olin, Chief Executive Officer]

Thanks, everyone, for listening.