Bergenbio ASA

OSE:BGBIO

Earnings Call Analysis

Earnings Call Transcript 2023-Q4

[Martin Olin, executive]

Good morning. My name is Martin Olin, I'm the CEO of BerGenBio. And today, with me, I have Cristina Oliva, our Chief Medical Officer. And we will give you an update on the Q4 2023 report with some post-period updates on our main focus, the first-line non-small cell lung cancer STK11 study.I will just remind the audience about the formalities. So in a nutshell or highlights, BerGenBio's fourth quarter represented a very interesting momentum in the operations, but also in our financial performance. So our main focus is the first line STK11 non-small cell lung cancer study BGBC016, and it's really progressing as planned. There are no new safety signals observed as of to-date. We have received regulatory approvals in all the 6 countries that we have selected in the European Union, enabling the initiation of the Phase IIa sites in the first half of this year, as we have also previously guided. And we have seen a very strong support from the oncology community, which makes us really encouraged about the ability to progress the study and complete the enrollment.The focused strategy has significantly reduced our operating expenses. So for the 2023 financial year, operating expenses totaled NOK 192.2 million, which represents a reduction of 37% compared to the operational expenses for 2022, which stood at NOK 306 million. The year-end cash position of NOK 156.4 million are projected to fund our operations until the end of 2024, in line with previous guidance. If exercised all the outstanding warrants that can be exercised in the first 2 weeks of April this year, we will extend our runway into the second half of 2025. We also gratified that bemcentinib data that we have reported continues to attract significant interest. And we have reported multiple Phase II data in prestigious oncology meetings throughout 2023 and also in the fourth quarter of last year. And most recently, we have announced that new preclinical data continues to support the potential of bemcentinib beyond non-small cell lung cancer or we should probably say beyond oncology.This is the focus of the company. First, NSCLC STK11 non-small cell lung cancer, which, by all means, represent a significant opportunity from a lot of aspects. If we look at lung cancer today, it is still by far the largest cause of cancer-related death and non-small cell lung cancer represents roughly 80% of lung cancer incidences. Despite the advancement in the treatment of non-small cell lung cancer, the unmet medical need remains significant, and it is particularly related to 2 levels; one, those patients who either have a negative or low expression of PD-L1 are known not to respond well to checkpoint inhibition in combination with chemotherapy, which is the standard of care for these patients. But in addition to this, treatment of the disease is complicated by the fact that there are a number of non-targetable oncogenic mutations, of which the largest one or one of the largest one, STK11 represent up to 20% of frontline non-small cell lung cancer patients. And this is translated into a very significant opportunity. If measured at today's pricing of drugs for the treatment that will be beneficial for the patients we believe that this represent a market opportunity in the U.S. and the 5 big use in Europe of more than $4 billion annually.If we look at the STK11 and the acceptance of the fact that it is a poor prognostic factor, the STK11 mutation and the impact or the medical impact has certainly gained increased attraction and has been reported in numerous prestigious journal to be a bad prognostic factor. And in that respect, I think we can say that BerGenBio's role or bemcentinib's role as an AXL inhibitor actually have gained significant interest as a potential modality to address a rather complex biology related to the STK11 mutation which Cristina will address later on in the presentation. And we do believe that the aspects or the features of bemcentinib, a highly differentiated AXL inhibitor have some very nice potent features, which makes it ideal as an immune modulatory agent in combination with checkpoint inhibition and chemotherapy in frontline therapy that we are currently pursuing. First of all, it's a highly selective potent and improved inhibition with fewer side-effects. It concentrates in the lung by a 40-fold of a normal tissue, but it also crosses the blood-pain barrier, and both of these are really interesting features in the treatment of a lung-related disease, in this case, non-small cell lung cancer. We have a very extensive database. We have studied the drug in more than 600 patients and have shown that it combines very well with chemotherapy and checkpoint inhibition. It's safe. And we have also seen monotherapy activity in a number of indications. We have received a fast track designation from the FDA for this particular subset of patients. And why is this relevant? The relevance of a fast track designation opens the opportunity to have a closer interaction, more frequent interaction with the FDA or the regulatory agencies in the United States to resolve issues and also enable a faster process towards a potential approval for market authorization. And we have recently filed -- well, in the last 2 years, filed IP that protects bemcentinib in this particular indication until 2042.And I will now hand over to Cristina to walk you through the case of AXL inhibition in non-small cell lung cancer.

[Cristina Oliva, executive]

Thank you, Martin. Good morning, everyone. Over the next few slides, I would like to walk you through the case of the AXL inhibition with bemcentinib in first-line STK11 mutated non-small cell lung cancer.So AXL expression on tumor cells, but also on immune cells plays a critical role for the disease progression and the metastatic spread. AXL expression on tumor cells actually activate a series of signaling pathways that lead to survival, proliferation, migration, angiogenesis, therapeutic resistance and immune evasion. But AXL expression is also very relevant in the host cells and specifically in immune cells, creating a tumor microenvironment, which is significantly immunosuppressed. Bemcentinib inhibition of AXL is expected actually to play a role both on tumor cells and on the immune microenvironment. Bemcentinib has demonstrated to add the clinical benefit to patients treated in combination, either with chemotherapy or checkpoint inhibitor. We believe that actually treating these patients early, meaning in first line before they actually develop therapeutic resistance may significantly delay their disease progression and hopefully prolong their survival.But what is actually the environment that is created by an STK11 mutation? STK11 mutation create an immune desert with actual expression and also drive the immune evasion. Therefore, a tumor, which is an STK deficient tumor develops a significantly immunosuppressive structure. What we call actually a cold environment, which is refractory to immunotherapy and has very specific characteristics. Number one, a striking infiltration of immune suppressive cells that you will see at the bottom in blue, including the Treg, but also the TAN, which are actually tumor-associated neutrophils. On the other hand, it also creates inducing exclusion of most of the inflammatory immune cells that are depicted here in red. And just to name a few of them, the CD8 T-cell, the NK, the CD4 T-cell, but also the M1, the microphage type 1. All-in-all, this creates an environment that does not respond to therapies.What is relevant for our case is that AXL actually is expressed in the vast majority of STK11 mutated non-small cell lung cancer and it actually substantiate what is the detrimental role of AXL in creating an immunosuppressive environment. Therefore, targeting AXL on one hand could restore the response to immunotherapy in STK11 mutated patients and we know that STK11 mutated patients do not respond well to immunotherapy. But on the other hand, it could also reduce the resistance to chemotherapeutics.So STK11 mutation is definitely an attractive target. But it's not an easy target to be identified or to be treated, I should say. Why? Because it has a very complex biology. A study has recently reported that on the STK gene, there are over 1,300 mutations. The vast majority of the STK11 mutation over 80% result in a loss of the STK11 expression, making therefore drug targeting really challenging. Therefore, the best and most promising approach in this patient population that is currently underserved by the therapeutics available is to improve their immune response.Let me walk you through some preliminary new clinical data. You might recall that actually we have reported preclinical data supporting the mechanism of action of bemcentinib in new cells. This is a new observation that we are currently expanding to other subjects. And it's a patient case study out of our BGBC008, second line study. You might recall, this was a study, a Phase II conducted with the combination of bemcentinib and pembrolizumab in patients previously treated. And the aim was really to observe clinical benefit in this patient population with a pretty bad prognosis. In these specific cases, we observed not only a clinical benefit offered by the combination as this patient, as you can see in the third bullet point had an overall survival that goes beyond the 16 months in second line, but also has allowed us a first assessment of the immune cell status that was evaluated pre and post the first cycle of chemotherapy. The preliminary observation seem to support the mechanism of action of bemcentinib. And specifically, that number one, the [silo set] that we know are critical to induce an immune response to cancer are indeed activated following the treatment with bemcentinib and pembrolizumab. On the other end, the immune suppressive cells like the Treg cells that actually are kind of negatively impacting the response to cancer result has been decreased in number. And in other very relevant observation is that actually we have now evidence of AXL inhibition and target engagement from bemcentinib. This study will be further increased in terms of numbers. So we will definitely report additional data at the later stage.So we are not the only one targeting STK11 mutation, but we are actually reassured that our approach to target the immune response in this poor prognostic patient population actually seems to be validated by other clinical trials. As you can see here, there are some trials ongoing that target not just STK11, but other poor prognostic subgroups of non-small cell lung cancer. We believe that our key differentiator is that we are the only one actually targeting AXL. And I hope, actually, I have explained you the biological relevance of AXL in this patient population.We are supported by the data we have gathered so far in a relevant indication, which was a second-line non-small cell lung cancer. And we believe that this data definitely support the potential for adding benefit in first-line STK11 mutated non-small cell lung cancer with the combination of checkpoint inhibitor and chemotherapy. So let's just remind ourselves what were the main data. The encouraging progression-free survival and overall survival that we have observed in approximately 100 patients previously pretreated. You see that actually the PFS positively compare with the available comparator in this line of therapy. The overall population benefited from the treatment. But what's interesting is actually that patients with high AXL had an even better and longer benefit. Positive results have been observed across the population regardless of the PD-L1 status. And preliminary data show that actually there is a potential benefit also in hard-to-treat mutation that are characterized by an immune-suppressive environment like not just STK level, but KRAS and KEAP-1.Let me give you an update on our first-line study. I want to remind you that it's made of two phases, the Phase Ib, which is a running phase where we will study the combination of bemcentinib, checkpoint inhibitor chemotherapy, so the standard approach in this subset of patients. This 1b is progressing per plan. And as Martin has just mentioned, no new safety signals have been identified to-date. The Phase IIa will be exactly the same regimen, but it will be applied to a selected group of patients with STK11 mutation. It will be a global study conducted both in US and in Europe. We have selected high-volume oncology centers with high expertise in the treatment of non-small cell lung cancer. We have obtained the competent authorities approval for all the countries that we have selected to participate. And we definitely see strong interest and a very active participation from our investigators that clearly I'll try to identify a new treatment in a high unmet medical need that is represented by patients with this poor prognostic biomarker, STK11.So what are the key expected news flow? Number one is the start of the Phase IIa expected in the first half of this year. And then of the interim analysis in the second part of 2024 and in the first part of 2025.So in summary, to conclude this case of AXL inhibition by bemcentinib in this patient population represented by first-line STK11 mutant non-small cell lung cancer. There is across the medical community an increase about the awareness of a need for new treatments in this patient population. As I said, this is a patient population that is significant in number, but actually underserved by the current therapeutic options. Extensive AXL expression in STK11 mutated patients is actually reflecting an immunosuppressed microenvironment. AXL expression is also relevant when is identified on immune cells, as I showed you, and on tumor cells, creating actually a cold system that poorly respond to available therapies. We have early evidence and we are broadening this evidence as we speak, of the immune activation that is induced by bemcentinib and that supports bemcentinib's mechanism of action. We have previously reported efficacy of bemcentinib when combined with either chemotherapy or checkpoint inhibitor in 2 Phase II studies that have been reported and presented at various conferences or submitted and accepted as manuscript in second line on small cell lung cancer. We have observed activity of bemcentinib as monotherapy in difficult-to-treat patients. Therefore, we believe that offering an early intervention in first-line STK11 mutated non-small cell lung cancer would have the ability to reduce and delay the tumor, the chemotherapeutic resistance, therefore, to provide a better clinical efficacy to these patients that are in high need of new treatment. And as I mentioned, the ongoing study, BGBC016 is progressing in accordance to the guidance we provided, that would allow for the initiation of the first Phase IIa in the first half of 2024.Let me now switch gear and share with you new data that supports the role of bemcentinib in serious respiratory infection. This data has been recently presented just really a few days ago at the Respiratory Tract Infection Conference in the U.K. and have actually demonstrated that bemcentinib has activity in human in vitro models infections that are caused by different viruses like influenza, Respiratory Syncytial Virus and rhinovirus. In this model, it has been observed that BEM, bemcentinib actually reduced -- the down-regulates the cytokine IL-6 and IL-8 that are 2 important inflammatory cytokines that are associated with the severity of the disease. On the other hand, in another model actually of influenza, bemcentinib has demonstrated actually to control or limit the lung damage that is induced by the infection, therefore, supporting 2 more tissue therapy healing and repair. This is something that has already been reported from our ACCORD Study, where actually the addition of bemcentinib to the standard of care reduced the cytokines, again, IL-6 and IL-8, that are both associated with COVID-19 disease. And as you can see, the addition of bemcentinib to the standard of care for COVID-19 has demonstrated actually the ability to shorten the hospitalization in these patients or to prevent the further deterioration of this patient that were in a very frail condition.And now I would like now to hand it over to Martin to go through the key financials and the news flow.

[Martin Olin, executive]

Thank you, Cristina.So this slide represents a summary of the key financials for the fourth quarter of '23. And as you can see from the slide, the focus strategy has continued to show a reduction in the operating losses, which stood at NOK 43 million for the quarter. And importantly, the net cash flow was reduced too, in this quarter, NOK 11.8 million and we expect a stable cash use in the period going forward of around NOK 40 million per quarter, and that we believe will enable us to go to the end of the 2024 based on a cash position of NOK 156 million by the end of 2023. Importantly, the warrant exercise or the ones that were issued in relation to the rights issue we completed in the summer of 2023 may have exercised allow the company to continue its operations, primarily with the focus on the first-line non-small cell lung cancer STK11 study into the second half of 2025 and potentially unlock some very significant value potential related to the data from the 16 study.This is a snapshot of the key newsflow that we expect for the remainder of 2024. So for the first-line STK11 non-small cell lung cancer study, we are still in progress, and we plan to complete the Phase Ib enrollment as previously guided and also, therefore, to initiate the Phase IIa study both in the U.S. and in Europe, as Christina alluded to previously. And also importantly, I think, to continue to analyze the PBMC mechanistic data related to the mechanism of action of bemcentinib in those patients that were treated in the 008 study. I think we've also made some significant advancement in the establishment of a synthetic control arm, which will, of course, not replace the randomization principle, but it will certainly give weight to the data we hope to generate in this study. In the second half of 2024, we are planning to announce some interim data from the 1b/2a study, but we also continue to seek for opportunities to publish our data, and in this case, could be additional PBMC MoA data in the second half of '24.Other relevant newsflow is of course, the warrant exercise period, the outcome of it. The period is the first 2 weeks of April this year. We're going to represent our present additional severe respiratory infection data and we may also be able to announce potentially new clinical trials focused on lung cancer and funded by third parties, and we expect to have an update on the partner program with [ADCs] namely the program that is named ADCT-601, and in the second half of this year, an update on the tilvestamab out-licensing process, but also their manuscripts from completed studies we expect to be published.So in summary, we believe that BerGenBio has a very clear focus with the approach in first-line STK11 non-small cell lung cancer with some encouraging development, the Phase Ib enrollment and the completion of the 2A in line with the guidance, the interim data, which may potentially unlock significant value, which is based on the fact that there is no available effective treatment for these patients today and we believe that BerGenBio is certainly on the frontier of exploring a treatment modality for this patient population. Our cash position allows us to fund our operations through the end of this year, but warrant exercise in the first 2 weeks of April may actually support our runway into the second half of 2025 and allow for additional data related to the first-line non-small cell lung cancer study.And that was today's presentation. Thank you very much for listening. And I think we will have a Q&A session.

[Operator]

Yeah, we have some questions from the audience. So can you update on the enrollment of the STK11 study and the different doses?

[Martin Olin, executive]

Yes, we can. So as I have said, probably [indiscernible], we are not giving specific guidance as to the number of patients in the study, but we are progressing in line with the guidance, which means that we would expect to be able to initiate the Phase IIa study in the first half of this year. And importantly, we have seen no new safety signals, which is the primary endpoint of the run-in study, the Phase Ib part.

[Operator]

Do you see any competition from patient enrollment from other clinical trials at the sites you have included in the trial?

[Cristina Oliva, executive]

Yes. There are definitely competition -- competitor studies I have mentioned just a few of them, but we are not actually seeing any competition at the site level. What happens when you run these clinical trials, actually, you take a commitment and the investigators at the site make a commitment, not actually to accept any other studies that would be in the same indication or in the same patient population. So the competition is very active, which is actually, for us, confirmation of the value of the STK11 proposition, but no competition at site level.

[Operator]

For clinical trials and treatment, so are there any comparable alternative treatment methods in the market for the non-small cell lung cancer? And are there any competitor from other companies to combat this syndication.

[Martin Olin, executive]

So you've seen, actually, we have just selected a few of the competing studies. They all have different combinatorial approaches. What's common across the board is that actually, they all aim at stimulating the immune system. But the mechanism of action is slightly different. And as I said, bemcentinib is the only AXL inhibitor that actually is currently in clinical trials for this STK11 indication.

[Operator]

Can you share any insight or early data from the STK11 study or when would this be available?

[Martin Olin, executive]

So we expect to provide initial data from the study end of the second half of 2024, as we have also guided previously. Although we have, of course, it's not a blinded study, so we have some insights, but the number of patients are in reality at this moment in time too small to make any valid conclusions. I think we can say that we are very encouraged by the progress and also the fact that we have, at this point, see no new side effects. And that's the most important part because that allows us to open the IIa study, which is the efficacy assessment part of the study.

[Operator]

You mentioned the EU approval for the Phase II part of the study, but do you have EU as a problem.

[Martin Olin, executive]

Yeah. Long time ago.

[Operator]

What is left to start the Phase II part of the study.

[Martin Olin, executive]

That is to confirm the selection of the 2 doses that we have identified in the Phase Ib part.

[Cristina Oliva, executive]

Correct. So we will move into the Phase IIa only once we have actually identify the dose. And that's actually the reason of completing a running phase to have a clear understanding of the safety of this combination and the best dose to move into the expansion in 2 way.

[Operator]

You mentioned the news flow, but can you give the key milestone during 2024 and when we can expect this to take place?

[Martin Olin, executive]

Well, I think it's obvious that there is at least 1 very key milestone in the first part of 2024, which is the initiation of the IIa study, which I think Cristina by all means, is a major milestone because we would then have cleared the safety part. And then the second part, equally important or probably equally exiting, the initial first interim data from a small, though not the full population, but for a relevant number of patients being treated in the first 2a part.

[Operator]

So a question about partnering. Why doesn't you have a partner yet and when can we expect 1.

[Martin Olin, executive]

I think if you think about where we are in the development of bemcentinib, we have now established a clear focus in first-line non-small cell lung cancer for a particular subset, which are patients with STK11 mutations. And there are 2 elements to consider here. First of all, we have not yet established a safety profile. We are doing that now. We believe that we are progressing it very well. But also STK11 mutated patients are, from a clinical point of view, a relatively new discovery. And therefore, I think we should expect, which we have also said previously that a partnering event is most likely more relevant when we have those safety, but are also initial and potentially mature safe efficacy data from the study. But if delivered to what we can hope for, i.e., if we can repeat what we have seen previously, we are very encouraged by the opportunity to eventually find a partner, which we also, by the way, think may actually be the best route forward for bemcentinib to reach the market as fast as possible together with the partner, but later on.

[Operator]

A question about the cash going forward? Will the cash burn increase in the Phase 2?

[Martin Olin, executive]

No. We expect it to be around the NOK 40 million on a quarterly basis. It's mainly impacted, of course, by enrollment, which we have included in our cash projections or cash use projection related to the treatment of those patients and some study related activities that we have accounted for. So no, we don't expect it to deviate much from NOK 40 million on a quarterly basis.

[Operator]

And a question about the warrant you have out in the market. How much do I have to pay per share if I exercise my warrants? And will I get the same type of share if I buy one in the market now?

[Martin Olin, executive]

So the pricing of the warrants has been established, and that will be established prior to the window being opened and it's defined upfront in the sense that it cannot be below 0.10 and it cannot be above 0.13. And it depends on the WAP or the weighted average volume price before the window opens. And if you exercise the warrants at the price which can vary between 0.10 and 0.13, you will get shares in BerGenBio representing the shares that are outstanding and issued today as tradable to us.

[Operator]

So it's the same share?

[Martin Olin, executive]

Yes.

[Operator]

Thank you. I think that completes the Q&A session.

[Martin Olin, executive]

Thank you very much.

[Operator]

Thanks, everyone.