Kiadis Pharma N.V. (OTC:KIADF) Q2 2020 Results Earnings Conference Call September 30, 2020 9:00 AM ET
Amy Sullivan – Senior Vice President, Corporate Affairs
Arthur Lahr – Chief Executive Officer
Paul van Hagen – Senior Vice President, Finance
Conference Call Participants
Lenny Van Steenhuyse – KBC Securities
Ladies and gentlemen, thank you for holding. And welcome to the Kiadis Pharma Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions]
I must advise you that this conference is being recorded today. And I would now like to hand the conference over to your first speaker, Amy Sullivan. Please go ahead.
Thank you, Valerie, and good afternoon. Thank you for joining us today for Kiadis’ First Half 2020 Conference Call. Next slide.
During today’s call, Arthur Lahr, our CEO, will deliver general business update and then we will open the call for Q&A. After which, Paul van Hagen, our Senior Vice President of Finance will also join us. Please note that we posted our half year results on our website today. We encourage you to review those fully. Next slide.
Before we begin, please note, that we will be making forward-looking statements on this call. There are risks and uncertainty associated with our business and we encourage you to review our semi-annual report for a full description of these risks.
I’ll now turn the call over to Arthur. Next slide.
Hey. Good afternoon, and good morning, everyone, in U.S. I’m pleased to give you an update on where we stand with the company. As slide four describes, 2020 was truly a transformational year. In 2019, we started with our NK activities, but at that time, we are still very active with a T-cell product with the Phase 3 program and preparing for a European market launch.
Unfortunately, we stopped with those programs and changed our strategy to the NK cell platform, where we’ve made truly remarkable progress. And we’ve been able to, of course, develop more clinical data — show more clinical data in different conferences, got multiple trials approved and started enrolling patients and secured two important partnerships.
And with all that, with new cash coming in from equity raises, as well as the partnerships, we currently have about €26 million in cash. Next slide.
To give you an overview of our company, I would love to tell you a bit more about the platform and our stage of development. We have a truly unique immunotherapy platform based on hyperfunctional NK cells, derived from optimal donors and then expanded with PM21 platform.
We can engineer ourselves and we do so where needed, but we don’t have to. Base NK cell platform already has the appropriate persistence and potency to be effective in patients. The platform in addition is off the shelf and truly industrial and that really was what attracted our partners Sanofi and the U.S. Department of Defense.
We also have a lot of clinical data in severely ill immunocompromised patients with cancer, and in those patients, we’ve seen remarkable remissions and the strong improvement in outcomes, as well as strong anti-effective efficacy. You’ve never had any safety events and we’ve been able to give the product repeatedly to patients and see the cells persist in those patients. Next slide.
So what do I mean when I say that our cells have a very bold applicability and if you look at the NK cells in nature, they have multiple different ways to kill a target cells. And in our NK cells, we have upregulated all those different mechanisms and have thereby made them a truly hyperfunctional. With that, the NK cells really have a unique role across the different diseases and across even heterogeneous disease and escape. Next slide.
In addition, the platform is truly scalable. With our platform, we can actually continue to expand the cells weeks and weeks without any loss of functionality. And in addition, we can cryopreserve the cells for them and it could be your expansion without again loss of potency and efficacy. And because of those unique features, we can take material from a single donor and expand it into more than $1 million prescription. That gives us a unique ability to scale up and to drive down cost of goods. Next slide.
With our platform we’ve now created a very rich pipeline with four active programs and a number of additional programs that are under preparation. Our most advanced program is in transplants, where we’ve gotten approval to start a Phase 2, which we intend to activate and start enrolling end of the year.
Our AML program is — has generated a very strong proof-of-concept data in 21 patients and we’re currently enrolling a Phase 1 in the United States. Our preclinical multiple myeloma program has been partnered with Sanofi Pasteur or Sanofi. It is an engineered NK cell where we have knocked out the CD38 again. We partnered this program a couple of months ago and received an upfront payment of €17.5 million. We’ve recently launched an influenza COVID program where we anticipate to move into Phase 1 as soon as well and we have an IND approved for this Phase 1 and the program is fully funded by the U.S. Government. Next slide.
To give a very high level overview of the partnership with Sanofi, why we partner is our CD38 knock out NK cell. This knock out NK cell works synergistically with Sanofi’s recently approved anti-CD38 antibody.
The problem, as you may know, with anti-CD38 antibodies is that they hampered their own efficacy by not only killing multiple myeloma cells but also killing the patient’s own NK cells. By knocking out CD38 actually, though, we can infuse new fresh NK cells and thereby bolster the potency of these anti-CD38 antibodies.
And as I mentioned, the upfront was for this preclinical program was €17.5 million, but there’s many more milestones linked to preclinical, clinical and regulatory milestones, as well as up to a low double-digit royalties. Next slide.
I showed you a rich pipeline that we’ve created over the last few years. But this is only just to start. This slide just gives a couple of the expansion opportunities that we have with our platform. The programs involved are the ones that we currently have running. But if you take for example, blood cancers, we have now programs in acute myeloid leukemia and multiple myeloma, which of course, has the opportunity to move beyond those programs, CML, long Hopchken [ph], et cetera.
In solid tumors, we have not yet launched a program, but we have a lot of preclinical data confirming the synergy between our NK cells and multiple approved antibodies, as well as for example, PARP inhibitors. And of course, we will expand into those programs and build a pipeline also in solid tumors.
In infectious disease, we launch a program in flu and COVID, but the clinical data that we already generated, that shows a dramatic reduction or dramatic effect on a serious microbial hospital infection, and of course, we want to expand and explore those opportunities further.
And then lastly, transplants, the data that we have so far is in haplo transplants. But the impact of our cells both on residual tumor cells and infections, of course, makes this platform suitable to expand in other types of transplants. Next slide, please?
We often get asked how we are different from other NK companies and there’s a couple of key parameters that clearly differentiate us and set us apart to some of the well known names, especially in the United States.
To start with clinical proof-of-concept data, we have more clinical data proof-of-concepts or proof-of-efficacy data in patients that any other party in the field. We have data in 45 patients with very long readout times, two years and beyond, which compares very favorable — favorably to the other parties.
We’re also clinically more advanced with a Phase 2 starting, whereas most parties are still preclinical in Phase 1. We use very different source material. We start with mature fully licensed NK cells from healthy donors and we thereby pick the most optimal donors for specific indications, taking an ideal profile — NK cell as a starting point for expansion. There is very different from a number of other parties who start with stem cells, which still needs to be fully maturated into NK cells like a product.
We also use a very different manufacturing platform. In our manufacturing platform we don’t use life impact cancer cells as the primary reagents to expand, but instead we use PM21, which is derived from these cancer cells, but it’s pretty purified and does not contain any residual tumor cells and tumor DNA. And this gives us a huge regulatory and safety benefits over the other platforms.
Finally on engineering, all other parties engineer their self, because they have to, to obtain the right potency and persistence of their platforms. We’ve shown in our clinical trials, as well as preclinically that even the non-engineered cells have the adequate potency and persistence. We can engineer and the deal with Sanofi, of course, clearly supports that, but we don’t have to. We only do it if there’s additional benefit.
With respect to partnerships, as you can see, we have had not only a large pharma partner evaluate and thereby cell data platform with also the U.S. Government. Next slide.
So to summarize our position in the fields across the key dimensions and requirements for cell therapy, I think strong and potent cells that have a broad mechanism of action and are able — which you are able to treat many different diseases, a truly industrial platform manufacturing system that allows reaching a loss of a large patient population. I believe we truly have a great ideal solution to make NK cells for the future of immunotherapy. Next slide.
So let me switch to some of the clinical data. The first program I would like to talk about is the transplant program. Next slide.
In K-NK002 we’ve hit two of the three milestones that we guided on at the beginning of the year. We’ve got our IND approved to start a Phase 2 REALM trial. We will get — given significant updates with clinical data. And the only final step that we have to make this year is to start the actual enrollment. Next slide.
The clinical data that has been generated in the past speaks for itself. What we do in this program is infused 30 billion NK cells in a transplant patient. This is a huge number of NK cells. It’s about 10 times of the number of NK cells that healthy people will have in circulation in normal daily life, and of course, a lot more if you compare this to the transplant patients.
In a transplant patient after various courses of chemo, no or almost none NK cells are left. And that is very unfortunate, because chemo will have made any residual tumor cells very sensitive to killing by the NK cells.
What we do is we then infuse at the right time when residual tumor cells are sensitized to NK cell killing we infuse 30 billion cells. And the results, as I said, speak for themselves. The NK cells are able to significantly reduce the risk of relapse in these patients and improve survival in these patients. To just have one patient out of 24 relapse in a severely ill AML population with this cytogenetic profile is truly remarkable.
Also very interestingly is the reduction in GVHD, transplant patients, unfortunately, still suffered from a lot of chronic GVHD and as you can see in this sample, almost half of patients after expansion will have this lifelong disease. The addition of our NK cells brings that down to zero. Next slide.
Based on the remarkable Phase 1/2 data, we are now starting a Phase 2 trial in the United States with the BMT CTN. BMT CTN is the consortium of the top 20 transplant units and the fact that they’ve adopted and endorsed this study is a great validation of the data that we have available.
The trial design is essentially the same as the previous trial, treating patients at the highest dose level of 28 cells per kg. The endpoint is a one year relapse, and as I mentioned, the trial is expected to start later this year. Next slide.
The next program that I would like to mention, obviously, is acute myeloid leukemia program. Next slide.
In this program, we’ve achieved all milestones that we set ourselves at the beginning of the year. An ID for a Phase 1 trial got approved. We started enrollment and we’re continuing to enroll that trial. We’ve in addition provides a lot of updates on — with clinical proof-of-concept data from the previous trials. Next slide.
Let me give you a summary of the data that we’ve generated in the past. We’ve treated with our collaborators or other collaborators 21 patients with a single course of our K-NK cells after induction chemo. The number of cells infused in these studies is lower than in transplants and ranges from between 1 billion and 8 billion cells. The range is so wide because in this study some of the patients were one and a half or two years old, whereas others weighed 100 kilo.
The patients that were treated across two separate trials were very, very ill. They had had multiple prior treatments for two, five, more than half of these patients have been transplanted in the past and had relapsed after a transplant. They all had very active disease with the 40% median Bone Marrow blasts. Most of these patients were refractory to FLAG and many of them had severe comorbidities, CNS disease, fungal infection, tuberculosis, et cetera.
Typically, in this type of a patient population, third-line salvage and beyond, you would expect to complete remission of about 20%. In our population, because so many of these patients were refractory to FLAG, you would probably expect even less.
In our trial, however, we saw a complete remission of 75% among the U.S. patients and the overall rate response of almost 80% in the HFDA [ph] trial. Also, the remissions were quite durable after the treatment.
For those patients that had a response, overall survival was almost a year and that is despite the fact that many of these patients were not subsequently transplanted. Normal standard of care provides for patients that are in relation that may pursue to the transplant, but many of the patients in our study were too ill, too fragile for such a transplant, especially if they had been transplanted before. So a truly miraculous results that clearly provides a great promise for the NK cells. Next slide.
Let me give you a couple of examples of specific patients. This is for patients that three GMP and Brazil trials that all had either CNS disease or infections or both. And they all had multiple prior treatments and all had been transplanted. They have relapsed after transplant.
To give two examples, the patient number one has a mycetoma, which is a fungal infection in the brain, which was measured to be about 2×2 centimeters. The patient in addition had mycin resistant endo focus [ph], and of course, have a — had relapsed and had active AML.
Patient number three had pulmonary TB, had been transmitted twice in the past. Patient five was first diagnosed when he was 15 and this was his seventh treatment. He had been transplanted also in the past, and unfortunately, also he had after that transplant.
All these patients got their NK cells, relatively low numbers, these were at the lower dose levels and all of them have been complete response and all the infectious complications disappeared. They all had prolonged duration of complete response and they all survived roughly a year despite the fact that none of them was eligible for subsequent transplant. So again, clear proof that the NK cells can drive remarkable readmissions in severely ill patients that have no alternatives left. Next slide.
Based on the data, we’re now enrolling a Phase 1 in the United States, which follows essentially the same protocol, but with a couple of modifications. And those modifications, we believe had provide the potential for even further improved outcomes.
One important modification compared to the previous trial is that we’re now using the off the shelf platform. In the past trials, patients had to wait for production of NK cells, because the previous trials were relied on the use of family donor material. And that waiting time, a couple of weeks, is often too much for these severely ill patients. And in fact, a couple of patients never made it to treatment because they already died in that waiting period.
In this new trial, there is no waiting period, cells are immediately available. In addition, because we’re using the off the shelf platform, we can connect more optimal donors than what you have in cell is you have to select a donor from family members.
Thirdly, in this new trial, we will get repeated infusions. The data I’ve shown so far is just from a single course of NK cells and no cancer is typically treated or cured with just a single course of treatment. And we’ve had one patient where we have given two courses with again remarkable results and that approach giving multiple treatments once a month, once every two months will now be included in the next study. And then finally, we’re dosing these patients with a higher dose level than what we did in the previous trial. Next slide.
So, as you’ve seen, we’ve recently launched a new infectious disease program. Next slide.
Although, we hadn’t set any specific milestones at the beginning of the year and expectations to the markets, we’ve achieved a number of critical ones. We’ve started a number of important R&D collaborations, secured government funding and got an IND approval for Phase 1/2 trial. The funding provides complete funding for a program and thereby is very supportive in our current situation. Next slide.
So why did we pursue an infectious disease program. As this data shows, we already knew that the NK cells had a very strong anti-effective effect. And on the left, you see the antiviral activity over our NK cells in the transplant trial. These are severely immunosuppressed patients that often are at risk of CMV reactivation and BKV infection. And as you can clearly see, the addition of the NK cells significantly reduced the risk of these viruses for these patients.
I already mentioned on the right, that in the AML trial, we had a number of patients with infectious complications. And as I mentioned, in those specific cases infectious complications were resolved. So there is a clear sign that our NK cells have a very strong antiviral and antimicrobial effect. This in itself is not surprising. NK cells are designed by nature not only attack tumor cells, but also to attack virally infected and the microbial affected cells. Next slide.
So with that, we decided to pursue a new program in the respiratory field. To take a step back in the flu, as well as COVID, the ultimate need for the world for patients is to have prophylaxis and treatment for all potential strains, all seasonal strains and open label strains, not only for this current COVID-19 but for any potential future SARS and any potential future flu pandemic or epidemic.
Unfortunately, with current products, this is impossible. Current products are typically need to be changed for each individual virus or strain. This is of course well known from flu, where every year a new faction has to be developed. It’s also likely for SARS or for different products and use for different SARS strains. This of course takes time, which is a problem in epidemic.
In addition, vaccines typically work have at least efficacy in those patients that need the most, immunocompromised and high risk patients with a weaker immune system typically do not share convert as well to or from use of a vaccine compared to healthy effective patients. In fact, a vaccine efficacy with just the normal flu vaccines is just about 50%.
So, why NK cells? NK cells are essentially designed by nature to be effective across all stains. There is 20 years of data that shows that NK cells protect against any flu strain and any modified flu strain. So with NK cells we have the promise of a truly universal approach to treat and protect against these viruses.
In addition, we’ve shown data that our NK cells then work in immunocompromised patients. They do not rely on an effective functioning immune system, as vaccines do. And then finally, we have a platform, we can scale up, make products available off the shelf and it can create an economic profile that provides for health economic benefits. So NK cells have a huge potential not only in COVID but also in flu. Next slide.
So we started on the path to develop a product also in this field. We’ve set up a construction with a number of key Dutch R&D groups, like to further explore the mechanism of action and the functionality of the cells, either alone or in combination with antibodies and vaccines.
The partners we work with, has a lot of — have a lot of experience and they are world renowned for pandemic viruses like SARS and flu. We set up a Phase 1/2 trial in the United States with NCH, after which our IND got approved and that whole program is fully funded by the U.S. Government. Of course, we’re looking to the future and plan to expand a GMP capacity, pursue stock binding contracts with the U.S. Government and other governments, and pursue future funding. Next slide.
So I want to summarize and conclude with a quick overview of the progress we’ve made in 2020 and the outlook for 2021. In 2020, we’ve achieved almost all the targets that we set at the beginning of the year. There’s still two things to come. One is the start of the Phase 2 trial and the second thing to come is the start of additional new clinical trials in solid and blood tumors. But beyond that, everything that we’ve guided to the market has been achieved.
That provides a great platform for 2021. In 2021, we expect a lot of safety and efficacy data across all these new trials that we’re now launching. 2021 thereby provides the opportunity for a lot more proof-of0concepts and efficacy data that we already have at hand.
With that, I want to conclude and thank you for your attention and ask if you would have any questions.
Thank you, sir. [Operator Instructions] We do have a question from the line of Lenny Van Steenhuyse of KBC Securities. Please go ahead. Your line is open.
Lenny Van Steenhuyse
Hi. Good afternoon and thanks for taking my question. My first question actually pertains on the NK-REALM study with the…
Lenny Van Steenhuyse
… K-NK002. So the IND was approved in May with the first patient yet to be enrolled. Of course, I can imagine that there’s some reluctance for starting transplant procedures in the context of the pandemic. So could you perhaps give us a bit of an indication on general activity in the cell — in the stem cell transplant field for the past few months? Is there a general freeze and transplant related clinical trials? And lastly, does the BMT CTN have a specific policy on this? Thank you.
Thank you, Lenny, for that question. COVID-19 has not had any impact on our REALM trial. To say differently, the fact that we haven’t yet enrolled patients has nothing to do with COVID. We haven’t had any signal from the sites that we will start the trial with, that COVID is an issue or will be an issue.
And the reason for the time lag between the IND approval and the start of the trial is much more Monday. We got the IND approved with a couple of requirements for modifications to the trial and those modifications have to be process through a protocol amendment that you then have to file with the FDA and we have to wait for feedback.
And with that finalized protocol, we have to go back to the CTN and get final IRB approval. And beyond that point, you start activating the sites. So that total process, unfortunately, takes much more time than we would have liked and that’s the only reason for the time lag. It’s a purely administrative set of steps that we’re going through and that is the reason why we haven’t get in order to enroll.
Lenny Van Steenhuyse
All right. Very clear. My second question relates more to the OpEx. So the R&D costs came down versus the second half of last year, also excluding the impairment and restructuring costs from the second half of last year, we have some wind down of the clinical trials on ATIR, of course. Is there still any spending expected related for that program? And secondly, as of course, the new trials are starting to be initiated, what should we expect going forward in terms of R&D spending into 2021 and the second half of this year?
Yeah. The financials of last year are very hard to compare it to the financials of this year. We were a very different company with a Phase 3. So what we decided to do — and in the beginning of this year, but we still have a lot of the restructuring cost in our P&L. So what we decided to do was to be very specific about the cash burn that we had in Q3 of this year. The cash burn was €11 million.
In that €11 million cash burn, there are no residual after cost, there’s no residual restructuring costs. It is really the cost purely for our NK cell business and the company as it currently exists. And it is very predictive, if you will, for the coming products.
We will see a ramp up in cost when the clinical trials start to become bigger. But that is not going to hit our cash burn in the next six months or so. So, the €11 million is a good representative number for the cash burn in the coming quarters.
Lenny Van Steenhuyse
Okay. Thank you. And perhaps a final question from my side. I was wondering if it’s reasonable to assume if the K-NK004 program at Sanofi could enter clinical development in the course of 2021, if you’re able to make any comments on that. Thank you.
Yeah. We are, unfortunately, cannot make any comments on it. I wish we could. It’s Sanofi’s program. They — with exclusively licenses and that, of course, mean that they have control over the timelines. It also means that we’re not at liberty to give guidance on those programs unless they do so.
And of course, in a peer company like Sanofi, it’s not very customary to give guidance on when you expect a clinical trial to start. So I’m afraid that with the Sanofi program, we cannot give any specific guidance. We just have to wait for the different milestones to be triggered.
Lenny Van Steenhuyse
All right. Thank you very much for your comments.
Thank you. [Operator Instructions] And there are no further questions at this point. I would now like to hand the call back over to Amy Sullivan.
Thank you, Valerie, and thank you all for joining us today. If you have any follow-up questions, please don’t hesitate to contact me. Have a great day.
Thank you. Ladies and gentlemen, that does conclude your conference call for today. Thank you for participating and you may now disconnect.