Alterity Therapeutics Limited (ATH) Earnings Call Transcript & Summary

Well, good morning. Good morning for the Australian investors, and of course, good afternoon, evening to those joining us from the U.S. I'd like to welcome you to MST's Rare Diseases, Rich Returns Webinar. We have today Dr. David Stamler, MD, CEO of Alterity Therapeutics; and of course, Jon Pilcher, CEO and Managing Director of Neuren Pharmaceuticals. Investors commonly focused on the big targets, so we look at cancer, high blood pressure, cholesterol, they're all indeed multibillion dollar markets. But also extremely competitive. Today, we'd like to try and highlight the less well-known, the rare diseases, which indeed in my view, offer very, very much equal value and perhaps potentially greater value. In the U.S., a rare disease is defined as a patient population of less than 200,000 regulatory authorities offer a number of advantages and incentives to companies to develop drugs in this area. And if we look, in fact, at Neuren presents a great example of what a rare disease can bring. It's over the course of MST's coverage, we've seen it grow from around $200 million market cap to now USD 1.6 billion. And if you think that's only one of their 2 drugs, and it's only for one indication and one market, one can see that Neuren has much left to offer. Perhaps Alterity presented as the next best thing. It's a great example of what rare drugs can or rare diseases can bring. [Operator Instructions] With that, I'd now like to introduce Dr. David Stamler from Alterity Therapeutics. Over to you, David.

Great. Thank you, Rosemary. I'm going to bring up my presentation to share and after I do that, maybe Rosemary, you can tell me if you can see it that in full-screen mode or...

Sorry, it's not -- it's got there -- it's -- you're not in full screen, but that's now you're right, you're fine.

It's full screen Okay. Great. I think -- all right. Great. Well, anyway, thanks, Rosemary, and thank you, everyone, for joining us a real pleasure to tell you about the great work my colleagues have been doing at Alterity over the last several years. I would encourage you to look at our forward-looking statements as referenced in this slide. Our name Alterity is actually an English word that means the state of being different. And I think it nicely summarizes our approach towards treating the neurodegenerative diseases that really are in our sights. Our goal is to modify the course of disease, not just address the underlying symptoms. And accordingly, our therapies are designed to do this. Another term for, of course -- is for treatments that do assess the underlying pathology or disease-modifying therapies. And it's really the ultimate goal of many pharma companies in this area. Our lead candidate is a drug that we refer to as ATH434 or just 434 and this is a novel drug candidate that targets proteins that are involved in the pathology of neurologic diseases such as Parkinson's disease and related disorders. And I'll talk more about these in a moment. Our first indication is a rare disease called multiple system atrophy or MSA, and it's a truly devastating condition that has no treatment for its underlying cause. It is an orphan drug or an orphan disease in the U.S. And accordingly, we granted that orphan drug designation in both the U.S. and in Europe, and that gives us various favorable interactions with regulatory authorities. Although we have an ongoing Phase II program, which includes 2 studies. One is a randomized double-blind study in early-stage patients and then a biomarker trial that we've announced recently in late-stage patients. And I'll spend a bit of time telling you about these studies. Our chemists at Alterity that are headquartered in Melbourne, have done great work in the last several years generating fresh patent and drug candidates. And I think this is really important for our overall commercial strategy going forward. Finally, our R&D team is quite experienced with 3 neurology drug approvals through the FDA. So we are optimistic that we can do the same thing with our lead drug candidate. My bio is there on the left. I'm happy to be able to tell you that myself and a few key team members on the right side of the slide, Margaret Bradbury and Cynthia Wong, we've been successful in bringing drugs to the market in the neurology area. Most recently, we were at together at Auspex Pharmaceuticals, a San Diego-based company that was acquired by Teva in 2015 for over USD 3 billion. I'll be talking about Parkinsonian disorders, which are a truly unmet need, at least a target that has a lot of room for new therapies. Now Parkinson's is a syndrome of motor symptoms that you've likely seen in friends or family members that includes slow movement, a shuffling gate, sometimes tremor. And it gets its name because Parkinson's disease is the most frequent cause of this syndrome. However, it's not the only cause. And there are other disorders that are called Parkinsonian disorders because of the motor symptoms. And they are less common things you haven't heard of. One I've told you about is MSA. That's our target in first indication. There's another one called PSP. These diseases have prominent nonmotor symptoms. They also have a limited response to existing therapies, which makes it even more troubling. Parkinson's patient can respond for a very long time to the standard therapies, but an MSA patient very well will not. And importantly, the available treatments for these diseases are symptomatic treatments they don't address the underlying pathology of disease. Now what goes hand in hand with a big medical need that is unmet is obviously a significant commercial opportunity that is appealing to investors, this data on this slide is from a marketing research with about 30 U.S. neurologists, half specialists, half a generalist. And clinicians really had a strong intent to prescribe based on the mechanism of action of the drug and the fact that it was addressing the underlying pathology of disease. And unlike many drugs in this space, it is an oral drug that is administered twice a day, and that was also very appealing to physicians. So with rather conservative assumptions from a commercial standpoint, we estimate peak sales of up to USD 725 million, and that's just in the U.S. just for MSA. So our portfolio is summarized on this slide. And as mentioned at the top of my talk, there are -- we have 2 ongoing Phase II trials. One is what we refer to 201, and that's a double-blind trial in early-stage patients. The 202 study is a biomarker trial that's really focused on more advanced patients compared to the first trial. We've been conducting a natural history study in MSA called bioMUSE and that's been ongoing for a couple of years. And that's been truly a fascinating and unique respect of our development program. And I will be showing you some summary data from that study in a moment. 434 is also being evaluated preclinically in animal models of Parkinson's disease through funding from the Michael J. Fox Foundation that's headquartered here in the United States. And then as I mentioned at the beginning of my talk, we do have a very active discovery program in -- to generate new IND candidates to take into the clinic. So let's talk a little bit about our first disease and what our biologic target is. What you see pictured on the left side of this slide is a cartoon of alpha-synuclein. And alpha-synuclein is a normal protein that's in all of our nerve cells. It's inside the cell, and it's has the critical function of enabling neurons to communicate by allowing the neurotransmitters to be released from the end of the nerve. Now to do this, it has to exist in this unfolded state that you see pictured here. But unfortunately, in diseases like Parkinson's disease or like MSA, the protein misfolds and then it aggregates and it can't do its work properly. So our strategy is to really block this misfolding in aggregation. What you see on the bottom part of the slide, is the normal physiologic unfolded protein. But in disease, it forms these clumps called oligomers and then fibrils that are insoluble. And then the protein can't do its work. Importantly, the body also tries to clear these proteins from neurons from other cells in the body, and that causes an inflammatory response, which exacerbates the pathology. So we're really trying to stop that process and in doing so to save neurons. Now how we do this is rather unique, and we do this by targeting excess iron that's increased in the brain in areas of pathology. Now these are data that come from an autopsy study where they looked at the brains of Parkinson's disease patients. And these regions that are shown here on the slide is substantial nigra, 2 different areas. They have increased iron in the patient's data is in blue, the healthy controls of the same age are in green. And we see the patients have excess iron compared to those healthy controls. Now in the same study, they also looked at the brains of patients with MSA. And similarly, they saw increased iron here in multiple brain regions as the name implies multiple systems are indeed affected and we see increased iron. So this is an autopsy study, and we aim to try and reduce this iron in patients, so to do that, we really need tools to measure that iron in a living patients. So if you fast forward over the last couple of decades, great advances have been made in MRI technology. where you can do various aspects of measuring things on both metabolites and iron in the brain of patients. And what you see here in this picture at the end of the orange arrow is this dark red staining material, and that corresponds to the increased iron that you see in the orange aeros from the autopsy study. And this is important for 2 reasons. Number one, we are using this to qualify patients to come in the study, number one. And number two, this is our primary endpoint because this is how we believe our drug will work. I won't go through this in detail, but the cartoon on the right really shows how the excess iron and this imbalance can promote oxidative stress. Iron itself is the root cause of oxidative stress. And then as I've shown you the -- that can lead to an inflammatory response. We really hope to break this vicious cycle by binding and redistributing the excess iron in the brain. So to summarize our approach, we're redistributing excess iron that's increased in the central nervous system. In doing so, we reduced protein aggregation and preserve its function. We reduce oxidated stress with the overall goal of rescuing neurons. And the hope is that we're going to modify the course of disease and improve the quality of life in patients who are affected. So now let's talk a little bit about 434. You see a nice 3-dimensional picture of the drug on the right. From a Cana standpoint, it's a small molecule, which is important because that means it can easily cross the blood-brain barrier. Because it binds iron, and let's go of it, I'd like to characterize it as an iron chaperone. I've mentioned it's an oral drug, which is easy to use. And we've shown in Phase I studies that it is readily absorbed and achieved concentrations in the brain that are associated with efficacy in animal models of disease. And I have told you that we have orphan drug designation, which is very helpful. And we do have a development path that has been reviewed extensively and endorsed by the FDA and the European Medicines Agency. This is a rather data-heavy slide. But really what I want to show you on the bottom part of the slide, is the iron binding of 434 -- the strength of the iron binding to a 434 versus alpha-synuclein. So you see 434 is 10 to the minus 10 versus alpha-synuclein 10 to the minus 5. And basically, as those negative numbers get larger, it means stronger binding. So 434 binds iron, about 5 orders of magnitude stronger than alpha-synuclein, which is how it prevents it from aggregating. So that's what we wanted to do. But it doesn't bind it stronger than this protein called transferrin. That's a really critical protein inside in the body that really shuttles the iron around. And we think the 434 binding is really in the sweet spot of binding stronger than synuclein, not stronger than the normal proteins. So what does this do? As I've told you before, this reduces the alpha-synuclein aggregation. You can see those data there in the top panel. On the blocks, the increase in brain iron that we've seen in this animal model, where untreated animals are in white, injured animals in gray that received vehicle and then 434 really blocks that iron increase. And that's associated with a marked reduction in oxidative stress in the bottom panel. So really, what you're seeing on the right side of this slide is what we expect the drug is going to be doing in all animals, including humans. So now let's talk a little bit about our MSA program. For those of you that don't know this rare disease, it is rare and rapidly progressive. The main clinical impairments include motor problems, as I mentioned before, the Parkinsonism, unstable gate and uncoordinated movements. But importantly, these patients also have autonomic impairment, which really makes maintenance of blood pressure very difficult or normal control of bladder and bowel function. And then if you take a look at the diagram on the right, patients tend to present with nonspecific symptoms. But then when they start getting Parkinsonism or uncoordinated movements that are referred to as cerebellum features. That's when they tend to come to the attention of a neurologist. And if they're on the ball and they recognize this patient, they think this is not your garden variety of Parkinson's disease, but these are really the patients that we want to enroll into our clinical trial, those that have motor impairment, but don't require a walker or a wheelchair. And unfortunately, more than half of patients do become -- or do require the use of a wheelchair within 5 years. And the median survival was only about 7.5 years after symptom onset. So it is really rapidly progressing. We have completed Phase I as summarized on this slide. There were no serious adverse events in the trial and no AEs that led to withdrawal, and all the adverse events were mild to moderate in severity. And we did look in older and a younger cohort and saw a similar profile, which is very good news because some of our patients will indeed be over 65. And there were no significant findings in terms of vital signs, EKGs, blood pressure, et cetera. So really, I think, overall, a very clean safety profile. So now I'm going to tell you about the natural history study. This is in our target patient population. But this design is an observation study. So there's no experimental treatment here. We're just observing these patients. And the main goal of the study really was to design and derisk the Phase II study. So we started this in the middle of the pandemic back in 2020. And we really wanted to hone the patient population that we were going to recruit into the Phase II. So we want to learn a lot about them. And we also want to identify the most suitable biomarkers for demonstrating target engagement. So we enrolled about 20 patients, we followed them for a total of 12 months. We followed most of them. There's still a couple of patients that are ongoing. But we looked at the various biomarkers. Iron, as I've already shown you on an exam patient. We've also looked at other forms of neuroimaging, MRS is one, neuromelinin and blood flow. We've also looked at fluid biomarkers. That's looking in spinal fluid or in plasma and these are important proteins that can tell us something about the disease activity. And then finally, we are looking at wearable movement sensors, which allows us to assess the motor performance of the patient in an outpatient setting. And then, of course, we're interested in understanding the clinical scales that we would use in the definitive trial, both motor, autonomic -- autonomic we called it that blood pressure bowel and bladder issues and we're also interested in activities of daily living, which is really how the patient functions and feels. So just to give you a little recap of the goal was to really help design and derisk the Phase II study. This is learning from the bioMUSE natural history study to optimize patient selection, choose endpoints and assess them with precision and pilot clinical measures. And what we showed is that we can really identify an iron signature that is very classic for MSA that will help us differentiate from lookalike diseases like Parkinson's disease. So we learned that from the study. We also tested the spinal fluid of the patients in this study and showed that we could differentiate an MSA patient from a Parkinson's patient. We, through our colleagues and really, this is due to great work being done at Vanderbilt and have been able to develop a new MRI template to improve the region to define the anatomy with great precision. If you can see these white lines in here. This really helps us identify and demarcate what are the specific brain regions we want to target. So that's innovative work being done by the folks at Vanderbilt and then we are developing novel ways of quantifying the brain iron in individuals who are treated. And then finally, we did look at wearable sensors and a new scale called urinary symptom profile that has not been used in MSA before. And we showed with the wearable sensors that there clearly is a decline over time in a rapidly progressive patient that we could measure. And also, we could demonstrate pathology on this urinary symptom profile. And that -- these are scales and tools that we took into the Phase II trial. So this is the double-blind trial that I mentioned at the outset. It is a well controlled. It's a randomized overlend, placebo-controlled, we're looking at safety and efficacy of our drug candidate in participants with MSA. We're also looking to demonstrate target engagement based on various biomarkers, as I just showed you in that last slide. We're targeting early-stage patients, so they need to be ambulatory with relatively short duration of motor symptoms and biomarker evidence of MSA. And I'd say that is unusual to require several different biomarkers to come into a trial. The sample size is about 60 that we're targeting in up to 30 sites in Australia, New Zealand, Europe and the United States. Patients will be treated for 12 months and not surprisingly, the primary endpoint is the change in iron content as measured by brain MRI in the region of interest. With secondary endpoints that are relevant to the patient population, both these activities of daily living that look at function and how a patient feels, motor exam, scales at autonomic function. And then we're looking at a whole host of other imaging biomarkers and those fluid biomarkers and wearable sensors I mentioned. So what you see on the left side of this slide is just the schematic that patients will be randomized to either a high dose of 434 or a low dose of 434 or placebo in equal numbers. And this is a depiction of the primary endpoint. This does come from the bioMUSE natural history study. And it does show that the MSA rating -- the MSA severity, which is on the x-axis, does correlate nicely with iron content on the y-axis. And that's part of the basis that we feel that this is the suitable primary endpoint for the Phase II study. Now as mentioned, we are conducting a biomarker study. We just launched this trial within the last month or so. And this is a single-arm open-label study. But what's interesting, and I'll come back to this is it is essentially assessing the same endpoints as the double-blind trial. So we're looking for target engagement based on imaging and fluid biomarkers, and we're also looking at safety and efficacy in this open-label study. Now here, we're looking at clinically established or more advanced patients with MSA that also have biomarker evidence. We're looking at 15 patients. We'll treat them for the same length of time as the double-blind trial. And the primary endpoint is the same and the secondary endpoints are essentially the same. The reason the study is useful is because our primary endpoint is objective, not meaning it's not subject to bias. So therefore, we can actually look at how 434 may reduce the iron and potentially improve symptoms in this patient population and compare it to what we see in the earlier trial. So we're quite excited by the study as well. So in summary, we have a Phase II program that's ongoing with 2 studies in MSA patients. We're targeting an orphan disease that has no approved treatments. The Natural History Study has really helped derisk that Phase II program. I told you a bit about our development team and the success that we've had at and our very successful discovery group that is generating new compounds all the time. On the right we see the milestones that we've met to date with the Phase II program, and we expect to be closing enrollment in third quarter of this year, third quarter calendar year and as -- in second quarter, we did present updated bioMUSE data on variables and then most recently, as mentioned, we did initiate the Phase II study in a -- or the Phase II biomarker study. So with that, I will close. Thank you for your time, and I hope I've left enough time for questions.

Thank you very much, David. Indeed, there are some questions if I can just go through them. You have been asked is how much do you think the medication is going to cost? And how long will it take to complete the Phase III trial?

On costs, we don't know. That's something that the commercial organization or commercial part of our organization would determine. Regarding the -- but I would say that the pricing of the drug that's factored into our commercial -- or we should say the pricing, at least in the U.S. is factored into our commercial assessment of the peak sales of $725 million. Regarding...

Can you share, what that is sir? Can you share...

Yes, Typically orphan drugs for a patient population of this kind, especially if their disease modifying could be priced anywhere from $100,000 to $150,000 per year. In -- regarding Phase III, that's a much more difficult thing to assess largely because -- that it really depends on the strength of the efficacy signal that we see in Phase II. So a stronger efficacy signal will lead to a smaller Phase II study. I think we'll know more when the study reads out, we'll have a much better sense of that. But I'd say with demonstrated efficacy because so -- no treatments have demonstrated clinical benefit, I think a trial like that could enroll rather rapidly.

Prefect. Thank you. And some more questions. How has the patient enrollment numbers progress for both the Phase II trials?

Yes, they're going really well. I think they're clearly on track to meet our corporate milestones of completing enrollment by the end of third quarter in the larger trial. And having just initiated the other trial, it always takes a little while to ramp up, but the interest is very high. the center that is doing the trial in the U.S., it gets a lot of referrals from all over the country. So there is very high demand.

It makes sense, I guess, a stable disease quickly progressing and no treatment imagine there would be piped. Another question, when can you expect any data from the more advanced open-label study 202. Obviously, that's got a sneak preview as to what's happening in 201. So I think everyone will quite in to hear the answer...

Yes. It kind of depends how rapidly enrollment goes. But my hope is that we can see something at least 6 months in advance of the readout of the double-blind trust. So sometime in '24 and as enrollment progresses, we can give a little clearer guidance on that. But it's still a little early to have any firm views on that.

Can you provide any details about PBT 2 ATH434? And any royalties that may be revealed?

I'm sorry, could you -- you mentioned PBT 2 and 434?

No. It's PBT. I think the ATH434, I'm sure, is the actual question.

I see. Yes. So right now, we only royalties that would be due to any other party is a very low single-digit royalty to a scientific partner on the drug. But the majority -- the vast majority of the drug is wholly owned by Alterity.

Okay. And another question, when will access be available in Australia or Australians able to go to the U.S. to access this? I'm not sure if that's the trial whether they can go on the truck because obviously, we have a trial site can stray or on...

Yes. I mean we have trial sites in Melbourne and in Sydney. Those -- that information is available on clinicaltrials.gov. And also, if there's any question about participation in the study, we have a website. I think I've got this right, clinical [email protected]. I know it's quite a muffled, but maybe we can provide the Rosemary with that e-mail address if anyone has questions about participating in the trial afterwards.

And just a little bit more on you, David, in terms of your 3 FDA approvals, obviously, within the Australian market, that's quite novel. Could you tell us a little bit more in what potential similarities with ATH434 at the moment what you're doing.

Yes. So the first approval I had back in 2007, 2008 was with another orphan disease called Huntington's disease, which has similar prevalence to similarly debilitating disease. It's not as rapidly progressive. And that was also an academic pharma partnership in large part, similar to what we're doing with Vanderbilt. And that was -- that is also a disease that has no therapies approved. That went to advisory committee. That was a very challenging approval, but we were able to get that one through. Now the most recent approvals, as I mentioned, were with spec pharmaceuticals. And those were -- also one was in Huntington's disease and one was in tardive dyskinesia which is a side effect of commonly used antipsychotic drugs that are used for various conditions bipolar disorder, schizophrenia, even some forms of depression. So those were -- those molecules, again, were discovered and managed internally, and we filed those NDAs, did all the interactions with -- so that's why I feel like we've -- I've spent a lot of time with this division at the FDA. We understand kind of how they think, how they operate our team is very seasoned in knowing how to deal with them. So I think there are a lot of pitfalls in terms of working with the FDA, and nothing can replace that experience.

Thank you. Well, thank you again very much for joining us this morning. It's been very helpful and better understanding the work that you're doing, and we look forward to the updates. Thank you.

Great. Thanks so much for having me. Bye-bye.

Pleasure. Thank you.