Anelixis Therapeutics, LLC (ELDN) Earnings Call Transcript & Summary

Good morning, and welcome to Novus Therapeutics Conference Call. [Operator Instructions] Please be advised that the call is being recorded. Now I'd like to turn the call over to Jon Kuwahara on behalf of Novus Therapeutics. Please go ahead.

Thank you, operator, and good morning, everyone. Yesterday afternoon, Novus Therapeutics issued a press that outlines its acquisition of Anelixis Therapeutics, a concurrent financing, and changes to the leadership team and Board of Directors. This release is available at novustherapeutics.com under the Investors tab. Before we begin, I would like to remind everyone that statements made during this conference call relating to Novus' expected future performance, future business prospects or future events or plans may include forward-looking statements as defined under the Private Securities Litigation Reform Act of 1995. All such forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. Actual outcomes and results could differ materially from those forecast due to the impact of many factors beyond the control of Novus. Novus expressly disclaims any duty to provide updates to its forward-looking statements, whether as a result of new information, future events or otherwise. Participants are directed to the risk factors set forth in Novus' reports filed with the Securities and Exchange Commission. It is now my pleasure to pass the call to Keith Katkin, Chairman of the Board of Directors of Novus Therapeutics.

Thank you, Jon, and good morning, everyone. As we communicated back in June, Novus initiated the process of exploring a range of strategic alternatives to maximize shareholder value. Yesterday, we were very pleased to announce the conclusion of that process with the acquisition of Anelixis Therapeutics. We believe the acquisition of Anelixis represents the highest potential value creation opportunity for our shareholders and creates the most promising path for Novus' future. I would like to thank our Board members, past and present, alongside our investors in their commitment and support in advancing Novus' mission. It is now my sincere pleasure to introduce Dr. David-Alexandre Gros, or DA, our newly appointed CEO and member of the Board of Directors of Novus Therapeutics. DA arrived at Novus from Imbria Pharmaceuticals, where he cofounded and where he served as CEO and Chairman of the Board. Prior to Imbria, he was President and COO of Neurocrine Biosciences, Chief Business and Principal Financial Officer of Alnylam Pharmaceuticals and Chief Strategy Officer at Sanofi. Before Sanofi, DA held leadership positions in health care investment banking at Centerview Partners and Merrill Lynch and in health care consulting at McKinsey & Company. He earned his MD from the Johns Hopkins University School of Medicine, an MBA from Harvard Business School and a BA from Dartmouth College. I have known DA for over a decade and look forward to his taking this company forward in this next phase of its development. With that, I would now turn the call over to DA. DA?

Thanks, Keith, and thank you, everyone, for joining us today. I'm excited and humbled by the opportunity to lead Novus as we pursue a new direction with a focus on patients for whom anti-CD40 Ligand therapeutics may provide a potentially life-saving treatment option. As Keith mentioned, our Board of Directors recently explored a range of strategic options to create and maximize value for Novus shareholders. It identified and seized the best possible opportunity in acquiring a privately held biotechnology company, Anelixis Therapeutics, which has developed AT-1501, a next-generation anti-CD40 Ligand antibody with broad therapeutic potential. We believe that AT-1501 has the potential to be the best molecule in its class. With AT-1501 as the cornerstone of our pipeline, we see ourselves poised to grow Novus around this target and develop therapies to help patients undergoing organ or cellular transplantation as well as those living with autoimmune or neurodegenerative diseases, all of whom face limited treatment options. The Novus Board of Directors believes that the acquisition of Anelixis represents the greatest value creation opportunity for Novus stockholders as well as one that has the potential to bring great benefit to patients. The acquisition of Anelixis was structured as a stock-for-stock transaction, whereby all of Anelixis' outstanding equity interest were exchanged for a combination of shares of Novus common stock and shares of a newly created nonvoting convertible preferred stock. These nonvoting shares may become voting shares should they eventually be converted to common shares. With the acquisition of Anelixis, Novus entered into a definitive agreement for the sale of Series A nonvoting convertible preferred stock in a private placement to a group of accredited investors led by BVF Partners, with participation from Cormorant Asset Management, Ecor1 Capital, Logos Capital, Fidelity Management and Research Company, Adage Capital Partners, Woodline Partners, Ridgeback Capital, Janus Henderson Investors and Samsara BioCapital as well as additional investors. The private placement is expected to result in gross proceeds to Novus of approximately $108 million before deducting placement agents and other offering expenses. The proceeds from this private placement will be used to advance Phase II clinical trials of AT-1501 in up to 4 indications: renal transplantation, islet cell transplantation, autoimmune nephritis and amyotrophic lateral sclerosis, or ALS. Our vision for Novus is clear. We will be focused. We will be agile and we will be guided by the data and by the science. The biology around CD40 and CD40L is well-validated, and we believe that CD40L is not only the optimal target to drive therapeutic efficacy, but that we also have a potentially best-in-class antibody. We are excited to advance AT-1501 and to use interim readouts when possible to optimize its development and to update investors. On a personal note, I am grateful to be partnering with Steve Perrin, our new President and Chief Scientific Officer, to whom I will shortly pass the call. Steve invented AT-1501 and brings over 20 years of drug development experience to Novus, having most recently co-founded Anelixis Therapeutics and served as its Chief Executive Officer. Over the past decade, Steve has worked with the ALS Therapy Development Institute, or TDI, to build the world's largest ALS drug development program, bridging preclinical and clinical programs. Anelixis was originally spun out of TDI. Prior to TDI and Anelixis, Steve held R&D positions at the Hoechst-Ariad Genomics Center, Aventis Pharmaceuticals and Biogen Idec. He received a PhD in Biochemistry from Boston University Medical Center, where he also started his career as associate professor of medicine. He has a Bachelor of Science from Boston College. Steve?

Thank you, DA. As DA mentioned, CD40 and CD40 Ligand receptors have been an attractive target in the biotech and pharmaceutical industry for decades. The engagement of these receptors play a pivotal role in immune system activation by mediating both antibody and cellular immune responses through modulation of germinal cell function, B cell responses as well as polarization of pro-inflammatory T cells. The initiation of a robust immune response is mitigated by costimulatory signaling the CD40 ligand, binds costimulatory receptors such as CD40 on antigen-presenting cells as these antigen-presenting cells are simultaneously presenting foreign peptides on their MHC receptors to T cell receptors on lymphocytes. The interaction of CD40 Ligand and CD40 results in clonal expansion, antibody production and secretion of pro-inflammatory cytokines that amplify an immune response. Blocking the activation of the CD40 Ligand pathway ameliorates disease progression and pathology in preclinical models of autoimmunity and prevents acute and long-term allograft transplant rejection in multiple species. Mechanistically, blocking this pathway results in impaired germinal cell center function, B cell activation and T cell polarization to pro-inflammatory lymphocytes, but importantly, it does not cause systemic lymphopenia. The opportunity and excitement to clinically regulate the activity of the CD40, CD40 Ligand pathway is reflected in the multiple companies with Phase II programs targeting either the receptor or the ligand and a spectrum of autoimmune and transplant indications. For several of our programs, there are competitive clinical programs, but Novus is the only company exclusively focused on CD40 Ligand biology. In addition, Novus is the only company focused on islet cell transplant for people with type 1 diabetes and ALS. Our lead program, AT-1501, is a first-in-class IgG1 anti-CD40 Ligand antibody blocking FC effector function. It has high affinity binding to CD40 Ligand, has shown very good manufacturability and biological activity and has a half-life of 18 to 26 days in humans. We are focusing our efforts on the development of an antagonistic antibody targeting the ligand rather than the receptor since targeting the ligand has been shown to be more efficacious in preclinical models of autoimmunity and in the prevention of acute and long-term allograft transplant rejection. This preclinical efficacy may be mediated by several factors, including differences in the cellular distribution of the receptor versus the ligand. Anti-CD40 Ligand antibodies also inhibit both CD40 as well as CD11 co-stimulatory receptors on antigen-presenting cells, thus inhibiting the pro-inflammatory polarization of CD4-positive and CD8-positive lymphocytes. Blocking the ligand also polarizes CD4-positive lymphocytes to Foxp3-positive Tregs, which functionally secrete IL-10 and other cytokines, creating a tolerogenic environment in the context of preventing allograft transplant rejection and autoimmunity. To date, we have completed a single-ascending dose Phase I study of AT-1501 in healthy volunteers and people with ALS. In the study, AT-1501 showed a good safety profile with low ADA responses that were not dose related. We observed linear dose proportionality across the dose ranges and a half-life of up to 26 days. This data suggests the potential for extending dosing intervals and for the development of more convenient administration methods such as subcutaneous formulations. In the 8 mg per kg cohort of the Phase I study, we conducted an immune challenge with KLH, a shellfish protein that was injected subcutaneously. In the control subject without AT-1501, there was a robust antibody response to foreign KLH protein, which peaked at 15 days. AT-1501, however, completely abrogated an immune response to KLH in 2 of the 3 treated subjects. We have selected our indications based on preclinical data that was generated with either our molecule or historical anti-CD40 Ligand molecules. Preclinical data in rodents, pigs and nonhuman primates suggest that blocking CD40 Ligand is the most efficacious way to prevent acute and long-term transplant rejection in renal, corneal and islet cell transplant and in some cases, can induce long-term transplant tolerance. Blocking CD40 Ligand has also been shown to be more effective at preventing allograft transplant reduction compared to blocking CD40. The ability to prevent acute and chronic transplant rejection in the absence of calcineurin inhibitors has the potential to transform the clinical management of preventing graft rejection mitigating nephrotoxicity, increased opportunistic infections and increased malignancies associated with calcineurin inhibitors, or CNIs. Islet cell transplant has the same upside as described for organ transplant, with the additional ability to eliminate the toxicity of CNIs, specifically on transplanted islet cells. Chronic exposure to CNIs and organ transplant is associated with an increase in type 1 diabetes. This is due to the toxicity of CNIs on beta cells in the pancreas. Similarly, CNIs are toxic to transplanted islet cells. Up to 50% of transplanted islet cells may die within 3 days of transplantation, in part due to the C&I toxicity, thus exposing subjects to risk of transplant rejection and requiring multiple islet cell transplants in order to obtain a sufficient islet cell mass to eliminate the requirement for exogenous insulin. In autoimmunity, we are focusing on autoimmune nephritis. There was a long history of preclinical and clinical data demonstrating that blocking CD40 signal ameliorates disease progression, modifies biomarkers of disease and improves renal function in focal segmental glomerulosclerosis, or FSGS, in lupus nephritis. Soluble CD40 Ligand also often correlates with disease flares in autoimmune diseases. The clinical development program in ALS is based on positive preclinical data in a rodent model of ALS conducted at the ALS Therapy Development Institute, or ALS TDI. ALS TDI has screened approximately 500 compounds in rodent models of ALS and blocking CD40 Ligand function is 1 of only 4 or 5 compounds that slows disease progression, improves survival and improves muscle function in this model. Similarly to how soluble CD40 Ligand can correlate with flares in autoimmune diseases, soluble CD40 Ligand also correlates with disease progression in ALS. Novus is poised to initiate up to 4 Phase II clinical studies from now until mid-2021. The Phase II study in ALS, which was paused in the early phase of COVID-19, is expected to start enrolling in the next month. While we do not expect to have interim readouts in the ALS study, the studies in islet cell transplantation, renal transplantation and autoimmune nephritis have opportunities for interim analysis prior to top line data. We are focusing on renal transplantation since it is a well-established procedure with an estimated 23,000 transplants performed in 2019 in the United States and a 3- to 5-year waiting list of over 90,000 people. 10% to 15% of all renal transplants are retransplants due to long-term graft failure. CNIs are a critical component of immunosuppressive regimens to prevent acute and long-term transplant rejection. However, chronic exposure to certain CNIs, including tacrolimus, is associated with nephrotoxicity and increase in opportunistic infections, increased malignancies and an increase in type 1 diabetes due to pancreatic beta cell toxicity. These liabilities may result in a requirement for reduced exposures to CNIs over long periods of time and a decrease in the ability to prevent long-term rejection. We believe that AT-1501, in combination with the elimination of CNIs from renal transplant procedures, may increase long-term graft survival and significantly eliminate the toxicities associated with long-term exposures to CNIs. Several historical studies have described the effect of anti CD40 ligand antibodies in nonhuman primate models of renal transplant and shown that anti CD40 ligand therapy can prevent both acute rejection and long-term rejection in nonhuman primates. In these models, the lack of immunosuppressive treatment results in acute transplant rejection in 14 days. Chronic administration of anti-CD40 Ligand antibodies as a monotherapy for 5 months, however, inhibits transplant rejection with good kidney function as measured by protein urea with no adverse events. In order to study anti-CD40 Ligand treatments in combination with current immunosuppressive regimens, anti-CD40 Ligand was administered together with a brief course of basiliximab plus mycophenolate mofetil and Solumedrol for 3 months in another historical study. Animals in the combination group had a mean survival of greater than 300 days. There is currently a limited number of islet cell transplants occurring in the United States, yet there are over 1 million people in the U.S. with type 1 diabetes. An estimated 70,000 people with type 1 diabetes are in the so-called brittle phase of the disease, chronically taking exogenous insulin for decades, suffering from glycemic unawareness and at-risk for significant comorbidities. Adoption of islet cell transplant as a treatment option for type 1 diabetes has hampered the toxicity associated with the CNIs that are required to prevent islet cell rejection yet result in acute islet cell loss and dysfunction. CNI toxicity and islet cell loss often require multiple islet cell transplants to eliminate the necessity for exogenous insulin. The toxicities associated with CNIs are also increased the risk of severe renal dysfunction in a patient population where renal function is already compromised. The elimination of CNIs in islet cell transplant could thus potentially transform treatment options for people living with type 1 diabetes. Historical studies in nonhuman primate models of islet cell transplant showed that treatment with anti-CD40 Ligand antibodies induces long-term islet cell function and graft survival even as a monotherapy in the absence of any additional immunosuppressive agents. We've expanded on these early observations with AT-1501 in a nonhuman primate model of islet cell transplant comparing the safety and efficacy of AT-1501 with an immunosuppressant regimen containing CNIs. Animals undergoing islet cell transplant with AT-1501 monotherapy have significantly higher C-peptide levels immediately after transplant. The islets with AT-1501 monotherapy appeared healthier and could dynamically sense glucose levels as demonstrated by a functional increase in C-peptide levels after eating. Animals treated with AT-1501 had better graft function, improved appetite and significant weight gain a year after transplant compared to standard immunosuppressive regimens where acute rejection was often observed. Systemic lupus erythematosus, or SLE, is one of the largest autoimmune populations globally with between an estimated 65,000 and 120,000 patients in the United States. Up to 40% of people with SLE develop lupus nephritis and may experience kidney dysfunction, requirement for dialysis and end-stage renal disease. Similarly, FSGS is an autoimmune nephritis resulting from podocyte injury associated with immune complex formation in the glomeruli. FSGS is also an orphan disease with a prevalence of 40,000 people in U.S. and variable progression to end-stage renal failure. Proteinuria is often utilized as a biomarker of kidney dysfunction and can be leveraged for patient stratification as well as a surrogate marker of improvements in kidney function. There are currently no FDA-approved treatments for FSGS or lupus nephritis, with systemic steroids and CNIs being most widely prescribed. There is a long history of modulating CD40 Ligand activity in preclinical models of lupus nephritis and glomerulosclerosis with anti-CD40 Ligand antibodies. Anti-CD40 Ligand antibodies ameliorate disease progression and improve survival in the rodent SNF and NZB/NZW generic models of SLE. There is also pathological improvement of fibrosis in the kidney and spleen, improvements in kidney function and reduction of immune cell infiltrate into the kidney. Systemic biomarkers of lupus such as anti double-stranded DNA antibodies are also reduced with anti-CD40 Ligand treatment. Similar data has also been described in preclinical models of FSGS. Anti-CD40 Ligand treatment ameliorates kidney dysfunction as measured by a reduction in proteinuria, and improved kidney function appears to be mediated by a decrease in immune cell infiltrate into the glomeruli. ALS is an orphan disease with approximately 5,000 new cases diagnosed in the U.S. annually and a prevalence of 30,000 cases overall. ALS is a progressive neurodegenerative disease due to loss of motor neurons in the spinal cord. Despite 2 approved drugs, the median survival remains only 3 to 5 years after symptom onset. The ALS Therapy Development Institute discovered the activation of the costimulatory pathway and activation of CD40 Ligand signaling at symptom onset in skeletal muscle, brain and sciatic nerve in rodent model of ALS. Using a murine antibody to block CD40 Ligand function in mice, they further demonstrated blocking CD40 Ligand, suddenly improved muscle function, slows disease progression and improved survival. These clinical manifestations are due to reduced immune cell infiltrate of macrophages into the skeletal muscle and the destroying of denervated nerves. The plasticity of the nervous system to repair itself in the absence of this immune cell attack results in an improved neuromuscular junction occupancy and improved muscle function. Blocking CD40 Ligand signaling also prevents pro-inflammatory polarization of lymphocytes, reduce neuroinflammation and improved motoneuron survival in rodent models of ALS. The company is initiating a Phase II study of AT-1501 in people living with ALS, with enrollment expected to begin in the next month. The trial is a 12-week open-label dose-escalating safety and biomarker study with 3 doses of AT-1501. The endpoints of the study are safety and tolerability, changes in pro-inflammatory biomarkers as well as changes in neurofilament light chain. Exploratory clinical endpoints will also be assessed. I'd like to finish my presentation by echoing DA's earlier sentiment and expressing my excitement to have joined Novus and to further developing AT-1501. With that, I'll turn the call back to DA. _

Thank you, Steve, and thank you all for joining us this morning to learn more about the developments at Novus and our new vision. A recording of today's call will be available for playback later today, and more details can be found on the Novus website, novustherapeutics.com. Thanks again for joining.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.