Brii Biosciences Limited (2137) Earnings Call Transcript & Summary

Good morning and, good evening, everyone. Thank you for joining us for Brii Bios' Business Update Investor Call. This is Sara Qiu, Associate Director of Investor Relations. We have some exciting news to share with you today regarding our recent corporate updates. Before we start, I would like to remind you that the management may make some forward-looking statements during this call. These statements involve risks and uncertainties, and the company is not obligated to update them based on new information or events. On today's call from Brii Bio's executive management team we have Dr. Zhi Hong, Founder and Chief Executive Officer; Dr. Ankang Li, Chief Strategy and Financial Officer; Dr. David Margolis Chief Medical Officer; Dr. Susannah Cantrell, Chief Business Officer; Dr. Ellee de Groot, Chief Technology Officer. Dr. Ankang Li will highlight agreements with VBI on BRII-179. Dr. Zhi Hong will discuss the important role of BRII-179 within our HBV functional cure strategy. This will be followed by a Q&A section. And finally, Dr. Hong will close with final remarks. Now I would like to turn the call over to our Chief Strategy and Financial Officer, Ankang Li. Ankang, please go ahead.

Thank you, Sarah. Thank you all for attending this business update call. Last night, we announced our latest transaction with our partner, VBI. Through these strategic transactions, we are able to strengthen our position in HBV functional cure and our operational reach. During the ongoing global weak capital markets for biotech companies, we continue to look for opportunities to create long-term value for our shareholders. We believe these transactions brings such value creation opportunity. I will summarize and highlight the key components of the transaction and Dr. Hong will tell you more about how this transaction fits our HBV pipeline strategy. The key asset in this transaction is BRII-179, which is a therapeutic vaccine for HBV. You will hear more about this asset in the later part of the presentation. There are a number of components in this transaction. First, we agreed to acquire global IP of BRII-179. Accordingly, this transaction will eliminate future milestones and royalty payments to VBI, which will significantly increase the upside of Brii if this program becomes successful in the future. In addition, Brii decided to start transferring manufacturing technology to additional sites. This provides Brii with more control over future clinical and commercial supply of BRII-179 and expand our footprint for future supply globally. We also agreed to acquire VBI-1901's Asia-Pacific rights. This is a glioblastoma program, which has already received fast track and orphan drug designations from the U.S. FDA. The Phase IIb study is ongoing. As consideration for these transactions, we are first going to issue a promissory note of $2.5 million for eliminating PreHevbri's milestones and royalty payments. And then we will issue another $7.5 million note to acquire BRII-179 IP, and we will pay additional $8 million in promissory note upon completion of key technology transfer activities. We'll pay $5 million promissory note for the VBI-1901 Asia-Pacific rights. After June 30, 2024, once key technology transfer activities are completed, we will take control of VBI's manufacturing site at Rehovot for $10 million in cash. These are the summary of the transaction. Now I will turn to Dr. Hong to give you more information about our pipeline strategy. Thank you.

Well, thank you, Ankang. Good morning, and good evening, if you're calling from China, and we apologize for some of the timing that we have, no way of controlling in terms of signing. I know some of you probably are enjoying your Chinese New Year holiday, in which we made a presentation last night on U.S. time and also today trying to provide additional information for additional investors. And really appreciate your joining us for today's call. So what I'm going to do is try to provide additional context for this transaction as BRII-179 clearly is a key differentiator for us in the search for cure. Next slide. As you know, in the last 5 to 6 years, the company has invested enormous amount of resource focusing on and prioritizing on our program to significantly increase the HBV cure rate. We have invested in 3 different complementing assets, BRII-179, which is therapeutic vaccine, and BRII-835 is HBV targeting siRNA and BRII-877 is broadly neutralizing antibody. So very pleased to inform you, as we have done so in the past conference calls where we have made steady progress in all 3 programs. For specifically -- for 179, we now have those clinical proof of mechanism as well as proof of concept. We know that the therapeutic vaccine induced strong antibody response as well as broader T-cell response in patients. And so far, more than 180 patients have been dosed with this therapeutic vaccine, and we provided information to China, CDE and NMPA and they have granted us with breakthrough designation. I think this is something that we like to provide you the knowledge and then this decision was done in November last year. So we're not publicly stating this fact. And for the 835, also are working with our partner, Vir, and we have demonstrated clinical proof of mechanism as well as proof of care and this vaccine is for degrading all HBV RNA transcript so far. As we updated some time ago, about 380 subjects exposed, in fact, this number is much higher now. 877, which is the most potent broadly neutralizing antibody also working with VIR it demonstrated the clinical proof of mechanism as well as proof of cure. And as you know -- are aware of this, following VIR this is one of the most potent neutralizing antibody and the very early data at 6 milligram and they were able to induce more than 1 log of surface antigen reduction. As of last update, we have stated about 240 subjects dosed. And I can tell you, as of today, this number is much high. So as you can see, as we continue to mature all 3 programs, and we're heading towards the late stage as we transition into the item based on the scientific insights and clinical evidence we have got so far and really turn our focus into late-stage clinical trials, where we can follow the study with sufficient amount of patient and to address the key outcome more definitively. So as you can see that we have over the last 5 years conducted many combinations. These are smaller studies and together with our partner, Vir, and then this small Phase II study have already yield results and continue to produce evidence to really provide insight for us to transition into late-stage combination studies. Next slide. I think at the last AASLD in November 2023, we have 2 late-breaker presentations. One of them is the one that highlighted the combination of BRII-179, the therapeutic vaccine, with BRII-835, which is the siRNA. In 2 studies, we have demonstrated that 179 was able to induce strong T-cell response and more specifically also robust antibody induction response in proportion of patients. And the study is quite interesting. As you can see we have given the therapeutic vaccine for either 4 doses or 9 days and we see very safe, well-tolerated safety profile and we have mostly primarily injection site reactions, and we have not seen any serious adverse event that can be attributed to 179. And what's really interesting is that we reported before that a significant proportion of patients failed to induce any antibody response, and we believe these are the patients that have much impaired intrinsic antibody response against the infection -- against the viruses. So through this study we have an insight that 179 has the ability to assess patients' intrinsic immunity as such that it can provide a very important patient individual strategy as we further to improve the functional cure rate and more on this later. Next slide. The second late breaker that we have presented at AASLD is the combination of 179 on top of PEG interferon alfa. As you may know, that PEG interferon alfa is the treatment, although not very well tolerated, it was able to induce single-digit functional cure. I think in this study, we have confirmed that. And obviously, this is with the one that has a lower baseline of surface antigen in which there is a partial response to PEG interferon. We're able to demonstrate -- at the end of treatment -- that combination of 179 on top of PEG interferon alpha was able to improve the surface antigen clearance at the end of treatment and also that benefit was sustained during the 12 weeks of followup. When you see the number here below in the box is the per protocol number. Obviously, as we continue to follow this patient to longer term, we will report on the ITT numbers and those information will be provided in the future conference and coming up shortly. And more importantly we through regression modeling and we were able to identify that the antibody response, i.e., surface antigen seroconversion rate is closely correlated with the improved loss of surface antigen. So we're very pleased that to have this data and that's consistent with the induction of immune responses. And then clearly, this is the first time we demonstrated that BRII-179 was able to induce neutralizing and functional antibody response as well as T-cell response. So we're very pleased with this result. And suggesting that 179 used properly in combination with other curative regimens was able to improve the functional cure rate. Next slide. As I mentioned earlier, we have an ongoing Phase II study where we're actually looking at the role of using 179 to differentiate [indiscernible] patients. This is the ongoing study of siRNA in combination with PEG interferon. And the clinical objective of this study is to confirm that data obtained by Vir reported in November 2022 at AASLD that -- in that report that the siRNA plus PEG interferon was able to induce some of the best-in-class functional cure rate. However, it doesn't have the PEG interferon control. So in this slide we're actually going to have -- have to have comparison with the PEG interferon alone. So that will allow us to definitively address the contribution of siRNA, which we believe contribute to the best-in-class functional cure rate. But we're also going to do so in both 179 naive as well as experienced patients. Those patients -- we actually have the phenotyping of those patients in terms of their response to the 179 vaccination. So the schematic is pretty clear here. We were able to -- we believe that 179 can be utilized to assess patients' intrinsic antibody response. And by doing so, we're able to identify those patients who have sufficient intrinsic antibody response that will be important for the cure. And then in those patients, we will test the siRNA plus pegylated interferon whether or not they can achieve higher functional cure rate. And then clearly, this is the belief that we have. We believe that this has a very sound scientific rationale in the middle of trying to aim to [ coupling ] results hopefully by the end of the year and maybe early next year. Next slide. Also, as I mentioned earlier, so far in the last 5 years, we have conducted multiple smaller combination studies. These are the studies that are providing us a scientific insight as well as clinical evidence that will allow us to transition our functional cure pipeline into late stage. As you can see that as we're reporting out the data from the early studies, we are planning for future studies as multiple future studies are under consideration. We're hoping to initiate them this year. So with the aim to power the study with large sample size and with definitive -- will definitively address the functional cure rate and contributed by each component. And our target remains to be the same that is trying to improve that to be a functional cure to higher than 30% perhaps by better selecting patients we will reach even higher functional cure rate. So our ambition remains the same and that's continued to be the case through the last 5 years and into the future. So with that, I think I'm going to stop the presentation and then we'll open up for Q&A. And by the way, we do have our other executives on the call, and they can provide you specific detail with regard to some of the transactions.

Thank you, Zhi. We will now open the line to Q&A. [Operator Instructions]. The first question is coming from Roanna with Leerink.

This is Rosa Chen on for Roanna Ruiz at Leerink Partners. A couple of questions from us, one, maybe for Ankang. We just want to confirm that the new deal with VBI, you will no longer owe milestone payments and royalties for 179 in the future after these promissory notes. But what about the PreHevbri royalties and milestones? Are those also "like canceled out" from the current deal?

Rosa, thank you for the question. Yes, so the deal will eliminate milestone payments to both PreHevbri and BRII-179. And on the royalty side, we are also eliminating all the royalty associated with BRII-179 and PreHevbri, but we will still pay upstream license fee not to VBI but the upstream licensee fee will remain the same.

Understood. And then thinking about future registrational studies, could you guys employ a strategy similar to what you're doing for 179 and 835 with pegylated interferon, where you're enriching for the patients who are responsive in a future registrational study. The concern is would you need a very large number of patients? Or would it be a more homogenous population, so you could actually have fewer patients with the same powering?

Yes. That's a very good question. We're actually doing a lot of modelings on this in terms the -- it all depends on the treatment effect and in terms -- compared to the standard of care at this point, which is the pegylated interferon. So that treatment effect size is assumption is very important for the size of the patient -- the sample size. But we do believe that it will not -- given our current assumption, it will not need a very large patient sample size in order to demonstrate the clinical efficacy, but we must make sure that we have good discussion with CDE and NMPA to define the safety [ modulation ]. And what will be the safety population, how many patients we need to be exposed to the combination in order to get registration. So I think those are very important questions that will be discussed with the regulator to achieve understanding. But clearly, our intent is going forward with the study that's powered enough to address both efficacy and safety -- as well as safety.

Got it. Do you have a ballpark number in mind?

It's hard to really evince the thinking from the regulator. And then, I think, minimally, you have to have 300 patients. We believe that's the starting point of a safety population. You think you need 300 patients to address the clinical efficacy.

Sorry, the 300 patients is for clinical or for safety?

For safety, that's minimum. We don't -- we obviously have to have discussion with regulators to understand the eventual sample size has been agreed. Efficacy, we don't believe we need 300.

And then the Phase II study that's ongoing for PEG-interferon and 835 in the APAC region and China, when can we expect to see data there? I know you just started dosing like over the summer.

Yes. So the one that with -- the naive to 179 that -- those patients have been fully enrolled. And the patient that has 179 experience [ are near to ] completion for enrollment. So we do have data coming out towards the end of this year for the naive patients and then perhaps early next year for the experienced patients.

Thank you Rosa. Thank you Zhi and Ankang. [Operator Instructions]. We also here have a few offline questions that I'm going to read. Given the considerable challenges in developing hepatitis B drugs, I'm curious about the timing of your decision to acquire the rights to 179 IP and what motivates the other party to sell. Is it due to the substantial size of the hep B market and the distinctive features of their product?

Well, thank you for the question. And, I think, some of these questions are philosophic. I understand that many people have been following HBV functional cure journey. In the last 5 years, it hasn't been easy, but I also want to highlight the point that over the last 5 years, we have learned a lot. As I've mentioned before in the past calls where we now know how to clear surface antigen. We also know what's important to sustain those surface antigen clearance. Now we have a strategy and reach patients. So those are the learnings from the past 5 years. So we think that's going to be very, very important for the future regarding the motivation to do this, and there's -- it's always something that you need to be prepared in terms -- from a drug development perspective. You just cannot wait until you finish all the studies and ready to register and then you try to work on the CMC manufacturing issue, that will be too late. So we believe the timing is actually pretty good in terms of how we start looking at the manufacturing and supply side of the effort, making sure that we have enough security around our footprint and because this is a very large product. And I think having a reliance on a single manufacturing will be a significant risk going forward. So -- and for all of those people who have experience in dealing with this large product, whether or not you're from big pharma, small biotech company, it's always very important for you to have some level of redundancy in terms of how to make those products. I think the timing is good for us to do that now so that we can avoid extensive bridging study down the road. And then once you approve the product, then you introduce a new manufacturing site, and that will be significant undertake at that point. So based on those, and we believe this is a good timing. And also the market condition, frankly, is helpful because it's very challenging in the capital market. And I think there are -- while you have challenges, there's also opportunities. And this is why I think -- this is a perfect example where we're leveraging that. The capital market condition to get a good deal in my mind to acquire the asset where we have already had so much information that we know about 179 in the past 5 years. So we believe this will allow us to secure our upside in the future as Ankang has spoken to you before. That's a worthwhile investment at this point. And so -- this is really some of the consideration we have, something that we'll be thinking about it for quite some time. We simply leverage this opportunity to make this happen.

Thank you, Zhi. And then a follow-up is could you provide insights into the rationale behind the decision to issue the notes as part of the agreements with VBI and how does this financial arrangement benefit Brii Bio in the long run?

That's a good question. I'm going to ask Ankang to answer that. I think there's multiple ways of doing this. And obviously, you can use cash, significant amount of cash to do this as well, but we believe having this promissory note is the best option. Maybe, Ankang, you can add additional color to this.

Sure, certainly. So I do want to first highlight that since the many components of those transactions are contingent, it depends on competition of certain activities by VBI to achieve certain milestones. So we -- I think we also look at VBI's relationship with their debt holder. I think we came up with this plan to pay for the rights we are acquiring and the assets we are purchasing by issuing promissory note to VBI. I think this, on the one hand, will give us more flexibility in looking at the future payment schedule to optimize our cost on interest as well as our cash needs. And also -- it also provides certain way for us to control the contingency part of the payment. And also, will satisfy the debt holders requirement for certain return on their capital. I think, this is a really complicated deal that involved different parties to allow us to achieve our goal.

And I just want to add one more thing, right? So we've been working with VBI for 5 years, it has been a very long-term partnership between the 2 companies. I think by this transaction, we're able to reduce significantly their debt, and that's going to provide them a much better and healthy financial situation. So we're happy to do this for our partner when there's a need, but at the same time, we also use this opportunity to secure our future upside. So I hope this addresses your question.

And the next -- we will go next to Timur with Raymond James. Timur, please go ahead.

Thank you for the question. First, we have a question on PreHevbri in the Asia-Pacific region. Can you just talk about the upside for this therapeutic in the Asia Pacific region. And what is your progress here in terms of marketing, commercialization, et cetera?

Yes, that's a good question. We obviously made the decision transaction in last July. Over the last 6 months, we have really looking for a partnership that we can work with and having a reduced royalty rate and milestones that will help -- hopefully help us to enable better partnership discussion. We, as a company, do not want to get involved into the prophylactic vaccine. We are a therapeutic company focused on HBV cure. So I think for us to reach those market and we simply want to do that through partnership. We do not want to do -- we do not want to extend our own effort into those markets that we have no presence, no experience with. So those things are ongoing and that we hope that with the reduced rate and reduced -- limited royalty that can help us to better ensure those partnership to happen. But more to come. And again, the deal -- what we're trying to do is really trying to focus on HBV cure and 179 is the major component of this transaction. But we're also taking this opportunity to improve the economics for the PreHevbri so that we can better enable our partnership discussion.

Yes. Understood. And then a similar question for 1901 and glioblastoma. Are you planning to develop this yourselves?

So, yes, that's a very interesting question. I mean I think this is one thing that we've been following them for a while. I mean the center of the rationale is an interesting one because as you know, for GBM, currently, there is no treatment. And it's a very high [indiscernible] and the survival rate is very, very low. And I think most people think this is a very challenging area for therapeutics. The scientific insight here is that 95% of the GBM actually are CMV positive. So the scientific rationale behind this is that the CMV positivity could potentially label the tumor as a [ hot ] tumor for treatment for immunotherapeutic treatment. I think VBI had conducted a open-label study. This is our obviously open label study. They have shown some early results that compare to the historic control and quite exciting data that has correlation with the immune response, they were able to induce with the 1901. And because of that, they have moved forward with the discussion with regulators and getting there in terms of regulatory pathway going forward. Obviously, this is a very challenging area. So for us, this is a very opportunistic approach where we're trying to help VBI to reduce their debt rate. At the same time, we want to make sure that we can realize the opportunity outside for us as well. So this is where if the data -- should the data turn to be positive in the future, exciting results, and then we're able to either do that ourself or through partnership in Asia Pacific and in Greater China to make sure that this product is available for all the cancer patients who are facing these incredible challenges. And there's really combination of therapy for this.

Okay. And just a final question on 179. I see you have some late-stage studies planned in combination with 179. You also talked about selecting patients using 179. Just in terms of kind of your view right now, do you think that 179 will potentially be more useful as -- sort of as a selection tool for you? Or do you think it will actually be used in the final regimen to treat patients for functional cure?

That's a very interesting question. We do believe 179 is very versatile. Not only it can be used as a way to select patients. It can also be used as a therapeutic modality to enhance functional cure rate. So we are obviously planning for future studies. But we would prioritize those studies and potentially with one study that looking at using 179 as a tool to assess -- to select patients and in an another study we'll evaluate the contribution of 179 on top of a curative regimen. So -- because we have all the tools available, so we do not need to have additional partnership conversations with others, and I think we can do this ourself. Obviously, 179 is also a potential asset that can be used by other companies for selecting their patient also adding to their potential curative regimen. So we do believe 179 poised at that very versatile role in this competitive landscape. One thing that we did notice where there's other people begin to realize the important role of siRNA and the neutralizing antibody as therapeutic vaccine. But Brii is the only company that has all the 3 tools, and we believe we're going to leverage this capability to rapidly move forward with those combination regimens. And we actually also want to work with others to further expand the role -- the value of 179. So those are very good questions. Thank you for asking.

Thank you Timur and thank you Zhi. We see another question from Rosa with Leerink. Rosa or Roanna, please go ahead.

Rosa on for Roanna again. This is a follow-up question. For VBI-1901 in glioblastoma, could you just clarify what exactly is ongoing right now that you would be taking over? Are there clinical studies that you would insert into right away or you are taking over the regulatory discussion from VBI to determine the registrational steps?

We're not taking anything order. We simply obtained the right and then I think VBI will continue to develop them forward. As I mentioned, they have done a number of open-label studies. These are small data sets. But so far, the data looks interesting from the -- in terms of the correlation of the immune response versus the signal on the relapse free kind of -- or stable diseases. I think those are obviously compared to the historic controls. And I think those are very interesting. And they will continue to develop this program forward. In this case, we're not. We do not plan to be involved at this moment with regard to conducting additional clinical trial or regulatory discussions, and we're -- simply we're a partner of VBI to continue to move forward. As I mentioned earlier, by doing this transaction we simply provide them the financial health and stability to support them to continue to progress this program forward.

Thank you Rosen and Zhi. Okay. All right. That concludes the Q&A session of today's call. Now I will turn it back to Dr. Hong for final remarks.

Well, thank you very much, everybody, and for really paying attention and following us in the past many years, and thank you for the many action question that you have asked. I think as a company, we continue to put the HBV cure as a top priority for the company as we transition from a regional drug developer into a global drug developer with the 179 situation, the transaction that we have done so far. I fully appreciate some of the frustration some of you may carry in terms -- in the past where the HBV functional cure is -- seems to be more complicated than anticipated early on. And -- but I do want to remind you, in the last 5 years where some of the therapeutic modality failed as you are all well aware of that. But there's a significant amount of scientific insight and the clinical evidence being obtained. As I mentioned early on, we continue to believe that it's very important for us to have the tool to clear the surface antigen, which we can do that now very effectively. We also need to understand how to sustain those clearance of surface antigen because you can just simply clear them and then they rebound, it doesn't really -- it doesn't achieve the functional cure. And the last piece is about selecting patient, not selecting patients in terms we found ourselves in a rare population rather than selecting patients based on our understanding of their intrinsic immunity. And then those are very important. I'm sure they have more insight that will be obtained as we continue to progress this program. But our belief to cure HBV in the larger proportion of patients between 30% to 40%, that goal remains the same. So I appreciate your patience, your understanding and your support in the past, and we look forward to continue working with you closely. So thank you for joining today's call. Have a good day.

Thank you all again. And please feel free to reach out to us via IR at briibio.com in the meantime, if you have further questions. Thank you. Goodbye.