Cynata Therapeutics Limited (CYP.AX) Earnings Call Transcript & Summary

Okay. Great. Let's get going. Good morning, everyone, and thank you for joining. Welcome to the first Cynata Therapeutics Investor Webinar of the year. Presenting this morning will be CEO, Dr. Kilian Kelly; and Chief Business Officer, Dr. Mathias Kroll, who will take you through activity and highlights for the quarter ending December 2024, and then we'll have time for questions at the end of the presentation. Dr. Geoff Brooke, Cynata's Chair, is not on the line today as he is currently traveling overseas. [Operator Instructions] And lastly, just as a reminder, this call is being recorded and will be available on the company website in the coming days. I'll now hand over to Kilian to formally commence the presentation.

Thanks very much, Lauren, and good morning to everybody, and thanks for joining today. So as usual, we'll keep the presentation relatively brief, so we have time for questions and answers at the end. So as everybody will be aware, we completed a financing during the last quarter. And there have been some changes to the largest shareholders in terms of percentage, not in terms of any selling of the shares, but we're still in the same position where we have our 3 largest shareholders who are Bioscience Managers, Fidelity International and Fujifilm. The market cap of the company is now just a bit over AUD 55 million. In terms of our clinical indications, so we still have our 4 active clinical programs in 4 very different disease areas. We'll run through each of these in a moment, but the 2 internally funded and managed programs are acute graft versus host disease, where we have an ongoing Phase II and diabetic foot ulcers where, of course, we completed our Phase I clinical trial and announced really great results in December, and we'll go through those again in a moment. The 2 partner-funded programs are osteoarthritis, which is in Phase III and kidney transplantation, which just commenced during the last quarter, and it's a Phase I/II trial. And again, just a reminder to everybody that although those 2 latter trials are funded and managed by partners, we retain the full commercial rights to those programs. So the highlights of the quarter, I mean, it really was a very eventful and very successful quarter for the company. I guess, most notably, we completed our Phase I clinical trial in DFU. And we were delighted to be able to say that our novel MSC wound dressing product, CYP-006TK demonstrated safety and tolerability and also showed positive efficacy data. And again, we'll go through that again in a moment. Our Phase II clinical trial in acute GvHD also progressed very well. We've seen a significant increase in the rate of recruitment in recent months, and we've got past the 40% complete mark at this point. We're still aiming to complete enrollment in that trial this half of the calendar year with results late this year. We also treated the first patient in our kidney transplant trial and the first cohort of that trial is anticipated to be completed during this current quarter. In Phase III osteoarthritis, the final patients treatment was administered. So you may recall that the final patients were enrolled in November 2023, and patients receive a final injection in their knee after 1 year. So that took place for the final patients in November just gone. We're now in the home straight really with the final follow-up visits to be completed around November this year and results in early 2026. We also strengthened our balance sheet with the R&D tax incentive rebate as well as an institutional placement, which was very well supported, and we were delighted to receive support both from existing investors and indeed some new investors in that placement. And so we concluded the quarter with about AUD 10.5 million of cash and a runway into the middle of next calendar year. So just to go through those diabetic foot ulcer results. As I said, first to set the scene, diabetic foot ulcers remains a huge problem. So diabetes itself is very common and becoming more common. About 1/3 of people with chronic diabetes will end up developing a diabetic foot ulcer or DFU and about 1/5 of those patients will end up needing an amputation. So it's really an enormous problem. We have a novel wound dressing product, which is seeded with MSCs and then applied it directly to the wound. This is a way of delivering the MSCs directly to the wound surface. And this is the product we used in our recently completed trial. So the trial was conducted in Australia at 4 different sites in Adelaide and Perth. We randomized a total of 30 patients with non-healing DFU to receive either standard of care throughout the study or the novel Cynata wound dressing for 4 weeks followed by standard of care. The patient visits were completed in September, just gone. and then we announced the results in December. So first and foremost, as a Phase I trial, the primary objective was safety, and we didn't expect any issues there, but nonetheless, it has to be confirmed, and we were very happy to say it was. So the product was safe and well tolerated. No participants withdrew from the trial or even from treatment due to adverse events, and there were no suspected serious adverse reactions. So that was the first box ticked. But we also saw really encouraging efficacy data. So on this slide, on the left-hand side, you can see the change in wound surface area from baseline in absolute terms. In other words, the wound surface area measured in millimeter squared. And on the right, you can see the average percentage change from baseline within each patient. And both of those show a very clear difference between the active group and the control group. So the control group very clearly reduced the average wound surface area, whether we look at it in millimeter squared terms or percentage. In percentage terms by the end of the study, we had a reduction of about 84% in the active group. Now when we look at the control group, we can see that in absolute terms, we actually saw an increase in the average wound surface area and a pretty small decrease in percentage terms, certainly nothing like what we saw in the active group. So this really showed that our product was having the effect that we hoped. It also led us to notice that the control patients did particularly poorly if they had large wounds at baseline. So we then did a second analysis looking only at those larger wounds, and these are wounds that were measuring more than 200 millimeters squared at baseline. There was a similar number of patients in each group with those size of wounds. So it was 9 patients in the active group compared to 10 in the control group. And what we saw here was really interesting because in the active group, the results look very, very similar to what we saw when we included wounds of all sizes. But when we look at the control group, the results in these larger wounds were much worse than what they saw when we included all wounds. So what this confirms is that the larger wounds did particularly poorly in the standard of care group. And that's really important because it's the larger wounds that are most likely to lead to serious complications, including amputation. So this is a really important finding for us. Now we're continuing to complete the analysis and study report for this trial and really turning our attention to next steps for this program, which includes engagement with potential partners and regulators and consideration for next steps for the development program. Looking at our other trials. So we have, as I said, 4 clinical programs overall, and we now have 3 active trials within those programs. And the first is graft-versus-host disease, which really is our key focus internally at this point. So this trial, of course, follows on from our very successful Phase I clinical trial in graft versus host disease. This is an ongoing Phase II trial. It's a randomized placebo-controlled trial, double-blind in 60 patients with newly diagnosed high-risk graft-versus-host disease. This is taking place in the U.S., Europe and Australia. As I mentioned earlier, we're now more than 40% complete in terms of enrollment and aiming to complete enrollment in the first half of this year with results expected late this calendar year. So that's another hugely important milestone coming up. Our Phase III osteoarthritis trial, this is in partnership with the University of Sydney and funded by the Australian government under an NH and MRC project grant. So as I said, the final patient treatments are now complete. That happened in the quarter just gone. We are in the last year -- well into the last year of the follow-up phase now with that expected to conclude in November this year and results a few months after that. And just a reminder for everybody that we are seeking to show a disease-modifying benefit here, which means that we're not just trying to show an improvement in symptoms, but we're actually trying to show that we at least slow down the degenerative process that happens in these patients. And right now, there are no treatments approved for disease modification of osteoarthritis. So if we're successful here, this will be truly transformative for the treatment of osteoarthritis. And finally, our kidney transplant trial. The first patient was enrolled in this trial in the quarter that we've just completed. This trial is in partnership with Leiden University Medical Center in the Netherlands. Again, they are managing the trial and have got grant funding to run the trial. But again, we retain the commercial rights. This trial is divided into 3 cohorts. So the first cohort will involve 3 patients getting treated with our product, CYP-001. The first of those was completed in December, and we're aiming to complete the first cohort of 3 patients in this current quarter, and we will then have some initial results from that cohort shortly thereafter. I think it's also worth reminding everybody that this trial follows on from a previous trial that LUMC ran using donor-derived MSCs for a similar purpose. And the purpose here is to use the MSCs to allow the dose reduction or withdrawal of the anti-rejection drugs that these patients take. Those drugs work well, but they're very toxic. So there's a lot of efforts underway to try to find safer ways of preventing kidney transplantation rejection. And this group at LUMC has previously run a trial with MSCs from a different source that showed very promising outcomes. So we look forward to these results very much as well. Now moving on to the outlook and the commercial potential. At this point, I'll hand over to Mathias to provide some updates on that side of things.

Yes. Thank you. So on this slide, you can see our lineup of commercial partnering events, and this is complemented, obviously, by a number of scientific and therapeutic area events in which we are very present liaising with the scientific community and key opinion leaders in clinical. But coming back to the commercial one. So we've just attended Biotech Showcase and presented to a mixed audience of investors and potential partners. And following up from this presentation and as well from meetings we set up through the one-on-one partnering system, we had the opportunity of meeting organizations and persons with complementary capabilities in commercialization, manufacturing and development. Some of the parties we met were investors, others were bankers, public relations firms with special skills, strategic advisers and so on. Importantly, being in San Francisco during BioWeek also allowed us to continue business discussions that had started earlier and have been ongoing. Also importantly, our proposition of offering our platform for feasibility evaluation and collaboration with other technologies, MSC technologies notably continues to gain traction. And we've had a number of new contacts in this regard. Indeed, some companies are thinking about combining their MSC technologies with ours at a project or even at a larger portfolio scale. And this is obviously also driven and underpinned by research results just published this week, but not only providing a mechanistic hypothesis why our technology compares very favorably to some of the other technologies and has indeed some superior features. And I think Kilian will give you some details on that.

Yes. Thanks, Mathias. So yes, as I imagine most of you will have seen just yesterday, we announced that this new paper has been published, which is, I have to say, quite a complicated paper, but it's a very important study for us. This is the outcome of a PhD program that took place at Monash University here in Melbourne. And the project involved essentially comparing MSCs from different sources, including, of course, Cynata's iPSC-derived source, but also donor-derived MSCs from bone marrow, adipose tissue, also known as fat and umbilical cord. Now the findings were really very interesting in many ways for us. One important point is that there were a lot of differences between MSCs from different sources and in particular, between the iPSC-derived MSCs and MSCs derived from bone marrow and adipose tissue. Another important point, which I think is something that we have been saying for quite a while is that there was much more variability between batches of donor-derived MSCs than between batches of our MSCs. And again, that makes sense because we're making our batches from the same starting material every time. All of our batches come from the same cell bank from the same donor. And of course, that's not the case for donor-derived MSCs. We also found that the iPSC-derived MSCs secreted a lot of molecules that other MSCs did not secrete. So there was a huge number of these molecules, which can have a range of different effects that our cells are secreting which other cells are not. And that could have an important impact on the effect those cells have in vivo. And another very interesting finding was that both the iPSC-derived and the cord-derived MSCs display properties consistent with what could be described as younger cells. And again, that's not surprising because, of course, bone marrow and adipose tissue-derived MSCs are typically derived from adult donors. So they are "older cells." And we also then had some tests of these cells in various in vitro models, and we saw that our cells, in particular, showed very good wound healing and immunomodulatory properties. And of course, those properties are absolutely front and center in 2 of the active clinical programs, in particular, diabetic foot ulcers and graft-versus-host disease. The immunomodulatory properties also have very broad application in many other conditions as well, including both osteoarthritis and kidney transplantation as well. So overall, this is a very important paper for us. It really underlines a lot of what we've been saying and really helps us sort of validate a lot of that. And I think in particular, for engagement with potential partners that will be very valuable for us. Just to conclude before we move on to questions. So as I alluded to at the start, we still have a lot of clinical news flow coming up. So we've announced those DFU results, and they're great. So that, of course, is box ticked. But that is by no means the end of what's coming up. So this year in GvHD, we aim to complete enrollment around the middle of the year and have results towards the end of the year. We aim to have osteoarthritis results from the Phase III trial in the early part of next calendar year. And during this year, we'll also have results from the initial cohort of the kidney transplant trial as well. So as I said, there's still lots of clinical news flow coming up in 3 very different conditions. And I would encourage everybody to keep a close eye on what we will be announcing over the coming months. And so with that, Lauren, I think we can pause there and see if there are any questions that have come in.

Yes, we've got a few. [Operator Instructions] We have several questions around the positive DFU results and what your strategy moving forward is and whether you might be able to provide any kind of indicative time frames for this?

Sure. So as I said during the presentation, first of all, although we obviously have announced the top line results, the completion of the full clinical report is an ongoing process that takes some time. It will be completed in the next month or two, I expect. But in terms of next steps for the program, one thing that I think we need to make clear is, right now, we are not planning to go and start a Phase II trial ourselves using our own funds. So I think that's an important point. So the money that we raised before Christmas is not earmarked for a DFU trial. What we are aiming to do is to continue the engagement with partners. And as Mathias said, we've had a number of very productive discussions, both prior to at JPMorgan week and indeed, those continue. So we will be continuing that and also engaging with regulators and key opinion leaders in order to map out what the next clinical development steps will be, for example, what the next clinical trial will look like. I think it's important for us to continue to do that even if we end up in a position where this would be a partnered program, for example. I think it's very useful for us to sort of map out that remainder of the pathway even for the purposes of those partnering discussions. So we'll be continuing with that. And this is really an ongoing process. I mean, in terms of specific time lines, it's hard to say exactly when any of these discussions will reach a conclusion. We'll be updating the market as and when we have information that we can share on that.

Thank you. And still on DFU, there's just a question regarding the data analysis and whether the company has gone back and analyzed the data using the wound size as a covariant.

So the -- we have not yet conducted that covariate analysis. We are looking at the full data set and identifying whether there should be further post-hoc analysis conducted. By that, I mean, analysis that weren't planned initially. There may be further such analysis performed, but that's, again, a sort of an ongoing process in terms of looking at the data in detail and working with our statisticians and indeed clinical advisers to determine what further analysis would be worthwhile.

Thank you. And then last one that we have is in regards to an announcement back in early 2021 around establishing the Cymerus manufacturing process at FCDI. And given that now that is about 4 years ago, wanting to understand what stage the process is that?

Yes. So we did indeed commence the tech transfer to FCDI, I believe it was in 2022. I think if memory serves me, I'm open to correction on but I think the agreement was signed at the end of 2021, and we commenced the project in 2022. The FCDI has undertaken runs of our process at their facility, what we call demo and tech transfer runs. What we haven't done there yet is to make what we would call actual clinical batches of product. And one of the reasons for that is that we haven't actually required that during this period of time. We had manufactured the product for the GvHD and OA trials and so on at Waisman Biomanufacturing, the CDMO -- sorry, the contract manufacturing organization that we worked with originally. So we had already manufactured stock for these ongoing trials there before we commenced the transfer to FCDI. So as I said, we haven't actually needed to make clinical product there yet, but that is very much our plan for the year ahead, basically. So we are now planning to move towards that and be in a position to have product available for further trials in the various indications that we're currently pursuing.

One final one. You touched on this earlier in your presentation regarding funds and not going towards the DFU Phase II. Also cash position currently looks strong at $10.5 million with a runway into mid-2026. Can you please just reiterate what it is funding?

Yes. So a key part of it is, of course, the ongoing GvHD trial. So that remains -- sorry, that is now the only clinical trial that we are actually funding ourselves. As I mentioned, the other 2 are being funded externally. But GvHD is very much still ongoing and being funded by us. So that's certainly a large part of what those funds are for. But in addition, the new funds that we brought in before Christmas, we will be putting part of those funds towards manufacturing. So as I said, getting ready for making clinical products at FCDI, Fujifilm CDI for further trials. That's one part of it. Also to work on further engagement with regulatory authorities around the world. So that includes, of course, the U.S. FDA, but also the equivalent regulatory authorities in other jurisdictions. And that's to help plan out the next stages of the programs in all of these indications, actually, so not just DFU, but also osteoarthritis and GvHD in the near term in particular. So that's in broad terms, what those funds are allocated for.

Thank you. I keep saying last question, and then we get another one in. So I wanted to go through in light of last week's research regarding -- sorry, yesterday's research, which came out. The question is around how can Mesoblast products be so well received and successful? And how could they manage to get enough donor cells to produce their product versus the manufacturing process of Cymerus?

Sure. I mean, look, I don't think I'm going to -- I'm not going to start talking about any other particular companies. But if we want to talk about, in general, the concept of making MSCs from donor material, such as bone marrow or adipose tissue or umbilical cord as was used in the paper that was published yesterday. We're certainly not saying that it is impossible to do that or to generate batches of product that are produced in that way. Of course, it is possible, and that has been done quite extensively by numerous companies and indeed academic groups over the last 20 years or so. So we are not saying that, that can't be done. We've never said that can't be done. And what we are saying is that the process that we have and the approach that we have has a number of very important advantages. So we can, first of all, avoid the need for new donors, which means we don't have the variability between donors, and we don't have the logistical challenge of finding those new donors. Secondly, because we make ourselves using iPSCs as a starting material, it means that we -- when we use our patented process to turn iPSCs into MSCs, we don't have to grow the MSCs a great deal. And the reason that's important is that can result in various changes to the MSC properties. The other thing that came out from this research yesterday, in particular, is that iPSC-derived MSCs appear to have a number of advantages anyway in terms of the molecules that they secrete and the cellular age, which means the fact that they have these properties of younger type cells. So we believe that our process is the ideal way of making MSCs. We believe it has a lot of advantages, and we're building up the evidence to show all of those advantages. But that's certainly not to say that it's impossible for anybody else to try different approaches. We're not trying to say that. We just believe that we are ideally placed to capitalize on the opportunity for MSCs. And I think the recent FDA approval of an MSC product really opens the door for MSCs in general. And as I said, puts us in a position where we're absolutely ideally positioned to capitalize on that in the years ahead.

I would also like to add that it's important to think about the volumes that we're talking about. For example, a therapeutic indication of steroid-resistant graft-versus-host disease in pediatric patients leads you to a market size in the United States of hundreds of patients, but it's not thousands or tens of thousands. So already Cynata's indication in GvHD in adult patients that are high risk is larger. And then if you think about a mass market like osteoarthritis, where certainly autologous stem cell approaches have been tried and tested and even some allogeneic ones. There, we're talking really about large volumes. And I think the industry and associations are waiting for us as they have been very much discouraged and cautioned by the fact that so far, there's been a lot of variability in MSC preparation. So we can do away with that. And hence, with our scalability and consistency, these mass market indications become actually for the first time, accessible with a highly consistent and potent product.

Unmute myself. Thank you both. I think we can leave it there. We've run out of time, and that's all the questions that we have. Did you have any closing remarks?

I'd just like to again thank everybody for joining today and for your interest in Cynata. And if you're an existing shareholder for your ongoing support, I think we've got a hugely exciting year ahead as we've just outlined. And I very much encourage you to keep paying attention to what we're doing, and I think we'll see the rewards of that in the months to come.

Thank you, everyone. That concludes today's presentation. I hope you enjoy the rest of your day.

Thank you.

Thank you.