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

Okay. It looks like we have everyone. So good morning, and thank you for joining. Welcome to the Cynata Therapeutics quarterly investor webinar. Hosting 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 March 2025, and then we'll take questions at the end of the presentation. [Operator Instructions] And lastly, as a reminder, this call is being recorded and will be available on the company website in coming days. I'll now hand over to Kilian to formally commence.

Thanks very much, Lauren, and thanks to everybody for joining us today. We appreciate your time and your ongoing support. So today, the presentation will be pretty brief. We're going to focus on the recently completed quarter, the March 2025 quarter. And then we will have time for questions and answers following that. So as we mentioned in our quarterly, we finished the quarter with about $8.5 million in cash, which is sufficient to give us runway through to the second half of calendar year 2026. So importantly, that is sufficient to bring us out beyond the expected readouts from both our graft versus host disease and osteoarthritis clinical trials, which we will say more about in a moment. And there haven't been any changes to our substantial holders and our share price is around about where it was at the start of the quarter. But of course, we would certainly be seeing plenty of opportunity for that to change dramatically as we have these major readouts coming up later this year. So in terms of our clinical pipeline, it remains the case that we have 4 active clinical programs: osteoarthritis in Phase III; graft versus host disease in Phase II, which follows on from a very successful Phase I trial; diabetic foot ulcers, where we just recently completed a Phase I clinical trial with very encouraging results; and kidney transplantation, which recently commenced, that's a Phase I/II trial. Just a reminder, that 2 of these programs are partnered with academic institutions and funded externally. So that's osteoarthritis with -- partnered with University of Sydney, and kidney transplantation partnered with Leiden University Medical Center, and both of those trials are being funded with grant funding. But a reminder that in both cases, we retain the commercial rights to those programs. So just moving to the highlights for the recently completed quarter. In terms of our graft versus host disease trial, which is still the trial that our main focus internally is on, this is a trial that we are managing and funding ourselves. The trial is ongoing at more than 35 clinical centers in Australia, the U.S., European Union and Turkey. I'm pleased to say that patient enrollment has really progressed very well in recent months. We're past 60% complete, and we're on track to complete enrollment around about July this year, so really not far away at all at this point. And if we do that, we'll have the primary results from this trial late this calendar year. So just a reminder that our graft versus host disease trial has a primary evaluation period that's just 100 days after enrollment. So once we complete enrollment, we really move very quickly towards results in this trial. So that is a very important milestone coming up within the next sort of 7 months or so. And if we can show anything like the results that we saw in Phase I, then this really would be a platform for a successful commercialization of this product. So that's one to really keep an eye on as we go through this year. The other trial that's nearing completion is our Phase III clinical trial in osteoarthritis. As I mentioned, this is partnered with the University of Sydney. And anybody who's been following us for a while will know that patient enrollment was completed back in November 2023. The final patient treatment was completed in November 2024. And we expect the final patient visit in this trial in November this year, and so that will lead us to results in the first half of next calendar year. So we should really expect those results within a year from now. So that's the second of 2 very major clinical readout that's coming up. And a reminder that osteoarthritis in this trial, the reason that we have a 2-year follow-up period from when the patients are first enrolled is that we're aiming to show a disease-modifying effect. And what that means is we're aiming to show that the MSC treatment slows down or stops the degenerative process that causes osteoarthritis in addition to improving the symptoms. And if we can do that, it would be hugely important because right now, there are no treatments approved to be disease-modifying treatments in osteoarthritis. So this is a genuinely enormous opportunity for us, and it will be absolutely transformational for the company and indeed for patients with osteoarthritis if we're successful in this trial. The other trial that is still ongoing is our clinical trial in kidney transplantation, which is in partnership with Leiden University Medical Center in the Netherlands. The first patient was enrolled in December. During the recently completed quarter, a number of other potential patients were identified. Unfortunately, they were not ultimately enrolled in the trial for various reasons due to eligibility requirements as defined in the protocol, but patient enrollment is continuing and our partners at Leiden University Medical Center have advised us that they would expect to complete the enrollment of Cohort 1 during this currently ongoing quarter. During the quarter, we also had another paper published in a leading scientific journal. This one was in npj Regenerative Medicine, which is part of the Nature Portfolio of journals, again, very highly respected, high-impact journal, and adds to a number of other papers that we have published in various journals over the years. And this paper is really very interesting because it compared the MSCs that we make with our Cymerus platform to donor-derived MSCs from bone marrow, adipose tissue, also known as fat and umbilical cord blood. So they are the main sources of donor-derived MSCs that are often used in conventional MSC therapies. And this paper compared the MSCs from those different sources in a very detailed manner. And there were some really interesting findings. One thing I should say by way of background is that the effect of MSCs are largely driven by what we call the secretomes. And what that means is the proteins and other molecules that the cells release, that's really what drives their effects. And what this paper showed was that Cymerus MSC secretomes contained many more unique proteins than MSCs from other sources. In other words, Cymerus MSCs release proteins that other MSCs do not release and that means that there may be additional effects from our MSCs or indeed an added potency or added functionality. And in particular, Cymerus MSCs showed greater immunomodulatory effects than the secretomes of donor-derived tissue MSCs. And a reminder that, that means the effect of balancing the immune system, which is a key effect that is very relevant to a number of indications that we are pursuing right now, including graft versus host disease and kidney transplantation, but also indeed osteoarthritis and diabetic foot ulcers. We also found that the secretomes of MSCs using our iPSC-based platform and umbilical cord-derived MSCs resulted in much faster wound closure than bone marrow or adipose tissue of derived MSCs. And of course, that's directly relevant to our diabetic foot ulcer program. So this paper really just adds to the sort of way of evidence that the cells that we produce, not only do we have a way of making these cells in a scalable and consistent manner, but we're actually making MSCs that, in many cases, outperform primary or donor-derived MSCs. Now moving on to diabetic foot ulcers, which is the final clinical program. These results, of course, came out late in the previous quarter. So this is not news from this quarter, but it's an important reminder that what we saw were highly encouraging results in patients with diabetic foot ulcers. Our trial randomized 15 patients to our active MSC wound dressing and 15 patients to standard of care dressings. And what we saw was really quite a substantial difference in the reduction in wound size. So on the left side of this slide, you can see in all patients in the trial, at 12 weeks, we have about 65% reduction in wound surface area in the active group compared to just 22% in controls. And at 24 weeks, it was about 84% versus 48%. So a very big difference at both time points. And then importantly, on the right-hand side of this slide, you can see what happened when we looked at just those larger wounds, the ones that measured more than 200-millimeter squared of baseline, and you can see that there's an even bigger difference. One thing you might notice straight away is that we had a very similar effect using our active MSC dressing whether we looked at all wounds together or just large wounds. Again, we're in the high 68% for wound surface area reduction at 12 weeks and about 84% for the same measure of 24 weeks. But what's interesting is the standard of care group did a lot worse when it was larger wounds. So in fact, at 12 weeks, there was no improvement at all. And at 24 weeks, there was a reduction of just 32%. So that's really important because larger wounds, in particular, are a bigger problem. They're more likely to get infected, less likely to heal and more likely to lead to amputations. So again, these results, very encouraging and we're continuing to engage with partners and work out the next steps for this program, and we look forward to updating everybody on that as the year goes on. And just to give an update on the commercial side of things, I'll pass over to Mathias, who will say a few words about that.

Obviously, we continue communicating our story and also our new results. That's very important as we engage with both potential future corporate partners, peer-level partners, clinicians and thought leaders. And the examples of conferences we attend are really only just examples here. We attend more in an effort to create these opportunities to raise interest, raise awareness that could result in new collaborations, licensing and other joint activities. There are different tiers of partners, as I mentioned, disease specific partners, biotech peers and large corporates, and we continue engaging with these. It is not 1 year that I've been with Cynata and I think we can say that we continue to raise this interest and awareness. We went into review of our data and discussion of future potential projects with a number of parties. As you would expect, there are some attrition. So some have stopped. Some have taken off. At this moment, obviously, we need to recognize this is all a lengthy process. There's a bit of external uncertainty in the market, as you all know. So things just take time, but we are building, and they -- these activities are certainly continuing. It is also very well received as we add new scientific data. We've had some nice scientific publications. Kilian talked about one of them. And obviously, now in the lead up with the Phase II and Phase III trials coming quite close to readout within less than a year, it is obviously important that we've got companies ready in the starting blocks to get going as soon as these results are out. And that is what we have already built in part and an activity that we are trying to expand on. Back to you, Kilian.

Thanks, Mathias. And just to finish off before we move over to questions and answers. A reminder of the catalysts that we have coming up. And again, we recently announced our DFU Phase I results, but we have more data to come in the very near future. And in particular, it's those Phase II GvHD and Phase III osteoarthritis results, both of which are expected within the next year. First of all, we're expecting graft versus host disease results late this calendar year, then osteoarthritis Phase III early next calendar year. Those are 2 enormous milestones, as I said, and we're very, very excited and optimistic about getting those results. In addition to that, of course, we are progressing our kidney transplantation trial. And after the completion of enrollment in Cohort 1, we will have a review of the data in that cohort, and we should have results from that to update the market on within the next few months as well. So as I said, there really is a huge amount to come. And it is, I would say, probably the most exciting year in the company's history is what lays ahead of us at the moment. So with that, I'll stop there and pass on to Lauren to see if there are any questions that have come in.

Yes, there is. And the first question is in regards to the SMART CRC announcement, which is very exciting. I just wanted to get some clarity on how you see Cynata benefiting from your participation in the SMART CRC as a sense of funding is more focused on contract manufacturing. So if you could please explain how you came to be involved in it and what the benefits will be for the company?

Yes, I'm happy to take that question. So the SMART Cooperative Research Center that brings together a wide range of players whose skills and expertise are actually quite critical for the field of Advanced Regenerative Therapies because these therapies contribute the letters A-R-T to their acronym. The total budget is $238 million. That's very significant and it shows that the Australian government is actually attributing a big significance and importance to the development of onshore innovation and manufacturing capacity in the space. And as we are a leader in the regenerative field with our advanced clinical and broad preclinical portfolios, it's only logical that we got invited to join the SMART CRC. As we are now entering the phase of transitioning from innovation and development to future commercial product supplies over the next few years, the question of how to manufacture advance regenerative therapies at high scale and quality and in a cost-effective way is absolutely paramount. So I think it was a good decision of the government to bring the innovators and technical experts together in the space to establish the required capabilities onshore in the country. If you think back to COVID, that certainly taught us a lesson on sovereign capabilities. And so yes, joining the CRC now offers Cynata the opportunity of accessing great expertise in projects that are of relevance to Cynata and also others. And that happens in a really very flexible way on a project-by-project basis with selected partners and it involves government contributions to the cost of each project. So all around, really just a very good opportunity for us to move ahead on some technical developments.

Thank you for that. And can you please discuss the difference in approach of Paradigm Pharma and Cynata on osteoarthritis?

Yes, sure. So I mean, first of all, Paradigm has a completely different type of product. So of course, Cynata's product is a cell-based therapy, Paradigm's product is what we would call a small molecule drug. So I guess, what people would view more as a sort of a traditional pharmaceutical drug product. So it's a completely different type of treatment. In terms of the approach we are both taking, I mean, there are also, to my knowledge, differences in the clinical trial design and so on as well. We, of course, have this very large Phase III trial that is fully enrolled. It's a randomized controlled, placebo controlled trial, which is designed to show, as I mentioned during the presentation, a disease-modifying benefit. So my understanding is that the design of the Paradigm trial is very different to that. And obviously, I'm not in a position to kind of comment on what sort of the approach they are taking. But I think it's fair to say that we have very, very different types of products and a different clinical development program as well. So really quite substantial differences between the 2 approaches.

Yes. If you allow me, I'll just add a few words to that, taking an abstraction from a specific competitor. So when you look at the pipeline of disease-modifying osteoarthritis drugs, I think you will realize that we should really be in a leading position. There is strong competition. I won't hide that. There's Novartis with the program. They had 3 assets, [ killed 2 ] in the last few weeks, actually still taking 1 forward. There are a few other cell therapies as well. But I think from the scientific literature, there are good reasons to be very confident in the MSC approach. It's very safe, and it will come to the market as one of the first potentially transformative disease-modifying osteoarthritis drug. There's nothing on the market as we speak. And knowing the potential of our MSCs looking even at osteoarthritis pilot trials that were done with tissue-derived MSCs and some encouraging results out of that, we're really very excited about that market.

Okay. I'm sticking with the clinical pipeline. So since Mesoblast has received approval for graft versus host disease and FDA approval, the question is, have you noticed any changes to interest in Cynata's trials and your products in general?

Yes. So Mesoblast's approval was certainly very good news for the Australian biotech sector and for the MSC sector, in particular. It is worth stressing that their approval is for a subset of pediatric graft versus host disease. So it's in children with acute graft versus host disease who are classified as steroid refractory, meaning they didn't respond to steroids. So it is a subset, as I said, of the pediatric market. Our ongoing trial and our Phase I trial are in adults. In addition to that, our ongoing trial is in patients with newly diagnosed graft versus host disease as opposed to having to wait until they become steroid refractory. And so we are pursuing a very different segment of the market, and it's worth stressing that adults account for about 80% to 90% of the market. So the segment we are going after is certainly a much larger segment. In terms of the impact in terms of changes, I mean, what the, I think, Mesoblast's approval has done is to, I guess, draw attention again to the usefulness of MSCs in this indication. It provides validation in that we now have an FDA-approved MSC therapy. And so there's no doubt that a lot of people have taken notice of that. And I think in the -- among partners, there's certainly a renewed interest, I think, and that's good news for us as well. So yes, I think overall, Mesoblast's approval is great news for us as well as being great news for Mesoblast, of course, and indeed the wider sector.

An extension to this question is what are your plans once you get your results for Phase II acute graft versus host disease trial, especially if they are positive results?

Yes, I'm happy to take that. As we've always said, in principle, our strategy is to partner commercially. And I think a clinical Phase II result that is convincing certainly gives you the credibility and gives any licensees, the assurance that this is real. And that is an excellent entry point for a licensee. However, we are also looking at a number of other potential scenarios because, as everybody knows, the earlier you license out, the more value you share with your future commercial partners. And as such, especially in an indication such as GvHD, there are a few scenarios that we could imagine where Cynata actually contributes to further development and to commercialization efforts in selected markets. Now building all of that up from our current setup, that is a steep uphill, of course. But with several very big trials coming our way within the next 12 months, it is conceivable that, that will actually, over the next few years, give us the latitude and freedom to decide a little bit about this type of investment and access this type of capability. So in principle, to summarize, yes, it will be out-licensing. However, we could also maybe consider other scenarios where it's a joint pivotal development and commercialization effort, especially in certain markets.

Thank you. That was our last question. Unless anybody has anything more that you would like to ask, now would be the time. If you think of something after the call, you are welcome to email at Kilian directly using the details that are on the screen now, and we'll come back as soon as possible. But before we go, Kilian and Mathias, do you have any closing remarks?

Yes. I would again just like to thank everybody for joining us today. But more importantly, thank you for your ongoing interest in Cynata and your ongoing support. As I said, we have a really huge year ahead. If we are successful with our GvHD and osteoarthritis trials, I think we will see a real breakout for the company, and I think that we'll see our loyal shareholders rewarded. So that is very much what our focus is and what we're hoping to deliver for everybody in the year ahead. And as I said, thank you for your continued support, and please feel free to get in touch if there's anything further that you want to hear from us. Thank you very much, everyone.

Thank you.

Thank you.

That concludes today's call. Have a lovely day.