Decoy Therapeutics Inc. (DCOY) Earnings Call Transcript & Summary

Our next presenter is a Houston-based clinical stage oncology company, targeting therapies to treat pediatric and other cancers, including advanced solid tumors. Their lead compound represents a potential paradigm shift in the treatment of cancer initially targeting Ewing sarcoma. At this time, I'd like to turn it over to Salarius Pharmaceuticals.

Good afternoon. This is David Arthur, CEO of Salarius Pharmaceuticals, and I'd like to thank everyone for joining us here today at LD Micro 500. I'd like to take the opportunity and tell you a little bit about Salarius Pharmaceuticals. We are an exciting biotechnology company that are exploring the space known as epigenetics. This is an area more commonly known as the study of gene dysregulation. Now we have a lead candidate which is an oral novel agent that is able to affect some of these dysregulated cancers, cancers caused by the dysregulation of gene expression, by inhibiting an enzyme known as LSD1. By inhibiting that enzyme, we are able to disrupt the communication process that is used by this dysregulated gene expression. And we have taken this drug into a two-pronged development approach. Our first prong is Ewing sarcoma, a devastating rare pediatric bone and soft tissue cancer, which we believe offers the opportunity for accelerated regulatory approval, called that speed to market. And a separate prong -- our second prong, which is solid tumors, which we believe expands the market. And together, we believe we will get to the market quickly while concurrently working on expanding the market. Now at this point, we've already had what we consider to be positive interactions with the FDA and have received designations. You would expect at this point, rare pediatric disease designation, which sets us up for the priority review voucher, which is currently valued at $100 million plus or minus. The orphan drug status designation has been granted to us as well as most recently, Fast Track approval. Now a very positive aspect of Salarius is in addition to a low monthly burn rate, we've also been recipient of significant nondilutive support. One, almost a $19 million 2-for-1 matching award from the state of Texas. And when I say 2-for-1 matching funds, that goes to the development of the drug. In addition, we've received significant support over the years from the National Pediatric Cancer Foundation, whose mission is to bring less toxic therapies to patients suffering from cancers. Now I touched upon how we are advancing this drug. And first, through Ewing sarcoma as speed to market. And I must say, I'll touch on later, a recent announcement that we have expanded our Ewing's program to include Ewing's-related sarcomas, which effectively triples, if not quadruples, our shots on goal in this Ewing's and Ewing's-related sarcoma space. These are all tumors that share similar biology. Market expansion. We believe in the solid tumor space, we will ultimately pursue 1 or both of the following approaches to identify patients with specific mutations that may be more sensitive to LSD1 inhibitor therapy or -- and/or combination of our drug with checkpoint inhibitors, which would not only improve patient benefit but open up tremendous new markets for us. Now I touched briefly on our development program. And as you can see, we are well into Phase I studies that will have both a dose escalation and an expansion phase in Ewing and an expansion in solid tumors where we will then decide -- or an escalation in solid tumors, we will then decide how to expand. We are also doing work in immunotherapy and hematologic cancers, understanding how best to move into the clinic. And I will say that in hematologic cancers, of the 3 other LSD1 inhibitors in the clinic, of which we are one of only two that are reversible, efficacy in combination with another drug has already been shown in hematologic cancers. So we feel we're pursuing an excellent path here. And as you can see, we are in Phase I and moving into what would be considered patient numbers of treatment that begin to give us a look into efficacy. Now the next 12 to 18 months or 15 months is a very data-rich and milestone-rich period of time for Salarius with any of these potential disclosures acting as the catalyst or the potential value inflection point for Salarius. As you can see, we hope to initiate hematologic and immunotherapy combination trials. We expect to receive another significant distribution of our award money from the state of Texas. Although it was a $19 million award, we still have up to $9.1 million remaining. And then as you can see in the first half of '21, and this is in addition to being able to report out the results of our escalation studies, we will begin to get into data disclosures and potentially data readouts in a number of areas, including advanced solid tumors, Ewing's and Ewing's-related sarcomas. So let's take a quick overview of the science and move through this presentation. Now epigenetic enzymes are attractive targets for cancer therapy. This is -- we feel this has been validated by a number of companies pursuing epigenetics, namely companies like Epizyme and Constellation, which are successfully developing epigenetic therapies, different targets than LSD1. And as you can see, an enzyme that affects gene expression will ultimately lead to epigenetic-driven cancers. And this is the dysregulation of gene expression. And you can see on the right-hand side of the slide, when you have dysregulated gene expression, tumor growth genes are turned on and tumor suppressor genes are turned off. Drugs that correct or inhibit the communication of this dysregulation can help restore balance and, ultimately, make it very difficult and perhaps even impossible for these epigenetic cancers to survive. And that is the scientific premise behind epigenetic therapy and specifically LSD1 inhibition. So lysine specific demethylase 1 affects gene expression through enzymatic activity and scaffolding properties, and that's an important distinction because we feel that our scaffolding properties along with our reversibility, meaning we do not permanently bind to the LSD1 enzyme, give us a clear differentiation versus the other LSD1 inhibitors under development and in the clinic. And the reason this is important is LSD1 is important in normal cell function. As you can see, it is necessary for stem cell maintenance and development processes, i.e., hematologic function. But in cancer cells, LSD1 is overexpressed. As I said, it's an important component of gene dysregulation communication. And therefore, it's an important component in silencing or activating genes that lead to disease. We are able to reversibly inhibit this enzyme, and that leads to a reversal of incorrect gene expression and our ability to both inhibit the enzymatic and scaffolding activities. When you look at the -- I mentioned earlier, 3 other companies, organizations like Oryzon, Celgene and Imago are all in the clinic, Celgene has the other irreversible inhibitor. And we feel that pursuing the development path that we've outlined earlier, in addition, and taking advantage of our differentiating features of reversibility and the scaffolding activities in addition to enzymatic activities give us a clear and distinct advantage in this area. So as I mentioned, we have a speed to market and the market expansion strategy. Let's talk a little bit more detail about that. Now I'm going to take you through a short animation. I keep sharing with you the importance of LSD1 in the communication process, and you can see where LSD1 plays an important communication process between an oncogene represented by EWS-FLI, the Ewing sarcoma translocation, and LSD1 inhibition, our LSD1 enzyme. And by inhibiting that, we can hopefully reverse and correct dysregulation. When you look at this dysregulation and I'm now referring to the left-hand side of this Ewing sarcoma cell line, what you see is Ewing sarcoma. The red are tumor growth cells genes incorrectly turned on and the blue is tumor suppressor genes incorrectly turned off. When you take those same cell lines and you administer a seclidemstat analog, which is one of our early development compounds, you see a reversible of the gene genetic expression, which is what we hope for. When you now take this drug from cell lines and you put it into animal models, you see the type of results that you want to see. In this upper panel, what you see are animals where the blue line are animals with Ewing sarcoma cell lines implanted that, unfortunately, due to the aggressive nature of the disease are sacrificed at Day 21. On the bottom, you see animals that were treated with seclidemstat, and you can see what you would expect to see. By cutting off the communication platform, the tumors begin to grow at a slower rate, they plateau and melt away. There's a second model that showed us very similar results down below. And these are 2 of many models that we have run that indicate to us, we are going to have a positive impact. We believe we're going to have a positive impact when we take this drug into the clinic, which we have done. We are incredibly fortunate in the fact that we have continued to advance escalation of our doses through the recent turbulent times. We are enrolling in our 6 of 7 possible cohorts. We -- once we hit our dose -- our maximum tolerated dose, we will then expand into 20 patients in Ewing sarcoma at that dose. And as you can see, we are in 8 fabulous and well-respected centers across the United States. It's important to note that we are now at plasma levels in humans that are equal or above concentrations where we saw efficacy in animal models. Our plasma levels have continued to increase as we have escalated the dose. And we have not seen evidence of plateauing of plasma levels, all of which are very important milestones in drug development. We -- and so we will bridge off of this maximum tolerated dose escalation immune sarcoma to begin expansion in Ewing's-related sarcomas, which I'll touch upon in a moment. Now one important factor that I want to touch on during this discussion is PK. I mentioned earlier that we have been able to achieve drug levels in humans that are at or above drug levels where we saw efficacy in patients. And you can see efficacy in animals. And as you can see from the panel on the left, not only are we achieving those levels, but our current PK clearly demonstrates this is BID dosing or twice-a-day dosing. What's also important that we recently disclosed is that we believe we have seen preliminary drug activity in the target lesions of a patient with refractory Ewing sarcoma. In this particular patient, who had failed 2 previous lines of therapy, they enrolled in our study and were on drug therapy for 6 months. During that period of time, you can see from the graph below, they had a significant and ongoing reduction of their targeted lesions, which are generally the largest lesions of the patient up to 5 prospectively selected by the doctor -- the principal investigator and used for measurement. Now unfortunately, this patient also had new lesions occur in what is called the nontargeted lesion group. These patients have many, many lesions. And so using the very strict RECIST criteria, they were ultimately described as progressive disease. But this patient, looking at their targeted lesions, demonstrated a partial response, continued the response until the patient withdrew from the study due to requesting palliative care radiation therapy. This gave us the confidence to expand into Ewing's-related sarcomas because this is the early signaling that we've been looking for. Now let's talk a little bit about market expansion before wrapping up and opening this to questions. One potential of identifying patients in solid tumors is instead of going after specific tumors, going after mutations that are going to produce tumors that are more sensitive to LSD1 inhibition therapy. This allows us to enrich the clinical trial population and improve the probability of success. What's important to note is that the gene panels, the screening panels needed to identify these patients are already well accepted and available nationally and can easily transition from research into commercialization. We're currently executing this work to understand how best to move forward. So in summary, we believe Salarius is a tremendous opportunity given our position in the development process and our two-pronged approach with: one, speed to market represented by Ewing sarcoma and now Ewing's-related sarcomas, of which we will be enrolling 50 patients, 20 in Ewing's and 30 in Ewing's-related sarcomas beginning next year with data readouts next year. On the larger expansion opportunity, you can see that between advanced solid tumors and the opportunity to look at combination with immunotherapy upon -- of which there is significant data available, and pursuing hematologic cancers which has already been demonstrated to have efficacious activity with LSD1 inhibitors, we think there is tremendous upside to the value of seclidemstat in addition to the value of speed to market. I would encourage all of you to go to our website to look at a more robust corporate presentation that contains some of the information I've only been able to refer to here. I'd like to thank you for your participation. And I'd now like to open it to questions.

We do have some questions. Our first question is, does Salarius intend to pursue any partnerships with large immuno-oncology companies?

Salarius is interested in all opportunities that will advance the development of seclidemstat and we believe ultimately benefit patients. So to that end, we are active and have always been active in maintaining ongoing relationships and discussions with many strategic partners. I myself came from big pharma, and we utilize not only impromptu events, but also the large bio and JPMorgan events to make sure that we are continually in touch and updating potential partners.

Our second question is, will the Ewing expansion trial have 2 different cohorts?

Yes. So the Ewing's and what is now Ewing's-related sarcoma trial will have 2 different cohorts. One will be Ewing sarcoma, one will be Ewing's-related sarcoma. And these are sarcomas, these related sarcomas share similar biology in the FET family of translocations, which within that second set of sarcomas, Ewing's-related sarcomas, we will be recruiting 10 patients in each of 3 different types of Ewing's-related sarcomas.