Eledon Pharmaceuticals, Inc. (ELDN) Earnings Call Transcript & Summary

Greetings, and welcome to Eledon Pharmaceuticals Fourth Quarter and Full Year 2021 Operating and Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded today, March 24, 2022. I would now like to turn the conference call over to Paul Little, Chief Financial Officer of Eledon. Please go ahead.

Good afternoon, and thank you for joining Eledon's Fourth Quarter and Full Year 2021 operating and financial results conference call. I am joined on today's call by David-Alexandre Gros, Chief Executive Officer; Steve Perrin, President and Chief Scientific Officer; and Jeff Bornstein, Chief Medical Officer. Earlier today, Eledon issued a press release announcing financial results for the fourth quarter and full year ended December 31, 2021. You may access the release under the Investors tab on our company's website at eledon.com. Before we begin, I would like to remind everyone that statements made during this conference call relating to Eledon's 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 these forecasts due to the impact of many factors beyond the control of Eledon. Eledon 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 Eledon's reports filed with the U.S. Securities and Exchange Commission. It is now my pleasure to pass the call to Eledon's CEO, Dr. David-Alexandre Gros, DA.

Thank you, Paul, and thank you all for joining the call today. I'm pleased to report on the continued progress here at Eledon in the fourth quarter of 2021 and into 2022 as we look ahead to a transformative year. We have assembled an exceptional team here, and we are all committed to realizing the broad therapeutic potential of tegoprubart, formerly known as AT-1501. We recently announced the United States Adopted Names Council assigned tegoprubart as the unique nonproprietary or generic name for AT-1501. This is the name that we will now use going forward. In 2022, we are executing our strategy to explore the breadth of the tegoprubart's potential by evaluating the molecule in up to 4 open-label clinical trials across 3 therapeutic areas: neurodegeneration, focusing on ALS; transplantation, focusing on kidney and islet cell transplantation; and autoimmunity, focusing on IgA nephropathy. . Before I turn over the call to Steve for additional details on each of these programs, I'll provide a high-level update of our recent progress. In December of last year, we completed enrollment of the fourth and final cohort in our Phase IIa study of tegoprubart in adults with ALS. We recently completed dosing and visits for all subjects in the study, and we thus remain on track to meet our goal and report out top line data from this study in the second quarter of the year. Turning to transplantation. We received regulatory clearance to initiate a Phase Ib clinical trial in the United Kingdom, evaluating tegoprubart as a replacement for tacrolimus as an immunosuppressive regimen component for persons undergoing kidney transplantation. With this clearance, we are working on adding additional sites to the Phase Ib clinical trial, which previously received regulatory clearance in Canada. Also in kidney transplantation, the U.S. FDA requested last year that we conduct a nonhuman primate study evaluating tegoprubart monotherapy in the prevention of allograft rejection. While the trial is still ongoing, we have now transplanted all 4 animals, and are happy to report our preliminary observations showing that to date, monotherapy tegoprubart successfully prevented transplant rejection in a manner consistent with both historical anti-CD40 ligand antibodies as well as with our prior experience with tegoprubart in a nonhuman primate islet cell transplantation model. Next, we received ID clearance from the FDA to proceed with a Phase IIa clinical trial to assess tegoprubart for the prevention of allograft projection in patients undergoing islet cell transplantation for the treatment of type 1 diabetes. And finally, we received regulatory clearance in Australia, New Zealand and Malaysia to initiate a Phase IIa clinical trial evaluating tegoprubart for the treatment of IgA nephropathy, and we plan to expand the study into up to 8 additional countries this year. I'll close by reiterating that 2022 is shaping up to be a transformative year for us, highlighted by multiple clinical trial catalysts, beginning with our ALS trial data readout in the second quarter and followed by initial data readouts from our open-label studies in renal transplantation, islet cell transplantation and IgAN late this year. We look forward to sharing updates on our trials and further demonstrating tegoprubart's therapeutic potential. With that, I'll now turn the call over to Steve Perrin, our President and Chief Scientific Officer, to provide more details on our development programs. Steve?

Thank you, DA. I'll begin my program updates with ALS, our most advanced clinical indication currently in a Phase IIa study. Previous research has found a customary pathway to be an overactive pathway involved in more than half of people with ALS and preclinical work has demonstrated that stopping or delaying immune system activation by the inhibition of CD40 ligand can improve muscle function, slow disease progression and improve survival in an ALS animal model. This provides a strong scientific rationale for the development of tegoprubart in this indication. Our ALS trial is a 12-week open-label dose-escalating study with 13 sites in the United States and Canada. Enrollment in the fourth and final cohort was completed in December and dosing recently completed for all subjects, which will allow us to report top line data from all subjects in the study in the second quarter of 2022. Data from this study will include safety and tolerability of tegoprubart as well as multiple categories of biomarker endpoints with each subject serving as their own control by comparing changes from baseline. In the first category of biomarkers, we'll assess CD40 ligand target engagement because mechanistically, inhibiting CD40 ligand function has profound effects on B-cell maturation, antibody production and the antibody class switching. We anticipate we'll be able to assess the inhibition of CD40 ligand target engagement by tegoprubart with biomarkers of B-cell function. The second category of biomarkers are changes in pro-inflammatory chemokines and cytokines upregulated in people living with ALS. There is a long history of ALS data describing increases of pro-inflammatory signals in circulation, including TNF alpha, MCP-1, IL-6, IL-1beta, C-reactive protein and [ enraged ]. We anticipate that in subjects with elevated levels, a blocking of CD40 ligand will result in an overall decrease of these pro-inflammatory markers in circulation. Finally, we will also assess exploratory endpoints, including changes in ALS Functional Rating Scale, or ALSFRS, the levels of neurofilament light chain in circulation and redeem these exploratory end points given the uncertainty that 12 weeks of therapy is sufficient time to see an effect on these endpoints. But I will add that seeing an effect on neurofilament light chain would particularly be promising because of this biomarkers association with neuron health. Moving on to our renal transplant program. CNIs have been shown to be beta cell toxic, thus causing nuance at diabetes, neurotoxic thus causing neurological symptoms, including tremors, they also lead to hair loss and are associated with increased risk of heart disease as well as increases in infections and malignancies. Additionally, the chronic utilization of CNIs to grant graft rejection has been associated with nephrotoxicity up to 30% of patients after 1 year, up to 50% of patients after 5 years and up to 100% of patients after 10 years, which can paradoxically shortened graft survival in the same organs that CNIs are being taken to protect. By improving the safety and tolerability of first-line immunosuppression, we believe that tegoprubart has the potential to both improve patient quality of life and overall morbidity in the near term as well as ultimately improve graft survival rates in the longer term. We received regulatory clearances in both Canada and the United Kingdom to conduct a Phase Ib clinical trial of tegoprubart in kidney transplantation. This open-label study is planning to enroll 6 to 12 patients undergoing renal transplant with primary endpoints of safety and pharmacokinetics as well as exploratory endpoints, including biopsy-proven acute rejection, change in eGFR and biomarkers of inflammation and kidney rejection. Our goal is to demonstrate that tegoprubart can be safely utilized to replace CNIs as part of first-line immunosuppressive therapy in solid organ transplantation and prevent acute and long-term solid organ transplant rejection without the use of CNIs. We are currently looking to enroll our first patients and look forward to providing available data from this open-label clinical study later this year. In parallel to this clinical trial and as requested by the FDA is a prerequisite to a potential future U.S. kidney transplant IND. In the second half of 2021, we initiated a nonhuman primate kidney transplant study with tegoprubart as a monotherapy. The agency agreed that untreated animals would not be required given the large body of historical data demonstrating acute rejection in 6 to 8 days post-transplant in the absence of immunosuppression. As of today, we are pleased to share preliminary observations showing that monotherapy tegoprubart successfully prevented transplant rejection in all 4 animals in a manner consistent with both historical anti-CD40 ligand antibodies and with our prior experience with tegoprubart and islet cell transplant model. Data collection from the study is ongoing, and we will provide an update on the study results when the complete data set is available. Based on the data to date, this study further supports the strong preclinical evidence of anti-CD40 ligand antibodies, including tegoprubart for the use of prevention of allograft transplant rejection. Turning to islet cell transplantation. We are focusing on people living with high-risk type 1 diabetes who are on chronic treatment with exogenous insulin and who experience severe swings in blood glucose levels, hypoglycemic unawareness and associated comorbidities. Clinical trials conducted by the immune tolerance network as well as islet cell transplants and experience in other countries have demonstrated that islet cell transplant in patients with difficult-to-control type 1 diabetes can maintain glycemic balance, reinstate metabolic control and in some cases, even eliminate the need for exogenous insulin. However, the use of -- the current use of current calcineurin inhibitors or CNIs in the prevention of islet cell transplant rejection poses challenges as CNIs are toxic towards transplanted islets, potentially resulting in significant islet cell loss post transplant and thus potentially leading to the requirement for multiple islet cell transplants in order to reduce insulin dependence and improve hypoglycemic unawareness. In October 2021, we presented additional nonhuman primate data at the International Pancreas and Islet Cell Transplantation World Congress, showing a nonhuman primate model of islet cell transplanted animals treated with tegoprubart versus those treated with standard of care, including CNIs. The results demonstrated longer graft survival, better graft function and glycemic control and post-transplant weight gain indicating better overall health in animals treated with tegoprubart. Also in the fourth quarter of 2021, we announced FDA clearance of our IND, which allows us to pursue development of tegoprubart in islet cell transplant in the United States. While not only opening up a new geography for this indication, this regulatory clearance represents the first U.S.-approved IND for a therapeutic in islet cell transplantation. Importantly, the IND represents a similar dosing level as we are using in our current ex-U.S. transplantation studies and expect to use in future kidney transplantation studies. Primary endpoints will include safety and tolerability, glucose control, insulin independence, reduction of HbA1c, graft survival and graft function. We will also be assessing hypoglycemic unawareness events as well as renal function. We expect to open our U.S. site in the middle of the year and to report available data from this open-label study late this year. I'll wrap up with our program in IgA nephropathy or IgAN. IgAN is the leading cause of glomerulonephritis, a chronic autoimmune condition, resulting in progressive kidney damage. Onset usually occurs in younger adults, often while the patients in their 20s and is characterized by the presence of protein in the urine. Currently, approximately 40% of patients will progress to end-stage renal disease within 15 to 20 years indicating a significant unmet need because the treatment for end-stage renal diseases is lifelong dialysis or kidney transplant, both of which bear significant patient and health care system costs. We believe there is a strong mechanistic rationale for pursuing CD40 ligand inhibition in IgAN since tegoprubart has the potential ability to modify disease progression by reducing immune complex formation, immune cell infiltration and subsequent complement activation in the kidney. We recently received regulatory clearance to initiate a Phase IIa clinical trial of tegoprubart in the treatment of IgAN in Australia, New Zealand and Malaysia with plans to expand the study in Europe, North America and Asia in the coming months. The planned Phase IIa is an open-label study expected to enroll up to 42 patients with a confirmed diagnosis of IgAN and significant proteinuria. Patients will be subsequently enrolled in 2 different dose cohorts and received tegoprubart by IV infusion. The primary endpoint will be percent reduction in proteinuria at 24 weeks compared to baseline. We are in the process of opening up sites in multiple countries and recruiting our first patients. We look forward to providing initial data from this open-label Phase study later this year. With that, I'll now turn the call over to Paul for a financial update.

Thank you, Steve. In addition to the financial results summarized in our press release, you can find additional information in our Form 10-K, which we will file later today. The company reported a net loss of $8.8 million or $0.59 per share for the 3 months ended December 31, 2021, compared to a net loss of $5.9 million or $2.13 for the same period in 2020. Research and development expenses were $6.2 million for the 3 months ended December 31, 2021, compared to $3 million for the comparable period in 2020, which is an increase of $3.2 million. The increase in R&D spend primarily reflects an increase in clinical development costs and costs related to the production of clinical trial materials as we advance tegoprubart into global Phase I and Phase II clinical trials. . I'll turn to a few key financial metrics for the full year to date. The company reported a net loss of $34.5 million or $2.33 per share for the year ended December 31, 2021, compared to a net loss of $22.8 million or $15.72 per share in 2020. R&D expenses were $23.7 million for the year ended December 31, 2021, compared to $6.1 million for 2020, an increase of $17.6 million. The increase in research and development spend primarily reflects an increase in clinical development costs and costs related to the production of clinical trial materials as we continue to advance our tegoprubart programs. G&A expenses were $13.1 million for the year ended December 31, 2021, compared to $10.1 million for 2020, an increase of $3 million. The increase in G&A spend primarily reflects an increase in stock-based compensation costs and other personnel costs associated with increased headcount and an increase in other general operating expenses. This cost was partially offset by a decrease in merger-related costs of $2.9 million that we incurred in 2020 as a result of the Anelixis acquisition. We ended the year with approximately $84.8 million in cash and cash equivalents, which we expect to be sufficient to fund operations as currently planned into 2024, thereby allowing us to generate clinical data across all 4 of our currently planned trials and still have over 1 year of cash on hand. With that financial update, let me turn the call back over to DA.

Thanks, Paul. In summary, we are proud of the progress we have made across our programs and look forward to catalyst-rich 2022, beginning with a top line readout of our Phase IIa ALS trial in the second quarter. We have secured regulatory clearances and are well positioned to begin our evaluation in tegoprubart in 3 additional distinct indications in renal and islet cell transplantation and IgAN. With cash to fund operations into 2024, we are well capitalized to move these programs forward and closer to patients in need. We look forward to providing clinical updates through the remainder of the year and to building upon the strong base of evidence for targeting the CD40 ligand pathway to transform therapeutics for patients undergoing organ or cellular transplantation or living with autoimmune disease or ALS. With that, I will now ask the operator to begin our Q&A session. Operator?

[Operator Instructions] Our first question comes from the line of Rami Katkhuda with LifeSci Capital.

A couple of quick ones for me. But I guess, in ALS, are pro-inflammatory biomarkers elevated in all patients or just rapid progressors? And has the correlation between these inflammatory biomarkers and clinical outcomes been evaluated before?

Rami, great to talk to you. For the question on ALS, let me turn that over to Steve.

Rami, yes, so levels of pro-inflammatory markers have been reported in about 80% of people living with ALS, but it does not appear to be associated with progression rate, at least not in a way that's statistically meaningful that I've seen. There also has not been a study with therapeutic intervention with a [ prio ] biomarker plans to look at pro-inflammatory markers and see how a therapeutic treatment changes them. So we're one of the first to be doing that.

Got it. And then shifting gears a little, but for both kidney and islet cell transplantation, can you kind of remind us how many patients' worth of data you're looking to gather before you look to share results?

Sure. So for both of these indications, we'll share the results that we have towards the end of the year. What's nice with these indications and it's true across IgAN, islet cell and kidney transplantation is that even a small number of patients can be meaningful and data can be generated quite quickly. So for IgAN, we're looking at 24 weeks of data and for islet cell or kidney transplantation, data even as short as 90 days can be meaningful. We expect to have probably a handful of patients in the kidney transplantation trial and low single digits in islet cell.

Our next question comes from the line of Thomas Smith with SVB Leerink.

Just a couple on ALS. I guess, can you just walk us through any remaining gating steps here to the top line data? Like is it mainly just data scrubbing and analysis? Or is there still some degree of data collection that's ongoing? Or any other steps that are outstanding there? And then can you talk a little bit about the data that you expect to record at the top line versus data that either might not be available for the top line or that you're thinking about saving for presentation in a scientific forum?

Thanks for the question. Let me turn that over to Steve and Jeff.

I mean, Jeff, why don't you comment on the data collection and timing for last subject being dosed, et cetera.

Right. Thank you, Steve. So we've completed dosing and actually just completing follow-up on the patients in the final cohort of the study. And so there's no further intervention and no further data collection that is required at this point. It is now a matter of data -- finalizing data entry, data cleaning and generation of the final table figures and listings. So we anticipate having all of that in the near term and then being able to analyze the data and then disclose it.

And just to add one comment to that, Tom, is I mean the cohort for, as Jeff just indicated, just came down. So there is biosamples that still need to be sent out process for biomarkers, et cetera. So there is a little -- there's no more sample collection involved in the study because the last subject was dosed in last visit, but there is still some data collection that's going to happen with external vendors.

Okay. Great. Yes, that's helpful. And then can you comment a little bit, I guess, just in terms of your expectations for the data that you think will be available for top line versus maybe some of the data sets that you anticipate either wouldn't be available or that you would look to save for a presentation in the scientific forum?

Steve?

I mean our intention, I think, is -- I mean primary endpoint of the study, as you know, is safety, tolerability. And obviously, we're looking at drug levels in pharmacokinetics. This was our first multiple ascending dose study. In addition to that, as you know, we're looking at multiple different biomarker arms, and we intend to correlate the biomarker arms with drug levels, et cetera. So we kind of need a completed and compiled data package, right, to be able to interpret our biomarker data. I mean obviously, we'd love to aggregate all of that data. And after the top line data is written up and the CSR is done, we obviously would love to present this at a scientific conference.

But we'll come back, and we will report out on our [ believed ] impact the biomarker endpoints that we've been talking about.

Okay. Great. And then just one -- maybe one other question on the nonhuman primate data and understanding you just have the preliminary observations, but there any sort of comment or anything you can say on how this data set looks relative to other published CD40 renal transplant data in nonhuman primate?

I think the study, as we mentioned, is still ongoing. But to date, all 4 animals have been transplanted. As we mentioned, if you don't treat animals with any immunosuppression, the animals will reject and die typically within 7 days. And now all 4 of our animals are out multiple times that time period. And so what we're seeing today is consistent with what's been historically published and shown with anti-CD40 ligands as well as with experience that we've had with tegoprubart specifically in the islet cell transplant nonhuman primate model. We're excited by this data. And we feel that it's -- we've met the goal of the study, which was to show that tegoprubart, even as monotherapy was able to significantly inhibit solid organ rejection.

Our next question comes from the line of Matt Kaplan with Ladenburg Thalmann.

Congrats on the initial results from the nonhuman primate study. I guess starting there with respect to, I guess, next steps and your thoughts on interaction with the FDA and potentially moving forward in renal transplant in the U.S., what -- given the top line results that you -- the initial results that you have in NHP study? .

Matt, thank you for the question. In terms of our future interactions with agency, as we've mentioned, we feel that we've shown that tegoprubart even as monotherapy can prevent rejection in a kidney transplantation model. What we're going to do next is finish the study. So we expect to complete the study next quarter and be able to fully analyze the data, including things such as PK, antidrug antibody and the like. As you know, in parallel, we're going to be getting our data from the ALS study. So with regards to future interactions with agency, the agency would obviously ask to see all of the available data. And as such, we would first complete -- fully complete our nonhuman primate study, in parallel, get our ALS data and then use that to go back to the agency and have a discussion around next steps for kidney transplantation. All of that data is coming in as we've discussed next quarter. So this is in the near term.

Great. And then with the top line data for ALS, as you said, expected in the second quarter, can you give us, maybe for Steve, kind of a sense in terms of what you're looking for in the biomarkers? I guess, maybe specifically, what you would expect to see from a pharmacodynamic point of view, CD40 target engagement and what we should look for there? .

Steve?

It's a great question, Matt. I mean, as we said in the past, the primary arm of the biomarker study, which is important, is knockdown pro-inflammatory markers. There's many, many publications and literature showing upregulation of pro-inflammatory markers in people with ALS, and CD40 ligand inhibition should directly be able to modulate those levels of pro-inflammatory markers through modulating B cell and T cell activation. So that's really the primary objective. I mean, in addition to that, obviously, target engagement is part of that. Many of the markers that I'm referring to are involved in CD40 ligand activity, such as chemokines like CXCL13 that's expressed by activated B cells. So those are the important outcomes. I mean, obviously, we'd like to see some other relationships like a PD effected dose response effect. But until we see the data, it's hard to understand what we're looking for there.

And I guess with respect to the exploratory endpoints, I guess, neurofilament light chain, would you expect to potentially see a dose effect there as well?

I mean any effect on neurofilament light chain would be a really grand slam home run, so to speak, right? I mean it's a fairly short study. It's only 12 weeks neurofilament light chain as a surrogate of neuron health as the neurons -- at least that's what we're hypothesizing based on existing data that as neurons get sick and they die, part of their cytoskeleton ends up leaking from the CSF into circulation and neurofilament light chain has been a marker of that not only in ALS, but also in Alzheimer's, multiple sclerosis and other neurodegenerative diseases. So that is kind of the best outcome we could expect is to see some change in neurofilament light chain and to have that be associated with the dose response and correlate with inflammatory biomarker changes. That's like the perfect outcome if you can get there. But in a 12-week study, it's pretty short, whether we'd be able to see changes in NFL and/or even clinical end points at this point.

Great. Great. And last question in terms of progress with the islet cell transplant program. Any -- in terms of patient enrollment there?

We have not enrolled a patient yet. I think the key thing across our programs is to open up sites. And it's -- since you know -- as we think about the studies, we continue to be confident that we'll be able to enroll our trials. And what we've done is to really to budget for a number of sites that we think is going to be appropriate for us to begin to get patients and get data by the end of the year. And that's true really across the troughs. So now in islet cell transplant specifically, we're looking to open up our second site, so the U.S. site. That site should be open in about the middle of the year, which would then allow a second site to potentially bring in patients into the trial. So since meaningful data can be had in that trial in 90 days, since typically within 90 days one can see how well the transplanted cells are doing. If the patient is able to control their diabetes and if the patient is able to be insulin free, we expect to -- once we're able to enroll patients to be able to get that data quite quickly.

There are no further questions in the queue. I'd like to hand the call back to management for closing remarks.

Thank you, operator, and thank you all for joining us on today's call. We have an exciting year ahead of us, and we look forward to keeping you updated on all of our progress. Have a great evening.

Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.