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

Greetings, and welcome to the Eledon Pharmaceuticals Second Quarter Financial Results Conference Call. [Operator Instructions] As a reminder, this conference call is recorded today, August 11, 2022. I now would like to turn the conference over to Paul Little, Chief Financial Officer of Eledon. Please go ahead, sir.

Good afternoon, everyone, and thank you for joining Eledon's Second Quarter 2022 Operating and Financial Results Conference Call. I am joined on today's call by David-Alexandre Gros, Chief Executive Officer; and Jeff Bornstein. Chief Medical Officer. Steve Perrin, our President and Chief Scientific Officer, will not be joining today's call because he is attending a funeral. Earlier today, Eledon issued a press release announcing financial results for the second quarter ended June 30, 2022. You may access the release under the Investors tab on our company's website at eledon.com. 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. Now I would like to pass the call to Eledon CEO, Dr. David-Alexandre Gros, DA?

Thank you, Paul, and thank you all for joining the call today. The second quarter marked the beginning of an exciting period for Eledon as we reported the first of 4 distinct clinical readouts from our tegoprubart pipeline with positive Phase IIa results in ALS. This year, we have been focused on execution across our 4 clinical trials: kidney transplantation, ALS, IG nephropathy or IgAN and islet cell transplantation. I'm very encouraged by the progress we have made in each of these areas. In renal transplantation, we recently announced the first patient dose in a Phase Ib open label study of tegoprubart in Canada, the United Kingdom and Australia. We look forward to the continued enrollment of the study through the remainder of the year and based on the timing of our first patient enrolled, we aim to provide initial 3- and 6-month open-label data across available transplant participants in the first quarter of 2023. Additionally, we announced that FDA has cleared Eledon's investigational new drug application or IND application, for a larger controlled Phase IIa trial of tegoprubart with the prevention of organ rejection in patients receiving a kidney transplant, thereby allowing us to expand our development efforts for this important indication into the United States. Jeff will go into the trial design in more detail, but I'll note that this will be a superiority study versus standard of care with calcineurin inhibitors, or CNIs. As I mentioned, we were excited to report positive top line data in a Phase IIa study of tegoprubart in adults with ALS in May. Tegoprubart not only successfully met the primary endpoint of safety and tolerability and that showed dose-dependent target engagement and a level of reduction in proinflammatory biomarkers associated with the trend in slowing down of disease progression as measured by ALSFRS slope. Additionally, we observed a reduction in a number of biomarkers also associated with both IgAN and kidney allograft transplant rejection, which we believe provides significant validation of tegoprubart's broad therapeutic potential. With an eye to further progressing ALS clinical developments, we will be working with opinion leaders, the patient community and regulators on potential next steps as well as looking at different approaches to fund a potential future trial. Next, our Phase IIa study of tegoprubart in adults with IgAN continues to enroll, and we're expanding the enrollment landscape from our current 9 countries with 17 sites into another 3 additional countries, including the United States and China. Based on the enrollment progress to date, we expect to fully enroll the high-dose cohort in the first half of 2023. Our goal is to provide meaningful insights into to tegoprubart's clinical activity after 24 weeks of therapy in this indication, and we thus anticipate reporting initial 6-month open-label data from this study in the first quarter of 2023. Turning to islet cell transplantation. In June, tegoprubart was granted orphan drug designation by the FDA for the prevention of allograft rejection in pancreatic islet cell transplantation. This represents a significant regulatory milestone for this program, as we plan to open a clinical site at the University of Chicago in the coming months. We believe that this will be a major catalyst in the enrollment process going forward. With the planned opening of the Chicago clinical site and in order to more efficiently focus our resources, we made the decision to close the existing clinical site in Alberta, Canada. We believe the new clinical site in Chicago will be sufficient to enroll the study of up to 6 participants with type 1 diabetes and we anticipate reporting initial 3-month open-label data from this study in the first quarter of 2023. I'll now turn over the call to Jeff Bornstein, our Chief Medical Officer, to provide additional details on our development program. Jeff?

Thank you, DA. I'd like to begin by discussing our recent kidney transplant efforts. The cornerstone for the prevention of transplant rejection is the utilization of CNIs, even though CNIs are associated with significant side effects including beta cell toxicity causing new onset diabetes, neurotoxicity causing neurological symptoms, including tremors and decreased cognitive function as well as an increased risk of heart disease. Additionally, the chronic utilization of CNIs to prevent graft rejection has been associated with significant nephrotoxicity, which can impair graft function and even shorten graft survival in the same organs that CNIs are being taken to protect. By improving the safety and tolerability of first-line immunosuppression, tegoprubart has the potential to both improve patient quality of life and reduce overall morbidity in the near term as well as ultimately improve graft survival rate in the long term. We are particularly enthused about our kidney transplant efforts because of the large amount of nonhuman primate data generated both by ourselves with tegoprubart as well as with historic anti-CD40 ligand antibodies. In these studies, nonhuman primates treated with anti-CD40 ligand antibodies as monotherapy demonstrated protection from rejection for months at a time versus only days in untreated animals. As DA mentioned, we recently dosed the first patient in our Phase Ib clinical trial of tegoprubart in kidney transplantation. This 52-week open label study was based in Canada, the United Kingdom and Australia is enrolling up 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 the CNI as part of first-line immunosuppressive therapy and solid organ transplantation and prevent acute and long-term solid organ transplant rejection without the use of CNIs. With enrollment ongoing, we aim to provide an initial 3-month and 6-month open-label data across multiple transplant participants in the first quarter of 2023. These time points are relevant since acute rejection most often occurs within the first 90 days of the transplant and new-onset diabetes post-transplants often begin to be seen at 6 months. In addition, we were pleased to recently announce a regulatory milestone with the clearance of tegoprubart's U.S. IND application to evaluate tegoprubart for the prevention of rejection in kidney transplant recipients. The IND opening Phase II study will be a multicenter, open-label 2-arm active comparator safety, pharmacokinetic and efficacy study that will enroll approximately 120 participants [indiscernible] undergoing kidney transplant. Participants will receive tegoprubart or the active comparator tacrolimus as part of an immunosuppressive regimen, including corticosteroids, and mycophenolate mofetil or mycophenolate sodium. The study's primary objective is to assess whether graft function at 12 months post transplant into tegoprubart-treated participants. It's superior to tacrolimus-treated participants. The primary endpoint will compare the mean estimated glomerular filtration rate, EGFR, at 12 months for tegoprubart versus current standard of care. Graft function as assessed by EGFR at 12 months post transplant is associated independently with subsequent graft failure. EGFR has been established as an indicator of kidney function in both pre- and post-transplant patients and lower levels are associated with need for dialysis and transplantation or retransplantation. Secondary objectives include safety, incidence of new onset diabetes, biopsy-proven acute rejection and participants and graft survival. We will provide further information on the timing of this study later this year. Of note, the Phase II program includes an open-label extension study, allowing for the collection of long-term efficacy and safety from both this study as well as the ongoing Phase Ib study. We expect to run both the Phase Ib and the Phase II studies in parallel, so we can continue to report data and insights on tegoprubart on the Phase Ib study, while the Phase II is running. Next, I'll move on to ALS and recap the positive top line data we announced from our Phase IIa trial evaluating tegoprubart in ALS. This was a significant milestone for Eledon and has demonstrated the safety and tolerability of tegoprubart, provided insights into the role and potential impact of tegoprubart in ALS, and also help furnish some potential read-throughs for tegoprubart to other indications with overlapping biomarkers. The study was an open-label, multiple-ascending dose study that sequentially evaluated 1 milligram per kilogram, 2 milligrams per kilogram, 4 milligrams per kilogram and 8 milligrams per kilogram of tegoprubart administered 2 weeks, every 2 weeks via IV infusion for a total of 60 weeks. In the 2 lower dose cohorts, we enrolled 9 participants per group, and as we dose escalated, we moved to 18 participants per cohort as the higher 2 doses were where we had projected to see the biomarker effect. We collected blood samples of screening and just prior to first infusion for each participant as well as prior to each subsequent infusion so that each participant can be served as their own control in the study. The primary endpoint of the study was safety and tolerability with a range of secondary exploratory endpoints measuring biomarker activity for target engagement, changes in proinflammatory chemokine and cytokine upregulated in people living with ALS and changes in ALS Functional Rating Scale or the ALSFRS. The data showed that tegoprubart successfully met the primary endpoint of safety and tolerability with no serious or severe adverse events related to study drug and adverse events being generally consistent with what is expected in a population of ALS participants. Importantly, there were no signs of platelet activation or thrombosis in the participants and antidrug antibodies were present in less than 5% of samples, all of which were of low titer and did not impact tegoprubart drug levels. Tegoprubart target engagement as measured by a statistically significant reduction in CD40 ligand, a marker of T cell activity and CXCL13, a marker of B cell activity was achieved in a dose-depending fashion with the largest mean reductions occurring in the 2 higher dose cohorts. In addition, we also observed an increase in the percentage of participants who showed a reduced level of these biomarkers in a dose-dependent manner. Prior to launching the trial, we identified 6 proinflammatory proteins that have been described in the literature to be elevated in people with ALS, including TNF-alpha, MCP1, IL-6, IL-1, EN-RAGE and CRP. We were highly encouraged to see significant reductions in 4 of the 6 of these proinflammatory markers, including TNF alpha, MCP1, ENRAGE and CRP. In addition to these ALS associated biomarkers, we observed a total reduction in 23 of 32 proinflammatory proteins we detected, including myeloid markers CXCL9 and CXCL10, as well as complement C3 and the B cell markers, IgA, IgE and IgM. These additional biomarkers are of note since they play an important role in our other disease programs. IgA, C3 And CD40 ligand have been associated with disease progression and proteinuria in patients with IgAN. While CXCL9, BCL10 IgM and C3 have been associated with kidney transplant rejection. Lastly, as part of the exploratory endpoints, we reported that tegoprubart's target engagement and level of reduction in proinflammatory biomarkers are associated with the trend in slowing down of disease progression as measured by ALSFRS slope when compared to a cohort from the ALS PRO-ACT database. This database is a publicly available data collection from historical ALS clinical trials, containing demographic data as well as outcome measures, including ALSFRS. We found the participants with positive target engagement defined as those who had at least a 10% decrease in CXCL13 trended towards a greater slowing of ALSFRS slope when compared to those who did not achieve target engagement. These data taken together suggest inhibition of CD40 ligands signaling by tegoprubart results in a decrease in pro-inflammatory biomarkers that may result in a slowing of disease progression. We are very encouraged by these results. which further demonstrates the safety and tolerability of tegoprubart through the highest dose cohort. We also believe that showing a relationship between target engagement, reduction in proinflammatory markers and change in disease progression measured by ALSFRS, has an important signal in this devastating disease that further validates our confidence in tegoprubart's immunomodulatory potential in ALS. Finally, we look forward to presenting our data at an upcoming ALS conferences later this year. Moving to an IgAN. We believe in the strong mechanistic rationale for pursuing CD40 ligand inhibition in IgAN due to tegoprubart's potential ability to show beneficial effects on both the upstream and downstream pathophysiology of IgAN. While the current standard of care and other drugs in development generally aim to reduce production of antibodies or to alter kidney hemodynamics to reduce protein loss and tissue damage, tegoprubart has the potential to impact multiple steps in the pathophysiology by reducing production of IgA antibodies, reducing the production of anti-IgA, IgG antibodies, reducing immune complex formation and reducing cellular inflammation in the glomerulus itself. We are happy to report that we continue to dose patients in our open-label Phase IIa clinical trial in patients with IgAN. We have been actively engaged with regulators across the world and now have approval for clinical trials placed in 9 countries with plans to expand into up to 3 additional countries, including the United States and China. This global study is a 96-week open-label trial that will include 42 total participants in high dose and a low dose cohort. The primary endpoint is changed in the urinary protein to creatinine ratio, or UPCR, at week 24. Secondary endpoints include change in estimated glomerular filtration rate at week 96 as well as safety and tolerability. Based on enrollment trends to date, we anticipate fully enrolling the first cohort of this study in the first half of 2023. We believe it is important to accumulate 24 weeks of clinical data across multiple patients in this indication in order to properly evaluate tegoprubart's potential and therefore, we anticipate reporting initial 6-month open-label data from this study late in the first quarter of 2023. I'll wrap up my update by turning to islet-cell transplantation and our Phase IIa trial for the prevention of allograft rejection, where we are about to open our U.S. site at the University of Chicago. We believe this new site will be a critical step to jump-start the enrollment process of this study by allowing us to concentrate resources and close our Canadian sites. A key advantage of the Chicago site is it is focused on these novel types of approaches since islet-cell transplantation is considered experimental in the United States. And we are confident that the new clinical site in Chicago will be sufficient to enroll the study up to 6 particulates. This site will be actively screening for type 1 diabetic patients with hypoglycemic unawareness, who experience significant swings in glucose levels that are associated with serious risks and comorbidities. Our goal is to evaluate tegoprubart as the backbone of maintenance antirejection therapy similar to the design for kidney transplantation. In IgG specifically, we are also evaluating the ability of patients to achieve insulin independence as well as the number of islet-cell transplants required to achieve independence. We believe that by removing CNIs, which are directly toxic to the islet cells and replacing with tegoprubart, more patients may be able to achieve better glycemic control with fewer islet-cell transplants. With the opening of our first U.S. site, we are looking to enroll the first patient in the Phase IIa islet-cell transplantation trial and aim to provide available 3-month data in the first quarter of 2023. With that, I'll now turn the call over to Paul for a financial update.

Thank you, Jeff. In addition to the financial results summarized in our press release, you can find additional information in our Form 10-Q, which we will file later today. The company reported a net loss of $9.2 million or $0.65 per share for the 3 months ended June 30, 2022, compared to a net loss of $7.4 million or $0.50 for the same period in 2021. Research and development expenses were $5.7 million for the 3 months ended June 30, 2022, compared to $4.2 million for the comparable period in 2021, which was an increase of $1.5 million. The increase was primarily due to an increase in clinical development costs of $600,000, primarily with external CROs as we advance our tegoprubart programs and an increase in consulting expenses of $800,000 as well as personnel cost of $200,000 due to an increase in headcount and stock-based compensation costs. G&A expenses were $3.5 million for the 3 months ended June 30, 2022, compared to $3.7 million for the comparable period in 2021, a decrease of $200,000. Looking at the cost side of our business, we continue to remain diligent in the control of our discretionary spending and this reduction in year-over-year G&A spend is a reflection of these ongoing efforts. As of June 30, 2022, Eledon had $70.5 million in cash and cash equivalents, which we expect to be sufficient to fund our clinical trial operations as currently planned into 2024. Our cash runway allows us to initiate the Phase II trial of tegoprubart for the prevention of organ rejection in patients receiving a kidney transplant, but additional financing will be required to fund any future ALS clinical trials. With that financial update, let me turn the call back over to DA.

Thanks, Paul. As we discussed today, we are encouraged by the progress we made this quarter throughout our pipeline, and we are excited to continue the positive momentum generated in the first half of this year. We believe the first of our 4 tegoprubart clinical readouts demonstrated not only the potential to treat ALS but also a broader range of inflammation-related indications by targeting the CD40 ligand pathway. Through the remainder of the year, we will be focused on enrollment across our 3 ongoing trials as well as preparing for the launch of our larger Phase II kidney transplantation study. We look forward to providing meaningful data updates for each program starting in the first quarter of 2023. I'll now ask the operator to begin our Q&A session. Operator?

[Operator Instructions] And the first question comes from Thomas Smith with SVB Securities.

Just I guess, first on the updated data time lines. I understand there are a lot of moving parts here, but can you provide any thoughts on how many patients we can expect to see across each of these initial data sets in Q1 '23?

Tom, thanks for the question. We expect to get the same number of patients that we've been discussing in the past, and it's really just a slight change. So as you know, beforehand, we have been talking about late this year with the timing of when we started enrollment in transplant and IgAN in order to make sure that we have sufficient patients that just delays us slightly into the first quarter. So the target is to have a few patients in the transplant indications and then a handful of patients with 6 months of data in IgAN.

Okay. Got it. And then on islet-cell transplant. Can you just talk a little bit more about the team at the University of Chicago? And I guess, just give us a sense, are they actively performing these procedures today as part of other clinical studies and if they are kind of what the volume of that might be? And then I guess your thoughts around potentially expanding out to other centers in the U.S. I think there are 15 to 20 other academic centers that are performing these procedures. But just curious how you guys are thinking about expansion of this program?

Sure. So maybe I'll start with the second part, and then Jeff, I'll turn it over to you to talk about the first part of the question on the University of Chicago. But to answer your question about expanding right now, we're looking to focus on the University of Chicago. And because our IND includes cell manufacturing, right now, that's specific to the site. So the goal is to see if -- and we believe we'll be able to begin to enroll and to get traction in Chicago. And then over time, of course, we can revisit and think about where else we may go. Now Jeff, I'll turn the call over to you in terms of the site.

All right. Thank you, DA. Thanks, Tom. The University of Chicago is very active. They've been involved in islet-cell transplant for many years. They've done it under their own experimental protocol as well as protocols with other sponsors. They are active right now. And so they are very confident that they can enroll our study, and we've enjoyed working with them and their collaborative spirit and their enthusiasm. So we are very confident in them.

And the PI there is the same person who presented at our R&D Day.

Okay. Great. Got it. And then just -- lastly on the renal transplant program and congrats on the progress here with the first patient dosed and the recent IND clearance. Can you share any feedback on your engagement with FDA and maybe just some of the thought process behind running the larger Phase II program in parallel with the ex U.S. open label program?

Sure. So we can't share much about discussions, but perhaps what we can do is talk about how we ended up opting for superiority study. Jeff, why don't I turn that over to you?

Sure. Yes. Thank you, DA. So the thought process behind the design of the study was that it provides certain advantages. Superiority will allow us to design a smaller study, but also at the same time, perhaps have some longer-term commercial advantages there. The agency did give us feedback around trial design and did guide us in that direction. And from our point of view, regardless of what Phase III looks like, this study is going to be big enough and inform on the right endpoints to enable the correct design, whether that's a confirmatory trial that confirms this design or whether we have to switch to a different endpoint. We believe that this is designed to inform all of this.

To your question about the Phase Ib study, we plan to run, as we discussed, both in parallel. And the advantage of doing that is that it's going to allow us to continue learning about tegoprubart. And it will also give us a way to continue to report data about the performance of tegoprubart in kidney transplant, while the larger study is running.

And the next question comes from Rami Katkhuda with LifeSci Capital.

Congrats on the recent updates. Two quick ones for me. First, to clarify on a previous point, is mean EGFR potentially an approvable endpoint in a potential Phase III study? Or are you still going to have to focus on kind of graft survival long term?

Sure. So Jeff, why don't I turn that over to you?

Yes, sure. Thank you. So as you're probably aware, the precedence in this space has been noninferiority in Phase III focusing on graft rejection and patient graft survival. The mean change in eGFR has not been used to support approval. But that doesn't necessarily mean that it can't be in the future. And so we -- our plan is to look at the data we have and keep engaging with the agency. And like I said, on response to previous question, we'll be ready with the data from this trial, whichever pathway that takes us there.

Got it. That makes a lot of sense. And then tacrolimus is obviously nephrotoxic as [ we've talked on the past ], but can you quantify how much the treatment using effect EGFR patients receiving a kidney transplant in the first year?

Yes. I can take that, DA. Yes, thanks. So it's variable, of course, patient to patient and also depends somewhat on the quality of the graft that they got. But looking at data sets from published data and from -- also from head-to-head trials with for example, the belatacept trial, the mean GFR in CNI-treated patients typically is lower and tends to decline. And the rate of decline again is different in different individual patients, but it is predictive. There's data showing that if the EGFR at 1 year is below a threshold of 50 ml per minute per body surface area, that is predictive of poor graft function in the long run and you can have graft loss. And the lower you go, the worse -- the higher the risk of that bad outcome. So it is predictive and it's not surprising because it's predictive, and it's used as a validated surrogate in non-transplant indications, right? If you look at the IgAN program, the ultimate endpoint is GFR and proteinurea is the surrogate that's reasonably likely to predict. And the reason that GFR is the ultimate endpoint is that it's known -- it's known as an effective stand-in for the clinical outcomes of dialysis and kidney failure. So it's not surprising that the GFR can predict that. And consistently, calcineurin-exposed patients do have lower GFRs and their GFRs decline over time.

And the next question comes from Matt Kaplan with Ladenburg Thalmann.

This is Raymond in for Matt. Congrats on getting the FDA on board for Phase II renal transplant study. Very impressive. Just wanted to ask if perhaps did you have your view of the Phase Ib that you already started? Did that change in light of interactions for the Phase II program?

Thanks for the question, Raymond. Let me turn that over to Jeff.

Yes. Thank you. So if I'm understanding the question correctly, you're asking if our thinking around the Phase Ib study has changed in light of getting the IND open for Phase IIa. Is that right?

Yes, I was wondering if there's potential maybe the FDA kind of evolve in their thinking perhaps.

Right. Okay. So I can't speak for the FDA and what they're thinking. But for us, it's -- nothing's changed. We are executing our ongoing trial. We think that, that trial is going to provide very meaningful data on the safety and efficacy in a pilot program for sure, but still very meaningful data on what tegoprubart can do in this population. And as I mentioned on the call, our intent is to add a long-term extension trial to the program, not just to the Phase IIa study, but would also allow for those Phase Ib patients have the opportunity to continue long term should they be so inclined and they're doing well. And this will allow us to gain additional information over time on durability and long-term outcomes in that sentinel cohort. And we're -- we're very committed to that patient population and the participants in that trial, nothing's changed for us with the new study also coming on in terms of -- with the existing study.

One addition, just to clarify, the Phase Ib is ex U.S. So while the Phase II is where the IND was just cleared the Phase Ib will remain ex U.S. And as you might recall, a year ago, when we went ex U.S. with the trial, the agency had asked us at that time to do a nonhuman primate study. So what's changed has been really the completion of that nonhuman primate study and then the agency clearing at our IND.

Okay. Appreciate that. And I guess just 1 more question on the islet cell program. [indiscernible] products on opening [indiscernible] website. I was wondering if there's any lessons perhaps from the Canadian site experience that you might transfer over, any insight would be helpful.

Yes. Yes. I mean it's a very fair question to ask, but it's a difficult one to answer because there was multiple circumstances that contributed to that not going the way we had hoped in Canada. And it wasn't just 1 thing that there was definitely an impact of COVID, there was also some changing almost geopolitical landscape and how islet cells covered in across Canada and changing dynamic of who is referred to the site. So there was a lot of different factors that contributed to it. It's a fair question to ask, but unfortunately, I don't have a great answer for you. There's not one great takeaway that we had that we're going to say, "Aha, if we do this different it's going to go better." We do feel very confident in Dr.[indiscernible] and the team at the University of Chicago, and we do believe it's going to go different there. But there isn't really one key takeaway that we've taken from that, that we can apply going forward.

To pick here what Jeff just mentioned. So here the focus is the site since islet-cell transplants are considered experimental procedure in the U.S., all of the patients that are going through the site are focused on getting an experimental procedure so that allows for a slightly different conversation to be had with potential participants in the study. And as well, it allows for some different coverage and a different role in terms of our being able to support the program versus a program where parts of the cost could have been covered by the Canadian authorities.

And this concludes the question-and-answer session. I'd now like to hand the call to the DA Gros, CEO, for any closing comments.

Thank you very much for your assistance, operator, and thank you all for joining us on today's call.

Thank you. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.