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

Good afternoon, ladies and gentlemen, and welcome to Eledon Pharmaceuticals First Quarter 2023 Earnings Conference Call. [Operator Instructions]. This call is being recorded on Thursday, May 11, 2023. I would now like to turn the conference over to your host, Paul Little, CFO. Please go ahead.

Good afternoon, everyone, and thank you for joining Eledon's First Quarter 2023 Operating and Financial Results Conference Call. I am joined today on today's call by David-Alexandre Gros, Chief Executive Officer; and Steve Perrin, our President and Chief Scientific Officer; Jeff Bornstein, our Chief Medical Officer, is traveling today. Earlier today, Eledon issued a press release announcing financial results for the first quarter ended March 31, 2023. 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 it is my pleasure to pass the call to Eledon's CEO, Dr. David-Alexandre Gros. DA?

Thank you, Paul, and thank you all for joining us today. We began the year by announcing our primary organizational focus on our kidney transplantation program and have since directed our resources and efforts to advance this program forward. We believe that tegoprubart, our anti-CD40 ligand antibody can address a significant unmet need in patients undergoing kidney transplants through its potential to prevent rejection, maintain high graft function and reduce the many toxicities associated with calcineurin inhibitors or CNIs. We believe there is a profound urgency for new treatment options to benefit patients receiving solid organ transplants and kidneys, in particular. According to the United Network for Organ sharing, there are now over 25,000 annual kidney transplants in the U.S., the most in history and yet the standard of care first-line chronic immunosuppression for this growing market has not changed since the approval of tacrolimus in 1994. Our goal is for tegoprubart to ultimately replace tacrolimus as the standard of care post-transplant immunomodulator, significantly reducing the broad number of side effects associated with that drug and thus improving graft function and survival. This in turn should result in fewer patients requiring repeat transplants, thereby freeing more kidneys to be allocated to first-time recipients and thus allowing more people to receive the kidneys that they need to live. At the end of March, we presented open-label data from our ongoing Phase Ib trial evaluating tegoprubart transplantation at the World Congress of Nephrology. Our initial 3 participants do not show any evidence of acute rejection at measured time points, which is important since most rejections in the first year occurs within the first 90 days post-transplant. In addition, we observed strong graft function in our participants with [ mini GFRs ] above 70 at measured time points as far out as week 31. These results were highly encouraging and suggest early clinical proof of concept for tegoprubart in this indication, and we look forward to reporting updated data from this study at a medical meeting in the latter part of the year. In addition to the clinical progress, we made this year, we also strengthened our balance sheet through the execution of a private placement financing of up to $185 million, including $35 million upfront. Subject to achievement of our milestones, this financing will enable us to execute our kidney transplant clinical development plan, including our Phase II Vista trial in kidney transplantation. We were particularly proud to have this financing co-led by one of our historical investors, BVF Partners as well as by new investor Arma’s Capital. Of note, Sanofi, the global pharmaceutical company also participated in the financing, as did a number of private individuals and families that believe in Eledon's missions and have done so and invested in our company since our early days. With the financing completed, we are now laser-focused on execution. We continue to enroll our Phase Ib trial in which we have now enrolled 6 participants and expect to initiate our Phase II BESTOW trial midyear. With that, I would now like to hand over the call to Steve Perrin, our President and Chief Scientific Officer, to provide more details on our development programs. Steve?

Thank you, DA. I'd like to begin by touching upon the opportunity we see in kidney transplantation and why we made the decision to focus our resources on the development of [ tego ] for this indication? Kidney transplantation is a growing space, which has had limited innovation in decades. The National Kidney Foundation estimates that 660,000 people live with kidney failure in the United States and that of those, there are over 100,000 people on the kidney transplant waiting list with about 5,000 individuals dying annually while waiting for a transplant. Since the average disease donor transplanted kidney only functions for an average of 10 to 12 years, and the mean age of transplantation is 50 years old, most patients will require multiple kidney transplants if they are to live a normal life span. Therefore, the need has never been greater to pursue a new treatment option that can prolong the functional life of a transplanted kidney. That is our goal, and we believe this can be achieved with Tegoprubart, allowing transplanted kidneys till the last -- the duration of recipients lives and thereby freeing up precious kidneys so that a greater percentage of patients on the waiting list can receive a kidney. As DA mentioned, we reported open-label data from our ongoing Phase Ib kidney transplant study at the World Congress of Nephrology in March at the time of data submission, 3 patients have been enrolled in the trial, which has sites enrolling in Canada, Australia and the U.K. To evaluate signals of clinical efficacy, we reported the estimated glomera filtration rate, or EGFR, of each patient at specified time points. From large retrospective studies conducted in transplant recipients taking C&Is, we know that a 50th percentile eGFR falls around 50 during the first-year post-transplant. 12-month eGFR has been shown to be the most significant single predictor of future graph failure, and as EGR values decrease the risk of graft failure and hospitalization increases exponentially. Importantly, studies have shown that the 12-month eGFR is correlated with eGFR values seen as early as 90 days. And thus, we believe that the eGFR data we shared at 90 days is highly relevant and potentially predictive in determining graft function and outcome. At the time of our data submission for the conference, we had 3 subjects enrolled in the trial. Results from the first 3 participants demonstrated no incidence of acute rejection at 56, 167 and 232 days, respectively. Graph function was very good in all 3 participants with the participants having eGFRs of 54, 85 and 77 at the latest available time point of 49 154 and 217 days, respectively. Given the correlation between eGFR levels at 90 days and 12 months, we feel encouraged by these early results and their potential to translate into to longer-term graph functionality. Long-term graph lunching is critical but not the only part of meaningful outcomes we are looking for in kidney transplant recipients. The current standard of care calcineurin inhibitors help preserve graft survival, but they are also associated with significant side effects, such as hypertension, dyslipidemia, nuanced of diabetes and tremors. Moreover, Research shows that 10-year post-transplant, almost all transplanted kidneys will demonstrate evidence of CNI induced nephrotoxicity. We believe based on the evidence generated to date that tegoprubart has the potential to reduce or even potentially eliminate these side effects while also providing improved graft function. Turning to the safety results we observed in the study, were among the 3 participants tegoprubart showed good tolerability, especially among a difficult-to-treat population. None of the participants experienced acute rejection and there was no evidence of nuanced diabetes after transplant or any impact on glucose levels and 2 participants without diabetes at baseline. One participant was discontinued from the study on day 55 after developing BK viremia, a common occurrence following a kidney transplant, which occurs in 20% or more of transplant recipients. An additional participant elected to discontinue from the study after 33 weeks, reporting mild alopecia and mild insomnia, which the investigator did not attribute to tegoprubart. The adverse events continue once the patient was switched from tegoprubart to C&Is. We continue to make progress with this ongoing trial and have since enrolled an additional 2 participants who both remain on study. We expect to report updated data at a medical conference later this year. Building off our results from the ongoing Phase Ib trial, we remain on track to initiate our randomized open-label Phase II BESTOW study to assess the safety and efficacy of tegoprubart compared to tacrolimus and the preservation of allograft function after kidney transplantation. 120 participants will be randomized 1:1 to receive either tegoprubart every 21 days or twice-daily oral tacrolimus. The primary endpoint will compare the mean eGFR at 12 months for participants receiving tegoprubart versus tacrolimus. Secondary objectives will include safety and tolerability, participants in graft survival, biopsy proof and acute rejection and the incidence of new onset diabetes mellitus after transplant. I'd like to conclude by briefly covering our IgAN program, where following our announcement to deprioritize the program at the beginning of the year, we continue to collect safety data from the patients previously enrolled to provide additional insight into takeout safety profile. The data we presented at WCN from 16 patients in the high-dose cohort of 10 mg per kg every 3 weeks, showed tegoprubart to be safe and well tolerated with no serious nor severe adverse events reported and no early discontinuations. 4 participants had completed at least 24 weeks on treatment and 5 others completed at least 12 weeks. We are encouraged by the safety profile tegoprubart continues to display. And to date, we have now dosed approximately 100 human subjects across multiple disease indications. Given the de-prioritization of the IgAN program and having now generate key safety insights in this population, we are now winding down all IgAN study activities at our sites, and we anticipate winding down the vast majority of our IgAN activity and spend in the second quarter of 2023. With that, I'd now like to turn the call over to Paul for a financial update.

Thank you, Steve. The company reported a net loss of $10.8 million or $0.75 per share for the 3 months ended March 31, 2023, compared to a net loss of $9.9 million or $0.69 per share for the same period in 2022. Research and development expenses were $8.1 million for the 3 months ended March 31, 2023, compared to $6.6 million for the comparable period in 2022, an increase of $1.5 million. The increase was primarily due to higher clinical development expenses primarily with external CROs of $2.1 million and an increase in personnel costs due to increased headcount. The increase was partially offset by decreases in stock-based compensation, manufacturing and consulting expenses. General and administrative expenses were $3 million for the 3 months ended March 31, 2023, compared to $3.2 million for the comparable period in 2022, a decrease of $200,000. The decrease was primarily related to the lower stock-based compensation costs. Earlier this month, we announced the entry into a definitive securities purchase agreement with select health care investors that will provide up to $185 million in gross proceeds through a private placement. The purchase agreement included an initial upfront of financing of $35 million and additional aggregate financing up to $205 million, subject to achieving clinical development milestones, volume-weighted share price levels and trading volume conditions plus up to $45 million upon the full exercise of warrants being issued in connection with the agreement. The financing was led by BVF Partners at Arma’s Capital and includes participation from new and existing investors, including the global pharmaceutical company, Sanofi. Eledon ended the first quarter with approximately $46.5 million in cash and cash equivalents. With that financial update, I'll turn the call back over to DA.

Thanks, Paul. I am proud of the progress that Eledon has made in the early part of 2023 and feel we are now well positioned to make significant strides in our evaluation of tegoprubart as a potential much-needed replacement for CNIs in kidney transplantation. We are highly encouraged by the data generated to date in our ongoing Phase Ib study and look forward to both its continued enrollment and to providing a clinical update later in the year. Finally, following our financing, we now have a well-capitalized path to launch and execute our Phase II BESTOW trial, while we continue to report data from the open-label Phase Ib study in parallel. Operator, please begin the Q&A session.

[Operator Instructions] Your first question comes from Pete Stavropoulos from Cantor Fitzgerald.

I want to congratulate you on the successful financing and happy to see that the tego kidney transplant program is moving forward. So one of your investors stood out when I saw the press release for the financing, which was Sanofi. It's a well-established -- it has a well-established kidney and transplant franchise. So well versed in the space. Can you provide any color on those interactions? And what do you think drew company to invest in this molecule in program? Do you think it was the totality of the data generated with tego to date across all programs? Or was it kidney-specific data?

In terms of Sanofi, we obviously appreciate having them as a new investor. As you mentioned, they know the space quite well. They've also had said in the past that in terms of the way they viewed their interactions or their development in the space, they were not looking at kidney transplantation. I think they looked at us and saw a good investment opportunity. This was an investment that came though in the same way as other investors. So Sanofi did not get any type of rights beyond or in any way different from what other investors received in this financing.

So I have a couple of questions on the Basal study. The data presented for tego at the Kidney transplant World Congress of Nephrology, there was 1 patient who had BK viremia. Can you sort of touch on how common BK viremia is in kidney transplant? And how is it going to be handled in the Basal study? Will it be up to the investigator to withdraw the patient from the study? Or will there be some type of protocol in place?

Steve, I'll turn that over to you. Yes. BK viremia Pete is -- it's a great question. BK viremia is pretty common. It's common across all polypharmacy that is associated with the prevention of transplant rejection. It occurs in 10% to 20% of studies. And it does vary from site to site, country to country, and it does vary regimen to regimen. The standard practice for dealing with the viral load with BK viremia is to wean people off the immunosuppressant drugs that are required to prevent rejection and that's done at the discretion of the PI depending upon viral load. And then there's this balance between letting the immune system of the transplanted individual fight back the viral load while still trying to protect the organ from rejection. And obviously, that is up to the investigator on a site-by-site basis on how they want to manage that.

I don't know if you've disclosed, but is there opportunity to sort of wean off of tego and then sort of put them back on as time progresses?

So being an antibody, typically, administration, as you know, is every 3 weeks and so if somebody's viral load creeps up shortly after dosing, the investigator has a period of time where they could try to manage other immunosuppressant's to see if they can manage viral load and get it back down prior to the next infusion. There is some flexibility on if you wanted to delay the next infusion of tego provide a little bit. But as we know with biologics, you don't want to pause an infusion for too long due to increased risk of antidrug antibody responses. Again, we'd be in close dialogue with PIs if that's the route that they chose to take. And we would give them guidance based on what we know from our preclinical and clinical data to date on how to manage that.

Another question again on the Basal study. One of the goals will be to reduce steroid use, and there will be a steroid tapering from my understanding until they're completely remove from each of the patients' treatment regimens. Can you just talk a bit about like the clinical benefit it may be still on these patients, tapering them off? And how do you plan to capture that benefit?

The steroids, Pete, as you point out, another great question, is the primary difference between our Phase Ib study in the Phase II BESTOW study, where in the BESTOW study, they will start weaning participants off steroids fairly quickly have to transplant, and they will be off steroids by 6 months. This is not an uncommon practice. Many sites globally do a complete steroid taper, and there is variability among sites that do that. The biggest thing that's beneficial here to patients is, again, the side effects of steroids can be significant. And so getting patients off as many of the immunosuppressant drugs in a cocktail is critically important for managing side effects. And so we think it's a potentially great upside that we feel that with tego for that on board, we can completely wean people off of steroids in a fairly rapid banner by 6 months.

People don't like to be on steroids-- it's DA. People don't like to be on steroids long term. They've got just impacts in terms of blood sugar control, moods, ability to sleep a potential hair loss. So removing -- if we're able to allow people to taper completely off steroids, that would be another win on top of for moving the CNIs for patients.

And then in terms of the clinical study, any secondary or exploratory end points that you're going to use to sort of capture that benefit?

I don't think Pete, there's any exploratory endpoints that specifically deal with the tapering of steroids but obviously to be captured as part of the safety profile of tego, much like in our other studies.

We're going to look at removing steroids from both arms. So it will be -- it would be comparative. But in terms of the steroid specific side effects, one would see the benefits if one compares the data at historicals.

And again, congratulations on the financing and all the progress.

Your next question comes from Thomas Smith from SVB Securities.

A couple of questions on our end. I guess first on the Phase Ib study. You mentioned that you've enrolled 6 patients to date, and you're targeting a medical meeting later this year for an update. I was wondering if you could elaborate on some of the venues you're considering? And just walk through sort of your expectations in terms of how many patients and amount follow-up you think you could have by then.

So we'll look at a medical meeting towards the end of the year. There are a number of kidney meetings for this, including Kidney Week, where we might be able to present since we already have 6 patients, as we just mentioned. Even without counting potential new patients that come into the study that would mean that all of the patients would have over 90 days would most probably have over 90 days on drug by that point. So it would go from somewhere in the 90-day time frame all the way out to a year or so.

And then maybe just following up on the Sanofi investment. I understand they are pursuing solid organ transplant at this point for their CD40 ligand frexalimab. But maybe if you could just remind us of the differences between tego and frexalimab? And then just thinking a little bit bigger picture. I was wondering if you could comment on sort of the broader strategic interest in the space and how you're thinking about partnerships or other business development opportunities at this point?

So the 2 molecules are at both ourselves and Sanofi have an anti-CD40 ligand and that we're using a full antibody approach. And so the 2 molecules are probably -- if you look at the broader competitive landscape, the 2 that are the most similar, the difference has really been around strategy and where we've each company has chosen to focus. We've now chosen to focus on transplant. Sanofi's focus has been on larger population indications, including [ cogens ]. -- they're running trials in MS and they've discussed rheumatoid arthritis before. So that's the difference in terms of the approach that we're taking.

I was just wondering if you could comment on sort of the broader strategic interest in the space and how you're thinking about business development and partnership opportunities at this point?

So in terms of broader interest in the space, I think there are a lot of companies that are interested in the broader immunology space. It's become one of -- a key area of focus for both smaller biotech's as well as large pharma. From our perspective today in terms of business development, are not looking to in-license. That wasn't one of the reasons why we did the deal. And we now have the capital we need, if we hit our milestones to be able to take this drug and develop it all the way through to getting Phase II data and beyond.

So that's very much what we're going to be focused on, which is executing our trials and continuing to generate data with tegoprubart.

Your next question comes from Rami Katkhuda from LifeSci Capital.

Congrats on update. A couple of quick ones for me. I guess, first off, are you guys using the iBox scoring system in the BESTOW study?

Yes, that's being evaluated as an exploratory endpoint. Great question, Rami. We're obviously really excited that agencies are starting to look at alternative endpoints like iBox, which could be really transformational as far as helping to assess early-stage clinical trial development and the ability to estimate long-term graft function and survival. So great question.

And Rami, just to add to what Steve said, we're doing it as part of our collaboration with CareDx. So if you remember, we announced a collaboration with CareDx, and that covers a number of biomarkers and algorithms, including iBox.

And then going off the previous question, with recent regulatory successes in the ALS field, excuse me, can you touch upon potential routes to make cakes to continue development of tego in that indication?

So right now, this financing is going to allow us to advance tegoprubart in transplantation. And that's what we are primarily focusing on. We'll continue to look for other ways to potentially finance the tegoprubart and ALS as we said before, and we believe in order to advance tegoprubart/ALS that we would like to do is a trial that would be well designed and thus have the best possible chance of success to do a smaller trial, potentially one that would require less money, we don't think would help fundamentally answer the question of whether tegoprubart would work in ALS and as such wouldn't be the best solution for patients and for the field. So we're focused on transplant. We'll continue to look at ways to advance to tegoprubart and ALS. And if we do so, we do it in a way to have a trial that would be substantially set to truly be able to answer the question of how well tegoprubart is working in that indication.

Your next question comes from Vernon Bernardino from HC Wainwright.

Congrats on bolstering the balance sheet and I appreciate the presentation on the kidney transplant. This question is less more to do with that data, and I apologize for the music. So hopefully, you can hear me well enough. But and perhaps more to do with a study with tegoprubart in IgAN -- given what you perhaps see a side effect biomarkers that are looked at and perhaps end points you're considering for -- again, [indiscernible] with the kidney transplant but perhaps a future study with in IgAN, -- is there anything that is informing you that targeting anti-CD4 ligand as a strategy to perhaps replace calcineurin inhibitors is informing you that targeting anti-CD4 Ligand is working. Because as you know, with the southern inhibitors, you've seen that as those goes up, so the side effects for those this efficacy, except for perhaps a bit of an exception that we've seen with locker. So I was wondering if anything there you've seen so far? And I know the patients -- the number of patients have been low so far, so you don't have a concrete idea about how to answer this question. I was wondering if there's something you're seeing now that's perhaps in following you a future study and whether targeting anti-CD40 ligand is turning out as you expect. Sorry, for the loan preamble.

Vernon, thank you for the question. Steve, I'll turn that over to you to talk about what we're seeing and what we’ve seen in terms of biomarkers as well as how you interpret the data that we've generated to date with regards to tegoprubart efficacy.

We've actually gleaned an amazing amount of data from very diverse indications to date in a very short period of time, as you know. We demonstrated very robust target engagement in our ALS study, showing that we knock down both T and B cell markers of target engagement in a very dose proportional way. That translated into functional decreases in over 20 pro-inflammatory markers that sit downstream of stimulatory signaling. So again, very good functional data showing that tegoprubart modulated the immune system in that study, and it did so in a very rapid way after the first infusion, which was quite exciting. Globally, across all of our indications, the safety profile of tego continues to look very exciting and very encouraging. We haven't seen any serious adverse events in any of our studies. And these are patient population, as you just suggested that these patients in transmit and ALS are very sick and yet the drug has shown very good safety profile at this point and very predictable pharmacokinetics as well. So that opens up an opportunity when you kind of summarize all of that data in total that as we had hypothesized in general, going back over 30 years of data that blocking this pathway really has an opportunity in multiple autoimmune indications as well as in the transplant indications that we're pursuing.

Do you plan to present any -- even if its preclinical data that continues to validate the approach.

I mean on the preclinical side, we have multiple collaborations going on both with allograft transplant experiments as well as in the allograft transplant experiments as well as xenograft transplant spaces. We've mentioned, we have a collaboration with eGenesis that's ongoing. So we anticipate that as we continue to execute on those primate studies, both in allograft and xenograft that we will present them at some point at scientific conferences.

Your next question comes from Matt Kaplan from Ladenburg Thalmann.

Congrats on all the progress. I guess a question I was thinking I was reading -- I read this recent year times ago about transplantation, very compelling. And I was wondering how are doctors and patients responding to the initial data in your renal transplantation program? And is that potentially building more awareness for your Phase II trial? And I have another question.

That is a wonderful opinion piece that was published in the New York Times and I'd encourage really everyone on the call, if you haven't had a chance to read it to do so. Steve, let me turn it over to you in terms of awareness, the need and the receptivity that physicians that you've been talking to have had to our data.

The receptivity has been absolutely amazing. I mean there's a long history as we know of blocking this pathway going back 25 to 30 years with many different antibodies in preclinical models, in particular, but the field was set back in the early 2000s with the first-generation antibodies -- and yet to this day, blocking this pathway and in blocking CD40 ligand in particular, has been the most potent way to prevent transplant rejection. It was also a very, very potent strategy to ameliorate autoimmune diseases in multiple different models. So the second-generation antibody tegoprubart that we now have clinical data for us has really generated an incredible amount of excitement as we've reached out to potential sites for the BESTOW study and doing feasibility and the PIs have been very impressed with the eGFR data that we have to date, albeit on a handful of patients, but folks have been very excited because of the opportunity to reengage this pathway after so many years.

I guess other question. It might be too early to say, but with the kind of impressive data you really had so far and thinking about the BESTOW trial? And does the magnitude and duration of any potential EDR benefit or which might potentially dictate the path forward in clinically or regulatory?

Yes. So we obviously wouldn't want to show -- we're looking at eGFR and this is a superiority study. So we're going to want to see a statistically superior delta in terms of eGFR versus standard of care and the larger that delta is better. I would note that even small deltas in eGFR can make a difference clinically. So for example, we know that as early as 6 months if you attend point delta in eGFR means an 11% delta in the chance of a patient being post-transplant patient being hospitalized. Similarly, the lower the eGFR, the more likely the patients are to be hospitalized multiple times. And finally, of course, eGFR is associated with the risk of graft failure. So the lower the eGFR, the higher the risk of that kidney being lost. And that graph -- that increase is almost exponential, pretty much exponential once one has an eGFR that goes below 50 or 55, which is the mini in post-- in the year post-transplant. So if we would be able to move the needle in those patients by even only 10 points that would be very meaningful since we're looking at an exponential increase in terms of risk. Steve.

I appreciate that.

I was going to see if Steve wanted to add anything.

Yes, I agree. I mean even small differences in eGFR based on very large retrospective studies can really impact long-term graft function and survival. So even smaller differences will be very, very important.

And there are no further questions at this time. I will turn the call back over to Mr. Gros for closing remarks.

Thank you for your assistance, operator, and thank you all for joining us today on this call. Have a great evening.

Ladies and gentlemen, this concludes your conference call for today. We thank you for joining, and you may now disconnect your lines.