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

All right. Thanks, everyone, for joining us here on the Second Annual Guggenheim Healthcare Innovation Conference. I'm Vamil Divan, one of the biopharma analysts here at Guggenheim and joining us in this room next, we have the Eledon Pharmaceutical team. We did have one victim to some of the travel issues who is not able to join us, and that's the CEO DA Gros, but we do have Steve Perrin, President and CSO of the company. So we'll run through the story. And obviously, a lot of activity in the Eledon story over the last little bit here. Maybe before we dive to last week's data at ASN and kind of takeaways from that, just sort of for people less familiar with the story, give an overview on sort of how Eledon came together, the path to where you are now. And then we'll talk about last week and steps forward.

Sure. Vamil, thank you for inviting you Eledon to present today. So Eledon Pharmaceuticals is developing tegoprubart, an anti-CD40 ligand antibody focusing on transplant as a primary indications. There's a couple of reasons that. A lot of it's historical, and that blocking CD40 ligand has been one of the most potent ways to prevent transplant rejection in multiple species over time, including mice rats, nonhuman primates. And our goal is to replace tacrolimus or CNIs as is the cornerstone immunosuppressant transplant rejection. And we want to do that regardless of the type of transplant, be it heart, kidney, liver, cells where the organ came from, including both allograft as well as xenograft transplant.

Great. So maybe just to frame that, the opportunity, let's talk about tacrolimus, obviously been on the market for quite some time, a lot of challenges. Maybe you can talk through sort of the issues that tacrolimus poses to doctors and patients and how you're hoping to advance the care of these patients beyond that?

Sure. So tacrolimus was approved about 30 years ago in a non-inferiority study against the standard of care at that time cyclosporine, and it showed a better safety profile than cyclosporine did at the time. But tacrolimus, although it's a pretty good drug at preventing transplant rejection in the first 12 months, it has both immediate and long-term toxicities that make it very challenging from a health care perspective and doctors as well as for patients, including cardiovascular tox with increased hypertension. It has nephrotoxicity. So it's actually toxic and hurts the actual organ in the context of kidney transplant that you're trying to protect. Patients that have gotten other types of either organ or cellular-based transplants, such as cardiac and liver transplant, eventually see the same type of nephrotoxicity that one sees in a kidney transplant population. So nephrotoxicity is a significant side effect and a problem. There's also metabolic toxicities. It's toxic to the beta cells in our pancreas. And so about 20% to 30% of patients on tac end up getting new onset diabetes, which requires patient care for life and it's quite debilitating. And then finally, there's also a whole host of neurological toxicities that are associated with tacrolimus including brain fog and tremors, which are quite debilitating to patients, leading to compliance issues and longer-term risk of graft rejection post 1-year transplant.

Okay. Great. So you've had a couple big data readouts recently, the Phase Ib additional data from that back in August and then obviously, the Phase II. Last week maybe we walk through the program that you've developed here for tegoprubart and some of these data releases and we'll go from there?

Sure. So with our focus on transplant, our lead indications has been kidney transplant, driven by the fact that kidney transplant is the biggest market, the most number of transports that are done for kidney about 25,000 per year in the U.S. and about 25,000 in Europe. So that has been our main focus. We historically have been running several different parallel clinical trials in transplant, an open-label Phase I study that was initially mostly ex U.S. to understand how to integrate, tegoprubart into a CNI-free regimen with the rest of polypharmacy that's required to prevent transplant rejection. And then we launched a Phase II trial called BESTOW, about 2 years ago that was going to try to basically look and see if we could compete against tacrolimus in a superiority design, and if you want, I could go through the trial design in more detail if you want?

Yes, I think it would be helpful to frame that -- the design and then let's talk about some of the results?

Sure. So standard of care immunosuppression for the prevention of transplant rejection requires 2 different phases. There is a phase of induction therapy, if you will, around the time of transplant that usually is a high dose of methylprednisolone combined with ATG for T-cell depletion and T-cell control. Often, there's also prednisone that started around the time of transplant and then tapered down to a lower dose usually over the first month. And then standard of care has a tacrolimus dose it's industry a little higher. And then over time, they try to get to a lower trough level. The goal of the BESTOW study was to basically keep as much of the immunosuppression the same between the 2 arms as we could by replaced tacrolimus with tegoprubart as the cornerstone immunosuppressant to prevent rejection. The BESTOW study was a much bigger study than our Phase I study that I just described. It was a more global study. It enrolled about 120 patients total, randomized 60 per arm rolled in the U.S., Europe, Canada, Australia and Brazil. The primary endpoint, it was powered as a superiority design to examine kidney function that comparing a tac on to the tego arm, and it was powered to detect a 9-point difference between the 2 arms. And then for secondary endpoints, we collected things for the standard non-inferiority endpoint that's historically been used for approval of drugs in kidney transplant, including patient and graft survival, biopsy-proven rejection and then additional secondary endpoints around potential new surrogate endpoints, such as iBox as well as all of the serious side effects that I just mentioned for tacrolimus.

Okay. Great. So you presented the Phase II last Thursday. It feels like it's been a while since it came out but -- it's not less than a week. So you can talk through the results and then just sort of the feedback you received from the community at ASN?

Sure. So yes, we released our data last week at Kidney Week. Really exciting data from my perspective. I've been working on this drug for over 10 years, and I've been working on CD40 ligand for over 30 years. So it's been kind of a long road getting tegoprubart to this first great readout in a fairly large Phase II study. And the data exceeded all of our expectations for the most part, right? We have consistently seen some of the best kidney function that one has ever seen in the clinical trial with mean eGFRs in the high 90s, often in the low 70s in some of our cohorts in the Phase I, and we saw that again in the BESTOW study. The surprise that we got there was the tac arm performed significantly better than what we would have estimated historically. And we powered our study based on historical data, where most of the time, if you talk to doctors treating patients with tac or if you look at historical trials such as the iscalimab study, mean eGFRs on tac tend to be in the 50s -- mid- to low 50s. So we're surprised when tac came in at amino 66. So we missed the [ premier ] by 3 points. With that said, longitudinally, if you look at any time point in our study. And if you look at any subgroup, we pretty much beat tac across the line. In some of the subgroup analyses, we actually beat tac by as much as 10 points, including living donors. Patients that received poor quality kidneys as measured by KDPI. And if you start combining some of those parameters, the delta is actually got bigger and bigger. And if you actually stratify as a continuous variable across kidney quality with KDPI and living donor, it actually reached statistical significance in the study. Amazingly, we also hit a couple of other things that was quite exciting that you might not have expected how profound it was, but we actually hit the non-inferiority endpoint. The study was not powered to hit the the regulatory approved endpoint for transplant in 12 months, which is non-inferiority on patient survival graft survival in acute rejection, but we actually hit it even though the study wasn't powered to do so. And then the real big, big win was when you compare the safety profile for the 2 arms. I mean all of the toxicities that I described for tac actually showed up in a 12-month study. We saw an incredibly large delta in nuance of diabetes between the tac and tego arms. We saw hypertension imbalances with higher in the tac compared to the tego arm. We saw delayed graft function was a big component that we saw that patients post-kidney transplant is often sometimes takes your kidneys a while to start functioning and producing urine and you have to be on dialysis from that time frame. There is a significant delta on the duration in numbers of people that had delayed graft function on the tac arm compared to the tego arm. And the neurological outcomes were also quite profound where there was an incredible amount of tremors in the CNI arm compared to the tego arm.

Okay. I know you've only had this data for like 3 weeks now. So I'm just -- I think you're still going through the details. Is there anything in this population or the way the patient is managed, that could explain why the tac arm did better than what we've seen historically?

To your point, we're a couple of weeks into the data. But yes, we've had some clues and some of it is just the nature of clinical trials, right? Unlike real-world data where patients aren't managed as carefully in the context of a clinical trial setting, patients go into the clinic as often as they want. And we obviously paid for and manage this study, and we wanted doctors to give patients the best possible care that they could, but it was incredible to us how frequent visits often were in the tac arm compared to real world. And because they've been using this drug for 30 years, they have a very good understanding of how to manage and control the trough levels of tac exquisitely as long as they're seeing their patients often enough, which they did in our study. So that probably contributed to why there was very, very good kidney function on the tac arm compared to what you might see in real-world data.

Okay. So then maybe thinking about the data you have now, I think your next steps would be kind of analyzing it's more than getting in front of the FDA. So maybe you can just talk about what are the next steps? What should we expect to hear from the company next?

Yes. So clearly, the team is now transitioning post BESTOW to, next up, which is to design and launch and execute a Phase III study in kidney transplant. We've had some earlier dialogues with the agency to get some clarity about what that might look like, including that a single Phase III study would be sufficient. They've been guiding us for a long time that the endpoint we're at 12 months would be the non-inferiority endpoint that we've utilized for a long, long time in kidney transplant. And then as I mentioned, there is a new surrogate endpoint that the FDA is currently reviewing. It's called iBox. It was approved in Europe about a year ago as a secondary endpoint. But the consortia that's been promoting the utilization and approval of iBox is trying to guide it a little bit differently here in the U.S. where they're advocating for a subset of the iBox components, which I could describe to you, if you'd like, called abbreviated iBox, could be utilized as a co-primary end point alongside the composite endpoint for approval, which expands the label, if you will. I mean, it's kind of like taking -- we call it, 2 bites of the apple. You don't have to hit your iBox as an endpoint to to hit your non-inferiority for approval. But if you do, I can give you some better details on your label post approval.

Okay. Maybe one question here, just obviously, from a market reaction to the data on Thursday was pretty negative. What do you think is the disconnect in terms of what -- like what, based on your conversation with investors before and after relative to your expectations and kind of -- it sounds like pretty positive feedback from the kidney community what do you think the investors are missing?

So the -- so obviously, we have a lot of different constituents. The doctors and nephrologists at the meeting have been incredibly excited about our data to the point that the inbounds from them have been pretty incredible. There's also a great pod-cast that was conducted post ASN, if you haven't listened to it, that really summarizes a lot of components of the meeting, but because we we're a late-breaking abstract. Starting at about a minute 12 out of that 1-hour pod-cast, 3 different KOLs talk about our data and how remarkable it actually is from a safety perspective in particular. And how exciting that could be for them and for patients. It's definitely worth listening to. But safety alone is something that people have really, really focused on the -- people I think have been incredibly surprised at how good our safety was at 12 months compared to tac. And people know that those toxicities that I've described associated with tac are cumulative. You're going to see them accumulate year after year after year, and we've seen that in other studies. So I think that, that was one of the most exciting pieces. What I think the investment community missed a little bit is -- they have -- they thought that we had beat tac in the superiority component of our study. And that really was just the primary endpoint in a Phase II study that we could have had safety be the primary end point. We kind of shot for the fences on that outcome. And if tac didn't over-perform and behave more like historic, we probably would have hit it. But I think what the investors didn't do is go past the tagline that we missed our primary endpoint. We hit the non-inferiority endpoint, and we really hit a grand slam home run on all of the safety pieces.

Okay. Okay. Great. So let's -- looking beyond that a little bit, that as we think about the opportunity moving into Phase III, can you just talk about sort of the commercial dynamics here that you have to think about of the company. I think the other thing that, as we've talked to people about the Eledon story over the last year, the last launch in kidney transplant was belatacept, which didn't do quite as well as people were expecting. So your thoughts on belatacept, sort of maybe why it didn't sort of become the blockbuster people thought it might be? And then how would tegoprubart be a different outcome?

Sure. So I mean, one thing with -- -- so bela is a good drug, right? If you look at the bela data that's been published in the literature, the 12, 3-year, 7-year data for bela looked quite striking. It was approved 15 years ago. At that time, one of the disconnects I think, was that people didn't understand that eGFR was the best long-term predictor of graft function. At that time, there was a conception that biopsy-proven rejection rates was actually the best predictor. And we now know that there's a lot of data to suggest that actually BPAR rates don't have anything to do with predicting long-term [ graft ] function. And that's one of the reasons why it's not a component of iBox. When bela launched, their goal was to launch on safety for one thing. And second of all, the study because of the timing on when BMS launched that study, they actually were not comparing themselves to the approved standard of care, which was tacrolimus. They actually went against cyclosporine, which tac had beaten in that non-inferiority study. So I think those complicated the launch a little bit. And then I think the third piece was on the safety side that had a couple of minor hiccups, if you will. It has a black box in liver transplant because when they went into their liver transplant studies, they saw some deaths and it also had a higher incidence of PTLD. And we still see that today. It's not real common, but it's something that happens. And that's scares people, which is probably why bela only has about an 8% of de novo kidney transplant market share.

Okay, let's go beyond kidney. As you mentioned, the goal would be for all transplant potentially. So you do have the islet cell program going on with the University of Chicago. Maybe you can talk about islet cell and then other opportunities you have beyond de novo kidney?

Yes. So our second focus has been both islet cell and xenotransplant. In islet cell we have an ongoing study as an IST, as you mentioned with Dr. Rakowski at University of Chicago. He's been fairly outspoken about the data as has the diabetes community. He got 5 of the 6 patients off exogenous insulin very quickly after their islet cell transplant. It's a pretty minimal immunosuppressive regimen compared to what we see in kidney transplant because protecting cells doesn't require quite as much immunosuppression and tego is really the foundation and cornerstone of that. Historically, islet cell transplant has not been well adopted in the patient community because no one wants to go and get an islet cell transplant and basically swap out their diabetes for the toxicities associated with tac. And so we think that this is an amazing opportunity. Our goal here is to facilitate Dr. Rakowski and supply drug, so we can get 9 patients enrolled. Once we have about a year of data on those 9 patients, we intend to go to the agency and start to discuss what a Phase I/II/III strategy for approval of tego in the prevention of islet cell transplant rejection would look like. There is some guidance out there that what they've guided to Vertex as well as to cell trans. So Vertex has their terminally differentiated islet cell that are -- I think they completed enrollment of their Phase III recently. And then cell trans got approval about 2 years ago for cadaveric islets. They got approved on about 22 patients of data and Vertex's guidance has been 48. So we think we'll be somewhere in that frame, but we want to take that 9 patients worth of data, which we're quite hopefully be quite excited about and go and get some guidance from the agency on what a registrational type study might look like in islet cell transplant.

Okay. And the latest around xeno?

So xeno transplant, as people know, has made exciting progress in the last couple of years. If recently, unfortunately, we had a minor setback with the person that probably had the longest kidney transplant, which was an eGenesis kidney that was on tegoprubart in several other immunosuppressive medications made it out about 10 months post transplant. If you would ask me 1.5 years to 2 years ago that we would have somebody go out that far on a xeno-kidney transplant, it probably would have last and they actually did quite well. We still have a third patient that National has done that still has a viable kidney and it's doing well. And what's happening now, I think in the community with the approval of United Therapeutics IND path towards approval that's being run primarily right now out of NYU. And eGenesis also has approval for their path forward in kidney transplant xenotransplant. I think we're going to see the clinical trial protocols really start to add some better constraints about what we're doing with patients as far as what type of patients we can enroll how healthy they are. The compassionate use patients were patients that were pretty sick. I'm hoping that as we start launching the clinical studies next year, rather than the passionate use studies, we'll see some good progress on how to utilize xeno kidneys in the context of tegoprubart and the other immunosuppressive drugs to prevent rejection.

Okay. Great. So maybe a last couple of questions I have. One is sort of the competitive landscape. We get this question a lot too, because there are other companies with CD40s, CD40 ligands. What are you seeing out there competitively in terms of -- it seems like a lot of the CD40 and other indications. But just what are you seeing in the transplant space from competitors?

So right now, we're the only company that's in transplant for the prevention of de novo rejection with a sponsored study for blocking CD40 ligand. Obviously, the other competing molecules from Sanofi, Biogen, Amgen are focusing on the larger autoimmune indications, if you will, with Sanofi focusing on MS, Biogen Idec -- Biogen UCB rather just reported positive Phase III data about a year ago in lupus and Amgen's reported positive Phase II data in Sjögren's syndrome in RA. I think the exciting thing about this target with the competitors and with our drug is after 30 years of people wondering if CD40 ligand was a validated target and if the check box there is yes. It's clearly working in multiple indications. With our primary focus on kidney transplant and we're the only ones in transplant, I think we have a great opportunity to really make an impact and transform immunosuppression for transplant medicine in the next few years.

Okay. Great. So maybe last minute or 2 here, capital position? I know you're sort of in the middle of this raise now this week. Can you just share whatever you can in terms of your current position? What's your runway? And then tied that, what are the next catalysts we should look for within that runway to investors to be aware of?

Sure. So as of September, I think we've reported that we have about $90 million in cash. As you mentioned, we're in the process of closing a raise this week, which we're hoping would extend that cash runway out to Q1 2027. So that gives us a little bit more runway compared to what we would have had just with the $90 million in cash for September. What we're guiding for, for next year for catalyst would be clear regulatory guidance on all 3 of our indications. So have an end of Phase II meeting with the agency about what a Phase III trial would look like in kidney transplant. So that we can execute and launch that study by the end of next year. to get clearer guidance beyond what an islet cell registrational study would look like so that we can transition our investigator-initiated study with Dr. Rakowski into more of a multi-center islet cell transplant study, if you will, heading towards what might be a registrational study. And then finally, eGenesis announced that they got FDA approval on what an IND would look like for kidney xeno transplantation with 33 patients of data. Tego is the cornerstone of that immunosuppressive regimen. So we need to go to the agency and basically articulate what the approval plan would be for tegoprubart as part of kidney transplant rejection.

Okay. Sounds great. I'd agree with you on the xenotransplant comments, like the progress we've seen there is pretty remarkable over the last couple of years and interesting that eGenesis has chosen tegoprubart to be there, the backbone there. So thanks so much again for attending the conference. We'll see how things progress here over the next little bit, we'll watching closely.

Thank you. Appreciate it.