Entera Bio Ltd. (ENTX) Earnings Call Transcript & Summary

Good morning, and welcome to Entera Bio's Conference Call to discuss the interim 6-month results from the EB613 Phase II clinical trial and the financial and operating results from the second quarter of 2020. [Operator Instructions] Please be advised that today's conference may be recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Jon Lieber, the U.S. based CFO of Entera. Please go ahead.

Thank you, and welcome to the call. Joining me on today's call are Roger Garceau, our Interim CEO; Phillip Schwartz, our President of R&D; and Arthur Santora, our Chief Medical Officer. A press release announcing the interim 6-month bone mineral density data from the first 50% of the projected enrollment in the Phase II clinical trial of EB613, our oral human parathyroid hormone (1-34) in development for the treatment of osteoporosis and Entera's financial and operating results for the quarter ended June 30, 2020, was issued earlier today. For those of you who have not yet seen it, it's available on the Investors section of our website, www.enterabio.com. On our call this morning, we will share with you a business update and review of our financial results, which will be followed by a question-and-answer session. Before we begin our prepared remarks, I'd like to remind you that various statements we make during this call about the company's future results of operations and financial position, business strategy and plans and objectives for our future operations are considered forward-looking statements within the meaning of the federal securities laws. Our forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions and uncertainties. In particular, the Phase II clinical trial of EB613 is ongoing, and our conclusions from the interim data analyses may not be indicative of the final results from the trial. Furthermore, developments related to the COVID-19 pandemic continue to evolve, and the extent to which the pandemic will impact us in the future will depend on the duration and magnitude of such impact and the numerous factors that the company may not be able to accurately predict. These risks are described more fully in our SEC filings and are available on the SEC's EDGAR system and on our website. We encourage all investors to read our SEC filings. All of the information we provide on this conference call is provided only as of today, and we undertake no obligation to update any forward-looking statements we make on this call on account of new information, future events or otherwise. Finally, please be advised that today's call is being recorded and webcast. I will now turn the call over to Roger Garceau.

Thank you, Jon, and thanks, everyone, for joining the call this morning. I look forward to this and future calls, while I lead Entera Bio. Earlier today, we announced that we believe our exciting 6-month data from the Phase II clinical trial of EB613 in postmenopausal women with osteoporosis, or low BMD, along with our financial and operating results for the second quarter of 2020. The data we announced today represents an update to the 3-month biomarker data, which we reported from this Phase II trial back in May of 2020. This now includes 6-month bone mineral density data, or BMD data, for the first half of the subjects from the original 4 arms in the trial. To remind everyone, the trial was originally designed with a placebo group and EB613 treatment groups of 0.5 milligram, 1 milligram and 1.5 milligrams. Based on the interim biomarker data we announced in May of 2020, we added a higher 2.5-milligram dosed group in July of 2020. In the 6-month interim data reported today, EB613 appears to have a positive impact on lumbar spine BMD in a dose-dependent manner. While Art will provide additional color later in the call, I want to quickly summarize the data for you now. Based on the 6-month data, EB613 generated a main placebo-adjusted increase in lumbar spine BMD of 2.15% for the 14 subjects in the 1.5 milligram treatment arm as compared to the 16 subjects in the placebo arm. An additional analysis of BMD changes in all 613 treatment groups showed a significant dose-dependent trend and the percent increase in lumbar spine BMD. This further supports the decision we made in July to amend the protocol and add a higher 2.5-milligram dose group. The totality of the data generated to date from this Phase II trial supports the pharmacologic activity of 6 months free in osteoporosis, and we're very pleased with the interim results of Entera's first study evaluating EB613 impact on bone density. As a reminder, increases in lumbar spine BMD have been associated with fracture reduction in patients treated with subcutaneous PTH, and a change in lumbar spine BMD now is generally the accepted endpoint for regulatory approvals of novel PTH formulations. In July, we amended the protocol for the Phase II clinical trial to discontinue the 0.5 milligram and 1 milligram dose groups and add the 2.5-milligram dose group. This decision was based on the interim 3-month biomarker data, as indicated, we had not yet reached the maximum effective dose. While the data presented today support that decision, these results do not include any subjects from the recently added 2.5 milligram treatment arm. We believe the data from this dose-ranging clinical trial will be important to the future development of EB613, including the selection of the final dose to move into a potential Phase III pivotal study, which we are now targeting to begin late 2021 or 2022. Furthermore, the data we reported today, including the change in lumbar spine in the 1.5 milligram treatment arm and the trend analysis finding greater BMD increases in greater doses are highly supportive of the potential of the 2.5-milligram dose we recently added to the Phase II study protocol. Yes, the final 6-month data from this trial demonstrates that daily dose of EB613 of 2.5 milligrams is associated with the increases in lumbar spine BMD similar to that reported in published data from studies of currently marketed subcutaneous PTH. We believe that there may be a substantial market opportunity for EB613, obviously, subject to the successful outcome of any potential future clinical trials and the required regulatory approvals. The data we announced today, with a planned interim step in advance of the expected completion of enrollment of the Phase II study in the third quarter of 2020 and the final BMD and low market data for this study. Our assessment of the data today we shared with you includes feedback from leading outstanding outside clinicians that have designed and conducted many, many osteoporosis clinical trials. We totally have 131 subjects enrolled in our Phase II trial, up from 106 subjects as we reported back in July. Our enrollment is back on track, following a partial lifting of the COVID-19 restrictions. We believe the value proposition of EB613 is very strong, due to the fact that only a small percentage of patients with osteoporosis are actually treated due to cost, convenience and compliance challenges. The market research we recently reported points to a significant unmet medical need for an oral therapy that builds bones in this multibillion-dollar osteoporosis market. Operationally, we have continued to carefully monitor our expenses. Our current cash on hand is sufficient to support our planned operations into the second quarter of 2021. We also continue to entertain interest in our underlying technology platforms from a number of potential collaborators and partners. We have also continued to make good progress on EB612 for hypoparathyroidism. In our previously reported published data, we confirmed that oral PTH is effectively delivered into the blood stream and activates the PTH-dependent biological pathways in patients with hypoparathyroidism. Phillip will talk a little bit more about this later in the call. In addition to advancing our internal PTH programs, we also continue to support preclinical work in our collaboration with Amgen. We're pleased with the progress we've made there. We continue to work with Amgen to move the research and development program forward in accordance with Amgen's project plans and objectives. I'd like now to turn the call over to Dr. Art Santora, our Chief Medical Officer, to discuss the Phase II results of EB613. Art?

Thanks, Roger. As a reminder, the Phase II clinical trial is a dose ranging, placebo-controlled study in female subjects with osteoporosis or low BMD and is being conducted at 4 leading medical centers in Israel. Subjects were initially randomized to receive either a placebo or 1 of 3 doses of EB613, 0.5 milligrams, 1.0 milligrams and 1.5 milligrams. As Roger mentioned earlier, in conjunction with the evaluation of the interim 3 months data that indicated a maximum efficacious dose had not yet been achieved, we amended the protocol to discontinue additional enrollment in the 0.5 and 1.0 milligram dose groups and added a 2.5 milligram dose group. We were able to do this based on the safety profile of EB613 in both an interim analysis of the ongoing Phase II trial and other previously conducted clinical trials of EB613. Based on our amended study protocol, we anticipate enrolling a total of 36 subjects in the 2.5-milligram group, 31 in the 1.5-milligram group and 43 in the placebo group. When combined with the subjects previously enrolled in the 0.5 and 1 milligram doses, we expect the total enrollment in the Phase II trials to be approximately 160 subjects. Subject follow-up in the Phase II trial remained strong with 68 of the first 80 subjects randomized, completing their 6 months visit, even with COVID-19 restrictions that began earlier this year. In addition, there have been no serious drug-related adverse events in the trial. Finally, demographics of the subjects in this trial are consistent with other previously reported osteoporosis trials. As a reminder, this trial was designed to evaluate the effects of EB613 on multiple biochemical markers, including P1NP and osteocalcin, both bone formation markers, and CTX, a bone resorption marker at both 3 and 6 months and BMD at 6 months. Subject safety is monitored throughout the study through a standard set of safety assessments. The 6-month biomarker data are consistent with the 3-month biomarker data that reported in May, with no significant changes in any of these bone biomarkers after treatment with EB613 for 6 months versus placebo. Based on this data, treatment with EB613, our orally delivered human PTH (1-34), has a biomarker profile that differs from injectable PTH (1-34). However, of critical clinical importance, EB613 appears to have a positive impact on lumbar spine bone marrow density that is dose-dependent. While the increase in lumbar spine BMD in the EB613 1.5-milligram group did not quite reach statistical significance versus placebo, p-value was 0.08, it is a reasonable estimation of the potential treatment effect. In addition, a significant dose-related increase in lumbar spine BMD was found when BMD changes at all 3 EB613 groups and the placebo group were analyzed together. Taken together, these are very encouraging results. As expected and consistent with the published data from the studies of subcutaneous teriparatide, an analysis of BMD of the total femur and femoral neck BMD sites did not show a significant effect from treatment with EB613. Increases in and maintenance of BMD are widely accepted by clinicians throughout the world as indicators of an overall improvement of osteoporosis during PTH treatment. The change in lumbar spine BMD is a recommended Phase III study efficacy endpoint for a novel PTH (1-34) formulation intended to treat osteoporosis and developed using the FDA's 505(b)(2) regulatory pathway. A fracture endpoint trial is not required because subcutaneous PTH (1-34), generically named teriparatide for injection, has been shown to reduce the risk of fracture. Thus, we believe that the Phase II study is now well-designed to determine the effect of EB613 daily for 6 months on lumbar spine bone mineral density over a 0.5 to 2.5 milligram dose range. I will now turn over the call to Dr. Phillip Schwartz, our President of R&D, to share some updates with you on EB612 and our Amgen program.

Thanks very much, Art. Good morning, everyone. I would like to provide you with a brief update on EB612, our orally delivered product candidate for the treatment of the orphan disease, hypoparathyroidism. As a reminder, our goal is to treat patients' acute symptoms while normalizing serum and urine calcium levels and minimize the adverse effects of long-term calcium supplements and active vitamin D use. We are developing EB612 to be used as a first-line therapy that would be applicable to patients with different levels of disease severity. We have continued to conduct additional formulation work on EB612, including the identification of enhancements that we intend to evaluate in preclinical models, which, if successful, may provide the support to advance this program into a potential Phase IIb or Phase III clinical trial in 2021. As part of this work, we are evaluating the possibility that twice or 3x daily dosing may mimic normal endogenous pulsatile PTH secretory activity, and therefore, result in a better PK/PD profile. If we are able to extend the overall exposure and AUC, area under the curve, for each dose and reduce the impact of food on the bioavailability, we may be able to increase the calcemic effect while also limiting the risk of elevated urinary calcium. To remind you, elevated urinary calcium is strongly associated with many morbidities of hypoparathyroidism. Our collaboration with Amgen for the development of an oral anti-inflammatory agent has continued and we are pleased with the progress we have made to date. We are continuing to support the collaboration, and Amgen has completed several studies that have included the evaluation of different formulations of their drug. We also continue to focus on the development of our platform as it relates to the evaluation of new APIs and believe that these efforts have the potential to generate value through either additional validation of our technology platform and/or through potential business development activities. In the process of developing the technology for other molecules that are proprietary to potential partners, we continue to identify new technologies as well as enhancements to our existing platform. We look forward to this work potentially leading to additional patents and expansion of our capabilities. I'll now turn over the call to Jon Lieber, our U.S. CFO, to cover the financial results.

Thank you, Phillip. Revenue for the 6 months ended June 30, 2020, was $94,000 as compared to $74,000 in the first half of 2019, with revenue in both years attributable to the R&D services provided to Amgen. Cost of revenues for the 6 months ended June 30, 2020 and 2019 were $73,000 and $62,000, respectively and were comprised of salaries and related expenses in connection with the R&D services provided to Amgen. Total operating expenses for the 6 months ended June 30, 2020, was $6.4 million and included $3.6 million in research and development expense and $2.8 million in general and administrative expenses. Research and development expense for the 6 months ended June 30, 2020, consisted primarily of headcount-related costs, external costs related to the conduct of the EB613 Phase II clinical trial and consulting expenses and fees related to the preparation of a potential IND application for EB613. General and administrative expense for the 6 months ended June 30, 2020, was primarily made up of salary and related expenses including share-based compensation, professional fees, D&O insurance expense and legal fees. Net comprehensive loss was $6.1 million or $0.34 per ordinary share basic and diluted for the 6 months ended June 30, 2020. As a reference point, we currently have approximately 18 million primary shares outstanding and 26 million fully diluted shares outstanding. At June 30, 2020, Entera had cash and cash equivalents of $9.8 million. And in our 6-K that we filed today, we will report approximately $8.9 million in cash and cash equivalents as of August 12, 2020, which includes approximately $200,000 in proceeds raised through our ATM agreement with Canaccord. Based on current operating plans, we expect our 2020 operating loss to be approximately $11 million. This is subject to the expected timing of product development programs, including EB613, and subject to any continuing impacts of COVID-19 on our operations. As a result, we continue to believe that our current cash position will fund our operations into the second quarter of 2021. I will now turn the call back to Roger for concluding remarks before we go to Q&A.

Thank you, Jon. We are very encouraged by the BMD data we report to you today, especially in the 1.5-milligram treatment arm, and are eager to see the data from the recently added 2.5-milligram treatment group, which was not part of the data we released today. The improvement in lumbar spine BMD represents an important trend given our plan to use the 505(b)(2) regulatory pathway for EB613, as we believe that an improvement in lumbar spine BMD will be the required endpoint for any potential approval of EB613 to treat osteoporosis. We continue to believe in the market opportunity and the need for better therapies for a convenient oral format to be substantial. This has been supported by recent market research and clinician feedback that such oral forms could be their product of choice for patients with moderate to severe osteoporosis. We also believe our technology platform offers several benefits to potential collaborators who have expressed their interest in our patent-protected platform, which both delivers and protects macro molecules. We remain committed to opportunistically advancing these programs while protecting our financial resources with the goal of advancing EB613 into a Phase III program. This ends our formal presentation for today. Operator, you can now open the floor for questions.

[Operator Instructions] Our first question comes from Brad Hoffman with Maxim Group.

I had some questions on the BD front. First of all, congratulations on recognizing some revenue from Amgen in conjunction with the research work you're doing in collaboration with them. Wondering if there's any more color that you might be able to offer regarding the Amgen partnership and of course, sensitive to the fact that, to an extent, they must limit what you're able to disclose. And then also, if you could provide a little bit more qualitative color around some of your other BD initiatives. I think it's clear to everybody who follows this exciting story that the underlying drug delivery technology for large molecules has a wide array of applications. And congrats to Roger on the new seat.

Thanks, Brad. I appreciate it as well. Thanks for your support. As for both Amgen and other BD at this point, I'm going to ask, maybe Jon, can you give a little bit more color on Amgen? And then Phillip, maybe you want to chime in for the BD on other efforts, okay?

Sure. So thanks for the question, Brad, good to hear from you, as always. So with Amgen, we've done, as Phillip mentioned in his remarks -- in his prepared remarks, we've done a whole bunch of work supporting the advancement of the program that they are moving forward, and we've been pleased with the results so far. Obviously, they are in control of the project plan, but we've continued to support them, I think, effectively in that effort. As a reminder, there are potentials for them to opt-in for a couple of more molecules if they were to do that. That -- those, of course, come with potential milestones that certainly would help us from a capital raising perspective and to offset a significant amount of cash burn. We of course, don't have specific timing on that. But suffice to say that hopefully, if we can demonstrate some success there, they'll find that of interest and opt-in on those additional potential molecules. Maybe I'll pause there and turn it over to Phillip now.

Yes, Brad, pleasure. Yes. So in terms of Amgen, I'll just add that in terms of other molecules that we're looking at, obviously, in general, we look at both things that are in development and both products that exist in the market in terms of creating opportunities that people may not perceive otherwise. In terms of other BD activities that were going on, I would bucket them into 2 or 3 different areas. We have numerous ongoing conversations with a number of different entities. Some of them have to do with brand new API technologies that people are utilizing to create APIs. And thinking about it, not just from a convenience perspective, but also in the fact that sometimes many of the drugs that these people are developing are not amenable to being injected or to being infused for a variety of different biological reasons. So that's sort of one bucket, and we have a number of conversations going on with companies who are in that space who are trying to develop therapies for various areas, but cannot deliver them in the current state or the current matter that they are. And the second bucket is for people who have existing products, who are also interested in either doing life extension to those existing products or also just creating a larger market by creating greater convenience, and that's a second bucket of conversations that we have. And finally, the third bucket is when people have drugs that are in relatively late-stage development, and for whatever reason, they found that it's no longer possible for a variety of different reasons, whether it be competitive or scientific, to go ahead and proceed with those drugs as an injection, that would be the third bucket of opportunities. In general, what we've done is as we've gone ahead and we have -- we'll have material transfer agreements where people will send us material, and then we can evaluate it. And then from there, hopefully, if we're successful and they're successful, we can move on to an agreement.

Yes. Hopefully, that answers your question a little bit, Brad. Obviously, it's a big effort from -- especially from Phillip and the team in terms for trying, like how do we leverage our technology platform because -- which I believe is real solid and a good opportunity for folks to use.

Absolutely, certainly not locked on the community that each molecule you develop the oral delivery for, you're generating new IP. Maybe one follow-up question, if there are no others in the queue. On the data readouts for oral PTH (1-34) in osteo, intellectually, theoretically, is there an explanation for why you saw BMD improvement in vertebrae but not in the femurs, in the larger femur bones? How do you think about that? And maybe, if you don't mind, obviously, you're evaluating higher doses. Safety seems to be very clean. We agree it's a reasonable path forward. Do you expect better results in the larger bones from higher doses?

If you look at what we see with injectable PTH, okay, you see virtually no change in hip or femur, and that's exactly what we saw. So I'm not surprised at all, and Art [ can add ] color. The primary change in injectable (1-34) is really the spine BMD, which is what we saw. So the BMD pattern we see is similar to what we would have expected for that. So -- and so I'm very hopeful that the larger dose will produce the results moving on, but obviously, time will tell. The data will show. Art, do you have any additional comments?

Yes. No, just -- I agree with those -- that response. I just wanted to add that the spine is made up of bone that's almost exclusively what's called trabecular or cancellous bone. It looks spongy. Very -- it's a network of bone with marrow in the middle of it. And there's no dense cortical shell around it. The femur, however, the top of the femur, has some trabecular bone, but it is predominantly cortical bone. It's a dense bone that's found around the outside of long bones just because of the different biomechanical loads. So trabecular bone or spongy bone responds quite well in a favorable way to parathyroid hormone. There's relatively neutral effect on the cortical bone -- the dense cortical bone that's found in long bones.

I'm not showing any further questions at this time. I would now like to turn the call back over to Roger Garceau for any further remarks.

Well, I want to thank everybody for taking time this morning and joining the call. We're very excited about these results. And look forward to providing you with an update once we have any additional information to report. We all wish you have a very good day. Take care.

Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.