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

Good morning, and welcome to Entera Bio's conference call to discuss the financial and operating results from the third quarter of 2020. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I would now like to turn the call over to 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 Entera's financial and operating results for the quarter and 9 months ended September 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 would like to remind you that various statements we make during this call about the company's future results of operations and financial position, our interpretation of the interim data from the ongoing Phase II clinical trial of EB613 and the expected timing of data readouts from the ongoing Phase II clinical trial of EB613, our 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. Specifically, 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 on numerous factors that we 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 the information we provide in 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 to everyone for joining this call this morning. The completion of enrollment of our Phase II clinical trial of EB613 is a major milestone for Entera, especially given the extraordinary challenges related to the COVID-19 pandemic. It's also an important step forward as we progress toward a pivotal Phase III clinical trial. I'd like to thank the patients for their participation and the sites and the investigators for their efforts to both enroll and follow up these patients in the trial. I'd also like to thank the entire Entera team for their work and hard focus to support the sites in the enrollment and follow-up to date and faced with the many challenges related to COVID-19. As a reminder, the Phase II clinical trial is a dose-ranging, placebo-controlled study in postmenopausal female subjects with osteoporosis or low bone density, or BMD. The trial is being conducted at 4 leading medical centers in Israel and had an initial target of 160 patients, with the final enrollment being 161 patients. Based on the 3-month interim biochemical marker and safety data from the first 80 subjects randomized, the Phase II protocol was amended in the third quarter to discontinue the 2 lower doses of EB613 and at a higher dose, 2.5 milligram. After that point, new subjects, who are randomized received either 1.5 milligram, 2.5 milligrams of EB613 or matching placebo tablets. In August, we announced a 6-month interim biomarker and BMD data from the first 50% of patients in this Phase II trial. Art Santora, our Chief Medical Officer, will review some of the specifics shortly. But in summary, the data indicated EB613 has a meaningful and positive impact on lumbar spine BMD in a dose-dependent manner and supported the earlier decision to add the 2.5-milligram dose. These findings are important because increases in lumbar spine BMD have been associated with fracture reductions in patients treated with subcutaneous PTH. And a change in lumbar spine BMD is now generally accepted as an endpoint for regulatory approval of novel PTH formulations. Importantly, the BMD and biochemical marker data reported to date do not include data from any subjects in the 2.5-milligram treatment arm. We expect to report biomarker data that includes the 2.5-milligram dose in the first quarter of '21 and final data from this trial, including BMD, in the second quarter of '21. We believe that the data from this trial will be important to the future development of EB613, including the selection of the final dose to move into a Phase III study, which, assuming positive Phase II data, we are targeting to begin in 2022. 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 with subcutaneous PTH or other injected bone-building drugs due to cost, convenience and compliance challenges. The market research we conducted and reported earlier this year points to significant unmet medical need for oral therapy to build bone in this multibillion-dollar osteoporosis market. Turning to EB612 for hypoparathyroidism. We are focused on optimizing the formulations that we like to move forward, subject to funding. And Phillip will talk a bit more about EB612 later in this call. We've also continued to support preclinical work in our collaboration with Amgen. And we are pleased with the progress made to date and look forward to continuing to support the collaboration in accordance with Amgen's project plans and objectives. From a business development perspective, we have increased our efforts to leverage our technology platform and have an ongoing dialogue with several companies that are interested in exploring the use of our oral delivery technology with their injectable product candidates. While it's difficult to predict the timing of any collaboration, we are focused on moving some of these conversations into a formal agreement. Operationally, we have continued to carefully monitor our expenses. And our current cash on hand is sufficient to support our planned operations into the second quarter of 2021. Let's now turn the call over to Dr. Art Santora, our CMO, to discuss our Phase II trial of EB613.

Thanks, Roger. I'd like to personally add my thanks to the patients, investigators and their study site staff and the team at Entera Bio for completing the enrollment amidst the COVID-19 epidemic. As a reminder, the trial was designed to evaluate the impact of different doses of EB613 on biomarkers of bone activity after 3 and 6 months of treatment and on BMD, or bone marrow density, after 6 months of treatment. Subjects were initially randomized to receive either placebo or 1 of 3 doses of EB613: 0.5 milligrams, 1.0 milligrams and 1.5 milligrams. After the evaluation of the interim 3-month biomarker data that indicated that the maximum efficacious dose had not yet been achieved, we amended the protocol to discontinue additional enrollment of the 0.5- and 1.0-milligram dose groups and add a new higher 2.5-milligram dose group. After the protocol amendment, the final 60 subjects were randomized to receive placebo, 1.5 milligrams or 2.5 milligrams of EB613. The goal for the new 2.5-milligram group was 36 subjects, with slightly fewer subjects in each of the lower-dose groups. The total number of subjects randomized was 161, and the final numbers in each group will be known once we break the blind in the second quarter of 2021. Subject follow-up in the Phase II trial remains strong, with approximately 86 subjects having already completed their 6-month visit. In addition, there have been no serious drug-related adverse events in the trial. Finally, demographics of subjects in this trial are generally consistent with other previously reported osteoporosis trials in postmenopausal women. Based on the 3-month biomarker data generated in the trial, EB613, our orally delivered human PTH (1-34), has a biomarker profile that differs from injectable PTH (1-34). And we expect the final biomarker data in the first quarter of 2021. More importantly, when we looked at the impact of EB613 on BMD, based on the 6-month BMD data, EB613 generated a mean placebo-adjusted increase in lumbar spine bone mineral density of 2.15%. Statistical test for difference, p-value is 0.08 for the 14 subjects in the 1.5-milligram treatment arm as compared to the 16 subjects in the placebo arm. The placebo-adjusted increase was comprised of a mean BMD increase of 1.44% in the 1.5-milligram treatment arm compared to a mean decrease of 0.71% in the placebo arm. An additional analysis of BMD change in all EB613 treatment groups showed a significant dose-dependent trend and a percentage increase in lumbar spine BMD. Increases in maintenance of BMD are widely accepted by clinicians throughout the world as indicators of an overall improvement of osteoporosis during parathyroid hormone treatment. We look forward to reporting the final BMD data, including data from the 2.5-milligram dose group, in the second quarter of 2021. The change in lumbar spine BMD is the recommended Phase III study efficacy endpoint for a novel oral 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 fractures. As expected and consistent with published data from studies of subcutaneous teriparatide, an analysis of BMD of the total femur and femoral neck do not show a statistically significant effective treatment with EB613. I will now turn the call over to Dr. Phillip Schwartz, our President of R&D, to share some updates with you on EB612 and our Amgen program.

Thank you very much, Art, and good morning to 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 to minimize the adverse events of long-term calcium supplement 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 are evaluating in preclinical models. To date, we have identified 2 technological enhancements, which, if successful, could provide support to advance this program into a potential Phase IIb or Phase III clinical trial in 2021 or 2022. 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 preclinical 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, active pharmaceutical ingredients, 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 activity. Of interesting note, Novo Nordisk's recent acquisition of Emisphere may validate the inherent value of Emisphere-developed SNAC, an absorption enhancer, currently utilized by Entera as part of our drug delivery technology. As a reminder, SNAC was first patented in 1992. And the extensive development of SNAC by Emisphere recently culminated in the first FDA approval of an oral semaglutide, Rybelsus, for the treatment of diabetes. The approval of Rybelsus is helpful to Entera, in that SNAC is now an FDA-approved drug product. Entera has worked for almost a decade on enhancing the utilization of SNAC by adding additional excipients, ingredients which are not related to the drug or treatment of disease, in order to protect the biologics in other large-molecule drugs. The culmination of this work has resulted in an oral formulation of parathyroid hormone as well as a technology, which may be applicable to other drugs in development, such as the drug in the Amgen collaboration. In the process of developing the technology for other molecules that are proprietary to potential partners, we continue to identify enhancements to our existing platform. We look forward to this work potentially leading to additional patents, expansion of our capabilities and additional collaborations with partners. I'll now turn the call over to Jon Lieber, our U.S. CFO, to cover the financial results.

Thanks, Phillip. Revenues for the 9 months ended September 30, 2020, were $144,000 as compared to $134,000 in the first 9 months of 2019, with revenues in both years attributable to the R&D services provided to Amgen. The cost of revenues for the 9 months ended September 30, 2020 and 2019, were $104,000 and $102,000, respectively, and were comprised of salaries and related expenses in connection with the R&D services provided to Amgen. Total operating expenses for the 9 months ended September 30, 2020, were $8.9 million and included $5.2 million in research and development expenses and $3.7 million in general and administrative expenses. Research and development expense for the 9 months ended September 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 paid related to the preparation of a potential IND application for EB613. General and administrative expense for the 9 months ended September 30 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 $7.7 million or $0.42 per ordinary share, basic and diluted, for the 9 months ended September 30, 2020. As a reference point, we currently have approximately 18 million primary shares outstanding and 25 million fully diluted shares outstanding. At September 30, 2020, Entera had cash and cash equivalents of $7.1 million. And in our 6-K that we intend to file today, we will report approximately $6.2 million in cash and cash equivalents as of November 9, 2020. 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 currently believe our cash position will fund our operations into the second quarter of 2021. I'll now turn the call back to Roger for concluding remarks before we go to Q&A.

Thank you, Jon. We are pleased that we're able to complete enrollment in the Phase II clinical trial of EB613 despite the significant challenges resulting from the COVID-19 pandemic and look forward to reporting out additional data from this trial in the first and the second quarters of 2021. The market opportunity and the need for better therapies in a convenient oral form is substantial. We believe our technology platform offers several benefits to potential collaborators that have expressed interest in our patent-protected platform, which both delivers and protects macro molecules. We remain committed to opportunistically advancing those programs, while protecting our financial resources, with the goal of advancing EB613 into a Phase III program. This ends our formal presentation today. Operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Dan Michael, private investor.