Equillium, Inc. (EQ) Earnings Call Transcript & Summary

Thank you for standing by. My name is Joe, and I will be your conference operator today. At this time, I would like to welcome everyone to the itolizumab update. [Operator Instructions] I would now like to turn the conference over to Bruce Steel, CEO of Equillium. You may begin.

Thank you, operator. Good morning, everybody, and thank you for joining this call. We do have a very important update that we announced earlier this morning related to itolizumab and our partnership with Ono Pharmaceutical. I'd like to refer you to our forward-looking statements and other disclaimers we have available on our website and in our slide presentation. This morning, we announced that Ono has made a strategic business decision to let its option to itolizumab expire. Important to note that there have been no safety or any concerns reported with the data that we've delivered. And in fact, I think we would both acknowledge that the data sets that we have delivered under this partnership over the last few quarters was in line with expectations. I'd like to say that we're very grateful to Ono for the close partnership and support that we've received for the program, which has provided very substantial funding under sort of nondilutive financing, if you will, that has carried itolizumab through our development course over the last 2-plus years, enabling us to really hit 2 very important milestones with the program, importantly, clearing the interim analysis of our ongoing pivotal Phase III study in first-line treatment of acute GVHD that we announced at the end of July as well as completing our lupus nephritis study, where we reported positive top line data earlier this year. The decision from Ono, again, we believe was strategic in nature, and we do not believe had any ties to the data. And so for that reason, I'd say we are very pleased to have Equillium in control of itolizumab unencumbered going forward. To date, we have enrolled over 150 patients in the EQUATOR study. We also announced that at this point, we are pausing enrollment while we review clinical options for the program, which may include accelerating our time line to top line data to early 2025 with the goal of preserving the registrational integrity of the study. Recall that we maintain orphan drug and fast track designations for the first-line acute GVHD indication, where currently, no drugs are approved. In addition, in collaboration with our strategic partner, Biocon, they have recently completed a very robust placebo-controlled Phase II study of itolizumab in biologic-naive patients with moderate to severe ulcerative colitis. And we expect top line data from this study also early in the new year. We remain very enthusiastic about itolizumab, and this was our foundational asset. And while it has certainly taken, I think, a bit longer than we had intended when we started the company, we are now poised at the point where we have the 2 most important data events in the history of the company immediately in front of us. And this is really the reason why we started the company. So we're absolutely thrilled, I'd say, to be at this point with the program, where certainly, with the EQUATOR study potentially reading out top line data early in the new year, we'll be able to answer the very important question of, can we have a very significant impact for patients in areas of very high unmet need. And in the case of the GVHD indication where no drugs are approved in first-line treatment with very high mortality rates, the potential to save patient lives. We have made and we'll continue to make adjustments to our operating plan. And based on that plan, we have cash sufficient on hand without any further capital to fund operations into Q4 2025 based on these changes, which include the assumption of our acceleration of EQUATOR study completion. To do that, we would effectively be stopping enrollment where we are today and unblinding the study after the primary, key secondary endpoints at day 29. This would capture the 2 most important endpoints for the study, complete response at day 29, which is our primary endpoint and overall response, a key secondary endpoint at day 29, respectively. We do intend to meet with the FDA to review the EQUATOR study during the first quarter of 2025. We've also announced that based on the reprioritization of our foundational asset, itolizumab, to the top of our pipeline, given the very advanced stage of this program currently, that we have paused activities related to EQ101 and EQ302. We still have a lot of confidence in these programs, but we want to focus our resources on itolizumab at this time. Subject to additional resources, we would consider reengaging our activities around those 2 programs. Shown in the pipeline, obviously, we have updated our status and milestone estimates, and we are looking forward to these 2 events in the very near future. Just as a reminder, we have a critical mass of safety data and positive clinical results from itolizumab with over 1,000 subjects dosed across numerous clinical studies. Shown here are the top 3 from the Equillium clinical efforts as well as many studies that our partner, Biocon, has completed. And we highlight again the upcoming ulcerative colitis data over the next couple of months. And also recall that itolizumab is approved in India for psoriasis as well as received EUA for COVID-19 and CRS-related issues. I'd like to jump to our GVHD program and just refresh a bit on what we've accomplished so far with itolizumab in GVHD. So in the EQUATE study, what we observed were CR and overall response rates at day 29 of 61% and 67%, respectively. These response rates were associated with improved progression-free survival through 1 year. And importantly, patients were able to significantly taper steroids during the treatment course by 70% at day 29 and 99% at day 169. And itolizumab continued to demonstrate a favorable safety, tolerability and efficacy profile. And the above information were for patients who are dosed within the 3-day dosing window from first treatment of high-dose corticosteroids, which today remains standard of care. We believe that if the Phase III EQUATOR study has a positive outcome, that it should support registration. Obviously, we need to take this discussion to the agency. But again, given the very high unmet need in this indication where no drugs are approved, we do think that if we show a clinically meaningful benefit, we would have a good case for this program to support an approval process. Also importantly, from a commercial standpoint, we already have commercial scale manufacturing in place with Biocon, our strategic partner. So we view this as a fairly straightforward process from here to get this drug to patients assuming the study is successful and we can achieve success with our plans to move this into the patient setting. Also we would like to highlight that over the last couple of years, the commercial landscape has evolved considerably in the GVHD landscape. In terms of patients having allotransplants annually, it's roughly 10,000 patients a year. Approximately 30% will develop acute GVHD. And those patients that do not respond to standard of care high-dose corticosteroids have very high mortality and morbidity rates. About half of those patients will go on to develop chronic GVHD. Over the last 2 years, 2 important drugs have entered the market and established themselves, collectively approaching roughly $1 billion in revenue: that's Rezurock, the Kadmon asset that was acquired by Sanofi back in late 2021; and Jakafi as sort of the 2 main products available to treat second-line acute GVHD in the case of ruxolitinib, and both drugs are approved in the second-line setting for chronic GVHD. So we believe this represents a very attractive commercial opportunity and importantly, one that we can launch independently with a very small commercial team. I think it's worth highlighting that we have over 50 U.S. clinical sites in our EQUATOR study currently enrolling patients, including 9 of the top 10 transplant sites in the country. So again, given the very high unmet need, we believe this would be a very ratable accessible market to us. And again, based on the very unique manufacturing relationship we have in place with Biocon, one that we could easily address without significant additional capital. Furthermore, we do believe we could take advantage of the opportunity for rapid indication expansion, for example, into either steroid-refractory acute GVHD or potentially chronic GVHD. If you look at the overall landscape in our deck, you'll see sort of the main drugs that are approved and in development. And again, highlighting that in first-line acute GVHD, we believe itolizumab really is the most compelling asset currently in a Phase III program with nothing approved today. We do provide the data from our prior EQUATE study, highlighting the response rates we observed in that study and importantly, the CR rate that we felt was significantly above background placebo rates. And we do show the 2 most relevant data sets for that data, the MacMillan study from 2015 that was retrospective and importantly, the in-site GRAVITAS-301 study. And these are the placebo rates broken out by both high-risk and standard risk acute GVHD patients. So we observed something on the order of a 20% improvement in that initial proof-of-concept study. We do provide an update or an overview of our study design. This was a study where patients are dosed out to 85 days with an initial loading dose followed by 6 doses every 2 weeks. And again, highlighting the primary and secondary outcomes of CR at day 29, OR at day 29 and then durability of complete response from day 29 through day 99. And as mentioned, the IDMC, our data monitoring committee reviewed the interim when we crossed the 50% patient enrollment mark with 100 patients in the study and did receive a study-should-proceed outcome from that review. For a moment, I'd like to just highlight the UC study that Biocon has recently completed. We have a very strong scientific and mechanistic rationale for looking at itolizumab in GI diseases, which also reads on to the GVHD indication where lower GI issues are driving the high mortality rates. This was a very well-designed, robust study comparing itolizumab versus placebo versus adalimumab with all patients on standard of care, pre-biologics with 30 patients per arm. Top line data, as mentioned, is expected in the first quarter of 2025. And this was the first time we've evaluated itolizumab as a single fixed dose. And we do have now high concentration formulation enabled -- available that can enable delivery of prefilled syringe in the commercial setting. In terms of the study design, as mentioned, we have a 3-arm study. Patients are treated across the 3 arms for a period of 12 weeks. Nonresponders will then get crossed -- were then crossed over to the itolizumab arm for another 12 weeks. These patients are being assessed under the standard 12-point Mayo score with endoscopy at screening, week 12 and week 24. So we're very much looking forward to these results, which we think could be a key value driver for the program as a completely novel mechanism in ulcerative colitis, obviously, a very large commercial setting. Obviously, we have a very robust IP portfolio around itolizumab, and we would expect to avail ourselves of biologic exclusivity of 12 years from the time of first approval. And just a summary of the key financial metrics for the company. At the end of the second quarter, we reported $33 million of cash on hand. Net burn was essentially flat based on the Ono reimbursement. We have just about 35.5 million shares outstanding. And as mentioned, based on the changes to our operating plan, we are currently funded into the fourth quarter of 2025. I think we've covered the milestones, but again, with a focus that we're very excited about where we are with the program back with full rights that we started the company around with, again, the 2 most important data sets for the company expected now in the first quarter of next year. The company with itolizumab, we believe, is significantly derisked over the recent 2 data events that Ono has helped support us accomplish. And again, we think this initial indication, which when we started the company was always our initial indication, we believe is very attractive and now sort of validated by recent drug approvals in the GVHD setting. So with that, we'd like to thank you for joining the call today, and happy to open the call up for any questions. It looks like we have one from Catherine.

So our first question comes from the line of Catherine Novack of JonesTrading.

Yes. Can you guys remind us the powering assumptions for the Phase III and how much statistical power you will lose by reducing the sample size? And then for the original study design, what was the rationale for a 365-day study if all of the key endpoints are at day 29 and day 99?

Thanks, Catherine. Good questions. So in terms of the powering. Based on the EQUATE study, we designed the study at 200 patients for 80% power to observe a 20% treatment effect on itolizumab versus placebo. We felt that was very reasonable based on the previously observed standard of care CR rates and again, with a focus on CR. So sort of a key point of differentiation from prior studies is that based on the very high CR rates we observed in the EQUATE study and the relatively low CR rates that standard of care achieved, and we know that those CRs really drive longer-term patient outcomes, that was our focus. So it was 80% power to see a 20% improvement on active over 200 patients. And roughly speaking, at about 150 patients, we would lose about 10% of the power in the study or roughly 1% power for every 5 patients below 200. So what we've announced is that we're above 150 patients enrolled currently. So you can read that we have somewhere 10% or less reduction in the powering on the study. And then in terms of 365, the agency is interested and as our clinicians and patients, obviously, for longer-term outcomes as they're coming off of their transplant procedures. So initially, we felt it would be good to follow patients out to a full year. But the key -- the primary endpoint and the 2 key secondaries are captured at day 29 and day 99, respectively. We do know that 6 months is also sort of an important time line for overall outcomes and the trajectory of patients. So I think while we would intend to look at the data earlier, as we described at the day 29 outcomes, we certainly would continue to follow patients out beyond that time point as we're thinking about the overall study. I hope that answers the question.

Your next question comes from the line of Thomas Smith of Leerink Partners.

First, I guess, on the UC study. Can you just remind us of the patient population here? And walk us through what's been assumed here in terms of treatment effect, how the study is powered and what your expectations are for the top line data in Q1? And then you're also using the fixed dose here rather than the weight-based dosing that's being used in GVHD. Can you just comment on how you arrived at that dose and how confident you are in the dose selection in this study?

Yes. Let me -- I'll bring Steve into the discussion. But basically, these are patients -- the study was all conducted in India. One benefit to doing that is we were able to capture, one, very good clinical sites. I think we have a dozen clinical sites in India, but capture patients who are naive to biologics. So getting a very clean look at how these patients who have established ulcerative colitis and who are on standard of care medications, oral medications, typically prednisone or ASAs would fare coming into the study. So these patients generally had to be on stable treatment coming into the study, maintain that stable treatment during the initial treatment course. So relatively straightforward kind of study design. We wanted to look at not only itolizumab compared to placebo, but importantly, kind of global standard of care HUMIRA in the study to see how we compare against standard of care on biologics as an important sort of measure of outcomes. The study was not designed specifically or powered for any specific outcome. But we do feel that with 30 patients per arm, if there's a signal here, we should see it, particularly if we're observing itolizumab responses, call it, comparable to HUMIRA and some separation with those 2 arms compared to placebo, which is what we would expect or hope for at least as it relates to the itolizumab arm. Steve, anything further to add there in terms of the dosing?

Yes, sure. I think the question was how did we come to a fixed dose. So as you recall, this molecule has been tested across thousands of patients in various clinical studies. So there's a really big body of knowledge around the PK/PD. So we've essentially been modeling that as we've added more data to this, better understanding the PK/PD profile. And the fixed dose that we've come to is largely based on weight and the pharmacodynamic markers. And that's what we'll be testing. So one of the things that we can do from here with that sort of fixed dose is alter the fixed dose or we can actually extend out the regimen. So it's our first foray into testing a fixed dose, which, of course, is important when we think about the patient population, prefilled syringes, high-concentration liquid formulations that we've been developing as sort of a more commercially friendly, patient-friendly and commercially-viable presentation. So this is just sort of part of the typical evolution as we've moved from IV to subcu weight-based dosing, and then we've taken that data to derive a fixed dose. And that's largely based, like I said, on a lot of complex modeling on the data sets that we have to date.

Got it. That makes sense. Super helpful. And then just one on GVHD, and apologies if I missed this, but can you just comment on the plans for regulatory engagement here? Do you have to meet with FDA before you implement the changes to the study? And then how do you think about regulatory engagement after the study, assuming positive results?

Yes. Great question, Tom. So as we were coming into this update, obviously, and looking at what we could accomplish based on the resources at hand, we did engage our data monitoring committee in a discussion on where we were with the study as well as obviously key advisers in our regulatory team. So in concert with our DMC meeting, their recommendation was to pause the study. So we have notified the agency as of this morning that we have paused enrollment. We've paused enrollment versus stopped enrollment so that over the next, call it, 6 weeks, plus or minus, while we are tracking patients through their day 29 outcomes, we would have an opportunity to start reenrolling patients into the study if we have a situational change, i.e., additional resources coming into the company. But again, we feel comfortable that we have a large enough sample size where if we certainly achieve statistical significance in the study and we capture CR and OR and continue to follow patients through the dosing period, which is a 3-month window and beyond likely to 6 months, given the very high unmet need, very high mortality rates, we have orphan and fast track designations, we think we have a good case that this drug should get to patients. But we will certainly have to engage with the agency. We're hoping to be very collaborative with them in that discussion. So we've notified them that we paused the study. We've notified them that we will be reaching back out prior to the end of the year to request a meeting to review the study in its totality, and we would hope to have that meeting sometime early in the new year during the first quarter.

Your next question comes from the line of Roger Song of Jefferies.

Great. Maybe just to clarify, so Bruce, did you say DMC committee, they recommended to pause the enrollment and then you paused the enrollment and start to notify FDA? And then the other thing is maybe just give us some comments around how and when and so under what condition you will resume the enrollment. When would be the latest time you can make that decision to continue the enrollment for the GVHD?

Yes. Thank you, Roger. Yes, I mean, I think we -- when we got word from Ono on the expected outcome of the partnership, we clearly had plans in place holistically for the company with a focus on the EQUATOR study and how to ensure that we are kind of doing the right thing for patients and for the study in its totality. And as a company, you have to assume that the cash you have on hand is the only cash you will have and have a plan for that. And so what we've implemented this morning is the plan that allows us to complete the study. We believe in a way that can preserve the registrational integrity of the study and control that time line absolutely and get to top line data and have that interaction with the agency around the study and position us in a way that if all of that is successful, we would then be ready to start preparing our BLA and with a focus on how we commercialize the drug. And again, we think from the standard kind of commercial path, this is a very straightforward proposition in that regard, particularly given the very focused nature of where these patients are. And our in-place CMC partnership with Biocon really enables all that. So -- but with that said, whether it's investors or strategic parties that we think are going to be interested in this program now that it's unencumbered, if somebody said, look, we'd like to see the study get to full enrollment and kind of go back to the original powering, we have a window to do that. I would say the outside date of that is between now and the end of the year, potentially earlier. But again, the sort of plan here was our plan. We wanted to be very, obviously, transparent and engaged and collaborative with all of our stakeholders, which includes our data monitoring committee, which obviously is a very important part of this study. And they were extremely supportive of this plan given the outcome of the Ono partnership, had no concerns about the plan. And again, just to reiterate, the study is very much intact and in line with expectations. Nothing has changed there. There have been no new safety concerns whatsoever in the study. So again, we had a lot of support from the DMC for this plan. We've been very transparent with all of our stakeholders and also with the agency. So I hope that answered the question, Roger.

Great. That's very helpful. Maybe just a follow-up on that is just confirm for this outside of DMC interim analysis, any other data have been disclosed to you or Ono.

Yes. So obviously, the study is blinded to us as sponsor. And Ono has access -- or through yesterday, had access to all of the data that we have. I guess what I can comment on is we did do a recent -- a more recent data cut as of the middle of October. That data cut was preplanned based on our upcoming November DMC meeting. So we have regularly scheduled data monitoring committee meetings to continue to observe the safety and tolerability of the drug in the study. And so I'd say the updates there that we have are through roughly -- through 150 patients enrolled, we have a look at the overall study safety and tolerability as well as the overall complete response rate in the study at that point. Again, the data is blinded, so we don't know which arms those results are applied against, but we do have the totality of the data at 150 patients as of October 15.

Got it. Including the complete response rate. Got it. Okay.

And your last question comes from the line of Dae Gon Ha of Stifel.

Maybe a couple of clarifying questions. Going back to your pre-EQUATOR interactions with the agency. How much flexibility was discussed in terms of the enrollment size now that you're contemplating the pause and the 150 or so that you guys have? My understanding is you would need a safety data for at least out a year, but if primary and key secondary is day 29, just wondering what the flexibility is there. And then now that you have the unencumbered itolizumab, just wondering, can you walk us back to the time when Ono did step in for the initial options agreement? How many other parties would have been interested or were interested? And any plans on reengaging them in a conversation?

Yes. Thank you very much, Dae Gon. So on the first part, flexibility in terms of sample size, I think, was sort of your key question and time lines. So we had obviously, quite a bit of interaction with the agency as we were designing the study and getting approval to move this program ahead. Initially, we were contemplating a higher sample size that we reduced down to 200. We don't feel that there was a hard and fast number in terms of the number of patients we need to have in the study per se. I think we wanted to design a study that had reasonable powering based on what we felt could be the true effect size of the drug. And so that was what we took forward at that time. And again, the 12-month follow-up, I don't think that was set in stone either. We do know that I think 6 months in terms of overall follow-up would be likely the target we would have in mind for the study. We think that captures patients through a significant time line beyond their original transplant and beyond when they develop GVHD. So we'd have to maybe refresh a bit on some of those minutes, but I don't think 12 months was a hard and fast time line. Again, the 3 most important data events are all captured -- the 2 most important data events from our perspective are OR -- CR and OR at day 29. And then the second key secondary of durable complete response to day 99. And so the other secondaries go out beyond that. But again, we feel that certainly within the 3- to 6-month window, we're capturing the type of data we think would be sufficient to make our case to the agency. Sorry, Steve, you wanted to add something?

Yes. I was just going to say, if you recall, we're not dosing past day 87, that's the 7 doses. So the longer you go out in these endpoints, you're looking at overall survival at a year, which is quite classic. You're looking at do they get chronic GVHD. There's a lot of things there that are just classically monitored. But the FDA is very aware that the longer you try to follow those events out, the harder it is to power, the harder it is to control. So that's why things like durable response at day 99, which you can well control and sort of pin stats to was more relevant to the FDA. So I think the year follow-up is really just more of a classical way to think about these things and follow these patients out. But there's really a challenge in sort of tying endpoints there. So I think 6 months is really where the FDA was focused on having important endpoints in terms of secondaries. We've got most of those sitting at day 99, such as durable complete response. So I think if we had 6 months of data, that would meet the minimum threshold from an FDA perspective. The year, like I said, is more of a classical way to think about these studies. It'd be different if we were dosing beyond 6 months, but of course, we're not. We're finishing dosing at day 87 and continuing to follow those patients as a matter of course.

And of course, just to throw in the caveat, these are our -- what we think and believe, but we're clearly going to need to engage the agency in this discussion, and we're looking forward to doing that during the first quarter, hopefully. Related to your other question, Dae Gon, yes, so we had, I'd say, several other parties interested in the program. I view -- at the executive level and certainly my position, in particular, one of my key jobs is to make sure we understand what our options are in terms of supporting the business at all times, and that includes kind of what's going on in the capital markets environment and what's going on in the strategic partnering environment. So 2.5 years ago, when we were in the process with Ono, as I think most of us recall, that was an absolutely dire time in the capital markets. I think it would have been very challenging to have raised the capital needed to continue to advance itolizumab in development during the course of 2022. That's why we really shifted our focus to sort of the partnering modality. And again, we're thrilled to have Ono support us over the last 2 years. As a result of that support, we haven't raised any capital since February of 2021. And we received over $90 million in funding from Ono over the last 2 years. So we advanced the program a significant way, and we're absolutely thrilled to be in the position where we have cash on hand to get through the 2 most important data events in the history of Equillium, all within the next 3 months. With that said, based on the very advanced stage of the program now with a study ongoing that we think could support drug approval, we do think there will be strategic interest in the asset. And we have a small, very focused group of discussions ongoing right now. So we'll explore that, but again, our base case is to operate the company independently on the cash that we have available to us. And we think we've got a very good plan in place to get through 2 very significant data sets on 2 very robust, well-controlled placebo-controlled studies around the program. So yes, we're pleased to be in this position, and this is why we started the company. Hope that answered your question, and happy to field anything further.

This concludes the Q&A session. I will now turn the conference back over to Bruce Steel for closing remarks.

Great. Thank you, operator. Well, I think I just sort of generally made them in that last response. So again, thank you, everybody, who tuned in for the update today, a very important one for the company. And we look forward to providing further updates in the near future. Thank you very much.

This concludes today's conference call. You may now disconnect.