Faron Pharmaceuticals Oy (FARN) Earnings Call Transcript & Summary

Good morning, everyone. My name is Markku Jalkanen. I'm Faron's CEO. Welcome to listen to this BEXMAB update. You may have noticed that we did release the new data yesterday. And obviously, we'll be looking at that data as well. So we have a very interesting program. I'm not going to talk that much today. But instead, we have our principal investigator, Mika Kontro, who has been involved with the BEXMAB study from the very beginning, one of the designers and now really executing to patient enrollment. But then also we have Dr. Maija Hollmen, who has been looking what's really going on those patients when bexmarilimab treatment is on. And obviously, Maija will be sharing some really exciting data from that part of these studies as well. This is an interactive study with them. And that will be done in Finnish, but all the slides will be in English. The reason why we do this first part in Finnish is the request by our shareholders and investors that they would listen once at least all these exciting data in their home language, and we will be doing that today. But don't worry, at the end of the seminar or even then Juho Jalkanen, our COO, comes in and then summarize everything in English. So you will eventually get pretty much the same messaging from that talk. And I also remind you that you are free to do all the questions during the event. Just send them to that address that was provided to you earlier. So with this opening remarks, I will then switch my language to my own home language, and that is Finnish, and then just invite Mika Kontro and Hollmen to come on the podium. And then we start really talk about the myeloid leukemia, the most aggressive leukemia we still have around us and is probably tied really to put them on hold and get proper treatment for those patients. Maija and Mika, welcome here. Floor is yours, please.

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[Foreign Language] I'm now going to switch to English because the next speaker is our Chief Operating Officer, Juho Jalkanen, and he will now summarize these same findings we have been presenting in Finnish and really is pretty much new data we announced yesterday. Juho, please.

Thank you, Markku. Thank you, Mika. Thank you, Maija. Lovely presentations. First of all, everybody, so grateful to be here and present this new data to you. First of all, Mika talked about how dreadful AML and MDS are as a disease. We've been working in the medical field over 20 years with azacitidine, and still no improvements. The big problem is being refractory, being nonresponsive to it, and we desperately need something for these patients. Now across literature, it's been known that if you are CLEVER-positive, you usually do not respond to standard of care, that being a hypomethylating agent, and you have a pretty bad outcome. Our non-clinical work that Maija presented has shown that we can overcome resistance to aza. I'm going to look at a slide after this one on that topic. And now first time on this planet, the Phase I data shows that we can really overcome resistance to aza and get responses in patients that otherwise would be nonresponsive. On top of that, the ongoing follow-up shows that it is very likely that we will clearly succeed the overall survival of these patients, in other words, lifting the Kaplan-Meier's survival curve another bar up. And that's what you ultimately want to do in cancer care. So far, in these nonresponsive patient populations in HMA failed MDS, the response rate is now at 7 out of 8. And the only one that wasn't a clear response was unfortunately dropped out due to a severe nonrelated adverse event while being stable and already early in cycle 2. So I would say that patient even didn't have a chance to respond yet. So overall, we're still looking at an exceptional response rate at the moment. And a bit early to really state what will the likely survival be, but it will be good. This is a new slide Maija presented. I just wanted to pop it up, talk a little bit about it. Why is bex effective in AML and MDS. First of all, the upper row here, that's a CLEVER-positive happy AML/MDS cell, a blast cell. That network map, that's everything going on in the cell regulated by CLEVER-1. So it's like a vibrant city -- lively vibrant city, and the blast cell is a happy camper there. And you can -- we are at war against cancer. You can throw in aza, you can bomb it with aza. It's not going to work for this cancer cell. But give it bex and look at the network map, all that vibrant city infrastructure is destroyed. It's going to cripple that vibrant happy camper blast cell and then throw in the aza and get rid of the blast. So that's ultimately what bex will accomplish in layman terms. Because even I can understand that science. Then to the clinical data. So this is a waterfall plot of all patients treated so far, and you see the blast reductions in the bone marrow. So again, highlighting the majority of treated patients get a blast reduction. And what Mika covered here -- there, a lot of these patients are high-risk refractory, usually nonresponsive, and now we see responses in these patients. Another way to look at this data, these are very busy slides. Again, swim lane plot on everybody treated so far, you see the responses, you see the duration. If there's an arrow, they're ongoing. So we have a number of these patients, some almost up to 2 years, some over a year. The thing in AML and MDS, even with aza, that if you get a response, they're usually shortly lived. But here, it clearly seems that we can get duration as well, leading to the survival benefit we are likely to see at the end. So it's looking very good for the drug at the moment. But maybe to put it in perspective here for everybody in the audience, so we're hitting very high response rates in especially high-risk MDS, refractory and frontline. Ultimately, for a treating physician, the objective is get these patients into remission so that they could go for a transplant, which is the ultimate cure. If we can't get them into remission, let's give them a drug that gives them improved survival, a survival benefit. So I get asked, if you look at the numbers here, we do a lot better in MDS than in AML. So I get asked, one, doesn't it work in AML? What's happening in AML? It's the same stuff we saw in the MATINS trial. For those who have followed us over the years, MATINS was highly advanced solid tumors. We can get responses, but they come in the form of stable disease and survival benefit. And that's what we're seeing in AML. AML is so far into the disease, the blast counts are so high that it's very hard to win the game at that point anymore. We can hold back the cancer. We can improve survival. We've shown that the likely survival rate -- the median overall survival is going to be above 8 months, which gives us ground to run possibly a randomized study against the comparator in AML. But the low-hanging fruit here is again in high-risk MDS and especially refractory MDS that has failed aza because the response rate is very poor, the survival is extremely poor, and that's what we can significantly improve. So key learnings with the drug. And again, what we see in AML, MDS and what we saw in MATINS, getting early. In MDS, we're right on time still to intervene with the course of the disease. And like we saw in MATINS with CLEVER-1-positive patients, AML and MDS, the CLEVER-1-positive patients, almost all of them. So this is why we're seeing these great results. And if we do this, broadly applicable. Cancer -- in the war against cancer, cancer is going to suffer another defeat. The big defeat for cancer is with radiation, chemo, checkpoint inhibitors. We feel bex is going to deliver one more defeat to cancer. So our vision as a company is to get that Phase II data. We're going to talk a little bit about partnering, then partner to get more resources, take bex to its first approval in refractory MDS. But with the data, the stuff we've been talking about, we feel that bex could become a cornerstone of cancer care. Because given the MATINS data, it's proof of principle that it's likely that we can overcome resistance also to checkpoint inhibitors. We have data now from AML and MDS. We can improve hematological recovery. We know from our preclinical studies that in combination with chemo, we can improve hematological recovery and likely also survival, chemo being the most used drug in cancer. But to get there, to establish bex as a cornerstone of cancer care, this is where we need to produce clinical data. But we start focusing in getting the first approval in refractory MDS.

Thank you, Juho.

My pleasure.

Let me ask right away. What is big pharma waiting from us? And how they have reacted to data we have now provided from the BEXMAB study? Are they interested in moving on with the partnerships?

I get asked that question a lot. So when are you going to partner? That's a question I hear all the time. And let me take you through how big pharma works a bit. 80% of their pipeline comes from outside of their own company, small biotechs, academic research, 80%. So most of their pipeline comes out of their internal resources. The bar for producing enough data has risen during the recent year. They made bad bets along the line. Some of the bets have been bad bets. So the bar for proof of concept has risen. Ultimately, big pharma is looking for Phase II data. For them, it's a matter of derisking the drug they're looking at, being bex here, derisking it to a certain point that they feel confident that it's going to make it to a drug. Now if you put the math together on where we are at the response rate and the increasing number of patients we treated so far, the likelihood of bex becoming a drug is becoming pretty obvious. As I mentioned, ultimately, big pharma is looking for Phase II data. But at the moment, if you do the math, it's pretty derisked already. If you look at, for example, MDS, the refractory and the frontline, you can't necessarily combine the both populations. But altogether, we're looking at 12 out of 13 patients have responded. And the one that didn't, dropped out early. So in MDS as a total, it's looking pretty obvious that there is a drug here.

All right. Has the anti-47 -- CD anti-47 (sic) [ anti-CD47 ] failure, so to say, impacted on this field?

Yes, it has. The macrophage field is complex. It's been difficult. There's a lot of failures in the macrophage field. 47's recent late-stage failure with Gilead didn't help our case, unfortunately. But I actually feel very strongly that we would be compared to 47 as our mode of action completely differs. First of all, targeting 47 will allow macrophages to eat what they encounter, hence the cancer. But we will allow the macrophage to present what it eats to the immune system. So totally different. And targeting, for example, 47 will kill red blood cells. Anemia is a big problem for that drug. And as Mika presented, here's what I don't get as a physician. You got a vulnerable patient population like AML and MDS who suffer from neutropenia, anemia. You're going to throw in a cancer drug like anti-47 together with another one like aza or venetoclax, and they're all going to kill cells. They're already anemic. They're going to kill cells. Why do you get? tox issues, surprise, surprise. Easy to say hindsight here, but it was clearly obvious it's going to happen. We, again, as I mentioned and the data shows, we're likely to improve hematological recovery, improve anemia, neutropenia and all that. So it's totally opposite. The tox issues seen with 47 in any way cannot be compared to us.

Do you think that one day bex could be even used to help the chemo-treated patients who have lost bone marrow activities?

Exactly. That's what we believe. So bex could be so widely used possibly in the future, but it's going to need a lot of clinical work behind it to prove that to the world. But ultimately, yes, I do.

Thank you, Juho. So I will now thank you all the people who have also now hopefully sent some questions to us and invite Maija and Mika come to back over here. And I will then guide at the proper questions. And we will do this first in English, so questions in English first and then at the end also the Finnish questions. So Pawan and David, please?

Thanks, Markku. First question here is probably for Mika. So venetoclax plus aza combination trials that are ongoing in HMA failed MDS. How would you compare that treatment with the bex plus aza combination?

I think that's an excellent question. And there actually has been also several ongoing trials in the newly diagnosed MDS, azacitidine plus venetoclax. We currently are still waiting for the readout for those trials. With regard of newly diagnosed AML, we do know that toxicity has been issue for venetoclax. And for that reason, we actually are currently running our pan-Nordic LD-VenEx trial where we try to deescalate the dose of venetoclax to avoid toxicities. And the concern for MDS has been, as you have pointed out earlier, that we see patients with cytopenias. And then with venetoclax, we even deepen those cytopenias. There is, for that reason, certainly room for bexmarilimab. And I think that we -- what we really need to do is wait for the data to see that what kind of toxicities are related to aza plus ven, especially in relapsed setting, which is, as mentioned, very difficult-to-treat patient population.

Next question, what does the competitive pipeline in MDS currently look like?

Maybe I'll take that question. But you know the studies pretty well. Well, actually, in refractory MDS, there's not really much ongoing. I'm pretty confident saying we are the lead programming that. There is also, as mentioned there, aza/ven in the refractory, but that's mainly driven actually by an investigator initiative trial from MD Anderson. AbbVie, as the company that sponsored venetoclax, they're doing frontline high-risk MDS in the Phase III. So the refractory setting is pretty clear. There's also a new trial with bispecific CD123/CD3. It had tox issues. It's a drug from Novartis originally. It's been pulled out. But again, it's an investigation trial from the U.S. in refractory. So the refractory is pretty, I would say, clear from competition still at the moment. So it's such a hard disease to treat. In the frontline high-risk setting, as mentioned, there's a recent setback with 47, then recent setback with sabatolimab, the anti-Tim-3 from Novartis. The only thing really, that's going to possibly change the landscape is the aza/ven in the frontline high-risk MDS, at least on my radar. How about yours, Mika?

Yes. As mentioned, we still are waiting for the data. And it has been kind of long winding road because the readout has been delayed and delayed. Of course, that was the same thing for VIALE-A trial, which ultimately sort the survival benefit in AML. But as mentioned, we are still lacking the data for frontline MDS, and then we really should see that prior making drawing any conclusions.

And I would like to add that hopefully, you noticed that among those 8 patients we have now in this HMA fail MDS group, 2 of them had previous magrolimab anti-47 treatments and were refractory in there and then came to our trial, and we have a response. So that's just indicating how different the mode of actions between these 2 molecules really are.

Maybe to touch upon that because there's also a lot of patients in the trial that had received aza/ven previously in AML and MDS and still being refractory to that. They were responsive to bex and aza. So how I see even being a bit premature. We don't know the data from the Phase III in frontline harvest MDS. But even though aza/ven would become a new frontline in high-risk MDS, there's still going to be the refractory population. Totally wide open space for bex/aza to play in. Because people are still going to refract, bex is still going to work for them.

Next one, please?

It's a market size question. So what is the size of the patient populations that you're looking at for your indications?

Juho, this is for you.

This is probably a -- I'm thinking trial size or market size. Maybe just touch upon the trial size then is since there's no treatment approved in refractory MDS and it's an orphan condition, the trial sizes are likely to be small. We have sized them, but I'm not going to state them out here. But we're talking even a registrational Phase III kind of trial could be 150, 200 patients. And we're not taking paid trials.

And if I may comment on the kind of patient population size, so currently, as has been discussed previously, we do not have treatment options for those patients that fail HMA. And ultimately, all patients that will not receive allogeneic transplantation, which is the majority of the population, will ultimately fail. And of course, the question is then that should the bexmarilimab be in the first line already. But still that hasn't been the case. So for that reason, we actually have quite a large patient population considering all those patients that will have failed HMA treatment.

Yes. For the market and target population to be treated, it's relatively big in the field of high-risk MDS. But the way we see it as a company, we're going to work our way through first from the refractory, get the first label, get that population, drug to market, start revenues, then move up to the frontline. And again, there's plenty of room, there's plenty of patients that are not suitable for transplant. Aza/ven here, it's not so popular with physicians due to the tox. You want to reduce the dose, and there's a lot of stuff to do there.

Yes. Yes, certainly.

But just to summarize, even this refractory population in tens of thousands patients, which are only available...

We're still talking a significant market. And recently, global data estimated that in 2028, the global market for high-risk MDS would be EUR 2 billion, and evaluate estimated would be EUR 3 billion. So it's roughly there. And if that's the market size and bex would play a significant role in that market.

Anything else in English?

Last one so far, Markku, what type of partner would be ideal for Faron? So only hematological cancer or solid cancers as well?

[ Richemont ] would be my favorite. But Juho, you can answer.

So there's a couple of aspects we look at partners and discussing with a lot of them is that ultimately would be perfect if the partner would play in AML and MDS. For example, we have a hypomethylating agent and have an anti-PD-1 we could work with in solids. Ultimately, that would be a deal. Another scenario, if a partner were more hem-focused and not playing solids is that we partner with hem only. And we continue with revenues from there, we continue the solid tumor development. So we lead a lot of significant value in the company also that way.

Thank you very much. Dave, are there any questions in Finnish? [Foreign Language]

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Well, thank you very much for really good questions, and thank you following us. And we keep informing as soon as we make next steps and progress with the program. And obviously, we will also come back to our shareholders during the AGM. Hopefully, we have a further discussions on this topic. Thank you very much joining us. And I also want to thank the speakers for the excellent talks today. And Maija made everything clear because there were no questions.

That's good.

Yes. Thank you. Bye now.

Thank you.

Thank you.