Herantis Pharma Oyj (HRTIS) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Herantis R&D Update Overview Webinar. [Operator Instructions] As a reminder, this webinar is being recorded. Presenting today will be CEO, Craig Cook; with Henri Huttunen, our CFO; Antti Vuolanto, our COO; Sigrid Booms, our Director of Clinical Development; and Tone Kvale, who has just joined the Herantis management team as CFO. They will be participating in the Q&A section. And I apologize for any mispronunciations. It is not intended. The next slide shows our disclosure statement. As a quick reminder to our listeners, before we begin, I'd like to share that today's webinar, management may make forward-looking statements involving known and unknown risks, uncertainties and other important factors beyond the company's control that could cause the company's actual results, performance or achievements to be materially different from the expected results, performance or achievements expressed or implied by such forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements. Actual results and the timing of certain events may differ materially from the results or timing predicted or implied by such forward-looking statements, and reported results should be considered as an indication of future performance. Please note that these forward-looking statements made during this webinar speak only as of today's date, and the company undertakes no obligation to update them to reflect subsequent events or circumstances other than to the extent required by law. This webinar is being webcast and will also be available through the Investor Relations website after the live session has ended. With all these formalities out of the way, I would like to now turn the call over to Craig Cook, our CEO. Craig, you may begin.

Thank you, Julie, and welcome to everyone. Thank you for joining. The purpose of this webinar is to provide more detail and explanation in follow-up to the R&D update press release that was announced this morning. The R&D update follows an extensive piece of work with Board, management. We consulted widely with experts and other stakeholders in our fields of competence and in our fields of focus so that we could ensure that the inputs allowed us to make sound decisions and correct decisions. And on that basis, I think we are super confident and super excited about the direction that we have decided on for the company, and then I will take you through in this presentation. For those of you that may not be fully familiar with the background of Herantis, we are a Finnish company based in Helsinki. We listed on NASDAQ First North in Finland and Sweden. And our assets originate from world-class research at the University of Helsinki. Our science has been presented or published in top-tier journals, including Nature Science, Immunology and JPRAS. And that is a testament to just how good our technology and our assets are. Our scientific focus is on disease modification. So we're looking to regenerate the target areas that we're working on in these pathologies. We have CDNF, which is cerebral dopamine neurotropic factor for neurodegenerative [indiscernible] FC which is a gene therapy for lymphatic diseases. And our therapies are focused on slowing or stopping or even reversing pathology in these diseases. And our disease focus is Parkinson's disease with CDNF, and lymphedema, secondary lymphedema with VEGF-C. Now in both of these disease areas, they have suffered from a lack of innovation for decades. For example, Parkinson's, the standard of care today is the same as it was 60 years ago, 70 years ago. And for lymphedema, there's no medical therapies currently available. So we're aiming and hoping to bring treatments for these diseases into the 21st century. Our pipeline comprises 2 franchises in [ neurology ] and a lymphatic franchise. Our neurological franchise, the lead asset way is CDNF. In Parkinson's disease, we've just completed a Phase I earlier this year. And now we're looking to progress the program further with new administration routes, which is what I'll touch on later on in this presentation. We have next-generation xCDNF also in Parkinson's and other neurodegenerative diseases. This is [ select ] research phases. And for our lymphatic disease franchise, we have Lymfactin, which is for the treatment of secondary lymphedema, breast cancer associated secondary lymphedema. That is currently in Phase II, and we're expecting that to read out in early 2021. Success with our CDNF franchise would give us a multibillion-dollar drug, a blockbuster drug, no question. And for Lymfactin, similarly, a massive opportunity at hand there in our estimates, at least EUR 600 million and upwards. So let me spend some time on Parkinson's disease, CDNF and xCDNF. Earlier this quarter or August, September, we published 12-month data in February, we published 6-month data on this study. It was a first-in-human study that comprised an initial 6-month period where patients were put onto either CDNF or placebo. Then there was a second 6-month period where the placebo patients were also put on treatment. And currently, the study is in its 4-year follow-up. On average, the patients in the study were around about 60 years. And in terms of their disease, they have had Parkinson's for roughly 10 tenures. So that's a relatively advanced stage of disease with advanced dopaminergic loss. And we are very pleased that this study achieved its primary endpoint, which was safety. That's always -- it's a big triumph for any biotech company, taking a drug from preclinical animal stages into humans. So the outcome for us was most gratifying. The majority of the treatment-emergent adverse events were mild and transient. There was a similar safety profile in the 2 periods, the first 6 months and the second 6 months Importantly, there was no dose-limiting toxicities related to CDNF. This was not an efficacy study, other than to say there was no worsening of disease in a disease that typically you would expect to worsen over time. So with that strong foundation, that solid foundation, we are now focusing on designing a winning program. And there are 3 key pillars to the winning program. First of all, we intend to develop CDNF as a standalone product. What do we mean by that? Well, we're going to move away from the invasive surgical drug-device combination that we currently used in the Phase I, and we're going to use -- move towards a more patient-friendly regulator-friendly, physician-friendly route of administration, including intranasal, intrathecal subcutaneous. We have used these dosing approaches or these administration approaches preclinical. They're solid science and the data supports, for example, in intranasal CDNF can cross into the blood-brain barrier via those routes. So we have a solid base to start off with the alternative administrations. So we're backing CDNF all the way without having to rely on an invasive surgical device. So that's the first pillar. The second pillar is we're focusing on partnerability. So we want to accelerate the time to partnerability. Now this new strategy will increase the chances of successful as well as quicker development approval and commercialization. As a result of that, it's also expected that we will accelerate a partnering transaction with this program. So that's 2 pillars. And the third pillar is to target earlier stage patients where there's more remaining viable and functional neurons for CDNF to act on. So CDNF acts on dopaminergic neurons to regenerate or replenish or rejuvenate the neurons. So where in earlier disease, there are still viable neurons to work on, for CDNF to work on. A word on our xCDNF program. This is the follow-on program with 2 CDNF users has taken the paired molecule of CDNF, and it's taken the smallest, most potent tiny fragments of the parent CDNF molecule. And the data that we've generated so far has shown us a few things. First of all, that those small potent fragments of the original CDNF, they retain their biological activity, number one. Number two, they do penetrate the blood-brain barrier. And as I mentioned, blood-brain barrier is a challenge for CNS treatments. So they do penetrate and cross the blood-brain barrier, [ sorry ]. They are highly potent molecules, so we expect them to be able to cross the blood-brain barrier in the first instance and then exert their therapeutic effect. The stage of that program is to be at final stages of compound selection, and we expect to complete that selection process during the first half of next year. This also will not require surgical device. It will be administration by a simple peripheral injection. Lastly, I want to touch on VEGF-C, our Lymfactin asset for secondary lymphedema. So lymphedema, our focus was on breast cancer associated lymphedema. So this is when patients come in with breast cancer, and they are treated by removal of the cancer as well as removal of the axillary lymph nodes, the lymph nodes in the axilla. And the removal of those lymph nodes in the axilla means that the lump drainage and the fluid drainage from their arm is affected or damaged or destroyed. So the arm swells, becomes heavy, and it's a very, very unpleasant disease. With Lymfactin, this is an injection that is given at the time of lymph node transfer surgery with the intent of reestablishing that lymphatic network such that the drainage can be reestablished and the fluid can flow freely once again and reduce the lymphedema or the swelling of the effected arm. We're currently in a Phase II trial, as I mentioned earlier, and we expect to get the data on that in the first quarter of 2021. So in summary, 2020 has been an intense year from a news flow perspective. We've had positive top line results for the Phase I/II study in Parkinson's, 6 months in February, 12 months in September. We've strengthened the Board of Directors. There's been changes to management. And as you know, we've now also released the R&D update with -- from our perspective, the right strategy moving forward for the company. 2021, similarly, we're hoping and expecting to be a period with a rich news flow, including starting with unblinding of the top line data for the clinical study with Lymfactin. We also expect to complete development of the new administration routes for CDNF and select the lead candidate for xCDNF. So in summary and hopefully, what I've conveyed during this presentation and hopefully, what will be remembered is, first of all, we have cutting-edge science in biological and gene therapy, really hot topics and groundbreaking science in both biological and gene therapy. We have taken that science and we've successfully translated it into humans, and both of them have been established as safe. We have a clear strategy, and we know what needs to be done in order to make a significant impact on these unserved diseases. We have a highly skilled team. They've proven their track record of execution, their credentials and in terms of taking the program forward. As I mentioned, we expect rich news over the next 12 to 18 months for all of our programs, CDNF, xCDNF and Lymfactin. And finally, we have a clear path, we believe, to potential profitability and commercialization. And this strategy that we have now in place and we will be executing, we believe gives us, and maximizes, our chances of success for partnerability and commercialization. So I'm going to hand back to Julie to take any questions. And the team are available to answer as necessary.

[Operator Instructions] Our first question is, can you give some more details on the rationale for this new direction?

Yes. So I think as outlined in the presentation, this strategy allows us to build positively on the progress in the programs to date, whilst at the same time, minimizing the risks associated with a drug-device combination such that we will have a treatment that is more patient-friendly, more regulatory-friendly, more physician-friendly and clearly more appealing to partners. The other important aspect to add to that is that this new strategy, specifically for CDNF will also expand the target population that we can address because of the fact that we won't be using surgeries, so we will be moving away from that, expand the target population to patients with earlier disease and getting into the treatment in an earlier phase of the patient's disease process.

The next question is, how do you see the CDNF and the xCDNF program working together?

Henri, do you want to take that one?

Yes, certainly. First of all, the 2 programs are synergistic and complementary. However, they -- of course, their timing is, the schedule of development is different. CDNF is clearly more advanced with already some clinical data available, particularly on safety, while xCDNF could be considered perhaps more exciting, but it's at an earlier stage of development. So far, I mean, the both programs have benefited from data generated in the other program. For instance, we have been able to push the discovery and lead optimization phases of xCDNF forward quicker based on the mechanistic data that was earlier generated for CDNF. And secondly, both noninvasive CDNF and xCDNF are expected to have broad applicability in degenerative CNS diseases. But because CDNF is a protein, it may be perhaps a little bit more limited in terms of indications compared to xCDNF. And it is possible that there could be a specific indication for CDNF and a separate one for xCDNF in the future. And finally, we see this multiple shots on goal strategy also our risk mitigation tool.

I have a question that's sort of a follow-up to that. How confident are you about being able to pass the blood-brain barrier with the new administration methods? Do you consider this a major risk?

Julie, sorry, you're going to have to repeat that. You broke out.

Sorry. Okay. How confident are you about being able to pass the blood-brain barrier with the new administration methods? Do you think of this as a major risk?

There's always risk in drug development. But as I mentioned, we already have data in this regard that we are able to cross the blood-brain barrier with [indiscernible] scratches, not a cold start that we're working with. Henri, anything to add to that?

No, not really. I mean clearly, if this was a cold start, we had nothing. It would be a completely different story, but we do have preclinical data for many of those routes that we described previously and also the xCDNF data is looking actually really, really good in terms of the [indiscernible] penetration.

I'm sorry, Craig, I didn't mean to cut you off.

No, no, I was just saying, I think that hopefully answers the question.

The next question is, do you have enough CDNF material to cover the new development program?

Sigrid, that's one for you.

Yes, okay. Yes, we do have enough and we have sufficient supplies to cover our needs for the -- up to the coming early phase clinical trials. And in addition, we are already far in our process development for larger-scale CDNF production, and we'll move this now to the process of GMP environment.