Herantis Pharma Oyj (HRTIS) Earnings Call Transcript & Summary

Good morning, and welcome to the Herantis Pharma company update webinar. My name is Julie Silber, and I will be your moderator for today's event. Presenting today will be CEO, Craig Cook, who will give a company update regarding the going forward strategy announced in yesterday's press release titled Herantis Pharma to focus on CDNF and xCDNF programs. On call today is also Herantis' COO and Head of the Lymfactin program, Antti Vuolanto. He will be on hand to take any questions at the end of this call. I wanted to give listeners a quick reminder, and if we can go to the slide on the forward-looking statements, during 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. Please note that the 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. We will continue at the end of this call with a Q&A session. And after that, we will be followed by closing remarks from our CEO. [Operator Instructions] As a reminder, this call is being recorded and will be available for replay soon after the event. And with that, I would like to turn the webinar over to Herantis' CEO, Craig Cook. Go ahead, Craig.

Thank you, Julie. Good morning, everybody, and thank you for attending this webinar. The plan for the webinar is to go over the Lymfactin program, and then also focus on the CDNF and xCDNF strategic update. And thereafter, as Julie said, we will take some Q&A, questions and answers. So starting off with the Lymfactin program. This is a medical therapy for lymphatic diseases. And in breast cancer, patients often undergo removal of the lymph nodes in the axilla and in their armpits at the time of surgery to prevent further spread of the cancer for these patients. And as a result of that, the lymphatic drainage from the arm is cut off from the rest of the body, meaning that the lymph fluid and the fluid in the arm is unable to drain. And then you get the picture that you see in the photo on the right-hand side, where the arm becomes very swollen, very painful, very debilitating for these patients because there's nowhere for the fluid and the lymph to drain as a result of the lymphatic system being disrupted. And Lymfactin is a growth factor that stimulates regrowth of the damaged lymphatics. And thus, the intention is to reconstitute the lymphatics with the use of Lymfactin. And on that basis, with that promise, we took Lymfactin into a clinical program. There have been 2 clinical studies conducted with Lymfactin. There was a Phase I safety study completed in February 2018, which established safety and tolerability for Lymfactin, and that has maintained out through 24 months. This was not an efficacy study. But nevertheless, we did look at some potential indicators of efficacy. Subsequent to that, there has been a Phase II efficacy study in Breast Cancer Related Lymphedema, where there were 2 groups of patients, one group that got Lymfactin with surgery and a second group that didn't get Lymfactin with surgery. And the intention was to then compare these 2 groups and identify a treatment effect for Lymfactin. Unfortunately, as we announced a few weeks ago, those study results were inclusive. And some of the main reasons for these are illustrated -- for the inconclusive nature of the study, are illustrated in this slide. Quality of life and arm volume reduction was the key -- were the key primary outcome measures or endpoints of this study. And if we look at the quality of life, the intention is not to go into too much detail on the data side. These graphs are here for illustration and to make the point regarding each of the outcome measures. So if you look at the quality of life specifically, we see that both groups showed improved quality of life. And the access in this right-hand graph here is the lower the score, the better is the quality of life. So we see that for both groups, Lymfactin and placebo, there was an improvement in quality of life. But what we also see is that there were significant baseline differences between Lymfactin and placebo, which means that it is not possible to compare the groups and identify a specific treatment effect through Lymfactin. And we see a similar picture in the arm volume reduction in the plots at the bottom. Again, we see there's a lot going on with Lymfactin, and the change in Lymfactin is different to that from placebo. But once again, there's significant baseline differences as well as variable outcome measures. And the combination of these meant that it's -- once again, it was not possible to identify a specific effect, treatment effect that was related to Lymfactin. On more positive notes, there is reason for optimism regarding Lymfactin as we see in some of the secondary or exploratory endpoints outlined on the slide. So tissue water content there, we're looking specifically at the amount of water in the tissue of these patients -- in the arm tissue of these patients. And we see that over 12 months, if you compare the [ visible ] 12 months to baseline, there is a statistically significant improvement in the Lymfactin group versus placebo. Again, there were baseline differences, as you can see in this graph, but potentially an indicator on the tissue water content side of it. Physician scoring index. Here, the physician, the principal investigator scored key parameters of the Lymfactin or lymphedema treatment for the patients on Lymfactin and placebo. And of the 10 best patients, 7 of those were from the Lymfactin group. And in VEGF-C expression, and VEGF-C is the growth factor that is stimulated by Lymfactin, we see an increased expression of VEGF-C in the [ wombs ] of patients, 6 for Lymfactin versus 2 for placebo patients, so these potentially suggest a proof of principle relating to the Lymfactin's mechanism of action. But as I outlined on the previous slide, the primary outcome measures did not allow us to define and quantify the effect -- the treatment effect related to Lymfactin. So this study was very carefully planned with top key opinion leaders. And based on preclinical data and best practice regarding the treatment of lymphedema at the study start, the learnings of this program, it's a pioneering program, it's a groundbreaking study, no one has ever done anything like this previously. So there's certainly learnings in the study moving forward, such that we understand that even though there was a change different from placebo, it was not sufficient in this study to separate the treatment effect from placebo. So as a result, we conducted a comprehensive strategic review with the Board and management of Herantis. And that evaluation was focused on learnings from the study, how best to accurately evaluate treatment effects, implications for the overall program, resourcing requirements. We are a small company. These are resource-intensive and expensive programs as well as strategic considerations of Lymfactin versus our central nervous system assets CDNF and xCDNF. And moving forward, the decision and outcomes of that analysis is that Herantis will focus our in-house development on our CNS assets in neurodegenerative diseases, specifically CDNF and xCDNF. Lymfactin clinical development will be discontinued in Herantis. Instead, we will seek a partner that we can out-license the asset to who will then take on the further development of Lymfactin with the necessary resources and strategic focus. So Herantis will now be a pure-play CNS company focused on neurodegenerative diseases. We have 2 assets in the portfolio, CDNF, that's Cereal Dopamine Neurotrophic Factor, which is a biological protein; and xCDNF, which is a chemically engineered version of CDNF. And CDNF has completed a Phase I study towards the end of last year in Parkinson's disease. And moving forward now, we will be expanding the routes of administration to both intranasal routes of administration as well as subcutaneous route of administration for both Parkinson's disease as well as neurodegenerative diseases, respectively. And then we have xCDNF which is focused on Parkinson's disease in terms of the treatment for chronic neurodegenerative diseases. And I'm going to -- the next 5 or 6 slides are the key points and the key highlights regarding the data we have on CDNF and xCDNF, which is important to understand the promise and the excitement that we have around the portfolio. So first of all, CDNF and xCDNF act very powerfully on a key system called proteostasis. And proteostasis regulates the fate of every protein from synthesis through to degradation. And as we all know, protein are the building blocks of everything in the body. And if they go wrong, if we mess with proteins, then we mess with the body. And in diseases such as Parkinson's -- in neurodegenerative diseases such as Parkinson's and Alzheimer's, proteostasis goes awry, it becomes faulty, and that's where CDNF steps in because it acts to restore the protective effects of proteostasis and potentially stop or even reverse the pathology, the disease pathology. It's a highly active area of research. We're in great company with other major players such as Roche, Merck, Biogen, Google Ventures and Calico Labs. It's a very active area of research and a lot of promise. So these could be potential collaborators. They could be potential partners of us, but it's a very active area of research. So that's the first thing. The second thing is CDNF has been established safe in Phase I where the adverse events were mainly mild and transient. There was a similar safety profile between groups, similar safety profile between different time periods in the study. There were no dose-limiting toxicities related to CDNF. This wasn't an efficacy study because of the advanced stage of patients' disease. What we can say, however, is that there was no worsening of disease in a disease that typically would be expected to worsen over time. The third point is related to biomarkers. So we've continued to analyze the data from the study and generate and receive additional data and analytics. And there's a very interesting emerging picture of the effect of CDNF on biomarkers, specifically that we see biomarkers in the cerebrospinal fluid. They change in response to CDNF treatment. We also see that those changes are correlated with improvements in motor function and biological dopamine signals on brain imaging. Some of these subjects, very interestingly enough, also have been found to carry genetic mutations related to Parkinson's, including LRKK2 and GBA. And finally, the biomarker profile suggests that actually, the proteostasis, the effect that CDNF has on proteostasis is also manifesting in the biomarkers and the change in biomarkers that we see. And some of the data is mentioned at the bottom of the slide, which I won't go into in too much detail other than to summarize and reiterate that a very specific CSF biomarker signature seems to be emerging in responders to the treatment, which is very exciting and very compelling moving forward. And this slide is linking the picture that we're starting to establish that combines the genetic, the clinical, imaging and biomarker data as a response to CDNF treatment. So this is a 62-year-old male, the disease -- he had disease for 10 years, so he's advanced in terms of the stage of his disease. And on the study, he had 6 months placebo treatment initially, followed by 6 months of CDNF treatment. Sorry. And what we see over here, first of all, is his interesting genetic genotype. So he was a LRKK2 patient that is related to Parkinson's, number one. Number two, if we look at the motor score, and the motor score is assessed by a tool called UPDRS and the lower the score, the better. So we see that on the y-axis, the lower the score, the better. The first 6 months, the first column is while the patient was on placebo. And there we don't see much change, maybe a slight improvement in the motor score. But once the patient is put on to CDNF, we see a dramatic improvement in the motor score as a result of the CDNF treatment. So that's the second key parameter. Then we move on and we analyzed the imaging for this patient. Again, the first 6 months is looking at the patient while he was on placebo. And here, we're imaging specifically the dopamine neuron. So that's the pathology that is involved in Parkinson's. And we see here that the number of dopamine neurons or the imaging of those dopamine neurons reduces over time. Once the patient is put on to CDNF, we actually see that to stabilize and potentially even start to increase. So the imaging of the dopamine signals in this patient's brain responded to the CDNF treatment. And then finally, we did a very sophisticated and advanced analysis of the biomarkers in all of these patients. And here, we see a strong picture that correlates with the genetics and motor score and imaging. Again, we have the first 6 months where the patient was on placebo. And red means responders. So in the first 6 months, we see there's not a lot of red, it's mainly blue, yellow, white, pink. So very little response to the placebo, as one would expect. But once the patient is put on to CDNF, there's a dramatic difference and all the biomarkers -- not all the biomarkers, but several biomarkers lights up a bright red. So very convincing suggestion of a response to CDNF treatment. So to summarize, in the first 6 months for this patient, while he was on placebo, not much going on in motor score, deterioration in imaging and not much going on or even deterioration in biomarkers. Once the patients is put on to CDNF, we see dramatic improvement in motor score imaging and an effect in the biomarkers. So a very compelling picture, putting together all the key parameters of CDNF treatment of these patients in Parkinson's disease. What about xCDNF? So with xCDNF, we've taken the smallest, most potent compounds or components of CDNF, and we've engineered it chemically to achieve 2 things: one is to cross the blood-brain barrier; and two is to retain the potency of CDNF. And this data -- I'll present the data now on the blood-brain barrier crossing as well as the potency that demonstrates we have been successful in that engineering. So here, we looked specifically at the blood-brain barrier penetration in these animals. xCDNF was injected. And then concentrations were monitored in the blood as well as in the brain. And the y-axis here is the concentration of CDNF, xCDNF. The blue line is the concentration in blood. So as you would expect, when the animals were injected, the concentration increases and then reduces over time. The red line is the concentration in brain, which was done with a very specific technique to make sure that we could measure accurately the concentration in the brain interstitial fluids, so that's once the xCDNF has crossed the blood-brain barrier. And the red line here shows that a high proportion of the xCDNF administered into the blood actually crossed the blood-brain barrier into the brain. So a big tick there for the blood-brain barrier penetration. For the potency, this was a further study where we induced Parkinson's type like disease in animals. And then we assessed the effect of the xCDNF treatment on that. So on the left-hand side, we're looking specifically at dopamine neurons and the survival of dopamine neurons. The y-axis is the number of dopamine neurons, so the higher, the better. And then the x access is different groups of animals that were in the study. The gray group is a control group. So these animals were healthy, there was no disease whatsoever. The rest of the groups are animals that were treated with CDNF after having had the disease induced in them. The vehicle group didn't receive CDNF treatment, and we see there a dramatic loss of neurons up to 50%. But for the animals that received CDNF, there's -- and specifically the higher dose CDNF, there's at least a 50% improvement in protection of these neurons. And this is only after 4 weeks of treatment in these animals. So a very compelling picture for protection of dopamine neurons with xCDNF. On the right-hand side, we're looking at alpha-synuclein, and that's a bad protein -- or that's a bad substance that is toxic and implicated in pathology of many neurodegenerative diseases. Again, the y-axis is the amount of alpha-synuclein. And here, the lower it is, the better. So the control group have low amounts of alpha-synuclein. The vehicle group are those animals that were induced with disease but weren't -- didn't receive CNF treatment and those alpha-synuclein levels are very high, through the roof. And then the animals that were treated with xCDNF have got dramatic reductions in alpha-synuclein. In fact, they're supernormal levels of alpha-synuclein that demonstrates -- further demonstrates the potency of xCDNF. So again, a very big tick in the box of potency as well as the blood-brain barrier penetration shown on the previous slide. So in summary, there's a lot that we know about CDNF. There's emerging evidence that is ongoing with CDNF and xCDNF, and we will be having a Capital Markets Day in the next, roughly 2 months, around about May or June, where we will be giving a full update on all the data that we are generating. But what we're seeing now, what we know now is that CDNF, xCDNF have strong multimodal mechanism action that restores proteostasis as well as reduces neuro inflammation, very key -- both key parameters in disease. CDNF has been established as safe in humans. We have novel evidence of biomarker impact in humans. There's the genetic and biomarker patient subgroups that are starting to emerge. We powerfully protect neurons in vivo, and we normalize these toxic disease aggregates such as alpha-synuclein. So a very intriguing and encouraging and promising picture based on the data that we are starting to generate. In terms of time lines, news flow. This just captures the programs within Herantis at this point in time. So as I mentioned, Lymfactin, we've had the data readout. That was inconclusive, and now we're going to be focusing on business development and out-licensing of that asset. CDNF has completed a Phase I. We're expanding that for nose-to-brain administration and subcutaneous nose-to-brain. We have the collaboration ongoing with Nanoform. That is progressing very well and according to plan and a very exciting program there. Plus we have xCDNF, which is at lead selection and going through the preclinical stages, as I've shown you some of the data. So a very comprehensive and rich news flow potentially with our drug development programs. So in summary, for this specific presentation, we have optimized our strategy. We focused on CNS. It's a data-driven strategy. Moving forward, we will be a CNS neurodegenerative company. We will seek and we'll work hard to find a partner to take on the Lymphedema development and future for that program. We have this expanding body of evidence that we are able to impact key biological systems and biomarkers, and we're in great company there with other big players in the space. In the near to medium term, they are potentially rich news flow and milestones that we intend to achieve. And then, of course, our business model focus on partnering. We understand what partners need, and we're working hard to make sure that we can have ongoing dialogue and productive dialogue and answer the questions for potential partners and seek a partnering transaction with our assets. So I hope that's given a good overview of the Lymfactin program, the CDNF and xCDNF programs, the reason for our strategic decision that we announced in -- earlier today, and Antti and I are now happy to take Q&A.

Great. Thank you, Craig, and we welcome back Antti. There are a few questions in queue, and I just want to remind everyone, [Operator Instructions]. And the first one is, can you provide a little more color on the inclusive data? Was the data -- the inconclusive, excuse me. Was the data inconclusive due to a problem with the clinical study design? Or was it due to the clinical environment? For example, dosing issues, issues with different procedures at the different sites, et cetera, the baseline?

Antti, you want to take that one?

Yes. Yes. So first of all, the study was designed with the best possible KOLs in the field when the program was initiated in 2016, the clinical studies. So in that regard, the plan was clearly to address the clinical need. For the Phase II study, we observed, surprisingly, that there were major differences between the groups at baseline, which is a surprising observation as the study was randomized and then blinded for the study personnel. So basically, the patients were allocated in the different treatment groups in a random manner. And so the baseline differences that we have seen in quality of life and the volumetric measurement, that's purely coincidental. In addition to the baseline differences, the outcome measures that we used, which are the current golden standard in clinical practice, they are not -- they have turned out to be not the optimal ones, demonstrating the additional effect that Lymfactin might have on the patients as Lymfactin is a gene therapy, and it's very far from the current clinical practice that is used. So it's not a suitable measure for this kind of a clinical study. And those are clearly things that should be looked at in the future clinical study with a gene therapy like Lymfactin.

Great. Thank you, Antti. The next one is a follow-up to that question. You mentioned that Lymfactin safety profile remained consistent and was well tolerated. Is this still correct? Did you see any adverse effects? Were there any unpleasant, serious or even life-threatening side effects to the experimental treatment?

Yes. In the Phase II study, that was a good setup for comparing the safety of Lymfactin group versus the placebo group. And there, we didn't see any difference between the groups. So Lymfactin didn't cause any adverse events or more adverse events than the surgical treatment that was included in both groups. So in that sense, the safety profile of Lymfactin seems to be very favorable.

Great. So the next set of questions are about sort of the next steps with Lymfactin. Can you provide any more details on the potential for out-licensing Lymfactin? And where are you in this process?

Yes. So that's becoming an active work stream. Until now, it hasn't -- there haven't been any activities in terms of out-licensing. We, like any biotech, we have ongoing discussions with different pharmaceutical companies. But it's -- as of now, that -- we'll start that as an active work stream.

Great. So that sort of kind of answers the next question, what would the next steps look like for Lymfactin for a potential partner? A larger trial with similar design? Or would other influence likely be used based on the learnings from the completed study?

So I think -- well, I'll take that one, Antti, and then you can add to it. I think the key focus moving forward for Lymfactin and the key considerations for a partner would be on the outcome measures, making sure that the outcome measures are optimized to capture the treatment effect of Lymfactin, number one. The measurement of those outcome measures to ensure that they're consistent and reliable. And then also, making sure that the chance or the risk of baseline differences are minimized and mitigated such that the treatment effect of Lymfactin can be assessed. So I would say, those are -- and I would add to that, dosing. I think it's -- it will be an important aspect for any partner moving forward to make sure that the dosing for the asset is correct. So those are the 4 key things. The dosing, the baseline, comparability, the outcome points or the endpoints, the specific outcome measures and measurement of those outcome measures. Antti, anything to add?

No. I think that was a complete [ answer ].

Great. [Operator Instructions] At this time, we don't have any questions in the queue. One more question. What is going on with the Nanoform partnership? Can you give us any information on that?

Yes. So the Nanoform partnership is -- has commenced and is on track. As you may recall, we -- the intranasal route of administration is the evaluation and the expansion of the routes of administration for CDNF, and that was a strategic decision made towards the end of last year. And the Nanoform collaboration commenced earlier this year is on track. The project teams are working on the formulation. And at the moment, everything is on schedule and progressing well.

Great. Thank you, Craig. At this time, we have no further questions. One more last chance to ask a question. [Operator Instructions] I think with that, we can conclude today's webinar. Thank you, Craig. Thank you, Antti.

Thank you, everybody.

Wait, wait, wait. We have one more question, and that just came in. Can you give any more details on the timing on the formulation work for CDNF? For example, earlier like 2020, second half of 2020?

Yes. So we're hoping to have the formulation. We have 2 work streams on the formulation, Nanoform and Medpharm, which is a company in the U.K.. Both of those formulations, we expect, to be complete second half of this year, and then will go into the preclinical testing.

Great. Any more questions at this time? We have another question that came in regarding the CDNF and xCDNF programs. How would you describe the strength of your patent portfolio now at this time?

Well, I think we -- for CDNF and xCDNF, we're well covered both in terms of intellectual property, which comprises patents, trade secrets and know-how. And that's -- we continuously endeavor to strengthen the IP position of the assets, and I think it's fairly solid. Antti, you may want to add anything to that. But right now, it's an evolving process because we want to make sure that we continue to strengthen the intellectual property protection of our assets. And as I mentioned, that's a patents, trade secrets and know-how.

Yes, I think that's accurate. And what is important that we have protective composition of matter type of IP there, so I think we are very strong in -- IP-wise.

Any more questions at this time? There does not seem to be any more questions at this time. So once again, Craig, do you have any closing comments?

No. I thank everyone for attending. I think the strategic decision that we've made is in the best interest of CDNF and xCDNF on the one hand as well as Lymfactin, on the other hand, and we have a clear path forward on how we want to execute the strategy for both assets. And moving forward, the fundamentals of the business, we spent some time now optimizing the fundamentals of the business. The last year has been about focusing and optimizing some important decisions. We made some big calls based on the data, based on strategic considerations. And I think moving forward, we have a clear run now to build on those fundamentals and really give these assets, the chance of success that they have.

Thank you. And with that, this concludes today's webinar.

Thank you, everyone.

Thank you.