Herantis Pharma Oyj (HRTIS) Earnings Call Transcript & Summary

Hello, and welcome to Herantis Pharma's First Half of 2022 Call. This is Julie Silber, Investor Relations for Herantis, and I will be the moderator for today's call. Please note this call is being recorded. [Operator Instructions] Presenting today is CEO, Antti Vuolanto, after which, CSO Henri Huttunen, and CFO Tone Kvale will join the call for the Q&A portion. [Operator Instructions] Additionally, during today's webinar, management may make forward-looking statements that involve 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 implied or timing predicted by such forward-looking statements, and reported results should not be considered as an indication for 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 recorded and will be available soon on Herantis Pharma's website under the header News and Events and the sub-header Company Live Presentations. With these formalities out of the way, I would like to now turn the call over to our CEO. Antti, you may begin.

Thank you. I'm happy to host the first half report of Herantis and just to remind you that what we are an innovative biotech company and we develop disease modifying therapies for Parkinson's disease. And especially, we are now concentrating on the HER-096, that is a peptidomimetic compound that has been designed based on the active side of its parent protein CDNF and HER-096 combines the very compelling multi-model mechanism of action of CDNF together with a patient-friendly administration. So let's go into the highlights of the first half of this year. So on the financing side, we successfully completed 2 fundraising around directly share issue and the rights issue with the gross proceeds combined EUR 8.7 million. We have also reported very encouraging blood-brain barrier penetration data in dogs with HER-096. So that rounds out the previous data that we have on smaller animals. We also reported the results of a proof-of-concept study with Nanoform in which we demonstrated a successful preparation of HER-096 nanoparticles. We have also strengthened our management team by appointing Charlotte Videbaek as Vice President of Clinical Development. And of course, then we have had some transitions as of the CEO. So in January, our Board Member Frans Wuite was appointed as an interim CEO and now in July, I was appointed as the CEO, while Frans still continues in the Board. Maybe some words about myself. So my background is that I'm a Doctor of Science in Technology as training. I have been in the drug development since 2009. Then I was working more on the immuno-oncology side for almost 10 years. And after that, I joined around this 4.5 years ago to lead the operations as I have very strong experience in manufacturing, in quality operations, in preclinical and clinical development and also developing this kind of expert organizations. So I would say that the transition period now has been quite smooth. And I am really happy to be here in my main bureau. So let's go into the milestones that we have as a company. So as I said, we are concentrating now fully on the HER-096. And our near-term milestones include to complete the preclinical safety package that is needed for the submission of clinical trial applications. And these will take place during this year. The first human dose in the Phase I study that is planned for next year, that we aim to have during the first half of next year and the evidence of HER-096 safety and blood-brain barrier penetration in humans is a target for us for the second half of the next year. As a summary about Herantis, what we do, we believe that HER-096 has all the characteristics to be -- to potentially become a new type of therapy for Parkinson's disease as it has very unique disease-modifying mechanism of action. And then those are not of -- treatments are currently not available for Parkinson's disease. And the market in Parkinson's disease, it's huge. Currently, there are over 8 million patients globally. And as I said, no such treatment available that we are currently developing here at Herantis. We know that HER-096 rest use aminergic neurons and passes the blood-brain barrier in clinical -- based on preclinical data. Of course, our job is to demonstrate this then later in humans as well. And the previous work that we have done with CDNF both in preclinical settings and in the clinical setting that really, really risks the HER-096 development as we are basically having the same mechanism of action with HER-096. And our company strategy is to actively work on the partnering side, and we especially are looking forward with the next year, a blood-brain barrier penetration data with HER-096 in Phase Ia clinical study as we believe that that would be a critical milestone for the partnering discussions together with the safety data that we will get. So let's go then into a short description of where we are with our development. So just reminding you about Parkinson's disease, which is the second most common neurodegenerative disease. Parkinson's disease is a disease in the midbrain where dopaminergic neural cells they lose their ability to produce dopamine. And that causes both motor and nonmotor symptoms. And currently, the treatment is only capable of treating the symptoms, but they cannot affect the disease progression. And this is very important to keep in mind when we are developing disease-modifying treatments. So at the time of diagnosis, approximately half of the dopaminergic activity in the midbrain has already been lost. So basically, if we want to affect the disease progression, we need to be able to treat early-stage patients. We cannot wait, for example, until 10 years as then the dopaminergic activity has been reduced by maybe 85% to 90%. We also need to bear in mind that the economic burden of Parkinson's disease is huge. Currently, only within European Union, it is estimated to be over EUR 14 billion per year. And it is also expected that the number of Parkinson's patients are increasing for the next decades. And our aim is to develop completely new type of treatment for Parkinson's disease in order to stop the progression of the disease. And now I give the word to Henri Huttunen, our CSO, to go through more about the HER-096 and where we are with the development.

Thank you, Antti. So while neuropathologically Parkinson's disease is characterized by the progressive degeneration of dopamine neurons and also accumulation of deposits of aggregated protein in the brain, on the molecular and cellular level there is more diversity and particularly the disease progression involves multiple types of mechanisms. HER-096 similar to CDNF actually engages with 3 very important assets of the disease as well. So first of all, the compound is interacting and targeting the unfolded protein response pathway in the cells. And this is very important. It's -- the unfolded protein response pathway is an adaptive stress responsive mechanism that aims to protect the cells from, for example, proteotoxic stress that appears in dopamine neuron in Parkinson's. So we're targeting a key mechanism to help the cells to survive. Also HER-096, similar to CDNF, has direct effects on alpha-synuclein aggregates. The alpha-synuclein protein in aggregated form is the main constituent of the Lewy bodies that accumulate in the patient brains and are kind of like the key neuropathological hallmark of the disease. And this protein aggregation pathology is, for example, targeted by various immunotherapies aimed to reduce the alpha-synuclein aggregate levels in the brain. So we know that HER-096 also in preclinical models, for example, has robust effects on the alpha-synuclein aggregation pathology. And thirdly and also very importantly, there is inflammatory processes triggered by the continuous progression of the degeneration of dopamine cells as well as various type of glial cells responding to -- pardon, we have some technical issue here. So inflammatory processes, particularly neuro information, is an important part of the disease process. And the unfolded protein response pathway is centrally -- again, apologies for the technical issue. So the new inflammatory processes are centrally involved in the disease pathophysiology and then the progression of the disease, and the unfolded protein response pathway is on the molecular level very tightly linked to the inflammatory processes. So we are targeting key essential elements of Parkinson's disease on the cellular level by HER-096. And to remind you, while CDNF an endogenous protein of the human body was -- provided an excellent opportunity for disease modification in Parkinson's, it had also challenges, particularly because of the protein nature, the drug -- the CDNF drug had to be administered directly into the brain. And this is -- it's technically very complex and also it involves safety risks for the patients. So several years ago at Herantis we started a program for development of next-generation compound based on the CDNF biology and HER-096, which was released last year as the preclinical candidate, is now the small synthetic peptidomimetic compound that engages with exactly the same pathways as with CDNF does. And the key additional feature for HER-096 is that it can penetrate the blood-brain barrier, which is the key technical challenge in all the CNS drug development programs. So we are combining 2 very important parts in a single molecule. So we have the disease-modifying potential, addressing multiple important pathophysiological mechanisms of Parkinson's disease, together with the compound's ability to penetrate the blood-brain barrier to allow peripheral administration. See, HER-096 also has additional benefits compared to a biological drug and particularly CDNF. One is that it's manufactured very cost efficiently by simple chemical synthesis instead of a complex biological processes which was required for a protein. And also we have now extended patent protection since the key patent for HER-096 were filed in 2019 -- end of 2019. Now CDNF -- the decade of research by Herantis and also by many others on the academic side has provided a wealth of data on CDNF biology on its effect in various disease models. And this provides a great basis for HER-096 development. And we believe that this is an essential de-risking element for the whole HER-096 development program. There's now a good understanding of CDNF mechanism of action. There was actually a new paper that came out this week from the team at the University of Helsinki showing how CDNF modulates unfolded protein response pathway on the molecular level. These type of incremental increase in our understanding of CDNF biology is, of course, important for Herantis as well. There is evidence from various preclinical models, animal models of disease in Parkinson's, ALS, Huntington's, others, stroke that CDNF really can protect various types of neurons and improve the symptoms in these animal models of disease. And of course, the Phase I study that we complete with intracranial CDNF in moderately advanced Parkinson's patients provided an excellent data set to support further development of HER-096 as well. And particularly, we're particularly excited about the biomarker data that was generated in this study. And we have now done some back translational work, if you will, to connect these biomarkers also to HER-096 and quite excited about the new data that's coming. So over the years the data set that has been building for CDNF provides also a good translatability for HER-096. So we know that CDNF on in vitro cellular models, various models, CDNF engages with the UPL signaling pathways and it protects neurons in a way that's dependent on modulation called the UPR system. And then on the -- in animal models, we have shown that in Parkinson's models, both in toxin models and also alpha-synuclein-based models, CDNF has a robust neuroprotective and neurorestorative effects. We've also learned that in aged nonhuman primate model of Parkinson's, CDNF has very robust neurorestorative effects and also improves both motor and nonmotor symptom of the disease. And here, for example, you can see on the top right corner -- now the ours is not moving -- the top-right corner, you can see the difference of the sprouting of dopamine neurons in the nigrostriatal system of the monkey. So compared to the placebo group, the CDNF group has a really strong effect restorative effect on the dopamine neurons. And in the box #4 here top -- bottom left, again the translatability is strongly supported by the Phase I data with CDNF showing biological -- signs of biological response to the treatment in individual patients. And this all is now forms the betas to support HER-096 development. And we've already learned over the past year that HER-096 can -- and shown that HER-096 engages with the same targets with CDNF and it has exactly the same type of neuroprotective effects on dopamine neurons in the alpha-synuclein based animal models. And during the first half of '22, we have taken the preclinical program of HER-096 forward. The top-right corner summarizes the pharmacokinetic and distribution data that we have generated. So we have now confirmed in 3 different animal species, effective brain penetration. So in mice, rats and Beagle dogs, we see that subcutaneous delivery, injection of HER-096 results in pharmacological active, dose levels, concentrations in the CNS, particularly in the cerebrospinal fluid. The PK profiles in between different species are quite similar, which is good for a prediction of what might happen in the first human study. And importantly, we are on track with our method development for Phase Ia, so that we would be able to demonstrate the BBB penetration next in healthy volunteers in the Phase I study. On the left-hand side is a brief summary of our pharmacodynamic studies. So we have shown by using an aged miles alpha-synuclein model of Parkinson's or alpha-synucleinopathy in general, we have shown that subcutaneous injections of HER-096 3 times a week are effective in protecting the dopamine neurons from the progression of the pathology. We have shown that there is a robust decrease in alpha-synuclein aggregates in the affected brand region. And we also have shown there's a very, very strong impact on reducing microgliosis, a neuroinflammation the affected brain region. And importantly also in the -- during the first half of '22, we've produced data to show that the dose response in this animal model is very much as we predicted based on the known CDNF biology and CDNF -- previous CDNF studies. Now moving towards the first in human study, of course, preclinical safety and toxicology is important. So we have completed preclinical toxicology studies in rats. A 28-day GLP toxicology study has been -- the in-light phase was completed during the summer, and the reports are now being finalized. And similar 28-day in GLP toxicology study in Beagle dogs is currently ongoing. And then I believe the last dosing will take place tomorrow, which then will follow up with a detailed analysis of both the animals' postmortem and hope to finalize the reports for the toxicology program by -- during the Q4 this year. This means that we're on track with our preclinical program. There hasn't been any unexpected findings in this toxicology studies so far. So our goal of submission of the clinical trial application for the Phase I study by end of this year is in schedule. I believe this concludes our R&D review, and we can now move on to questions.

Yes. Correct. Thank you, Henri.

Thank you, Antti and Henri. Let's see. We do have a handful of questions here. [Operator Instructions] The first question is, now with the new CEO, has the company's vision and goals changed? Can you provide us with some of your new vision for the company in the short term and in the long term?

Yes. So during the first half, actually I think it was in January, we communicated about the strategy that the company will focus on HER-096. And this is clearly the vision and the goal of the company also now. So in that sense, nothing has changed. So now we focus on the lead asset, HER-096. And we are -- we want to demonstrate the safety and blood-brain barrier penetration in humans next year as we believe that that is a major milestone for HER-096. As Henri explained, reaching the target tissue in the brain has been one of the major obstacles in developing new pharmaceuticals for CDNF diseases, and that's why we believe that once we have done that during the next year, we have -- we are in a good place to further develop the compound and also related to the partnering discussions. And that's the other aim that we have to be very active on the partnering discussion side as well.

Well, that almost answers the next question. Can you give us a little bit more detail on the ongoing partnering discussions?

Yes. So as very standard for small biotech companies, we have been on an ongoing discussions with all -- I would say all the pharmaceutical companies that are active on the -- let's say, on the aging-related diseases, CNS diseases over the years. But during this year, especially when we have been able to create a very compelling data package of HER-096, including the preclinical efficacy data, mechanistic understanding and demonstrating the blood-brain barrier penetration, I think we have had very fruitful discussions during the first half of this year. And now we will continue those discussions. We will open up some more discussions. And now after the COIVID restrictions have been lifted, we really look forward for active in-person meetings with several companies as we are able to participate in live partnering events after 2 years of COVID restrictions. However, it's good to keep in mind that the outcome of such discussions, it's very difficult to predict. And the time lines in these discussions is longer. So I'm anyway very positive about the -- our current data package and the opportunities that it gives in these partnering discussions.

Our next question is congratulations on your recent raises. What will the proceeds be used for -- what will the proceeds be used for? And how will it create value for shareholders?

Tone, will you take this?

Yes. Thank you. We are pleased with the investor interest in Herantis and also the fully subscribed rights issue, especially under these difficult market conditions that we have been seeing all the first half of this year. The net proceeds will be used to conduct a Phase Ia clinical study with HER-096 next year. And as both Henri and Antti said, the aim of this study is to demonstrate the safety and also the active -- we can see the active concentration of HER-096 can reach the brain after a subcutaneous administration in humans. And we think that this is a very important milestone for the company, and it will de-risk further development of this asset. And we also believe that if we are achieving this milestone, it will create significant value for shareholders and also open up new prospects for partnering.

You are now preparing for the first in-human study for HER-096 for the first half of 2023. Where are you in the process? And what are the remaining steps? Can you give us some details?

Henri, please.

Yes, I would be happy to do so. So of course, there are various things to consider. One, if you restart from manufacturing, we are currently in the process of manufacturing the drug substance, the active pharmaceutical ingredient. And the GMP manufacturing of the drug substance will be completed by -- roughly by end of Q3, so end of September. Then we will move on to manufacturing the drug product. The formulation is fairly simple for the subcutaneous injectable product, and then we will be ready by the drug product manufacturing as we will be supplementing the CTA. Then, of course, the preclinical program will be completed in schedule. Now we are close of having completed in life phase in the toxicology program. All studies are in schedule in that sense and that we're now starting to prepare documentation for the clinical trial application. The Phase Ia study design has also been more or less fixed, where we're ready with that. The study will be a single ascending dose study in healthy volunteers. So essentially, the duration of the study will be much shorter as compared to previous clinical studies with Lymfactin and CDNF, for example. So we expect that we can complete the whole study from first patient in to actually data -- completed data analysis within about half a year. So if we can start by -- during the first half of the year, we should have the data completed by second half of '23. So -- and we have also importantly initiated negotiations with the clinical trial site. This will be a single center study. So the site, the CRO and the analytical partner, we are now currently negotiating with so that we would be ready to start the study again during the first half of 2023.

Could you elaborate a bit on your biomarker strategy and at what stage could you determine the optimal target population for HER-096?

Henri?