Herantis Pharma Oyj (HRTIS) Earnings Call Transcript & Summary

Welcome to Herantis Pharma 2024 Results Webinar. In this webinar, we will also cover a business update, and we will discuss about the very exciting year that we have ahead of us in 2025. During the webinar, you may ask questions and the webinar ends with the Q&A session. So please be very welcome to listen us. My name is Antti Vuolanto. I'm the CEO of Herantis. And together with me, I have CFO, Tone Kvale. So let's start with the necessary forward-looking statements, not going to read them through, but then a short summary of Herantis. So -- as a reminder, we are a clinical-stage public company listed at Helsinki First North. We develop novel type of therapeutics to address the unmet clinical need in Parkinson's disease and other CNS disorders. And our lead compound that we call HER-096 is a disease-modifying peptide that mimics the active side of a protein called CDNF, which is a neurotrophic factor, which has been shown to reverse the cycle of Parkinson's disease pathogenesis. So we already have clinical data from Phase Ia and an ongoing Phase Ib studies where HER-096 is administered subcutaneously. We have shown already a very good safety profile in healthy volunteers and also what is really important for us is the efficient brain penetration. And now we are continuing the Phase Ib trial with treatment of Parkinson's patients. I will come into those details a bit later. What makes Herantis unique is the efficacy data that we already have. So of course, we have great preclinical efficacy data with HER-096. But as we already have experience with mother molecule, the neurotrophic factor CDNF, which has the same mechanism of action as HER-096 -- and with CDNF, we made -- we conducted a clinical study, Phase I clinical study where we showed biological responses and clinical responses in advanced Parkinson's patients. So that places us very uniquely among the competition in disease modification in Parkinson's disease. And as an ambition as a company, we want to engage with the partner based on the Phase Ib results that we expect to report later this year and to engage with the partner before the Phase II, so that the partner will participate in the Phase II program. And we already have very strong interest from potential partners. A bit of background in HER-096. So we believe that HER-096 is actually an ideal candidate for Parkinson's disease modification. You can -- you will see in the middle of the slide that HER-096 mimics the active side of the CDNF protein. And HER-096 is a synthetic molecule, easy to manufacture. And what is the main benefit compared to the CDNF protein is that HER-096 penetrates the blood-brain barrier, so we can use a patient-friendly administration, subcutaneous administration to deliver the activity into the brain tissue. And what we expect from HER-096 in Parkinson's disease treatment? What we have seen in preclinical settings, we actually have a robust symptomatic improvement. But of course, eventually, we want to have a long-term effect, so disease modification, so slowing down or even stopping the progression of the neurodegeneration and the disease. And with this very differentiated mechanism that we have, we have also many opportunities in combination therapies and also in other indications. So why Parkinson's disease is such an important target? There is an unmet clinical need currently in Parkinson's disease. So there are therapies that can treat the symptoms, but nothing currently can modify the disease progression. So there is nothing that can slow down or stop the progression of the disease. And even with the current symptomatic treatments, definitely not all of the patients benefits from those treatments. So there is a large number of patients that are untreated even in the early stage of the disease. And as the disease progresses, eventually the current symptomatic treatments are not enough and the quality of life of the patients gets worse. And how we do this, how we do the slowing or stopping the Parkinson's disease? So basically, no one knows what triggers the degeneration of the dopaminergic neurons in the target area in the brain. However, we know that the neurons suffer from many different characteristics that makes the neurons to suffer. So there is endoplastic reticulum stress, meaning an imbalance of proteostasis. There is accumulation of toxic alpha-synuclein aggregates and there is general neuroinflammation in the surrounding glial cell tissue. And actually, these form a vicious cycle. So basically, each of these components strengthen each other and eventually, this results in decreased dopamine secretion and movement disorder. And once this cycle continues, eventually these neurons die. But with HER-096, we can rescue the function of these neurons. The target pathway is called unfolded protein response pathway, and HER-096 actually addresses that pathway, both at the target neurons, but also in the surrounding glial cell tissue. So normalizing, stabilizing the function of both of these cell types, which means results in increased dopamine secretion and normalized motor function. And this we have shown very robustly in preclinical settings. Today, I'm not going to go into those details at all. But let's go into the last year's reporting. First, the business highlights. So on the financial side, we were able to get -- we got the second tranche of the European Innovation Council Accelerator grant financing, altogether EUR 750,000. Maybe the biggest news during the year was that the Michael J. Fox Foundation and Parkinson's U.K. decided to finance the Phase Ib clinical study or trial of HER-096. We got EUR 3.6 million that covers the cost of Phase Ib and some ongoing biomarker projects. And this is, of course, extremely important external validation for Herantis as we were selected among a large number of applicants for this program. Then we also had a new option rights program that was decided by the Board. What is really important for the scientific progress is that the structural rationale of HER-096 was published in one of the best journals called Nature Communications. Extremely happy about that. And then, of course, last year, we set up the Phase Ib clinical trial, got the approval, and we actually were able to successfully complete the first part of that study and the second part is currently ongoing. And we continued this rapid progress in the first 2 months of '25. So the second part of the Phase Ib study started in January. So first time, HER-096 was used for treating Parkinson's patients now in the Part 2 of the Phase Ib study. But we also reported encouraging pharmacokinetic data from the Part 1 of the Phase Ib. This provides us insights to -- how to design a Phase II clinical study. But of course, very important that we were able to raise EUR 5.2 million in a directed share issue with strong support from the existing investors and also a selected number of new investors. And now Tone will provide us insight into last year's figures.

Yes. And as you can see here is 3 boxes. On the left side, you have the other operating income. And for us, this mean grant from European Innovation Council. So that is booked here both in 2024 and also part of it -- part of 2023 consists of that. But on top of that, we had a one-off loan [ waivement ] from Business Finland last year of EUR 4.5 million. So that is the reason why the other operating income was so high in '23 compared to what we have this year. For the operating expenses, this reflects the progress we have had during the year of Phase Ib, the clinical trial we're running there and also the ongoing biomarker project. And on the right side of the slide, you have the profit and loss. And last year, we had the positive results there, and that's basically what I mentioned regarding the wave-off of the Business Finland loan. Next slide. Then we move into the cash flow and the balance sheet. And for the cash securities during the year, we ended up including securities, EUR 2.1 million in cash position compared to last year, it was a higher amount. You can also see the cash flow, which reflects the operation cost of that year. And then the equity for 2024 ended just below 0, so negatively compared to EUR 4.7 million positively last year. But as you know, we raised money, new fresh cash in beginning of February '25 of EUR 5.2 million. So that improved the equity significantly.

Okay. Thank you, Tone. And let's go then to the business update. So basically, we are currently running the Phase Ib clinical study or trial. We expect to have the top line data by -- during the Q3 of '25. As mentioned, we already completed the Part A in which we dosed HER-096 in elderly healthy individuals, in 8 individuals, 300-milligram dose. And the purpose of this study was to complete the pharmacokinetic profile of HER-096 in CSF that we started in Phase Ia and now we completed in Phase Ib. And of course, confirming the safety profile that we already established at the Phase Ia clinical trial. And now we are running the Part B of the Phase Ib. There, we dose HER-096 in Parkinson's patients. So each of the patients will get 8 injections during 4 weeks, either 200 milligrams, 300 milligrams HER-096 or placebo. So we first run the 200-milligram cohort and then the 300-milligram cohort. And as mentioned, this is a placebo-controlled study. The outcome measures, definitely safety and tolerability of the repeated dosing, very important towards the Phase II planning. Of course, pharmacokinetics, again, important outcome for the Phase II planning. We have a rather comprehensive biomarker program in Phase Ib. I will provide you with the details of that. But we also assess symptoms both with using clinical scale and a wearable device that monitors the movements of the patients continuously. So related to the biomarker plan, we have different purposes why we collect biomarkers and what we want to establish in this Phase Ib trial. So first of all, we want to study the patients, their type of disease. So we study the alpha-synuclein presence in CSF. We do genetic testing, so we can identify some genes potentially that are associated with Parkinson's disease. Then actually, the fluid biomarkers is, in a way, a key part here. We want to -- we study these biomarkers, both in plasma and CSF cerebrospinal fluid, some of them also from urine. But there are different analytes and purposes why we take these samples. But on a high level, we want to see changes which are known to be related to Parkinson's disease, for example, mitochondrial damage or lysosomal dysfunction or we want to find target pathway-related markers, for example, from extracellular vesicles that provides us a tool to actually get biomarkers from plasma that are originated from the brain tissue. And then we do novel biomarker discovery. And also very important is the digital biomarker, the wearable device as in this measurement, if we have a potential symptomatic effect in the very short study, there is a possibility to observe even that in Phase Ib trial setting. So what is the clinical data about the CSF or the brain penetration of HER-096? And now this slide contains a combined data set from the Phase Ia and Phase Ib clinical study, so the Phase Ib Part 1. And in the figure, you see the red dots represent one -- in each dot represent one individual in the Phase Ia clinical study and the blue ones are the individuals in Phase Ib study. And as you can see, we have a very nice and clear CSF exposure profile that demonstrates that we are actually within the pharmaceutically active concentrations. The predicted elimination of HER-096 from the CNS is somewhere around 48 hours. That supports our previous hypothesis that HER-096 should be administered every 2 or 3 days. So extremely happy about the results, which provides us a tool to start designing the Phase II clinical study. So the key advantages of HER-096, we have a neurorestorative compound that really can slow down or even reverse the damage that we have in Parkinson's patients' brain. Easy route of administration, and we already have a nice safety profile. I already mentioned about the research funding that we received last year from the Michael J. Fox Foundation, Parkinson's U.K. I want to highlight that together with the support from the EIC fund, we have raised over EUR 6 million nondilutive research funding during the past 2 years. Of course, very important for a company like Herantis Pharma. And we also have secured EUR 15 million investment commitment from the European Innovation -- Investment Bank, sorry, from which we have now raised EUR 3.2 million in 2 previous financing rounds. Again, an important support for Herantis, which also allows us to exploit that vehicle going forward if we choose to raise additional financing, for example, for Phase II. So what kind of business opportunity we have in Parkinson's disease? Based on several market researches that are available, the market size for Parkinson's disease drugs will be more than USD 10 billion once the first disease-modifying therapies will enter the market, so maybe by 2030 or around that time. And based on our own market research with very conservative estimates, we believe that at least 20% of that market could be very well covered by HER-096. So we have a multibillion market opportunity in only Parkinson's disease. And why I say only in Parkinson's disease is that the same mechanism of action that HER-096 has been already shown to be relevant with the CDNF molecule in ALS, in Alzheimer's disease and some ischemic diseases. So basically, we have much, much larger market opportunity. But of course, the ambition of the company is to first demonstrate that in Parkinson's disease and then continue with other indications. So currently, we are running the Phase Ib clinical trial. We are preparing for the Phase II trial. And of course, once we have the Phase Ib readout top line data Q3 and full data set with all the biomarkers by the end of the year, that allows us then to design the Phase II study. And of course, for the Phase II, the primary objective is to show clinical benefit of HER-096. But at the same time, we are really actively seeking out-licensing or collaboration with big pharma. And the partnering status, basically during the past 2 years, we have met around more than 50 pharma companies. We have signed confidentiality agreements with 10 companies so far. We have got really clear feedback from the pharma, what can trigger a partnering agreement. And there, the positive Phase Ib clinical trial data is, of course, the key. But then we have the biomarker data, both from the clinical study and preclinical studies that are accumulating on a continuous basis, the pharmacokinetic data that is also coming from the Phase Ib. And what is also important is that we will have a readiness to launch a Phase II program. So we need to plan the Phase II and plan it in such a way that Herantis can run it. And all this together will most likely put us in a very favorable position during the second half of '25. So this is really an exciting year for Herantis. So -- and we are really looking forward to get the Phase Ib readout and to start the discussions with pharma based on these results. It is just like really great to be in this position, only half a year until we have this like great value inflection point coming. So as a summary, so we believe that we are in the forefront of the development of disease-modifying therapies for Parkinson's disease. We already have great clinical data with both HER-096 and the previous CDNF compound sharing the same mechanism of action. We have the exciting Phase Ib trial ongoing. We have the readout in September and we are currently preparing for the Phase II. So really like we are in a great position to go forward. And I can't wait until we see what are the results and how the year will end with Herantis. So I think we are now ready for the Q&A.

Yes. And just continue sending in questions during -- from the system, and we will take it here. So first question. Herantis reported encouraging pharmacokinetic data from the Part 1 of the Phase Ib clinical trial in January. What was so important with this data? You have mentioned it several times today, but if you can kind of concrete say what was so important for this?

So basically, as mentioned, it's key for us to design a Phase II study that really addresses the question of the clinical efficacy. And there, the pharmacokinetics and pharmacodynamics is the key to design how we administer HER-096 in terms of what is the dose level, in terms of milligrams and how often we dose the patients 2 or 3 times per week. And it really seems that all the assumptions that we have made with the preclinical data is very nicely translated into clinical data. So we have a very good insight now how to design the Phase II study in terms of this practical administration-related items. Of course, then we need to design what are the endpoints, and that requires quite a bit of additional like intelligence to be able to do a design that can show our primary purpose of the study.

Yes. Good. Can you explain what is the main objective with the Part 2 of the Phase Ib clinical trial? And are you on track to report the top line data in Q3 2025?

So the Part 2 of the Phase Ib trial, now we have first -- for the first time, we administer HER-096 into Parkinson's patients, 2 dose cohorts and placebo controlled. So of course, the main purpose is safety. But for us, very important to establish the biomarker studies and get good outcome from there, again, something that we can exploit in Phase II. And those are the main objectives. Of course, we will observe also the symptoms of the patients, but we need to keep in mind that 1 month treatment is very short considering the target indication. So let's see how the data then pans out.

Yes. Next question. You raised EUR 5.2 million in a very difficult funding market in February this year. How long is your cash runway?

Maybe you will answer that.

Maybe I will answer it. So we are really happy that we were able to raise this amount of cash in a very difficult funding market, as you all know. And we are so grateful to our investors who share our vision for HER-096. So with this funding secured, our cash runway takes us to -- or into Q2 2026 and thus far beyond the data readout for the Phase Ib clinical trial. So next question is -- let me see here. There are so many -- so many new questions. When did the first Parkinson's patient receive a dose of HER-096 in the Phase Ib study?

Well, that's a question that I cannot actually answer very accurately. We know that it was it 24th or 23rd of January when the second part of the Phase Ib study started. But as it's placebo-controlled, we don't know whether the first patient got placebo or HER-096. But first patients have already received HER-096 because we have several patients currently under administration.

Next one. Are your Phase I results translatable for other indications in addition to Parkinson's? Can you or are you planning to partner for Phase II trials also for other neurodegeneration diseases, for example, Alzheimer's based on your current Phase Ia data?

That's a very good question. So basically, the safety data that we have collected from the Phase Ia and now in Phase Ib, that will be applicable also for other indications. Potentially also some of the biomarker work can be exploited, especially if we're talking about the target mechanism or maybe changes in mitochondrial function or lysosomal functions. So yes, it's really much in a way, taking forward also the opportunity with other indications. Then about the potential licensing or partnering, it's a bit premature to say. Of course, we need to wait until we have the Phase Ib data. Then we start negotiations with pharma and then it really depends on what kind of terms we might have on the table, depending on the price tag and additional value of these other indications, which is, of course, something that is beyond what I can comment right now because it's not yet like concrete.

So next one is kind of on the same topic. Which is more likely to be next disease, ALS or Alzheimer's?

Again, speculation for which I don't have the answer right now. So we are looking at these different indications from several angles, the scientific angle, but also commercial angle. And then we need to also consider what is the appetite from potential partners and how the situation looks like in the autumn and once we -- when we have resources to actually invest heavily in other indications, which we haven't done yet.

Yes. Next one. It is nice to see the support from Michael J. Fox and Parkinson's UK. Can you provide a bit more color on the involvement from these external groups' collaboration? Do they provide any support beyond funding such as insight into navigating the regulatory side of things in Parkinson's disease?

Again, very good question. First of all, the consortium of Michael J. Fox and Parkinson's U.K., they have provided only like support for a couple of companies so far. So we have been selected among very few ones that have received that kind of a support. And that has included also very thorough due diligence on the science. And now during this project or Phase Ib study, we actually have like follow-up calls with both of these parties on a regular basis. We discuss about the progress. We discuss about the data. We get their insight as they are maybe the best experts for Parkinson's disease during this program. And we also hear what else they are doing in the field, for example, towards the regulatory processes. And they have said that their ambition is that they can support Herantis and HER-096 to become a true treatment. So they have a true incentive to help us as much as they can. So I really -- I'm really happy about the collaboration and look forward for continuing that during this year and beyond.

Good. Next, given the historical biomarkers, or the history, biomarkers have been challenging in Parkinson's disease. How do you see the sentiment of regulators towards biomarkers and their use in later-stage clinical trial? With the consideration of Phase II and beyond come down to Herantis' plans for a Phase II? Or would this be the responsibility of a potential partner?

Yes. If you look at the -- if you think about the biomarkers, there are multiple different like objectives for the biomarker work. And we are currently primarily concentrating on demonstrating that, yes, HER-096 affects the target pathway so that there is a biological response. And we also want to learn like other changes that HER-096, how it affects different processes. And primarily currently, it's like collection of that kind of evidence. And we are not currently looking at biomarkers that we could use in later-stage clinical development as outcome measures. That is a big challenge, definitely. But as I mentioned, our objective is to have a fairly quick symptomatic improvement with HER-096. And currently, at least based on the preclinical data and the data that we have with the CDNF program is that, we might have a very nice opportunity to really address the symptomatic side. So actually, potentially, we would not need to have a biomarker endpoint, regulatory endpoint for approval. Of course, this is something that we need to address together with the partner in Phase II and Phase III to see how that path goes. And of course, depending on the findings and of course, their -- a key milestone is during the second half of this year when we get the results from Phase Ib.

Yes. And then I think the last question coming up. Why should investors invest in Herantis?

Yes. Well, that's a good question. But if you look at our position currently, we are 6 months from a like major value inflection time point. And if the data pans out to be good, there is a huge market and there is actually huge unmet clinical need. And if we look at the Parkinson's disease modification space currently, there are not too many companies out there who are as advanced as we are. So basically, we have actually a true window of opportunity here in the coming 6 to 12 months. So it's a great possibility, I would say. Of course, it comes with the risk.

Okay. I think that ends the Q&A session.

All right. Thank you for listening us today. It was really a pleasure to be here. Great questions. I hope that we were able to successfully address those ones. And we hope that you will continue following us and share the enthusiasm that we have for this year. Thank you.

Thank you.