InflaRx N.V. (IFRX) Earnings Call Transcript & Summary

Alright. Welcome, everyone, to the 30th Annual Healthcare Conference of Credit Suisse. I'm Tiago Fauth. I'm biotech analyst here at Credit Suisse and we're joined today by the InflaRx for a fireside chat. Feel free to e-mail me any questions that you might have, and I'll try to work those in, but we can probably get started. As usual, we start with an introduction, kind of key highlights of 2021, where the company is, and then we can dive into some more detailed questions but I don't know, Niels, if you want to just take it away and give a brief overview and all that has changed with InflaRx in the last year or so.

Absolutely. First of all, Jake, thanks so much for inviting us to your conference. We are very happy to be here and speak about InflaRx today. I have with me Thomas Taapken, our CFO; and Jordan Zwick, our Chief Strategy Officer. The question was, let's go into what happened in 2021. 2021 was a very exciting year for InflaRx. We got accomplished quite a bit. We have, in principle, 5 development areas that are running with our lead molecule, vilobelimab, formerly known as IFX-1, and we had several data readouts, and we're looking forward to additional value inflection points short-term or midterm here coming up. So maybe start with our main endeavor. We've been in an immunoderm disease for a while called hidradenitis suppurativa, difficult name. I'm going to refer to it as HS. And we've had quite a bit of a challenge to change the primary endpoint where the established endpoint led to one approval of one drug, which is Humira in this field. That's been quite a while ago, but there's a very high unmet medical need, and we had really difficulties. By now other companies hit a similar problem that this placebo response rate on this endpoint can be relatively large. In fact, we didn't have a signal on that endpoint back then. But we saw multiple signs of efficacy, especially also on one of the lesions that wasn't captured at least the reduction of these lesions wasn't captured by the old endpoint. Long story short, we succeeded to have interactions with the FDA. Within our Type A meeting, we have now released that we have supportive momentum from FDA for a new primary endpoint that includes the reduction of all 3 inflammatory lesions. So these are nodules, abscesses and draining tunnels. And so we think this is a very big win for the company. This was not an easy task and in the end, we succeeded, and we are planning now to move forward with a pivotal program, and we voiced that we would submit the protocol in this quarter. And usually, there's about a 30-day review time for the agency. And once the protocol is cleared, we would like to exchange and also share with the market more details on that endpoint and how it plays out for us. And we are excited, looking forward to that. We think it's a major breakthrough for the general development in HS. And I want to mention that we are focusing on moderate-to-severe patients. So it's a pretty large patient population that have active draining disease, so have actively draining tunnels, which is maybe 70%, 75% of these patients in the larger trials. So this is a main success in 2021, which we got achieved in August, and we're very happy about that. And another very recently announced success in immunoderm is in the area of pyoderma gangrenosum. I'm sure we're going to speak about that a bit. This was a multicenter, U.S., Canada and Europe trial in a rare disease without any approved treatment option in the U.S. or in Europe. We saw an interesting signal relating to a dose response of our drug, and this is a very hard-to-treat rare disease that comes even with a certain mortality, but certainly very debilitating disease. No treatment options that are approved and so we're excited about this. This could lead into another pivotal program at some point. We are now planning that we just released the data to have further interactions with the regulatory authorities, but also get the feedback from our Board Advisory Committee, et cetera, on how to best move forward. There's some level of precedence, and I'm sure we speak about that today. That's the immunoderm that becomes more and more focused of the company. We're very excited about this. It took us a bit for the HS endeavor, but I think we are now on a very good trajectory here. We have also voiced that we completed, for us, a very large Phase III study, the enrollment of the study, just recently in October in COVID-19. And these are severely sick early intubated COVID-19 patients. So patients that have a lung failure leading to intubation. With our drug, vilobelimab, we enrolled 369 patients. To our knowledge, this is the largest 1-to-1 randomized trial with a new drug in intubated COVID-19 patients. It was quite a global endeavor, including South America, North America, Europe, South Africa, Russia. So with a small team. We're very proud that we got this pretty much accomplished on time and we voiced that we will have data readout in Q1 next year. So we're very excited about this because this is still not unmet medical need. We know that there's been great progress in other areas but for the worst and the most diseased patients, and we see more patients on ICUs now in Europe. Again, there's still no real good treatment options. So if that played out, it would be something that would be very fulfilling and helpful for society at the same time. And then we have ANCA vasculitis. We voiced positive data, also not so long ago in a small U.S. study, which was a safety oriented study where we treated our drug on top standard of care. And we voiced that we are on track for releasing data on ANCA-associated vasculitis European trial, which is the larger trial, which is more a proof-of-concept study and that could -- that will read out this quarter. So we're excited about that as well. The reason for that being that the pathway of the C5a receptor antagonist has recently been approved. So there is a very high unmet medical need for additional medication. We think we may have an interesting molecule here, and we're looking forward to seeing the data in due course. So that's on that horizon. And then finally, we have oncology. We have a study in small cell -- sorry, in squamous cell carcinoma of the skin. There's a link to hidradenitis suppurativa because these patients are prone to develop this disease. It's a very common skin cancer ever. It's more rare that these patients progress into locally advanced metastatic disease. Checkpoint inhibitors are approved, and there's a very good response rate, but pretty much 100% relapse within a given time. And second line, there's no proof treatment. And in fact, these patients are prone to die. So this is a high unmet medical need. It's an early study. We're going to have 2 arms. We have a drug supply agreement that was press released also with Merck for pembrolizumab. So one arm will be a combo therapy, one arm will just be our drug. So that's in a nutshell where we are. That trial is enrolling well and moving forward. So we're probably going to see first data somewhere along the road next year, but we haven't clearly voiced yet at what point we expect data. So we're very excited. We also have follow-on molecules. One is public, that is IFX-2, still preclinical, also an exciting molecule. And despite our setbacks in 2019, I think the team got accomplished quite a bit. And yes, so far, we had very positive readouts, and we have more data to be released once they are available to us in due course. So I stop here.

Sounds good. No, it's plenty. Now there are a lot of different directions to take this. But again, let's perhaps focus more on the immunoderm. That's where we get most of the questions and where a lot of the focus has been historically, right? So -- and I guess perhaps [C5a] given that that's the most recent data point and kind of a new venue for the company potentially. Questions, I would generally get, does that apply both to PG and to hidradenitis suppurativa as well is relative to the mechanistic rationale of C5a inhibition in these indications, right? So there seems to be a notion of lack of correlation between C5a, the serum C5a levels and certain endpoints or disease severity? How would you characterize how well described as either the role of C5a or neutrophils or however you want to characterize that in biodemographic notion and why you decided to explore IFX-1 in that indication?

Yes. Thanks. That's clearly a very good and interesting question. So the mode of action of C5a that is very well described is really with respect to neutrophil function. It's really -- it's one of the strongest chemoattractant. In fact, it is the most important player to make neutrophils stick to the endothelial wall and become ready to transmigrate to the tissue, in this case, the skin. That's very well described mechanism. And C5a is, if not the, it's definitely one of the strongest activators of these cells. So these cells start making granular enzymes, producing oxidative radicals. C5a has been implicated in inducing NETosis, which has been implicated by now, at least in HS to play a major role in the draining tunnels. So our original hypothesis was driven that these are neutrophil-driven skin diseases and this mode of action over time will likely prevent neutrophils from moving into the skin and getting activated on site. Now we've seen quite an interesting signal on draining tunnels. Hence, we were interested in changing the endpoint to reflect that mode of action and that unaddressed like medical need in HS. But in PG, neutrophil seem to play an even more prominent role as these ulcers are surrounded and filled with neutrophils. So this is long known and of course, PG is a very different disease, even though neutrophils play a role. These ulcers are not fluctuating like the lesions in HS. These are very tough to treat. Nasty ulcers, they can get larger and larger. Some of them lead to amputation of legs and extremities, and there's even a death rate associated when these patients are hospitalized. So it is not something where you see a lot of fluctuation. And usually, these patients come with a diagnosis of PG once all else, including antibiotics or other treatment attempts, wound care has failed. And so the type of lesions and the type of disease is very different in these 2. And I want to mention PG is much more rare. So we are estimating maybe slightly below 20,000 patients in the U.S. So it's a pretty rare disease and I know these were only 19 patients but given the precedents, this is actually one of the larger -- or maybe even one of the largest Phase II studies with a new drug. There was only one that was carried forward into a Phase III trial with a very similar endpoint closure of the target ulcer, which we believe indicates that FDA may have accepted that, even though we don't have written proof of that but at least this was the endpoint. And this was also an endpoint in our trial. And so we're excited about the early data. We think that the neutrophil migration activation mechanism is key to the progression and to the fact that the ulcers may see trouble in healing because you have a constant inflammation stimulus at the sites. So neutrophils, you need these cells to heal, but if you completely activate them, they will more disturb the healing than they can help. So you basically need non-activated neutrophils to do their job besides other cells. And so the results we see, some remarkable in the high dose group, 6 out of 7 patients that really close the wounds, we feel are very meaningful and could really cater to this mechanism. Now again, it's 19 patients, open-label, multicenter, U.S., Canada and Europe. But there's also hardly any precedence for placebo trial, placebo is an ethical problem because these patients come with a tremendous pain and if you offer placebo, this is what has failed, so to speak, before. So you have to offer rescue or at least some level of other treatment. So it puts a much different challenge, and it's a very different disease. But we believe that the mode of action of IFX-1 of vilobelimab caters to both diseases.

Perfect. I think that's helpful. Perhaps digging a little bit deeper on kind of the key debates on that data set overall, right? So you had some interesting data from group 1. And again, you tested 3 different dose levels, correct? So group 1 had -- you had some responses there. For group 2, you actually had a couple of pretty early discontinuations. Wondering if you can provide some context around that. And then group 3 is the one that you actually saw a more consistent benefit even though one patient got rescue therapy at some point. So I would also want to get some context there as well but overall, what's the best way to interpret these data in terms of dose response and how meaningful or how reliable could the treatment benefit that you've seen be relative to, again, very few or none placebo rates published out there necessarily for this particular indication? A lot has come back there, so I apologize for respecting the questions.

Yes, I was just going to say, maybe I'll start with the first question. First, why we believe that the data are meaningful. So I think one thing I mentioned already, these wounds don't usually close by just applying wound care. That's why they come to these centers. So PG diagnosis in and of itself is an exclusion diagnosis. So they usually went through quite a few treatment attempts before many of them including high-dose corticosteroids or cyclosporin or other things that have been suggested that may help certain patients, many of them relapse. So I think what's meaningful is that when you see the variety of patients, we have many that have had different treatment attempts. We have a few that have had no treatment attempts. So we had a couple of newcomers, but most of the patients had treatment attempts before and we saw a response in both. We also saw a response in a patient that was on adalimumab for many years for an underlying psoriasis and that's one of the challenges. These patients are usually core disease. Many of them have IBD disease. Some have other chronic inflammatory or immune diseases. Many of them are additional conditions like diabetes, obesity and other problems. So I think the fact that these ulcers healed completely under treatment, and some of them have been treated for years or we're on constant other drugs that supposedly could help this disease, please keep in mind, adalimumab is approved in Japan on the basis of a 22 patient open-label trial. So not much different from our trial here. And a similar response rate looking over all those groups in our space. So I think it is meaningful. Of course, the question is valid. It's an open-label trial. One thing we're trying to assess is what could be a placebo response rate in a comparative trial. There's very little evidence to say this is what you should expect. And I think it very much depends how you structure that placebo group. If you allow co treatment, it will be different than it's just wound care. Just wound care may be ethically not acceptable for many investigators. That's our learning. And so it very much depends how you structure that group. And this is something we have to work out still. So I have to still kind of delay that -- the full answer, how we're going to think about it. But one thing I want to share. We asked, of course, our lead investigator and some others, what their experience is in terms of spontaneous heating rates by just applying wound care. And the answer was very rarely this happens. So it's not -- and biology is hardly ever 100 or 0%. But very rarely, when you ask them, can you give a percentage number, they come out with something like maybe 5%, 10%, but they don't even know exact because this is not how they treat these patients. They try to use immunosuppressants sometimes. They use biologics. They would just try. Again, there's not even a consensus guideline on how to treat these patients. So it's a high unmet medical need area. And maybe last point from my side, and we don't know whether that is yet confirmed, but the patients who responded all had at least moderately elevated C5a levels at baseline. That was previously unknown that these patients have elevation in C5a and all responders had. And the other thing that we found interesting is that obviously, when you look at the C5a control in the high-dose group, you have, by far, the best control over C5a over a long time. And this is where we saw the best responses. Now the problem is we're measuring plasma C5a. We don't know how that translates into tissue into the whole skin. We've done extensive modeling about that question in HS with a much larger data set. So we have some idea how it could translate in a different disease but I do think the correlation to C5a level control in response is something that is at least giving us additional comfort.

Got it. Understood. So -- and I think you already answered it, but just to be clear, so if you're thinking about relative to HS, because that is going to be a question and a concern, you show some interesting data in a small sample size, what does that look like in a placebo-controlled fashion. Based on the interactions, it would seem that a placebo response rate, at least measured by these sort of end points, you should not be necessarily at risk relative to HiSCR, which is a separate discussion. Is that fair?

I think that's very fair. This -- I mean, at least this is our subjective view. It's not that our drug failed to show that it works on the lesions and does something good for the patients in our SHINE study. We failed on HiSCR. As you said, it's a score with a very high variability, mostly driven by the nodules that come and go, and they seem to be very prone to placebo responses. And since now, another large company had a very similar problem with a very high placebo response rate. We're not alone anymore. And I think a lot of what we have tried to transparently share with the public is now more and more confirmed by others. And so as we see it, you're completely right. We failed on that endpoint for reasons that we believe, in large, we understand now. And we found a way to mitigate that with a new endpoint. And this is not expected to be the same in a very different disease in PG, where you don't see fluctuating lesions, you don't expect high placebo rates. And where, frankly, there is a need to just have some drug that closes these wounds reliably. So I think that being a pretty orphan disease, it may give a different trajectory as to how a Phase III could look like, what really would be your control. I get a lot of questions, do you even need a control because some investigators say it's not really ethical to do that. So I think these will be interesting discussions with the regulator.

Got it. No, that's perfect. And it is a good segue, and you have kind of alluded to a couple of things there. We'll just switch gears to hidradenitis suppurativa specifically. So before we address the regulatory pathway, can you just kind of recap what have been some of the learnings, right? So based on some additional data modeling that you've done in analysis, there might be some updated thoughts on dosing, you indicated also some clinical experience from other competitors, right? So with some variability also on placebo and HiSCR. Since the initial results from SHINE, what has changed and how it has evolved, your knowledge about the disease, about the endpoints? And how does that inform your discussions with FDA?

Yes. I think that's really a great opportunity to go into high level our learnings. Again, thanks for that question, Tiago. And so maybe start with the score itself. The extreme variability was not known to us. So at 35 patients per group as we did in the SHINE study, you have 95% confidence interval [spanning] over up to 40%. So you know what that means. If you read 30, it could be 60 or 20 or so. So this is something we just didn't know because the readouts in the approval data from AbbVie looked so nice and tight, like 25%, 77%. And so we realize that the HiSCR, you can only get under control when you have a large patient population. So that's one thing we learned. Now HiSCR is a very difficult tool because of at least 2 learnings. One is the variability, but that's probably controllable. However, baseline differences in the AN count make a huge difference, even though groups can be statistically not different, slight differences can play into larger differences in the response rate. In other words, if you had -- I'll give you an example, if you have a patient with one abscess and 3 nodules, he has an end count of 4. To be a responder, it just needs to lose 2 nodules. And when you look at many of these patients, every other week, you see them switching between 3 and 2 and 1 and 5 nodules. So just by chance, the more patients you have with lower end counts, the higher your placebo rate is. And that also accounts that, of course, you have a much easier game with an active drug to show an effect. If you have more patients, maybe slight differences in distribution with lower end count. So the baseline end count has a huge impact on the response rate. That's one learning. And the other learning we have is that when you apply an IV drug, you have a lot of touchpoints. So that means, in our case, and that was also the case in another study from a competitor, where every 2 weeks IV, the patient comes in, he gets general wound care. It's compensation. We've learned that many dermal diseases, but specifically also HS, there is a susceptibility on those fluctuating lesions to react to more touchpoints to more care taking. A very experienced nurse in the U.S. in Detroit, once put it this way, you didn't test against standard of care. You tested against intensified standard of care. And so that may have an impact and I think there is some evidence outside our approach that this may play a role because the other trial that I mentioned, read out with a very high placebo response rate was also an IV administered drug. Now interestingly though, I haven't seen any larger trial where placebo rate on HiSCR replicated the AbbVie data below 30%. So maybe something has changed in the patient populations, maybe that something has changed over time. Many of them have tried different biologics. You hardly find these patients. Most of them have tried something.

Off-label.

Yes. And off-label or even Humira on-label. And so maybe that there is some reason there. But for these 2 different reasons, HiSCR is a very difficult endpoint and hard to control because if you're off the bit, your statistics don't play out. The second learning for us, dosing, you mentioned it is a big learning for us because in our Greek study with the open-label 12 patients, they were very sick patients, and we saw remarkable responses. We dosed 800 mg every week. But just for 2 months, just to see, is it safe, does it induce any kind of improvement. Now we had a lot of experience with 800 mg every 2 weeks back then already from other trials. And we were so clear that plasma levels in any other disease, you can control well with 800 mg every 2 weeks, including a saturation dose at the beginning. But so we said -- we went to 1,200 every 2 weeks. And turned out that was a mistake because when we did the extensive PK/PD and physiological based PK modeling, it really suggested that a dose slightly above 1,200 every 2 weeks, is giving you a much better coverage of the receptor in the tissue. Now this was after we set this model with all the knowledge we had and with really statistical talents that do this for living. And this is the outcome of the model, and it convinced both agencies, EMA and FDA to accept -- to go for a pivotal with a higher dose than we tested in the SHINE study. So we learned a lot. I mean it is, in a way, it's implicated because you may know that Humira is approved a double dose in HS. And in all other indications, it's half of that dose. So there is a hint that in HS, maybe because it's a skin disease. We see something very similar, maybe even more extreme in PG, you need a very high dosing to cover the skin. It's a big learning. That's learning #2. And learning #3 is that our drug has a specific mode of action that caters to all 3 lesions because over time, we saw a remarkable reduction in the majority of patients that were treated for 9 months. I think we saw a roughly 67% AN reduction over time. And in median, it was even 77%. And so when you just look at the roughly 70% of patients that finished the 9 months treatment, they had a remarkable improvement over time. This was not a primary endpoint. This was just an observation. So we're very confident that the drug helps the patient over time but more specifically, the learning is draining tunnels seem to be addressed by our drug if we dose high enough. And that could be a very big competitive advantage now that we see support of the FDA for a new endpoint that includes the reduction of these lesions, which was really not easy to get on the same page because they didn't like the European endpoint, the IHS4, which we had originally suggested, which the EMA was supportive of. But I think now that we have gotten over that cliff, we may really play a lead role in a new type of development for this disease with a new endpoint. And so I know that's still a while away from data. But we are very excited because we believe we figured out a lot of this disease and to be -- these are the 3 learnings that I see, I would say, besides many others, when looking into the meeting and how disease lesions play with each other, why are some patients, what we call jumpers, they change their end count by 50% every second time we see them. And so we learned a lot, but I think the most important learnings for us are the 3 points I just made, the variability -- so the HiSCR limitations, the importance of our mode of action for draining tunnels and the dosing. I think these 3 learnings set us up for, hopefully, more success in the future, but we're very confident.

Got it. And assuming that there are no issues with the proposed protocol, I'm assuming you're going to give us more details on what that endpoint would look like. I guess retrospectively, what that endpoint would have looked like for SHINE. Is that really -- and that could happen potentially beginning of next year that -- I don't know, it can be too granular on the timing for the endpoint?

No. I think that's generally a fair estimate. So we voiced that we want to submit the protocol in this quarter. As I said, the FDA usually has a 30-day review after the submission to either clear it or not. If it's cleared, it could be as early beginning of next year that we say the protocol is good. We can start the trial. We now want to share the endpoint, we want to share how that played out, why we chose it and give some more light to this. If the FDA, for whatever reason came back and said, oh, we have another request or we want something else, which we just want to wait to see that we have full alignment with an approved protocol, at least. If that was to take more time, then it's difficult for me to say this is the time that it will take. But of course, if that was the case, we would like to get that resolved as soon as possible. It's not that we anticipated because we had a very intense and very productive Type A meeting with the derm section and also, yes, with experts on our end. And so I think we are clear about what we're doing, but we want to be prudent and wait until it's moving into the trial, and then we release the information.

No, it's absolutely fair. And we are running out of time here. There's a lot of things to discuss. Perhaps just a couple more for me. Just quickly because we did get a few more inbounds on AAV, that's mostly because of ChemoCentryx and what ends up happening there from a regulatory standpoint. I don't know if you should want to highlight, again, you should have a readout. I don't know if there are any clear expectations on potential differentiation and what that could look like. Also, given that you do have PG and potentially HS going forward, how you're kind of prioritizing across these multiple trials, given that you're still a relatively small biotech company on execution, it could be challenging across the board. So how you're thinking about the upcoming readouts in prioritization?

Yes. Great question. So I'll start with the second one. At this point, we have very interesting data in PG. We have moved the block from our shoulders with the FDA being supportive of new endpoints. So we see a clear focus on immunodermatology. We think the mechanism is highly interesting. There's a lot more data, knowledge in HS about the role of neutrophils and NETosis in the tunnels, and so I mentioned it. So here, we see a focus of the company. Now ANCA vasculitis, nevertheless, is an interesting option going forward, but we haven't seen the data yet. So in the absence of the data, it's very difficult to say, what are you going to do with the program. Now expectation the trial, the CLEAR trial, that was the avacopan Phase II trial in Europe, that was very similar in terms of exclusion inclusion endpoint, et cetera, compared to our trial that is supposed to read out this quarter. And so there will be possibility to compare that to the avacopan Phase II data, right? The Phase III was a much longer treatment different endpoints, so on and so forth. But -- so our expectation would be in a positive -- if it's positive to show that with vilobelimab in the absence of mandatory more corticosteroids that, that arm compared to placebo shows a noninferiority on the response rate and on the remission rate, right? So we know this is the rare disease, it's a small trial. So it's not necessarily adequately powered to have that 100% certainty, just like the ChemoCentryx Phase II studies were. But to show the proof-of-concept to say, you can do that, and you're not worse off than 1 standard of care, would be -- that will be to win. Obviously, if the data look better, then that's better. If the data look less good, then there would be -- if it was clearly a trend to less remission and response, then we would consider that as not a positive for us. So I think the frame is relatively clear. The bar is relatively clear. But I want to mention one thing. Now that there's a drug approved, everybody wonders, and there's a lot of analyst reports about like, the market seems to be relatively large. The demand is there, but the label kind of specifically excludes the reduction of corticosteroids. And so there is an opportunity to work out a different type of label, but you have to, of course, address the question how much and how you're going to get market share with the drug being approved. And this is something we need to be guided through the quality of our data and also through different additional analysis. We've been voicing that our drug is -- has a fast onset and may have certain benefits compared to chemical, maybe also safety aspects, but that's all remain to be seen. But I think important question is how do you adjust the trial, maybe to shoot for the right label to have a good market share. So it's not a no-brainer in my view. There's still work to be done. For us, it's a great option in the future. As of today, we have a focus on immunoderm, which is, I think, understandable, but it's always great as a biotech have options.

Perfect. Now that -- I think that sums it up really well. So again, I appreciate you guys attending the conference. I appreciate the time. Hopefully, that was helpful for anyone listening to it but that's it from my end. So again, just thanks a lot and have a good rest of the conference.

Tiago, thanks so much for having us.