Inventiva S.A. (IVA) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Inventiva Full-year 2024 Financial Results Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Frederic Cren, CEO and Co-Founder. Please go ahead, sir.

Thank you, operator. Good morning, good afternoon, everyone. Thank you for joining us to discuss our 2024 full-year financial results. We issued the full-year press release this morning, and the webcast will be available in the Investors section of our website. I want to remind everyone that various statements that we may make today during this conference call and during the Q&A session will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Joining me on this call is Jean Volatier, our Chief Financial Officer, and Pierre Broqua, CSO and Co-Founder. I will first cover some of the key highlights for 2024 and some recent updates on our activities before I leave the floor to Jean, who will go over the full-year financial results. And, of course, we'll have some time at the end of the call for a Q&A. So, on the highlights for '24. So '24 ended on a very positive note, and we started 2025 strong, ready, and enthusiastic for what is ahead of us. In 2024, we have made significant strides in the clinical development of lanifibranor, and with the tremendous support and commitment of our clinical trial site, we have been able to close screening for our Phase III NATiV3 in early January '25. We can, therefore, confirm that we target the completion of recruitment in H1 2025, as previously guided. This will start the countdown to our top-line results expected in the second half of 2026, making lanifibranor the second oral drug that could be approved in the United States in MASH. In addition to being very close to reaching completion of enrollment in 2024 and in the first quarter of 2025, we had 3 data monitoring committee meetings with positive recommendations to continue NATiV3 without modification to protocol. The most recent one took place in February 2025, during which the safety data of more than 1,200 patients randomized in NATiV3 were reviewed. With this progress in Phase III, we are truly at an inflection point in our company's journey, and we have already begun strengthening our team to ensure we're fully prepared for successful regulatory submissions and the commercialization of lanifibranor. In 2024, we also reinforced our clinical data set for lanifibranor with the publication of the positive results of LEGEND, our combination proof-of-concept trial with lanifibranor and empagliflozin in patients with NASH and type 2 diabetes. The primary endpoint was met with a statistically significant reduction in HbA1c with lanifibranor alone and in combination. Insulin sensitivity was improved, consistent with other studies, and additional improvement was observed in combination with empagliflozin. Markers of liver injury significantly improved, and this improvement was solely driven by lanifibranor. The second goal of this trial was to look at the potential mitigation of the weight gain when adding an SGLT2 inhibitor to lanifibranor. We were very pleased to show that the combination of lani with empagliflozin completely mitigated the weight gain. Furthermore, lanifibranor alone and in combination leads to a shift toward metabolically LUCID tissue. Finally, meta-analysis data suggests that GLP-1 has a similar effect when combined with PPAR. This study is particularly significant given the high prevalence of type 2 diabetes among patients affected by MASH. We are convinced that the profile of lani is ideal to treat patients with advanced fibrosis and diabetes, a patient population that is hard to treat and at high risk of progressing to cirrhosis. We're looking forward to looking more in depth at our lani effect when combined with other drugs, particularly GLP-1, as we have randomized approximately 15% of patients on GLP-1 in the Phase III study. This year, we also announced that our partner, Hepalys, has launched the clinical development of lanifibranor in Japan with the initiation of a Phase I study. We believe that with the licensing agreement that we have in place in Japan, South Korea with Hepalys, and in China with CTTQ, lanifibranor will be ideally positioned to potentially become the leading oral drug in MASH in these 2 important geographic areas. Looking now at the organization and at the governance. We are committed to making lani a success story for patients, and this is definitely a priority for Inventiva. We are focusing on challenging all our resources and efforts on achieving this goal. As part of this process, we are reinforcing our development team to ensure that we're fully prepared for regulatory filing and the potential commercial launch. In February, following a strategic review, we announced the decision to focus all of our resources on the development of lani. Unfortunately, this decision comes with a stop of all preclinical activities not related to lani and would lead to a reduction of approximately 50% of our workforce. I want to emphasize that this was not an easy decision. Our research team has been core to Inventiva for the past 12 years and has been instrumental in the development of lani. We are currently in negotiation with the worker council, and while I'm unable to comment further at this stage, we are committed to working together through this transition. Regarding the governance of Inventiva, we also reinforced it, and we reinforced our Board of Directors with the appointment of 3 new Board members. The first one is Andre Turenne, the President and CEO of the Boston-based Biotech Matchpoint Therapeutics and former Global Head of Business Development at Sanofi. In December, Srini, the founder and partner of Samsara Capital, joined us, and we also nominated Mark Pruzanski as Chairman of the Board. You all are familiar with Mark. He's been the CEO and Founder of Intercept and has shaped the MASH market over the last years. Mark brings, of course, a wealth of experience in the MASH field in the U.S., along with deep expertise in financial strategy. We're excited to have him on board as we work together to achieve our mission of bringing lani to patients and driving meaningful progress in the treatment of MASH. Now, finally, before I hand it over to Jean, the financial situation. In 2024, we successfully closed on several dilutive and nondilutive financing operations, raising a total of approximately $184 million in gross proceeds. Most of these amounts come from our 3 tranche financing of $125 million each. The financing came from existing and trusting investors and especially new investors. We received the first tranche in 2024 and will be eligible to receive the second tranche following the announcement of the end of randomization. We should have then met all operational condition precedent necessary for the second tranche. Let me now turn it over to Jean, who will provide you with more details on our 2024 financial report.

Thank you, Frederic. Good morning, good afternoon, everyone, and thank you for joining us on this call. So yesterday, as I said, we issued our press release covering the full financial results for the fiscal year '24. And, of course, I will provide you with key highlights. Happy to answer more detailed questions during the Q&A time. So, I'll start with the cash position and cash flows. So we have reached at the end of '24, EUR 96.6 million of cash position versus EUR 36 million at the end of December '23. Therefore, a net positive variance of close to EUR 61 million. As a matter of fact, this represents roughly half a year of annual OpEx. Key factors, as said by Frederic, are, of course, the USD 184 million and EUR 170 million of raising under different operations, dilutive and nondilutive. The fourth principle is, of course, the raising of the second tranche of EUR 25 million drawn in January '24 from the European Investment Bank. The second in July '24 was the raising of EUR 20.1 million with the issuance of YLT deals. The biggest one, of course, related to the up to EUR 348 million finance structure transaction announced in October 14, '24, represent EUR 116 million net proceeds received during the fourth quarter and eventually, we received also the milestone, the first milestone of CTTQ Sino Biopharm, our Chinese partner as part of the financing in October. And you remember that there are 3 tranches and 3 milestones related to this transaction; also, we can come back on that. So, therefore, we do confirm the cash runway guidance disclosed previously, meaning we can operate until September '25 without the contemplated second tranche of the financing. And after the contemplated second tranche of the financing, we should reach September '26. Let's talk now about the key figures of the profit and loss account. So we have recorded revenues in '24 of EUR 9.2 million, and it refers to the milestones I talked about earlier with CTTQ Sino Biopharm compared to EUR 17.5 million in the same period in '23. The other income line is stable at EUR 5.5 million compared to EUR 5.7 million. It represents, as usual, essentially the R&D French tax credit. Of course, the most important line is the R&D expenses. We still represent more than 18% of our global operation expense, so amounting to EUR 19.9 million in '24 compared to EUR 110 million in '23, showing a decrease of 17%, which was due to the delays we have to face in '24 to be noted that as announced during the second half of '24, these R&D expenses have started to increase again following the restart of the patient recruitment in AT3. The marketing and business development line is still not significant at EUR 2 million, stable compared to '23. But with the approaching of the end of the Phase III expected to increase in the near future because we will start preparing the NDA filing and the commercialization capabilities. In terms of G&A, reaching EUR 15.8 million for '24 compared to EUR 13.8 million in '23, so a slight increase of 14%. We have had a complex year in terms of transactions, but we have also reinforced our IP position. Therefore, we have a slight increase, in particular, in other legal and compliance fees. There is a rather unusual amount, as you can notice in the net financial loss, EUR 86 million compared to EUR 5 million in '23. Two items, one-off items of EUR 33.4 million, which are related to a specific IFRS retreatment, noncash related to the fair value of the second tranche to be realized, we expect very soon and has to be treated as derivative instruments since considered as a call option instruments. We also have this year EUR 12.2 million of noncash interest related to the loans and related to the royalty certificates' amortization. The bottom line is that the company's net loss for the full year was established at EUR 184.2 million compared to EUR 110.4 million in '23. I will now turn it over to Frederic for the conclusion and Q&A. Thank you for your attention.

So we've made important improvement and significant strides, and I'm confident that we have a tremendous opportunity ahead of us with lanifibranor. If we look at 2025, we anticipate announcing the completion of randomization and the release of the second tranche of $127 million from our structure financing. Today, we are the only Phase III that is recruiting currently and evaluating an oral liver-targeted drug candidate. We have a robust data set, including our Phase II, in which we observed an improvement of one-stage fibrosis in just 6 months of treatment. The demand for MASH treatment is clear, and the available treatment options are still limited today to a single mechanism of action. We believe that given the heterogeneity of the patient population and the broad prevalence of MASH, having multiple oral treatment options will be a game changer for patients. Thank you, and we now open the floor for questions.

[Operator Instructions] And your first question comes from the line of Ritu Baral from TD Cowen.

This is Nicole online for Ritu. Just a quick question. Are the background doses for patients on background doses of GLP-1s, are they low-dose diabetic doses? Or are they also composed of a high dose for weight loss? And just a quick follow-up, how many patients do you guys estimate that you have enrolled that are on background SGLT2 inhibitors?

So on the first one, I'll answer, and then I'll let Pierre on the SGLT2 if you like.

GLP-1 is mostly antidiabetic dosing. It's not only semaglutide; it's other -- well, semaglutide is included, but you also have other GLP-1 agonists.

And by the top of my head, you had between 6% to 8% of patients on SGLT2 inhibitors at baseline.

And your next question comes from the line of Sam Hammer from Jefferies.

So, I know you expect to complete enrollment within the first half of this year. But what's your level of confidence in randomizing that last patient in the main cohort by the 30th of April to secure that EUR 116 million capital increase? And then secondly, given it's likely you have cash, including this second tranche just for the readout in 2H '26, what are the plans for any additional financing? And I know you previously communicated that it would make sense to post the data to have a partner. What's the level of interest here from pharma to be able to close the deal as quickly as possible?

So, many questions. So, the first one on the confidence of recruiting before the end of April, I would say it's high confidence, given we have communicated to all sites to stop screening at the beginning of the month of January. We took that decision because we had sufficient patients already randomized and sufficient patients in screening to reach the target of 969 patients, which are the patients that we need to enroll in the main cohort to achieve 90% of powering with the assumption of the SAP. The average screen period is between 10 and 12 weeks. And so we feel very optimistic that we'll meet that end-of-April objective. On your question about partnering, there is a lot of interest in the MASH market. I would say, finally, given that we've been going through a series of failures in the field. Luckily, some companies have reported positive data. And more importantly, the Madrigal resmetirom drug has been approved. There is no need for biopsy to prescribe it, and the commercial launch has been very solid, and they're definitely in the direction of a blockbuster protect. So, of course, that drives a lot of interest. We believe we have a very strong package. We are the only oral drug currently in Phase III development. Most likely, once we announce the complete end of enrollment, we can reassert that it will be the next oral drug to be potentially approved. And given the results we had in Phase IIb, we feel extremely strong about the commercial success of lanifibranor. On how we manage our resources, of course, we're actively managing our financial resources, and we're confident that the step we're taking will allow us to execute the clinical trial. We work, and we are committed to advancing the clinical program and ensuring the long-term value of lani. And of course, while we do that, we continue evaluating all options to secure the funding needed to achieve our objective, which is to execute the clinical trial file NDA and commercialize lani first in the U.S. and then in the European community.

Your next question comes from the line of Annabel Samimy from Stifel.

Just on the screening again, is there any specific rate-limiting step on that screening that could derail that last person who's enrolled in becoming an actual randomized patient in the primary arm? And then secondly, I guess now that as you've alluded to, the MASH market appears to be forming with the first approved treatment, the profile of FGF21s is emerging, and there's additional data emerging on incretins being able to drive MASH resolution. Has the way you think about the market and the population that lani would be most appropriate for changed at all? And how do you see this market fragmenting with the potential introduction of lani?

Thank you, Annabel, for this question. So it's very interesting. So, to your first question, what can derail the randomization of the last patient? Once the patient is in the screening pool, we have a certain amount of period of time to complete all the examinations that are on the protocol. So during that period, we need to do all the lab tests. We need to do the biopsy. The biopsies are digitalized, and they are read centrally. And it's all that process that takes between 8 to 12 months, 12 months, or weeks. And then once the patient is randomized, there is an appointment he needs to show at the hospital and then is randomized in the study. So that's why this period takes a certain period of time. There is a total amount of time for that period. So at a certain moment, if we see that the patient doesn't present himself to an appointment or the site is not reactive enough. And so this period of time to screen and randomize the patient is overdue. We can screen fail the patient automatically. So that's why it gives us confidence that we will randomize the last patient as guided before the first half of H1 '25. On your second question on where we see lani play a role in the market shape. As I said before, Madrigal's launch really showed that there is a huge market. And it's even more so because we believe Madrigal is not a tremendously efficacious drug. So we believe the market will further develop when we arrive with a more efficacious drug, and also, semaglutide with the commercial marketing of Novo will help enlarge the market. Where we see lani work, clearly, this is something we get extremely positive feedback. We have a drug that is really ideal for patients that have advanced fibrosis, F2 F3, and on top of type 2 diabetes. This is a large population. We estimate that more than 50% of patients with NASH have type 2 diabetes, especially in the F2 F3 population. This is a population that has a fibrosis progression that is faster than the overall population. They are more difficult to treat, and the profile of lani where we can see fibrosis reduction in 6 months, we can see resolution of NASH and especially a strong insulin sensitivity activity with a drug that helps you control your diabetes is a profile that resonates very well. Then lastly, and that's something really important to highlight, is that PPAR is a well-known mechanism with endocrinologists and diabetologists. In the U.S. alone, you have close to 6 million prescriptions of Pio. Pio is, as you know, old PPAR gamma. Let's call it a first-generation PPAR gamma with a profile that is really less attractive than ours. But still, even if generic, even if it's not promoted, you have 6 million scripts every year written in the U.S., which really demonstrates that the diabetologists and endocrinologists are very familiar, very used to prescribe PPARs mechanism. And so they will be, we think, attractive by the profile of lanifibranor.

Your next question comes from the line of Ed Arce from H.C. Wainwright & Company.

Just a couple for me. So I just wanted to get your thoughts on R&D expenses throughout the year, considering both the impact of the recent reduction in workforce and the elimination of the early programs, but also as well the full enrollment of NATiVE 3 in a few months and the carrying expenses of that. And then also relatedly, just wondering if you could help us understand any potential milestone payment receipts for this year that you would expect?

Jean, do you want to take these questions?

Sure. So for the profile, may say, of the R&D expenses this year, as I said, decreased by 17% because we know we have to face some operational problems, but we have restarted the recruitment in Q2. So the decrease versus last year and versus budget also, which was basically something like EUR 20 million, represents this momentum for '24. If we talk about EUR 125 million, we come back. I would say we come back to the normal way. We expect, compared to this year, a slight increase in the expenses. As I mentioned, because we will start, and Frederic also said also, we'll start to prepare the commercial capabilities. We will also focus on the NDA filing. So it should increase, let's say, by 10% to 20% compared to this year. With regards to the expected milestones, as of today, what we know about are the milestones related in connection with the transaction, as you know, because there are 3 milestones expected from our Chinese partner, CTTQ. One has been collected in '24, and there is one milestone per tranche. So we are contemplating the second tranche of the financing in '25. So, together with the second tranche, we may will receive the second $10 million milestones. Practically, it is paid 30 days after the last randomization disclosure.

Your next question comes from the line of Jacob Mekhael from KBC Securities.

Looking ahead to the top line data in the second half of next year, I was just wondering if you can share with us how soon after the last patient completes their treatment, you will be able to share the results? And perhaps how does that tie in with your cash runway being until the end of Q3 2026?

So yes, so once we have the last patient and last visit, I guess we'll need to wait for a couple of months to publish the top line data. And then, as we said, once we have the last patient randomized, we'll have, of course, more clarity on when that date will be. And in terms of financing, once we have raised the second tranche, which we expect to raise pretty soon, we'll be in a clear position to show that we have the means to deliver on our clinical objectives.

And just maybe one more question, if you can perhaps just remind us on the deal with Hepalys in Japan, what would a Phase III program would look like there? And would that be entirely funded by your partner? Or do you have to contribute to that?

Yes. So that's a very good question. All our licensing in Japan, South Korea, and China, all the clinical development that is done locally, are financed by our partner. So in Japan, the current Phase I and Phase III will be financed by Hepalys. We will have no impact on our finances. Similarly, the ongoing Phase III in China is totally financed by CTTQ.

Your next question comes from the line of Rami Katkhuda from LifeSci Capital.

I guess, first, how are you guys thinking about the design and timing of an outcome study? Where does the FDA require you to be with it prior to the filing of an NDA for Lani?

So yes, the outcome study. So there's been, a couple of months ago, a new guideline from the FDA, but it's very clear that the study, the outcome study, needs to be underway at the time of NDA filing. So this is exactly the plan we have internally and that we have discussed with the FDA, which is to run an outcome study in patients with compensated cirrhosis, and this trial will be underway when we file for NDA, and currently, we plan to file for NDA in the first half of '27.

And I guess with enrollment nearly complete here, can you remind us of the powering assumptions in NATiVE3 for the combined endpoint?

Yes. So the study is powered at 90%, 9-0, and we used the data from Phase IIb, which, as you know, is a 6-month trial, and we have used what we believe is a cautious approach. So we looked at the placebo effect. We have increased it by some percentages. Similarly, the effect size was reduced by a couple of percentages for both doses. And that's what we used for the powering at 90%. Why do we believe this is a prudent approach is because Phase IIb was a very successful trial. We met the primary endpoint and also the key secondary endpoint, but it was a 6-month trial, and given the mechanism of action and also the data that has been published by our competitors and if you look at data 12 or 18 months, you clearly see that with longer period of treatment, we believe the effect size of lani will actually be greater than what we saw in the Phase IIb. So, to answer your question, that's how we powered the study.

[Operator Instructions] Your next question comes from the line of Eliana Merle from UBS.

This is Jasmine on for Ellie. So, a question on the combination of lani and SGLT2 inhibitors. So going forward, what are your plans to study this? Do you think you'll need to generate more data here to support this combination use by physicians? And then secondly, how important do you think the mitigation of the weight gain with this combination is going to be to physicians and patients, particularly in the segment of NASH patients that are also obese?

So, on your first question, we have no plans to develop a fixed-dose combination lani plus SGLT2 inhibitor. Why did we do that study? Because I think it's important to have data that show the metabolically healthy weight gain that you see in patients with that in some patients treated with lani, approximately 1/3 to half of the patients that gained weight. We have demonstrated that this weight gain is metabolically healthy. We have demonstrated that there is a plateau effect. So it's actually a weight gain that stabilizes after 6 to 9 months of treatment. Nevertheless, some patients probably will be looking for an approach besides the lifestyle or beside a diet to control this weight gained so we wanted to show that if you combine lani with SGLT2 inhibitor, you manage to retain the benefit of both drug and at the same time, mitigate the weight gain that we have shown with that study. We also believe that the data that we are generating right now in the Phase III with patients with GLP-1 will help show that that's actually a very good combination, adding GLP-1 to lani to retain the advantages of both drugs, but also mitigate the weight gain will also be a nice combination to address the weight gain.

There are currently no further questions. I will hand the call back to Frederic Cren.

Thank you, operator, and thank you, everybody, for attending. That's a great set of questions. You have understood that our next milestone is the end of randomization. It's going to be, of course, for us, a strong event, but also, I think, for the MASH community because it starts the clock for an important Phase III that will read out. When I say important, because if you look at the profile of lani, we really have a drug that can be a game changer for patients that are suffering from NASH. With that, I really thank you for your strong support over 2024, and as I said, we have ahead of us, I think, a very exciting 2025. I'm sure we will have several opportunities to discuss throughout this year. Thank you very much.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.