IRLAB Therapeutics AB (publ) (IRLABA) Earnings Call Transcript & Summary

IRLAB Therapeutics have reported the Third Quarter for 2023. The company will now give a presentation followed by a Q&A. Viewers can also ask their questions in the live chat. So to present the third quarter in the digital studio, I'm happy to hand over to CEO, Dr. Gunnar Olsson. Welcome, Gunnar.

Thank you, and very welcome to the Q3 update from IRLAB. Today's agenda is as follows. I will start by giving you topline news in the period, this will be followed by an R&D update given by Nicholas Waters, our Head of R&D. We will then have Viktor Siewertz, our CFO, to take us through the financials. I will then end with some concluding remarks and we move over into the question and answer session. So operational highlights in the third quarter, starting with pirepemat. In July, the Data Safety Monitoring Board, the DSMB, had their first preplanned review when the first 25 patients have completed the study. The DSMB gave us a unanimous recommendation to continue the study according to plan. For mesdopetam, on the 21st of August, we secured the full ownership and all rights of the now Phase III-ready mesdopetam project. We also communicated our intention to continue with the development of the product. When we had secured the ownership of the product, we could also present all the data from the completed Phase IIb study. So on the 22nd of August we had a webcast. The results of the study was -- were also presented at the MDS Congress in Copenhagen. The results, in short, they showed the dose-dependent clear anti-dyskinetic effect and the dose-dependent anti-parkinsonian effect, and this coupled with a safety tolerability profile that was on par with placebo. Business development and financing. During this quarter, we have substantially increased our activities in the evaluation of potential collaboration partners and licensees. And with investors we have continuous -- we have continued our financing activities with participation in investor conferences, as well as discussions with financial advisors and investors. Events happening after the period, mesdopetam, in October, we communicated our collaboration with our regulatory advisors in the United States. Clintrex, who leads our U.S. regulatory strategy and the ProPharma Group, who acts as our regulatory agent in the United States opposite the FDA. And we're now together compiling the briefing document that needs to be put together before we can approach the FDA and ask for a meeting, a so-called end of Phase II meeting with a purpose to define the Phase III program. Regarding investors, we held a Capital Market Day last week on October 17. And for those who have not had the possibility to attend or see the live sent on the net, I give a recommendation to look at the recorded version of -- that can be reached through a link from our homepage. Financial summary. During the third quarter, we had no net sales; operating profit, minus SEK 40.7 million; earnings per share, minus SEK 0.74; cash, SEK 118.8 million; cash flow, minus SEK 36.7 million; average number of employees, 31; and share price at the end of the period, SEK 7.38. So with this short highlight of key events, I think it's time now to go to the R&D update. So please, Nicholas, would you take off?

Thank you, Gunnar. Thank you, everyone, for listening in today. I'll give you a brief on the strategy and the activities ongoing at IRLAB in terms of the development of our products. First of all, IRLAB, as you know, have a very strong focus on Parkinson's disease. And the pipeline is based on what we have learned about the complications in Parkinson's disease during the past 30 to 40 years. Recently there came a study published by the Michael J. Fox Foundation or an investigation run by the Michael J. Fox Foundation, looking at what the patients actually find to be their biggest problems. And among those is, of course, balance and stability, which is the biggest problem in Parkinson's disease. And then, of course, as a second problem, still the treatment of the basic symptoms: tremor, rigidity and bradykinesia is still high up on the charts in terms of medical needs. Then, of course, neuropsychiatric aspects of the disorder as well, cognitive decline, mood and neuropsychiatric symptoms such as psychosis, anxiety, but also the dyskinesia that we are addressing. Parkinson's disease is a progressive disorder, where there is a development of symptoms over time. The first symptoms observed are usually tremors, which is followed by bradykinesia, that is slowness of movement and rigidity, that stiffness in the musculature. On top of that, patients experience a number of additional symptoms over the years such as hallucinations, confusion, depression, the apathy, cognitive impairment and psychosis, but also motor complications due to the treatment with levodopa. And at IRLAB, we are addressing all these aspects of symptomatology. So we're not only focusing on slowing the progression of the disorder, but instead focusing on improving the symptomatology or reducing symptoms and their effect on daily life. So mesdopetam is in development for dyskinesia, but also hallucinations and psychosis. Look at pirepemat, which improves -- has the potential to improve balance and falls, but also cognitive impairment, speech and swallowing difficulties. 757 is a drug we are now developing specifically to treat apathy. And this is a project where we're looking, of course, at Parkinson's disease. But this is a molecule or a project where which we actually can stretch out into other indication areas, in other neurodegenerative disorders, such as Alzheimer's, for instance, but also frontotemporal dementia. 942 is a molecule, which has a very broad cognitive enhancing properties across different cognitive modalities. And we believe this could be a really useful tool in the treatment of cognitive impairment in neurodegenerative disorders, including Parkinson's disease. And more recently, we have nominated IRL1117 as a candidate to treat the basic symptoms of Parkinson's disease, that is the slowness of movement, rigidity and tremors. But also treat those without inflicting the fluctuation and complications that are associated with treatment with levodopa. So this makes up a very broad pipeline covering all the aspects of complicating symptoms for these patients. Few words on mesdopetam. You have followed us for a while during the fall, have, of course, a deep understanding and I've seen what we've published so far when it comes to mesdopetam. But this is a first-in-class novel compound with a novel mechanism. It primary inhibits dopamine D3 receptors in the brain, which are responsible for the genesis of dyskinesia. And one important aspect of this project or this product is that we have -- we believe that we have and we can have exclusivity into the 2040s based on the IPR estate that we have developed, and this is a very long period, I assure you. The lead indication here is levodopa-induced dyskinesias, but we can see a number of lifecycle management options here in terms of adding indications, but also into other populations, such as target dyskinesia. We have generated a lot of data on mesdopetam. And during the, what we call, the learning phases from Phase I through Phase II, entering now the pivotal stages of development, we have learned a lot about this molecule and generated sufficient data to be able to go to the FDA and have a discussion on the development program. And as Gunnar mentioned, we are now preparing for that meeting with the FDA to design the final out -- the final design of the Phase III program. We have shown this data, the number of occasions during the fall, and this is a comprehensive summary of what we learned from the Phase IIb study. But this also stretches back into the Phase IIa, Phase II -- Phase Ib studies. And we can conclude that we have clinically meaningful anti-dyskinetic efficacy with this -- with mesdopetam, without any impairment of motor function or other functions for these individuals treated with mesdopetam. We see consistent dose response pattern across key endpoints, meaningful and important to regulators, such as OFF-time, good ON and the regulatory preferred scale, the Unified Dyskinesia Rating Scale. And we have a safety and tolerability profile, which is on par with placebo at maximum or optimum efficacy, which positions mesdopetam as unique asset in this space. We have also decided on a dose for the further studies, 7.5 milligrams b.i.d. Few words on pirepemat, this is a compound where we are looking for the first time, we believe, in history, looking at reduction of falls with a sponsor financed project. This is a first-in-class novel mechanism. We are inhibiting alpha-2 and serotonin 7 receptors in the frontal lobe of the brain, leading to activation in neural paths in the cortex, which are involved in the control of balance. We also, with this program, have a patent-based exclusivity into the 2040s. And the ultimate objective of this program is to reduce falls or reduce the risk of falling in Parkinson's disease. And this is the #1 issue for Parkinson's patients today. And about half of all patients diagnosed or individuals diagnosed with Parkinson's disease, they fall recurrently, once or twice a month up to several times a day actually. And this is dependent on a number of mechanisms in the body. But primarily the loss of activation of cortical function is responsible, which leads to cognitive decline, impaired balance, leading to falls and quite substantial costs for the individual and for society. And this is a very important project for us, but also for the payers around the world who are paying for these fall injuries. Also here, we have generated a similar set of learning data from Phase I through Phase IIa, and we are currently in the middle of a Phase IIb study where we're looking at patients with recurrent falls or high frequency fallers across Europe. The idea here is to evaluate the effects on fall frequency, balance and postural dysfunction, but also cognitive functions and neuropsychiatric endpoints. And this is to prepare for a pivotal program. Looking at the market for a product in this space, there is a huge number of patients across the globe that are in need of a balance improving strategy. We expect to have completed recruitment during the Q1 this year and be able to -- we hope to be aiming to report topline results during the spring of next year. On top of these 2 advanced programs, close to Phase III in the middle of Phase IIb, we have 3 candidates in preclinical development. That's 757, where we're looking at addressing apathy, which is an unmet medical need across neurological disorders, and especially so in Parkinson's disease. We see that there is a quite large population in the main markets, around 1.1 through -- to 7 million people affected by apathy. We are right now completing the IND-enabling or CTA-enabling studies in Europe, and we are preparing this molecule for Phase I right now. With the 942, we are focusing on improvement of cognitive function. And also here, we are in the middle of IND-enabling studies. We expect to have this project ready for Phase I during next year. And for 1117, similarly, we are developing the IND-enabling program right now. We are working on the CMC development, but we also have here a very large population that is eligible for treatment, around 6 million people. And we expect to have reached Phase I readiness by the end of next year. So with those concluding remarks, I will hand over to Viktor to talk about the finances.

Thank you, Nicholas. So, a few short words about the financing or finances. We had a cash position in the end of the quarter at about SEK 119 million. The cost, as we can see in the middle graph on this picture, are decreasing, and that is partly a result of our cost control and partly a result of the declining cost in our clinical projects. What we do now is that we prioritize costs that will preserve or increase the value of the projects that we have. So that's how we look at the cost at the moment. So we are investing in the Phase IIb with pirepemat and we are maintaining the investments in the preclinical projects as well in order to make them Phase I ready. When it comes to headcount, we are still around 30 or 31 employees. The number of employees will probably remain stable as we believe that or is -- it's proven that all the employees are invaluable to us in all the projects or all the activities that we are doing at the moment. These are the analysts that covers us, so -- and they will come in after this presentation with questions. And with that, over to you, Gunnar.

Thank you, Viktor. So a couple of concluding remarks from -- before we enter into the question-and-answer session. First, I just want to remind you on our strategy in the company. We are addressing all stages of Parkinson's disease and also other CNS disorders when symptomatology is similar to that with Parkinson's. We are discovering novel candidate drugs with our unique ISP platform, the platform to generate discovery. This results in 2 innovation, higher success rate than the industry standard, and it gives us strong IP position. We're developing our candidate drugs from discovery to proof-of-concept, and then we are seeking a partner after proof-of-concept to take the product on to Phase III and later conversation. This year, we have seen a clear growth of our project portfolio. With mesdopetam, we have had the Phase IIb readout, and we are now preparing for the end of Phase II meeting with the FDA to define the Phase III program, and we've secured the full ownership and rights to the product. With pirepemat, we've continued the Phase IIb study. All the clinical sites now are open and running, and we've had the first pre-specified DSMB evaluation with the advice to continue. For 1117, this is a CD that we selected early this year and it started the preclinical development activities. And for 757 and 942, we have continued preclinical development. So we are now in late preclinical development and we'll see Phase I readiness in the near future. This means that the portfolio has actually grown quite a bit. So we can now say that we are in a world-leading position in Parkinson's. Parallel with the progress in the portfolio, we have also increased our BD activities and multiple opportunities are evaluated. And this has resulted in this picture of the portfolio. Mesdopetam developed for levodopa-induced dyskinesia, now aiming for the end of Phase II meeting to define Phase III. Pirepemat for reduction in risk of falls in Phase IIb study. We aim to have topline results by the end of first half next year. 757 for apathy, of course, in Parkinson's, but also in other neurodegenerative diseases where apathy is a common symptom, phase ready by end of this year. 942 for treatment of cognitive impairment, of course, in Parkinson's patients, but also in other neurodegenerative diseases where cognitive impairment is a common symptom, case-ready first half next year. And last but not least, 1117, where we now are in preclinical development and hope to see this to be Phase I ready by the end of next year. Some words about business development efforts. And as I stated, we have substantially increased our activities. And we now see awareness of IRLAB and the development pipeline and that awareness is increasing, and that is good news. We continuously have dialogues with potential partners, and we do it frequently. We have partnering opportunities across the entire portfolio, but the near-term focus for us that is mesdopetam and 757 and 942. So our key priorities, as Viktor stated, they are now focused on value-creating activities. So in clinical development, it aims to get to the end of Phase II meeting with the FDA for mesdopetam. It is to complete the Phase IIb study with pirepemat so that we can present topline results. And in the preclinical development phase it is now to get the 3 preclinical products into Phase I readiness. And on financing, we are working to increase capital base to enable further value creation. And this is through business development activities and/or other financing opportunities. So in the business development space, we continue dialoging with potential collaboration partners and licenses. And on the financing opportunities we continue dialogues with financial advisors and investors. So when we look ahead of us the next 18 months, we will have multiple possibilities for high value creation in the project portfolio. Mesdopetam, the end of Phase II meeting and following that or parallel to that, I should rather say, business development activities. With Pirepemat, the topline results and business development activities for Phase III. And preclinically, for 757, and 942, we are getting them ready for Phase I and we have development collaboration discussions. And 1117, make it Phase I ready and start of Phase I. So I think that this concludes the presentation. I think that we should now move over to question and answers.

Thank you so much, Gunnar, Nicholas and Viktor for that presentation. It's always very interesting to listen to all your progress and all your activities. And like you said, it's time to move on with the Q&A. And I would like to start off by inviting Soo Romanoff of Edison Group. Please, Soo, go ahead with your questions.

Thank you for the presentation, it's very helpful on your CMD. What are the key learnings that maybe you've taken away in comparing the FAS data to the PS data? And would that influence your future plans?

No. I think that the study was designed to be a dose finding study. And in the dose finding study, you really want to know what dose gives what type of effects. And then there's that in such a study, you always do both the FAS population analysis, the ITT as well as you do the per protocol analysis. But they have slightly different meanings. The per protocol analysis, which represent the PS population. That is really to determine what is the right dose that we should take when we continue our development activities. The ITT that is more to see, could the study qualify as a pivotal study in your future regulatory interaction. So that is really why every time you do a Phase IIb study, you do both of these analysis.

And then also, are we taking any measures to speed up the recruitment for the pirepemat study on the back of the nice progress we've made so far?

We are constantly looking into the study and the recruitment development, and we are taking actions with regard to see that we can do whatever we can to have as good recruitment as possible. I don't know if Nicholas you would want to comment further on the pirepemat study?

Not further, but I can deepen the response a little bit, and that is that we are, of course, working together with our CRO, which we have been doing since the start of the study to incentivize the patient, both patients and the sites to work hard and get the patients in. What we have learned during the course of the study is that it's a quite complex protocol where we have a number of visits at the sites. And this is, of course, always cumbersome for patients of this type. So we are looking at is perhaps doing some phone calls instead of having patients to come to the doctors. So that's one thing -- one example of an activity that's possible to make this a little bit easier for patients to participate. So that's one thing. And there are other things also, of course, that we are implementing as the study goes on. And we've been doing this since the start of the study.

And I think the last thing was, it was kind of nice to see this big transaction in the market for Parkinson's recently. And I don't know if we have any nice -- any takeaways or anything like that since we're always looking at comparable transactions and how that helps IRLAB?

We'll, of course, always when we have our partner discussions, we keep an eye on benchmarking with other deals. Having said that, we should still see that every deal is unique, because it depends on the needs from 2 parties, the taker and the giver subset. What I think is very positive for us that is that we have now -- how to say, we have busy times in interacting with potential partners. And as I stated, it is high on our agenda. It is a prioritized area for us. At the moment, we have the key focus on mesdopetam and for the 2 preclinical products, 757 and 942.

Thank you, Soo Romanoff, and let's move on to Gonzalo Artiach at ABG Sundal Collier. Hello, Gonzalo.