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

IRLAB Therapeutics have reported for the Fourth Quarter of 2023, and the company will now give a presentation followed by a Q&A with equity analysts. Viewers can also ask their questions in the live chat. So to present the fourth quarter of 2023 in the digital studio, I'm happy to hand over to CEO, Dr. Gunnar Olsson. Please go ahead.

Thank you. We could have the slides, please. Good morning, and welcome to the fourth quarter and end of year report from IRLAB. Next slide. Today's agenda, I will start by giving you news from the period. That will be followed by an R&D update by Nicholas Waters. And then Viktor Siewertz will give an update on the financials. I will then come back and give you some concluding words and looking into the future, and we will then end with a Q&A session. Next slide. Operational highlights during the fourth quarter. For mesdopetam, in October, we initiated a collaboration with Clintrex, our U.S. regulatory and clinical strategy advisers, and with the ProPharma Group, our U.S. regulatory agent, and the collaboration was to prepare full end-of-Phase II meeting with the FDA. In mid-December, we submitted an application for such a meeting and the FDA granted a meeting and the date was set to February the 20th this month. Next, please.. For pirepemat, IRLAB was granted an additional new patent for the drug that is used in the ongoing clinical development program. This patent runs into 2038. And it has the potential possibilities for extension that would lead to a potential market exclusivity into the early 2040s. Next slide, please. For IRL757, we completed the preclinical development activities, and we've started compilation of all the data for a regulatory submission to have permission to start our clinical Phase I studies. IRLAB was selected to receive a grant of USD 2 million from the well-known and well-reputed Michael J. Fox Foundation to support the development of IRL757 for the treatment of apathy. And we have now also contracted a CRO to run the Phase I study following the regulatory approval. And we anticipate the start of that study will be in Q2 this year. Next, please. Business development and financial activities. We held a Capital Markets Day in October in Stockholm, where we presented the portfolio development as well as the growth strategy for the company. We participated in the BioEurope in November in Munich, and we have now a lot of follow-up discussions with companies that we met at that meeting. Investor meetings. We have participated and presented at 5 investor conferences, and we have had continuous discussions with our financial advisers and investors. We increased the liquidity with a loan facility of up to SEK 55 million in December, and this is to extend our financial runway and, of course, increase our business opportunities. Next, please. Other highlights from the last quarter. With regard to myself, my appointment as CEO was extended into this year in December. We have recruited Fredrik Hansson as a new Director of Clinical Science & Biometrics, and he joined the company 1st of January. And this is, of course, a good strengthening of our clinical capabilities since we are now seeing more [ falls ] coming into the clinical phase. Next, please. Events after the period. With regard to pirepemat, this study has now come to a point where we can start generate new insights from the ongoing clinical study. We have observed that during the 1-month baseline period, fall rates are higher and they are more stable than we anticipated before initiation of the study. We have come to a point where we see a steady recruitment rate following opening of all the centers from late May. We have very positive patient feedback and we have had repeated requests to continue medication also after the end of the study period. And all in all, this gives us the ability to drive data-driven estimates for more accurate study time lines. And based on this, our data-driven estimates today states that we have patient recruitment to continue into the third quarter 2024, and probably absolutely important to us. It also shows that we have a high probability to detect treatment effects based on the observations of higher fall rate, more stability during the run-in phase and the lower dropout rates that we have seen. Next, please. Scientifically, we have now 2 abstracts accepted for presentation at the 18th International Conference on Alzheimer's & Parkinson's Disease in Lisbon now in March. The first abstract will give a detailed description of the React-PD, the Phase IIb start with pirepemat. And the second abstract will give a summary of preclinical observations of IRL1117. And this is the first time that the company reveals data at the scientific conference with regard to the IRL1117 compound. Next, please. Time now to shift, and I invite you, Nicholas, to give us an R&D update, please.

Thank you, Gunnar, and thank you, everyone, listening today. I'll give you a brief update on the progress in the programs during Q4. Next slide, please. As you all know, we are a company focusing heavily on Parkinson's disease, but not exclusively on Parkinson's. And in PD, there has been very good treatments available for the past 6 years in the terms of various formulations of levodopa, which treats the basic symptoms of Parkinson's disease, tremor, rigidity, bradykinesia. However, there are a number of issues which are not dealt with in Parkinson's. And Michael J. Fox Foundation recently published a survey. They have been asking patients across the globe now for -- since 2017 actually, asking questions about their priorities in terms of treatment. And this is -- the slide here shows an excerpt of that data, indicating that balance falls instability is still a huge problem or is the biggest problem for these patients. But there is also problems in the basic treatment of tremor, rigidity, bradykinesia, the hallmark symptoms of Parkinson's. And then we have the neuropsychiatric aspects of Parkinson's, which are not dealt with properly, and that is a treatment of cognitive function, but also mood aspects where apathy falls to some extent. And all these issues, they align with the areas that IRLAB is focusing on. Next slide, please. These symptoms, they come and they grow over time during the course of the disease, the 20 years, roughly 20 years of disease. And indicating that -- next slide, please, we are addressing all the -- on -- next again, next again, that's pirepemat, and next again, and next again, sorry for this. There you see. We are covering all the aspects of -- which are poorly or not treated at all today with our pipeline, well, IRL942, IRL757, mesdopetam and IRL1117. Next, please. Mesdopetam, a brief update on the status there. Next slide, please. This is the first-in-class compound with a novel mechanism. There is no other drugs that we can see in the clinical development pipeline globally, which addresses the same kind of mechanism. This is a mechanism which has been implicated in the genesis of dyskinesia in lots of literature in the past few years. Mesdopetam is an antagonist at the dopamine D3 receptor, so it inhibits overactivation of D3 receptors. We have built a patent portfolio around the asset, which has the potential to protect exclusivity into the 2040s. The lead indication for mesdopetam is levodopa-induced dyskinesia, which is an undertreated complication in Parkinson's disease across the globe. There are additional indications that we can consider also for mesdopetam, such as psychosis in Parkinson's. Next, please. The progress in the program has been quite steady during the fall. We started to work towards an end-of-Phase II study in September, October of this year and -- last year, sorry. We have compiled the so-called Briefing Book, which is the documentation that the FDA needs to be able to assess the utility of the product and the -- to discuss the further development of the program. So we have together with our collaborators in the U.S., our colleagues and friends at Clintrex and PPG, developed this Briefing Book. We submitted that actually on the 4th of January, so in this year. The objective of the end-of-Phase II meeting is to get alignment with the U.S. regulators concerning the forward -- further development of the Phase III program for mesdopetam. We expect that we will have some sort of written response from the FDA about 30 days after the meeting, and the meeting is, as I said, on the 20th of February. Next, please. The Briefing Book has -- is built around all of the studies that we've done with mesdopetam from the early preclinical IND-enabling studies, the long-term tox studies, the CMC development, that is the development of drug product and drug substance. And then we have the Phase Ib studies indicating this anti-dyskinetic and safety. We have the Phase IIa study, which indicated further anti-dyskinetic properties, but also expanded the safety and tolerability database and more recently, the Phase IIb study. And in parallel with the Phase IIb study, we conducted a number of Phase I studies necessary for continuing with Phase III. That is so-called drug-drug interaction studies that is studying how mesdopetam works together with other types of drugs that are used in this population. And then also the so-called mass balance that is following where mesdopetam goes in the body and how it's taken care of and when it comes out. These are very important studies to complete the package for an end-of-Phase II meeting. We've also studied pharmacokinetic properties in different populations, special populations, that is Asian versus Caucasian populations, and we can conclude that there is a very consistent pharmacokinetic properties across all populations with mesdopetam. Also in the Phase IIb study, we saw a clear signal of anti-dyskinetic effect -- efficacy and a very, very strong safety and tolerability package. So next step here is the end-of-Phase II meeting to be able to actually properly define the Phase III program for the product. Next, please. Pirepemat, this is a drug which actually addresses the biggest problem in Parkinson's disease falling or balance issues and falling. Next, please. Well, we have an ongoing Phase IIb study as you are aware. Why is it so important to prevent falls in Parkinson's. Well, about half of all Parkinson's patients fall recurrently during -- and this is in the later stages of the disease of course. But this also shortens the life span for patients. And the reason that patients fall is a loss of function in the cortical areas of the brain. So you have cognitive decline, you have impaired balance, which leads to falls and then, of course, injuries and costs. Next, please. So also pirepemat is the first-in-class drug with a novel mechanism. Like mesdopetam, pirepemat defines a new class of CNS drugs. This is very, very important aspect of the program from a commercial perspective. Then we have the mechanism, it's a novel mechanism inhibiting alpha 2 and serotonin 7 receptors, and the combination there leads to a very strong activation of cortical neurotransmission and cortical functions. Also here, we have patent-based exclusivity, portfolio patents covering the asset, which could give exclusivity into the 2040s. Next, please. Also here, we have built a package of studies or a series of studies, building towards the pivotal studies with, of course, Phase I studies initially besides all the preclinical development, CMC, tox and safety studies, we have recently completed the long-term tox studies, 6-month and 9-month studies. So we now have a complete package of toxicology data. We have a complete package of DMPK and safety data with the compound. In the Phase IIa study, we discovered that the drug actually improves cognitive function and reduce -- has the potential to reduce falls. We also saw some effects on neuropsychiatric symptoms such as apathy. And we are now in the middle of the Phase IIb study, which Gunnar alluded to. We have done some interesting observations in that study, which helps us enormously in terms of completing the study. And this study evaluates the effect of fall frequency, balance, postural dysfunction and also cognitive neuropsychiatric endpoints. Next, please. What we have discovered looking at the baseline data. So just a brief on the study outline. Patients are selected for the study by the sites that are 31 -- 38 of them now around -- across Europe, that knows their patients well. They are recruited into the study. And then we measure for a month, there is a measurement of the number of falls in these patients. And that month is then followed in the best -- in most cases, is followed by randomization. That means that the patients are then given placebo or either of 2 doses of pirepemat for 3 months. That is followed by a number of follow-up visits and then data management. But what we have seen now in the data so far in the baseline data, and of course, this is blinded. We see that the patients fall 2x to 3x more than previously anticipated, and the anticipations are, of course, based on literature data, but also on surveys we did before the study was started. And this means that we have a much higher baseline of falls. And if we have a higher baseline of falls, then it's much easier to detect a reduction of falls or an increase of falls actually if that should occur. So that's a much better outset for the statistical analysis, which means that we now believe that we may be able to reduce the number of patients in the study. We've retained our so-called power to detect an effect. We expect -- next, please. We expect the study to be concluded now in terms of recruitment in August or in Q3 this year. And that is based on the fact that all clinical centers are activated since May last year, and then they're pushing the recruitment quite hard right now. Looking at the cost of falling, it's quite substantial. We have discussed this before. But in the recent publications from the CDC, about USD 30,000 per patient ending up in hospital -- in hospital. And of course, that comes with a lot of problems for the patients and the caregivers also. So there's a high cost to falling. I mean if we can reduce that just a little bit, it would help these patients in this population a lot. Next, please. A few words on the development of the preclinical programs also. So if we start with the next slide. IRL757 to treat apathy. And apathy is one of the most common new psychiatric symptoms across neurological indications. Parkinson's, Alzheimer's, frontotemporal dementia, and you can go on with a long list. So this is a drug which is not only confined to Parkinson's, but we, of course, have a focus on the issues for Parkinson's patients. And as Gunnar mentioned, we were -- we received a grant from The Michael J. Fox Foundation, who thinks that apathy is one of the most important aspects to treat. We've got a $2 million grant from them to run a Phase I study or a series of Phase I studies, I'll come back to that. As you can see, there's a lot of patients available with this, the estimations around the -- in the largest markets across the globe, it's about between 1 million patients and 7 million patients and also the families around them. And we expect to be able to start IND -- we are in the middle or we have completed the IND-enabling studies, and we will start Phase I studies during Q2. For IRL942, which is developed in parallel with IRL757, we are right now in the IND-enabling studies, and we expect to have it Phase I ready by this year. Cognition is a huge issue for Parkinson's patients and also in other neurological disorders. There is one treatment available, cholinesterase inhibitors, which are approved, but they lack efficacy and have -- are not very strong, and they have a lot of side effects. We're thinking that there is place for a good or a better treatment for cognitive dysfunction in Parkinson's disease. And lastly, but not least at all, IRL1117, I'll come back to that, a totally new technology to treat the basic symptoms of Parkinson's disease. Next, please. So the progress in Q4 with IRL757 is that we actually have now compiled all the documentation needed for a CTA or a clinical trial application in the European systems where we will start to apply for -- to get approval for Phase I. We have completed the CMC development for Phase I. And as I said, we have funding for the Phase I studies. And this is a quite substantial package of Phase I studies. We start with a single ascending dose study and move directly then into a multiple ascending dose study over 9 days. And then we look at food interaction, all in one package. So it's a quite substantial comprehensive Phase I study package that we are running together with The Michael J. Fox Foundation. And that is to prepare for a proper Phase II or Phase Ib, Phase IIa studies. Then we have IRL942, which also has the potential to be the first in a totally new class like IRL757, once again, first-in-class to improve cognitive functions. The development there proceeds according to the plans that we have laid out. We are right now in the middle of finalizing the CMC development of API and drug product for further studies. We plan to initiate tox studies this year, the 1-month tox studies to be able to compile the documentation by the end of the year. We are right now in discussions with, as you know, with MSRD or Otsuka for the further development of any of these or both of these assets. Next, please. IRL1117, which is a really interesting product or project where we have discovered a technology where we can actually get sustained efficacy over a much, much longer time than you can get with levodopa. And I'm showing here the graph, and this is an excerpt from the poster actually that we will show at the AD/PD Congress in Lisbon in a month's time. The graph illustrates the oral administration of IRL1117 and then you see the sustained activation of motor function. And this is in parkinsonian rodents in rats, which are -- have Parkinson's disease. And this should be contrasted then with what you can get with levodopa, for instance, you can get about 2 hours activation of motor function in this type of model, and with apomorphine, slightly less about 1.5 hours. So those 2 apomorphine and levodopa are the most used antiparkinsonian treatments today. So here, we can actually provide a once -- potentially a once-daily treatment for Parkinson's, which would simplify the treatment, improve the treatment dramatically for patients. This also has the potential to be the first in a novel class. We don't know of any similar compounds in the development pipeline based on the same technology that we have developed. And the -- one of the key issues here is that we have a rapid onset with the drug. That's really, really important for the patients, rapid onset and long-standing efficacy. We are working on the development of CMC. This is a highly potent compound. So there are specific aspects of developing the CMC or the drug product, API here. Next, please. Viktor, I'd like to turn over to you to give a brief on the financial situations.

Thank you. A few words on the financials. So next slide, please. So if we go through the panels at the bottom to the left, we have the cash flow, where we can see that we basically had the same amount of cash in Q4 as in Q3, which of course, it is due to the loan that we took in late December. In the middle, you can see the cost structure, and you can see that we have decreased cost during the last 4 quarters, and that is, of course, due to a lot of activities being finalized, such as the Phase IIb study with mesdopetam and also the IRL757 project, which is now Phase I ready, where we had some costs during 2024, for example, for toxicology studies and so on, which are now paid for. So that is good in the current financial climates. We do keep our personnel. We believe that they are very important. So we are still maintaining about 30 employees in the company. And as stated in the bullets, the cash position was about SEK 111 million at the year-end. Next slide, please. So this is just an excerpt from the Q4 report where we also see that the cash flow is a little bit less than last year and that we have SEK 111.3 million in cash. That's all about the numbers. So back to you, Gunnar.

Thank you, Viktor. Next slide, please. So some concluding words and some look into the future. I'll start by reminding you of our strategy. We are addressing all stages of Parkinson's disease and also other CNS disorders. We're discovering novel candidate drugs with our unique ISP platform. And that gives us true innovation, a higher success rate than industry standard, and it gives us a very strong IP position for our compounds. We're developing our CDs from discovery up to clinical proof-of-concept, and then we are seeking partnering to -- around the Phase III and future conversation of the drugs. Next, please. This year -- or I should say, the last year 2023 has been a year of very major progress in the pipeline. And let me summarize you in this -- from this slide. With mesdopetam, we started the year by getting the readout and top line results of the Phase I -- Phase IIb study. Later in the year, we secured a full ownership and all rights to the product. We took it to Phase III readiness and we have now a scheduled end-of-Phase II meeting later in this month. For pirepemat, we have the ongoing Phase IIb study. All the clinical centers were opened. We had the first prespecified DSMB evaluation of the study. And as I stated before, we got a new patent granted that potentially extends market exclusivity into the 20 -- early 2040s. For IRL757, we completed our preclinical development program. We received a grant of USD 2 million from Michael J. Fox Foundation. And as Nicholas pointed out, it will finance the first-in-man study that includes a SAD and MAD and food interaction study in one study package. And we will start the Phase I study in the second quarter this year. For IRL1117, this compound was selected last year and we took it into preclinical development phase. For IRL942, we have the ongoing development activities progressing according to plan. With regard to the portfolio, we have now created a world-leading position in Parkinson's with our project portfolio. Some words on business development. This was a year where we really increased all our business development activities, and we have multiple opportunities that are evaluated. Next, please. And this has led to the following pipeline table. At the top, you see mesdopetam, lead indication treatment of LIDs, Phase III ready program and an end-of-Phase II meeting with the FDA in the next 2 weeks. Pirepemat, the lead indication treatment of falls in Parkinson's in Phase IIb and with study enrollment completed during third quarter this year. IRL757 for treatment of apathy now Phase I ready, and we anticipate start of Phase I through the second quarter this year. The IRL942 to treat cognitive impairment in preclinical, IRL1117 in preclinical to treat Parkinson's disease main symptoms, both these compounds where we anticipate to have them [ Phase III ] ready during the year. Next, some words about business development efforts. With the intensified activities, it is now so that awareness of IRLAB and the development pipeline we have, that awareness is increasing, and this is very good news. We have continuous and frequent dialogue with potential partners, and we have partnering opportunities across the entire portfolio. However, in the near term, we focus on mesdopetam and IRL757. Next slide, please. Our key priorities, they are focused for value creation. And to summarize them in the clinical phase, it is, of course, the end-of-Phase II meeting with the FDA later this month. It is to complete the recruitment for Phase IIb in the pirepemat study, and it is to initiate the Phase I study with IRL757. On the preclinical side, it is to make sure that we drive IRL942 and IRL1117 for Phase I readiness. And with regard to financing, we need to increase our capital base to enable further value creation. And we do this through both business development activities as well as other financing opportunities. With regard to business development, we have a continued dialogue with potential collaborators and -- [ collaborative ] partners and licensees. And we continue our dialogues with financial advisers and investors. Next, when we look forward over the next 18 months, we have multiple possibilities for high value creation which you want to use the word inflection points for value creation. With mesdopetam, it is the end-of-Phase II meeting with the FDA as well as the ongoing business development activities for Phase III. For pirepemat, it is the completion of the study and business development activities for Phase III. For IRL757, it is the start of the first human study and, of course, also the completion of that study and the business development activities to seek development and collaboration. For IRL942, it is getting Phase I ready, start Phase I and initiate development -- I should not say initiate, I would say, continue the ongoing development collaboration discussions that we have. And for IRL1117, it is to be Phase I ready and get into active Phase I study. Next slide, please. So IRLAB, having now a world-leading portfolio in Parkinson's to reduce the burden of the disease and to transform lives. We have pioneering biology and we have the unique ISP to generate our new molecules. We have a focused strategy. We have a validated business model. We are discovering new CDs that we take to clinical proof of principle, and we are doing deals. We have a broad and world-leading portfolio of products in the Parkinson's area, and we are an organization positioned for success. That's all for the presentation part, and let's now move over to the question-and-answer section. Thank you.

Thank you so much, Gunnar, Nicholas, and Viktor for your presentation. It's always interesting and inspiring to listen to your progress and activities. It's time to start off the Q&A, and I will grab one before we hand over to the equity analysts. So my question is this upcoming end-of-Phase II meeting and Phase III ready meeting on February 20. How time consuming is it for you in the management to perform this -- to prepare this meeting?

You want the long or the short answer? But the long answer is that we've been preparing for this since 2017 basically since we started the development. The -- but in the short term, the preparations are, of course, time consuming. However, they are not -- that is not to the expense of any of the other activities that we're running. The team is -- has been preparing the Briefing Book together with external experts, a lot of good, very, very good advice from the -- our U.S. colleagues in how to compile the documentation from, as I said, the early development to now the late-stage development -- mid-stage development in a very nice package that took a few weeks during December, a lot of meetings. But -- and then right now, we are reading in, studying our own data, refreshing our memories, so things we did 10 years ago and 5 years ago and preparing for the discussions. And discussions are based on the number of questions that we have posed to the FDA as you do in end-of-Phase II meetings.

Let me just add here. I want to commend the team that has done this, because what I think you should all recognize that is that within less than 6 months, we have secured the ownership and the full rights of the product. We have been transferring all information material from Ipsen. We have started new collaboration with U.S. colleagues. We have put together the briefing pack, and we will have had the FDA meeting for end-of-Phase II. I think that, that is a really good achievement by the team to do all this within less than 6 months.

And by that, it's time to hand over to Alexander Kramer at ABG Sundal Collier.

I have a couple of questions. I will start with the first one. So the first one is about the end-of-Phase II meeting with the FDA as well. And I was wondering about the midterm prospects here. At your CMD last year, you talked about the possibility of having a Special Protocol Assessment, SPA, to have an agreement on the Phase III design. Do you still plan to have such a SPA in place? And what is the time line for such an agreement?

We are, we are planning for an SPA to sort out details of potential protocols for the Phase III studies. We cannot give a time line on that at this time. We need to have concluded the end-of-Phase II meeting before we can actually go into that discussion with the FDA. But that will, of course, be the next urgent step to get that done.

Okay. And another question is regarding the pirepemat's React-PD study. And here, my question would be, could you give us some color on the number of patients that you have recruited so far? How happy you are with the recruitment speed? And also regarding that study is about the study amendment that you brought up in your press release. Is such -- what are the conditions for such a study amendment? And if such a study amendment would be granted in H1 this year, what impact will it have on the time line on the whole process? Like how much is it going to accelerate the process of finishing recruitment and top line data readout?

That was 4 questions in one.

Sorry.

On the end, so that I can remember, and you'd have to remind me of the first one later on. But the time lines for the study in the guidance we gave today, actually yesterday and today, we have built in any further discussions with regulators on this. But the benefit of what we have learned from the study leads to the conclusion that we can actually reduce the number of patients from the originally thought 165. And you should all know that this is the power analysis is based on a statistical assumption that you make before a study. However, now we have learned much more so we can actually refine the power analysis, which means that we can have the potential to reduce that. But that needs to be discussed with the regulators and that needs to be followed by a discussion on the statistical analysis plan. So those 2 things need to go hand-in-hand to be able to get to a conclusion. But we built that in into the guidance that we have delivered today. So we don't expect to -- we do expect to be able to get the last patients in by Q3.

Yes. Let me add here. For us as a company, the absolutely key priority for us, that is to have a study that delivers results that helps us take the next decision on investment, on continued development. And we are doing now absolutely whatever we can to really get to that position to have so much a strong position when we have the data coming out. So rest assured, we will communicate more details as we move forward and when we know more. But as Nicholas pointed out, this includes interactions with the regulatory authorities, and let us not speculate anything until we've had those kind of discussions completed.

We want the responses from the regulators before we share the information that we have generated. That's a key thinking around how we communicate.

And it's time to hand over the word to Soo Romanoff of Edison Group.

Thank you for the update. It's very helpful. And Alexander took some of my questions here. But can you give us -- for mesdopetam, I think we talked about having a small program. Will the Phase III study be sufficient for the regulatory approval or do you see a need to do a second study?

We know that the ground rules from regulatory authorities, including FDA, that is that they want to have 2 Phase III studies. However, there are exceptions, and the FDA has published a paper where they described those type of exceptions. Our advisers, they believe that there is a chance that we might only need one study, but let us keep this open. We have the meeting in 2 weeks' time from now, and we should not speculate here until we have had the meeting and when the discussion of this particular question have been done with the FDA. So we will definitely come back on this.

And Soo, for the size of the study, you asked about that also in the same question. So when it comes to the design of the Phase III program, of course, that is something that we will know much more about after the end-of-Phase II meeting. But what we have guided so far is that based on the data we have generated, Phase IIa, Phase IIb data, we expect that roughly 150 patients to 200 patients would be enough for one Phase III study to be able to assess the efficacy on dyskinesia, but also an antiparkinsonian effect of the compound. If you recall our previous presentations, we've talked about the reduction of OFF-time, which is really, really important. And we want to include that -- if possible, want to include that in the label.

Yes.

So 150 patients to 200 patients per Phase III study basically.

And importantly, the duration of the double-blind treatment will only be 3 months.

Yes.