Nxera Pharma Co., Ltd. (4565) Earnings Call Transcript & Summary

[Foreign Language]

[Foreign Language]

[Foreign Language] Over to you now, Miles. Thank you.

Thanks, Chris. So if we can turn to Slide 8, please. Muscarinic M4 and M1 receptors are well-validated targets for both psychosis and cognition and have been worked on by pharmaceutical companies for over 25 years. More than 20 years ago, Eli Lilly successfully demonstrated the antipsychotic effects of an M4/M1 preferring agonist compound called Xanomeline and achieved human proof-of-concept in 2 double-blind, placebo-controlled trials in schizophrenia and Alzheimer's disease patients. The relevant studies are shown on the right-hand side of this slide. Despite this clinical proof-of-concept achieved for the M4 and M1 targets, the development of Xanomeline was ultimately terminated due to severe GI and cardiovascular side effects most likely caused by its very limited selectivity over peripheral, M2 and M3 receptor subtypes. After these studies were reported, there were compelling reasons to want to design much more selective orthosteric M4 and M1 agonists, but this remained very challenging due to the fact that the muscarinic subtypes are almost identical in the agonist finding site, which is called the orthosteric site, confounding these efforts. With over 20 million schizophrenia sufferers and over 50 million dementias sufferers worldwide, the significant need to develop new treatment options remains at paramount importance. We believe that muscarinic M4 and M1 receptor agonist with high selectivity over the peripheral M2 and M3 receptor subtypes have the potential to be truly transformative treatments for these disorders. Please turn to Slide 9. Chris mentioned earlier, in 2016, Heptares was arguably the leading company focusing on selective muscarinic agonist drug discovery. This was what attracted Allergan to our programs. Since then, the 2 new companies have emerged in the muscarinic modulation space and are seeking to advance their own versions of muscarinic modulators for schizophrenia and Alzheimer's disease psychosis. Karuna Therapeutics, KarXT and Cerevel Therapeutics CVL-231 have recently reawakened investors and pharma industry to the potential of muscarinic programs for the treatment of psychosis and cognition. We welcome this new competition and the focus it brings to this exciting area of clinical development. The Karuna Therapeutics approach seeks to mitigate the problems with Xanomeline by administering with another agent to try to block the unwanted side-effects. Cerevel Therapeutics are using a positive allosteric modulator or PAM, that modulates the natural agonist acetylcholine. This approach relies on acetylcholine being naturally present, so it's quite different from an orthosteric agonist, which essentially replaces acetylcholine. Okay. Let's please turn to Slide 10. Let's focus now on our M4 program, which we believe will be a next generation, first-in-class treatment for schizophrenia and then for psychosis in dementias. With the supportive proof-of-concept study from Lilly's compounds Xanomeline, which I've already outlined, showing positive clinical effects on psychotic symptoms, Heptares applied its proprietary StaR technology and structure-based drug design platform to create molecules that were highly selective for the M4 receptor over other muscarinic subtypes, known to cause the GI and cardiovascular side effects. Because the muscarinic subtypes are so similar, structure-based drug design approaches were required to achieve the required high selectivity. Empirical approaches taken by many other companies had previously been unsuccessful. The results of these efforts was HTL'878, a highly selective muscarinic M4 receptor subtype agonist with excellent CNS penetration and drug-like properties that we believe offers a highly attractive approach differentiated from our competitors in development. I will now hand over to our CMO, Tim Tasker.

Thank you, Miles. Please turn to Slide 11. Schizophrenia truly remains an area of huge unmet medical need. Schizophrenia is a very large market, over 20 million patients worldwide. And despite the limited efficacy and significant side effects associated with current approved therapies, these drugs regularly achieve peak sales of over $1 billion. Yet there has almost been no innovation since the 1950s with all current and generic treatments, essentially having the same mechanism of action with limited efficacy. As a physician, I can tell you that the severe side effect profile of currently approved drugs, which are known as Atypicals, continues to drive high relapse rates, disease progression and discontinuation of treatment. In a chronic disease like schizophrenia, it's very important that patients keep taking their medicines. It is no use if they stop because they do not like the effects. So there is a significant need for new treatment options. We are hopeful our M4 program can be a potentially transformative treatment option for patients. There is a huge opportunity for a highly selective M4 agonist. 878 as a potential first-in-class therapy with a novel mechanism of action and we believe it has an improved tolerability profile. Please turn to the next slide. Here, I wanted to touch on a point that my colleagues raised earlier. There are now 2 companies advancing new muscarinic focused therapies through clinical development of treatments for schizophrenia. Karuna's KarXT is a unique combination of Xanomeline and Trospium. Xanomeline, the old Lilly drug referenced earlier, an M1/M4 preferring agonist, but with selectivity of the unwanted M2/M3 receptors also that with the cause of Xanomeline to be discontinued as a monotherapy. Trospium is an M2/M3 antagonist, utilized with the intention of down-regulating those horrible gastrointestinal and cardiovascular effects. Cerevel's CVL-231 is a selective M4 positive allosteric modulator, a PAM. And both KarXT and CVL-231 have attracted significant funding and investor interest for their respective muscarinic programs despite their observed gastrointestinal and cardiovascular side effect profiles. Please turn to Slide 13. M4 selective agonist provide the right profile to improve brain function in schizophrenia without adverse effects due to actions through other muscarinic receptors such as M2 and M3. M4 selectivity provides a strong effect on mechanisms important in schizophrenia but does not adversely affect the GI system or cardiovascular system, which are principally affected by M3 and M2, respectively. Xanomeline's original development was halted due to GI and cardiovascular effects through M2 and M3. And KarXT addresses this by combining Xanomeline with a muscarinic receptor inhibitor, but this is still a nonselective approach, and it does this imperfectly plus the inhibitor potentially brings its own problems. Cerevel's CVL-231 is a positive allosteric modulator, which activated M4 and is selective over M2 and M3. However, clinical data on file from this compound shows moderate effects on heart rate at doses that are expected to be active in schizophrenia. CVL-231 also acts indirectly to increase the effects of acetylcholine on the M4 receptor. 878 is our lead M4 agonist, which has now completed Phase I studies. We believe this is the only orthosteric agonist in development worldwide. This acts directly on the M4 receptor and is highly potent and selective for M4 over M2 and M3. Please turn to Slide 14. 878 has completed Phase I studies in healthy volunteers with single and multiple dosing up to 7 days in both young, healthy and elderly healthy volunteers. These studies showed that it was well tolerated and penetrated into the cerebrospinal fluid at levels which will likely be active in schizophrenia treatment. Furthermore, effects upon the brain electrophysiology, that is, brain waves were shown, which are seen with agents effective in schizophrenia. We saw no adverse effects caused by effects at other muscarinic receptors. Some small effects upon heart rate were observed at doses which showed effects upon electrophysiology. But these effects were minimal compared to the much greater effects of existing non-muscarinic treatments for schizophrenia. Animal data also shows that the effects of muscarinic M4 compounds on brain mechanism is important in schizophrenia occur at lower doses when the brain already has schizophrenia-like abnormalities. And so we expect, therefore, that 878 may have better tolerability than other muscarinic M4 modulators in development. We think the data from our Phase I study positions 878 nicely for a Phase II study in schizophrenia, and more details will be disclosed later this year. Please turn to Slide 15. I will now update you on the progress of our selective muscarinic M1 agonist 318 as well as our next-generation selective M1 agonists in development. You will recall, there is clinical and biological evidence that M1 can drive cognitive benefits in Alzheimer's disease patients. And that if cleansed of the side effects associated with muscarinic M2 and M3 receptors will be a useful treatment. We completed a 1-month dosing study of 318 of the safety, tolerability and preliminary effects upon cognition and memory in Alzheimer's disease patients, receiving the standard of care donepezil, also known by its brand name Aricept. We were encouraged that the clinical study showed 318 to be well tolerated and there were positive effects upon cognition and brain waves in these Alzheimer's disease patients, greater than and in addition to the effects of donepezil. Please note, however, that as a Phase I study, it was not powered for statistical significance. This data shows that the M1 receptors were activated and that this approach has potential to improve cognition in patients with Alzheimer's disease receiving standard of care. Regarding the status of the 318, you will recall this compound was placed on a voluntary clinical hold by us because of findings of a rare tumor in a long-term preclinical non-human primate toxicology study. This was a 9-month dosing study. We have carefully followed up all patients and volunteers that received 318 in human studies and examine them for any evidence of the type of effects seen in the 9-month non-human primate study using sensitive imaging techniques. And I can tell you, no adverse findings have been shown in these patients. The findings in the non-human primate were unexpected. All previous tests had shown no potential to cause tumors. We have extensively investigated these findings with Allergan, and we will now conduct some further toxicological studies ourselves before we make a decision concerning 318. As these investigations can take time, in parallel, we have been advancing multiple next-generation selective M1 agonists with new chemistry from discovery, and we expect the best of these to be ready for preclinical development shortly. The patient data we have gathered from 318 supports our hypothesis and the potential of the M1 approach to enhance cognition and memory in Alzheimer's disease patients. We will decide this year at the latest, which selected M1 agonist program to prioritize after further analysis. I will now hand over to our CEO, Tamura San, to conclude. Thank you.

Thank you, Tim. [Foreign Language]