OSE Immunotherapeutics SA (OSE) Earnings Call Transcript & Summary

Welcome to OSE webinar. We are very happy today to be with Nicolas Poirier, CEO of OSE, in order to explain the strategic partnership with AbbVie. Before giving the floor to Nicolas Poirier, I would like to inform you that you can post written questions during the webinar through the platform. We have also along -- around the table, Dominique Costantini, Chairwoman and the Chief of the Strategy; and Jean-Jacques Mention, Chief Business Officer. Nicolas Poirier, the floor is yours.

Good evening. Thank you very much for joining this webinar. So here we are. Once more, we are very happy to announce today this new strategic and very significant partnership with AbbVie, a very great partner for OSE. And we think these new partnerships illustrates very well again, the good R&D capabilities that we are delivering at OSE to provide and generate novel innovations and convince top pharmaceutical companies to develop with us first-in-class -- potential first-in-class innovations. So next slide, please. As I said, we are very happy and very honored of the trust of AbbVie in signing this new alliance, which will also beyond these agreements and the science that we will explore together tonight, these agreements also reinforce our capabilities and will energize our future since we have now the fuel to properly execute our strategy and prepare the next wave of growth. And I would like to take times tonight of this evening to explaining what is exactly this agreement, what is the science beyond this asset OSE-230, where we are going this year and next year with the strategy that we are executing. So this collaboration with AbbVie, 1 of the top player in immunology with all their capabilities that are really impressive, their expertise, and most importantly, their commercial strengths, we think it's a best scenario and the best chance for the products in order to provide the maximum chance of success of OSE-230. So OSE-230 is a program that maybe not everybody is familiar. Everybody is aware of our advanced program, maybe less on what we are delivering at the research or preclinical level. So OSE-230 is a new class of drugs, a new monoclonal antibody targeting ChemR23, a key receptors, the GPCR receptors involved in the new field of the resolution of inflammations. And I will take some time today to explain what is exactly the resolution of inflammations, what is really innovative and how we can hopefully, in the future, provide new way, new management of chronic and severe inflammations. But before entering the agreements and the science and the strategy, I would like first to thank very warmly all the AbbVie team, the scientific guys, IP, clinical, of course, certain evaluations, AbbVie teams. We met very fantastic people, fantastic teams, really dedicated individuals that have highly motivated to move forward all together on both sides with very efficient process. So AbbVie's at the top -- 1 of the top players in immunology. And you can believe us when we met such teams, it's not a surprise to see this company at the top level in this area. So we are really proud to have their capabilities now with us to provide the maximum chance of success to this program and hopefully for the future benefit of our patients and all the stakeholders of OSE. Third one, I would like also to start by -- to thank also the resource team for their hard work, very intensive efforts. We start to explore this new biology with few scientific several years ago. It was a quite long journey, but really interesting, really informative journey. We learned a lot and now are really happy to reach this inflection point and to see this innovation moving forward, hopefully, in the clinic, with AbbVie. So thank you to them. Thank you also to the team involved in manufacturing, CMC, IP, clinical and so on, the [indiscernible] value teams that all worked together with our scientists as one team to transform this innovation in a drug candidate that is currently in IND-enabling studies, so ready to transfer to the partner and to move forward in patients. And I would like also to thank particularly [indiscernible] AbbVie teams and in particular, Jean-Jacques, our Chief Business Officer, for having organized, managed all of these very intensive due diligence process. It was also a very long journey, really an important one. And this is -- I would like to thank you a lot for managing everything and for the signatures of these agreements and to convince -- having the capabilities to convince top pharmaceutical company of the potential of our innovation. So thank you again, Jean-Jacques. And congratulations to you also. So next slide, please. Now if we enter into the agreement, so it's a collaborative and license agreement on OSE-230. All indications and AbbVie will have the possibility of rights to develop, manufacture and commercialize these assets in all indications. So it means that they will cover all the costs after they enter in clinic. So in the frame of this agreement, the total deal value from this milestone is $713 million. So we are really happy by these great numbers for the area -- this indication in the inflammations. We will receive an upfront payment of $48 million as soon as the FTC, so the U.S. antitrust organization will have cleared this new partnership for AbbVie. So this is a process that will take a few weeks to review the deal and we will announce once it will be cleared and we will have received the upfront payments really soon. So in addition to France, OSE will be eligible of course to very classical development and commercial milestones up to $665 million, plus [ good ] Tiered royalties. I cannot say more on these elements, our partner does not allow us to say more, but what I can say that we are really happy and quite comfortable with this contract. And last but not least, we will continue in our research team to intensify our research in the field of resolutions. We have already notified additional targets, additional key receptors involved in the field of resolutions, and we are actively working on it to explore new biology in the field of resolution that is complementary beyond the first ChemR23 assets. Next slide, please. So now let's talk a little bit about science, but OSE-230, sorry, what is exactly this concept of pro-resolutions, positive monoclonal antibody and this paradigm how we can hopefully tomorrow manage differently chronic inflammations. So next slide, please. Everything starts as usual more than a decade ago. In Academy Club, in particular, around the lab of Professor Charles Serhan, in Harvard Medical School, which is also 1 key scientist in our scientific advisory board. So it's a very important people which advise us all along the research on this program. So it is covered and with these collaborators and [indiscernible] lab that inflammations does not disappear by itself, it does not [indiscernible] by itself. But the body actively produce molecules to shut down inflammation and completely change the paradigm on how we are understanding inflammations. Initially, it has been supposed or [ expected ] that the body after an injury and initial infection produce pro-inflammatory molecules, pro-inflammatory lipids, [indiscernible], prostaglandins, pro-inflammatory cytokine. And then when this molecule are not produced anymore, the inflammations disappear by itself. But this is not true. What we know now is that after this initiation, the peak of inflammations, the body shifts the production of pro-inflammatory mediators towards pro-resolutive mediator. So a new class of drugs that have been discovered by this lab that adds on immune cells. In particular, myeloid cells, macrophages, neutrophils that we love in our company. And then it has been discovered how these pro-resolutive mediators act on specific key receptors, GPCR expressed by these myeloid cells and actively shut down inflammation. So if we consider chronic inflammation by definition, it's unresolved acute inflammation where the resolution pathway is working probably the inflammation disappears actively and then the tissue return to [indiscernible]. So in our chronic and severe patients and situations, this process of resolutive pathway are deficient. There is insufficient production of these mediators as compared to the pro-inflammatory mediator. So the balance, not good. And you have these flares. This red curve of flares of inflammations. So currently, how we are managing inflammations in clinic is with, as you know, anti-inflammatory molecules, anti-inflammatory drugs, anti-cytokine, anti-integrins, anti-signaling molecules. All the strategy are I would say, from the previous words, trying to push back inflammation return in the past and completely forget that there was an injury. There was an initial [indiscernible] prior inflammation, and we cannot forget these elements. So the [ premise ] beyond the resolution of inflammation is to actively trigger this new pathway, these new receptors and to trigger these deficient pathways in situation of chronic and severe abnormal inflammation. Next slide, please. A few words about OSE-230, so I said it's the first monoclonal antibody described with positive properties. So it means that this receptor is not an anti-inflammatory approach. It's not an antagonist antibody. We are activating a key receptors involving the resolution ChemR23, expressed mostly by myeloid cells, inflammatory macrophages, inflammatory neutrophils. And in terms of mechanism of actions, we have 2 big components. The first one, real easy is the deep transcriptomic reprogramming of inflammatory macrophages toward a pro-resolutive phenotype secreting pro-resolutive and immunoregulatory molecule like IL-10. So it reprogrammed the macrophages to what is positive and repair phenotype. On the other side, the beauty of ChemR23 biogen and why we decide first to pick this target is because this target is not expressed at the surface of neutrophils in FC situation or in periphery even in inflamed patients. The target is [indiscernible] and so antibody has no access. And that's very important in terms of safety not to target all the neutrophil in periphery. But once neutrophils migrates and translocates into the inflamed tissue, upon exposure to inflammatory stimuli TNF, IL-6, TLR agonist, the neutrophil express is to face other target and then the antibody can target exclusively the neutrophil at this inflamed side. So it's a quite unique opportunity to target the territory use and abnormal excess of chronic neutrophil infiltrates in the tissue while avoiding their targeting periphery. So the question is what is doing exactly this antibody inflammatory neutrophils? So what we described is at this antibody by activating ChemR23 and using downstream signaling cascades in neutrophils, trigger the pro-apoptotic pathway. So it induced a neutrophil slow and noninflammatory neutrophils [ set this ] and avoid the neutrophil to survive and being [indiscernible] but also to die through the net of this pathway. So it's a little bit technical, but neutrophil can die by releasing their GNA [indiscernible]. And this make the [indiscernible] connect to this make depot in our tissue, and this is associated with deleterious impact on tissue of injury on fibrosis and ultimately organ function loss. So to summarize, MoA the programming of inflammatory macrophages and elimination of chronic and deleterious inflammatory neutrophil infiltrates in the tissue. Next, please. So where we can use, of course, this biology, basically everywhere. Neutrophils or macrophages are infiltrating chronically our tissue, we observe over exploration of ChemR23. In IBD inflammatory bowel disease, we and others also described overexpression and accumulation of these cells in rheumatoid arthritis, Type 1 diabetes, lung inflammation, kidney inflammation and so on. So what we described and we published 2021 in Science Advances journal that in particular, in IBD, so in ulcerative colitis and Crohn disease patients with this covered at the patients that are refractory to [ proven drugs ], standard of care like anti-TNF. These patients have not the same inflammations than the other populations that are responding to anti-TNF. Some patients are more lymphocytic adaptive immune system infiltrations. And the others in red, refractory populations illustrates high chronic and abnormal infiltrates of neutrophils. And this is already present before anti-TNF treatment, and it remains very high after exposure to anti-TNF. So basically, this data means that there is a large proportion of patients today in IBD that have neutrophilic inflammation that is not managed by the current drugs like anti-TNF. And the premise of the resolution for inflammation, if you have to understand the MoA is to eliminate these cells that are deleterious and using chronicity in terms of inflammation. On the right part, what we published also is that, of course, this target ChemR23 is overexpressed in IBD, the mucosal tissue of IBD patients. In particular, in these red population, the patients are refractory to anti-TNF and we confirm at histological levels on tissue section 3 that the target is expressed in these patients by macrophages and neutrophils. Next slide, please. So now a few words about OSE this year and the coming years because, of course, this agreement -- this achievement, sorry, is not the end. But on the contrary, I think it's the beginning of the start of a new wave of growth. We've really clear, identified near-term, midterm and long-term inflection points that I would like to take a few minutes to re-explain or to explain maybe for the others as today. So next slide, please. First, what we will do, what we have done in the past and what we will continue to reinforce and continue these business models of pharma partnerships, investing even more in our extra not ordinary research engine, leveraging the science to convince additional pharma to collaborate with us to develop new first-in-class innovation basically in immunology. We are immunology-centric company, so immuno-oncology, immuno-inflammations, transplantation, autoimmune disease for the benefits of more patients and of course, ultimately for the benefits of our shareholders. So next slide, please. Today, we have signed 3 very important pharma partnerships, 1 with Boehringer Ingelheim in particular in oncology. So they are developing our technology on selective SIRP alpha antagonist in solid tumors. We are currently developing together 2 compounds in solid tumors indications like head-and-neck, hepatocellular carcinoma and so on. And we hope to provide a new clinical update as soon as the data will be mature enough for our partners to communicate. So it's a total deal value of more than EUR 1 billion. So it's a very important partnership for us also in oncology. On the right, Veloxis, a very strategic U.S.-based company, but very strategic company with a clear and dedicated focus for the transplant market. So they have the right to develop FR-104, our customary antagonist agents for all the transplantation indications and in particular, they are first pursuing the development in kidney transplantations. We are currently running a Phase I/II in France in these indications, and our partner will pursue in Phase II more globally. And hopefully, last but not least, the new AbbVie agreement, but I think it's not necessary to come back on the economics or interest of these agreements. So next, please. Where we are today right now. So 3 partnerships at AbbVie and Veloxis, more than EUR 2 billion already signed in these 3 contracts. And that's really important because if we look at the numbers, these last years, we obtained or generated through these partnerships EUR 280 million, which represents more than 75% on how we invest in our R&D, how we are financing the company with non-dilutive funding to create more value for the patients, for our shareholders and of course for the company. So it's a very important element on how we are financing the company, how we will continue to finance the company through this business model with pharma partners. Beyond these 3 partners, we are developing 3 proprietary programs, 1 in Phase I, 1 in Phase II, 1 in Phase III. So most advanced is, of course, Tedopi, everybody's familiar with it. The most advanced cancer vaccine in clinical developments currently in Phase III evaluation in non-small cell and cancer patients in second line for checkpoint inhibitor. It's a very huge market that we can reach in the next -- [indiscernible] in the next 3 years, more than EUR 5 billion per year. So it's a clear, very important strategic investment for us and the last and derisked investments, we will come back on it. On the Phase II assets, lusvertikimab is currently under evaluation in ulcerative colitis and again it's a big market of more than $10 billion per year that we are currently exploring in Phase II. So let's move to the next line of the pipeline to come back on how we are developing innovations at OSE. So I will not reexplain the bottom part of the pipeline, the partner asset with Veloxis, BI and AbbVie in oncology and inflammation. On our proprietary assets. So Tedopi is currently under 3 investigator Phase II study evaluation, where physicians explore the cancer vaccine in combination with anti-PD-1, checkpoint inhibitors, or [ chemotherapy ] in Phase II in ovarian cancer, pancreatic cancer or lung cancer. Last September, we published this creates positive results in [indiscernible] oncology of the first Phase III in [ SedLine, mostly SedLine ] patients in non-small cell lung cancer patients where we identified a larger group more than 50% of patients that developed what we call acquired or secondary resistance to immune checkpoints. And in these populations, we observe a very good signal of efficacy in terms of increased overall survival, reduction of the risk of death, less toxicity for better quality of life. So based on this result, we rediscussed with the European and U.S. health agencies. We just announced in January the green light of the FDA to start this Phase III in now second line in non-small and cancer post-checkpoint figure only in secondary and acquired resistance patients. So in the population where we have seen the great signals. And we are working with the European health agency to start the triage soon. So it's a very important element, a very strategic and derisked investments because the success rate of Phase III is quite high, then we are leveraging of the first positive signals in the first randomized study. And now we want to confirm these results in this new pivotal study for the next 3 years. For lusvertikimab, the anti-IL7 receptor, we are running the Phase II in ulcerative colitis. We announced that we will have -- that we will complete patients, the completion of patient agreements for Q1 meaning beginning of this year, we are already end of February. So we will -- we are quite comfortable now. We will announce in the coming weeks completions of the agreements in this Phase II. And that's a very important element because it starts the clock for having a very good visibility on when this data will be released or Phase II ulcerative colitis, and now we are targeting mid of this year -- this summer 2024. Of course, it's a very important inflection point for us this year. Any Phase II positive in this area will create a lot of value and a lot of appetite from the pharma companies. And finally, the third asset, the anti-PD1, proprietary anti-PD-1, we released last Monday, the confirmed results of efficacy and activity in this first Phase Ib trial, where we have seen a very great signal of activity, more than 36% of patients of response. This very early in clinical trials with an early signal been really great. And now we will leverage on this data to pursue the development -- or pursue the strategic opportunities in niche indication [ orphan ] disease where we know that this antibody delivers some sign of activity where we know that this molecule should be work, but there is no access to anti-PD-1, no registered checkpoint inhibitors. And in parallel, we will be able now that we have the recommended Phase II dose, the signal of efficacy in patients to combine this proprietary anti-PD-1 with our own innovation, in particular, we are thinking to explore combination with Tedopi, of course. Next slide, please. At the research level, just to finish on what we are doing or what we will deliver in coming months, 2 years. We continue and we will intensify our investment in our Boehringer Ingelheim, first the positive monoclonal antibody platform that I think the majority of people nearly discovered today. This first ChemR23 asset is licensed to AbbVie, but we learned a lot. As I said, we have already identified additional key GPCR receptor involved in this biology. And we are working on it, exploring complementary TP beyond ChemR23, and we will be happy to provide any updates when the preclinical data will be mature enough. On the right part, on the Myeloid Checkpoint platform, we licensed the SIRP alpha technology to Boehringer Ingelheim in solid tumors, and we are also working on the new Myeloid Checkpoints, second generation through the CLEC1 antagonist program with very grids clinical data. So we will continue to prepare this program for the next stage of development. In the middle, something that is maybe more new for many people is our augmented cytokine platform, the Cis-targeting technology. The technology is not a platform based on targets, it's based on technology, how we can deliver the right cytokine to the right immune cells, not all immune cells at the right place. So the first asset is anti-PD1, our backbone with 279 fused to IL-7, but we're also working on new technology to the seize the mask, this cytokine and we will provide some news and updates along this year. Next slide, please. And this is the last slide. So I would like to thank you all again, for your interest and having joined this webinar today. Before to answer to your question, I would like maybe to recap the strategy. So on long-term, how we will create value for the shareholders? And our company is based on our business model. This business model allows us to generate revenue, nondilutive funding to reinvest in our research and also to explore Phase II, Phase III, hopefully, in the future indications with the strength, the capabilities of these pharma partners and ultimately, their commercial strength. So with BI, with AbbVie, with Veloxis, in oncology, in inflammation and in transplantation. So this is part of the long-term. For midterm, of course, this is Tedopi. We are launching this new Phase III. We have the green light from the FDA, And now we have [indiscernible]. We have resources implement this Phase III to officially launch recruits, new patients. So it's a program on 3 years. As I explained, it's a derisked investment and a very strategic investment over the next 3 years. The size of the Phase III will be very similar to the previous one. So the size of the funding or the financial need will be really similar too. And the market that we can conquer in the next 3 years is very huge, more than $5 billion per year. And we are very well positioned. Unfortunately, for the patients, this last 18 months, we observed 6 out of 6 Phase III failure with tyrosine kinase inhibitors with ADCs, antibody drug conjugates. So even with very efficient molecules, all of these molecules failed where we have this first positive signal of activity and efficacy in this Phase III. So we are very well positioned. And now believe me, we will conquer this market. Near-term, everybody has to understand that the big inflection point this year could be lusvertikimab, the Phase II readouts that we are expecting now for mid of this year. And we will explore any opportunities in particular, reinforce our business model of pharma partnership to pursue as the development of this program in a Phase II deliver positive results that, of course, we are expecting. And finally, just to finish. As explained, we'll pursue and intensify our investment in the research on the next positive target, but not only on all the other technology to refill the pipeline, but also if we have great opportunities and great value to expand what we could call now our portfolio of pharma partnerships with our capabilities to bring out new innovation. So this is potentially a new additional pleasant surprise along the way, a bonus, and we will be happy to comment this as soon this is positive. Thank you very much for your attention, and I will be very pleased to answer to any question.

Thank you very much, Nicolas. We are going to move on the Q&A session right now. First question. Can you provide some more color about the economics of this collaboration? Will AbbVie support us in clinical development in terms of funding or oversight?

Good question. It's important to be precise, the economics of these agreements. So the upfront, everybody understand is $48 million as soon as FTC antitrust -- U.S. antitrust clear the deal, hopefully soon. Then AbbVie will take in charge all the development activities, meaning they will finance themselves all the clinical developments, all the manufacturing developments and all the commercial developments also. OSE is in charge of IND and [indiscernible] studies, meaning toxicology studies and so that we are currently running. And we will continue to follow the program to provide scientific collaboration and expertise to make sure that the program is moving in the right direction. But at the beginning, I think it's really important not to lose the science and to make sure that everybody understands very well the mechanism of infections, biomarker of activity and so on.

Thank you, Nicolas. Second question. How we'll also look to utilize $48 million in upfront payments received in terms of priorities?

Very good question, too. So as I explained strategically, we are finishing the Phase II in IBD, in ulcerative colitis, meaning that the majority of the costs are behind us, there is no more -- a little bit, but no significant additional cost. So the most investments in the future will be, of course, this Phase III with Tedopi. So we have now a program over 3 years. These new fronts extends our financial visibility for more than 2 years now, 2026, meaning that we have now enough resources and fuel to accelerate, implement this Phase III, [ recruit ] the patient for the first 2 years. And in parallel, we have, of course, already 3 deals signed, 3 agreements with pharma companies. So each step, each milestone we will achieve will generate additional nondilutive revenue and extend our cash visibility. And as I explained, we want to reinforce our business model. So we hope also to sign new agreements on the way to continue to extend the cash visibility. But now with first significant and [ regret ] upfront is a lot of resources to finance the big part of the Phase III.

Thank you, Nicolas. Do you have enough funds to launch Tedopi Phase III with this new revenue?

The answer to this question -- so just to explain, we have enough to cover the next 2 years. The program is over 3 years. And the business model with the currently already signed deals all the future deals will -- we hope will be enough to extend the visibility for the next 3 years. And I mentioned this, so we financed a lot of [indiscernible] in the past, not a lot, but a significant part with grants, European or French government grants. So this is something that we are considering also to support or the derisk to the investments in this asset.

Okay. And did you have interest from [ OSE Pharma ] on such with the OSE-230 asset? Jean-Jacques, you can answer to this element. Not to say everything because a lot of secrets, but...

Yes, of course. Thank you, Nicolas. What I can say, of course, we had -- this product is very attractive. It's a new mechanism of action. So yes, we had a lot of discussion on this product, making a lot of interest, very attractive. So yes, definitely. I don't know, Nicolas, if you want to add something else?

That's clear. I think the size of the front also illustrates interest that other company may have in this competitive due diligence.

Thank you. I just want to remind that you can stand some written question on the platform. We've got still a few minutes. We've got another question. What is the timeline for the development of OSE-230?

Good question, too. Unfortunately, our partner does not allow us to explain their development plan and our timeline. So what we can say today, we are in IND-enabling studies, meaning still preclinical like IND studies enables are at the head of clinical development. So we are really confident that the partner will be able to move forward soon this program in clinic. And then we are not able to disclose any precise timing for the Phase I or the plan for Phase II and so on. But we will inform the market as soon as each milestone is reached or when there is upgrade on the development plan officially. Did you refresh, Florence, the...

Yes.

Since there is more questions, but you're relatable to see it.

Is there any scientific medical rationale to combine OSE-230 with [indiscernible] these assets?

It's a very -- very good scientific reflections that, of course, we cannot link to the development of the partner, we cannot disclose their development plan. But yes, if we think how this immuno, anti-TNF, [indiscernible] Anti-IL 23 or the Rinvoq check inhibitors, which are already the 3 blockbusters and a very good success. There are anti-inflammatory molecules. So as I explained, they are trying to push back or any bit suppress inflammations. We are on the other side of the inflammation, the resolutive sides, where today, nothing has been explored really in clinic in particular with such monoclonal antibody technology. So there is a lot of potential of combinations. But I think we need to be prudent. We are opening where I explained the new paradigm for the first time in clinic with this partner. We will have first to explore the safety profile and also the signal of activity, what is the strength of the efficacy of this approach in monotherapy. What are the group of patients that are responding very well. And then it will be easier to understand where there is potential of combination. But definitely, on a scientific purpose, there is room for synergy, yes.

Nicolas, we've got 1 more question. How about the potential of OSE-230 in obesity?

Huge markets. Huge interest right now. Now it's a pretty good question. There is scientific publications that described that ChemR23 is overexpressed in adipose tissue [indiscernible]. Maybe I know who's asking the question, but maybe these people is familiar with the fact that obesity trigger chronic inflammation, and this chronic inflammation in tissue, adipose tissue accelerates the capacity of the body to start also fat -- fat mass and so on. So yes, definitively, there is scientific rationale, but to be fully honest, we did not explore at all or yet as a potential in this area.

Thank you, Nicolas. Thank you very much. Nicolas, do you want to -- to say something to conclude?

Thank you. Thank you all for your participation to join this webcast. I think everybody understand that we are really happy by this new partnership with AbbVie, a very great U.S.-based large pharma company with global footprint. It's one of the top leaders in immunology. So we are really happy to have them with their capabilities to provide the maximum options to explore this new paradigm in clinic. And of course, we are really happy also to have this soon [indiscernible] that will allow us now to implement our strategy with Tedopi and with lusvertikimab. So thank you very much to all, and please do not hesitate to send us questions by e-mail if there is a remaining question or questions that we did not receive. Good evening to all.

Thank you very much. The webinar is over. Thank you for all your attention.

Bye.