Saniona AB (publ) (SANION) Earnings Call Transcript & Summary

Thank you, and welcome, everyone, to today's webcast. We apologize for the delays in getting started, but we're very pleased to have you all joining us to discuss the positive top line results from the Tesomet Phase II open-label extension study in hypothalamic obesity. We issued a press release yesterday regarding these data. If you have not had a chance to review it, that can be found on our website at saniona.com. Could we go to Slide 2, please? So before we begin the discussion, I just want to remind everyone that during today's call, we'll be making certain forward-looking statements. These forward-looking statements are based on current information, assumptions and expectations that are subject to change, and they involve a number of risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. Okay. Moving on to Slide 3. So joining me today on the call, I have Rami Levin, the President and CEO of Saniona. We also have Rudi Baumgartner. Rudi is Saniona's Chief Medical Officer and Head of Clinical Development. And we are very, very pleased to have joining us today on the call, Dr. Ulla Feldt-Rasmussen from the Department of Medical Endocrinology and Metabolism at Copenhagen University Hospital, and she is also the principal investigator on the Phase II study. And so now I'm going to turn it over to Rami to get us started. And if you could advance to Slide 4, please.

Thank you, Trista, and hello, everyone. I'm going to provide a brief introduction to Saniona to those on the webcast who may be less familiar with our story. So who is Saniona? We are a clinical-stage biopharmaceutical company focused on rare diseases, more specifically on rare diseases with unmet medical need. Our leading asset in clinical development is Tesomet, which we are developing for 2 rare disorders. The first one is hypothalamic obesity, of which we will share our open-label extension data today. And the second indication is Prader-Willi syndrome. In both indications, our goal is to progress forward into a Phase IIb study, which will be initiated in the first half of 2021. Not only does Saniona have a product in mid-, late-stage clinical development, it also has a unique ion-channel drug discovery platform. And what that drug discovery platform will do for us moving forward is it will fuel our future portfolio of products as we expand and grow. The leading asset in preclinical is SAN711, which we are currently exploring for rare neuropathic disorders. SAN711 is ready to move into Phase I, and our goal is to initiate Phase I with SAN711 in the first half of 2021 as well. So as you can see, the first half will be quite busy with the initiation of potentially 2 Phase IIb trials and a Phase I trial. Another asset in preclinical, about a year behind SAN711, is SAN903, which we are exploring for rare inflammatory disorders. Our goal is to move SAN903 into Phase I in the first half of 2022. And obviously, behind SAN711 and 903, we have a whole library of close to 20,000 different molecules that we intend to continue to explore potential treatments for rare diseases. We have a well-established research platform, which we discussed. We are building our internal capabilities in clinical development. And as we get closer to commercialization, our goal will be to build our commercial expertise as well, so we will have from research to development and all the way up to commercialization at the end of the process. One of the advantages of having a research platform is that, clearly, it will fuel our rare disease portfolio that we are primarily focused on. But there will be molecules that will be identified that are maybe more suitable, if you will, for larger indications. And in those cases, we most likely will prefer to out-license those molecules to larger pharmaceutical companies for them to develop and ultimately commercialize with the goal of receiving milestone payments and royalties if and when those products reach the market. And that business model is actually working already in practice where we have out-licensing agreements with a few companies such as Medix in Mexico and Argentina where we out-licensed tesofensine. They have conducted a Phase III trial last year and submitted the trial for approval in December last year in Mexico. They're waiting for approval in Mexico, which could come either end of this year or early next year. We've also out-licensed a product to Cadent Therapeutics, CAD-1883, which they are developing for essential tremor and ataxia. And last but not least, we out-licensed a product to Boehringer Ingelheim for their schizophrenia product. And under that agreement, we will have both milestone payments as well as royalties if and when the product reaches the market. And last but not least, last comment on recent news. I'm sure many of you have seen and are very much aware. But back in August, we announced the raise of $65 million, which was transformational for the company and really allow us now moving forward to really advance Tesomet and conduct the 2 Phase IIb trials that we need to conduct. They allow us to advance SAN711 and 903 into Phase I, and they allow us to build and hire the team that we need here in the U.S. And with that, let's focus on what we are really all here for, which is really talking about Tesomet and talking about the hypothalamic obesity data. And with that, I would like to pass it on to Dr. Feldt-Rasmussen.

Thank you very much, Rami, for this quick introduction about the company and how Tesomet came by actually. My name is, as you've heard, Ulla Feldt-Rasmussen. I'm a Professor at the Copenhagen University in basically endocrine rare diseases, of which hypothalamic obesity and hypothalamic injury is one. And I've been dealing with these type of rare diseases for more than 30 years. This Slide #5 shows you how Tesomet reacts in the brain. It actually affects both dopamine, serotonin and noradrenaline by increasing these levels of monoamines by blocking reuptake. So it's functioning on 3 different of these levels of monoamines. And one of the things it does is reducing hyperphagia by controlling the appetite sensation and the craving for food. But in addition to that, it also increases the metabolic rate as you can see an increased metabolic fat burn, which is, of course, of substantial additional help in losing weight. And it's meant primarily for Prader-Willi syndrome and hypothalamic obesity, and I'll share with you the results from the hypothalamic obesity study that was conducted in my center in Copenhagen. So we move to the next slide. Hypothalamic obesity is a very rare disease. It's an acquired hypothalamic injury. The patient population in U.S. is about 1 in 50,000 to 100,000. Its cause is very often craniopharyngioma since craniopharyngioma patients usually after treatment often with surgery will get obese in about 50% of cases. And the characteristics of this obesity is actually quite different from what you see normally in obesity because in, let's say, normal obesity development, the obesity comes about rather slowly over years, whereas in hypothalamic injury cases, it's rapid. And it's very sudden, intractable weight gain that comes suddenly, very, very sudden for the patient. And very often, they can gain tens of kilos within few months, some even more. Apart from the obesity and the weight gain, they have a lot of other injuries to their hypothalamus, which is a part of the brain that controls a lot of our other very important stuff like memory, attention, impulse. It's also controlling thirst, water and salt balance. It's controlling temperature regulation. It controls a lot of other issues that are very important. And it very often, this situation causes depression and suicide in these patients, not only from obesity but for these affections of the other parts of the hypothalamus. And if we go to the next slide. This is just demonstrating how the study was designed. The Phase II trial was designed in 2 parts. The first part is a double-blind, randomized, placebo-controlled trial where the primary outcome is mainly safety but also a bit on efficacy, but mainly to be sure about safety and tolerability of the pharmaceutical product. And in the first part of the trial, the randomized part, the patients, 21 patients were randomized 2:1, 2 active to 1 placebo. And this, as you can see in the left side, the 6 months double-blind was then stopped after the 6 months. And the patients were offered to continue in an open-label extension, meaning that the patients on placebo were then put directly on to Tesomet at that phase before the open-label extension. So 18 of the patients completed the double-blind part of the trial, and all 18 continued into and completed the open label. So this is the design. And as I told you, the primary endpoint was safety and tolerability. And we collected quite a number of different safety variables in that period, number and type of treatment-emergent adverse events, a lot of laboratory data, blood pressure and heart rate. Among the laboratory data were also a variety of different pituitary hormones that are also affected by the hypothalamic injury and where many of the patients were actually replaced by the relevant hormones. And apart from the primary endpoint, we had a number of key secondary endpoints: change in body weight, which was, of course, very important for obesity study; change in waist circumference; and change in glycemic control and lipid profile from baseline to the 6 months double-blind trial. And finally, we looked closely into heart rate and blood pressure as well from baseline to 6 months. And now after the almost 1 year of treatment, the results showed us that Tesomet was well tolerated in these adult patients with acquired hypothalamic obesity. We didn't see any meaningful differences between the placebo and the active group in heart rate or blood pressure. The type and frequency of adverse events during the full period or also into the open-label extension period were comparable to what we found in the double-blind part. The most common adverse events were sleep problems, dry mouth, headache and in the extension part, again, dry mouth, joint pain, headache and dizziness. And some of these AEs, for instance, dry mouth, is a result of the Tesomet effect. It was a little bit burdensome to some of the patients, but since they, as I will show you briefly, since they actually lost weight, they found that sort of a little, a small price to pay for the weight loss. There were a few patients with palpitations, 3 in placebo patients switched to Tesomet and none in the group that received Tesomet for full 48 weeks. The palpitations were considered not to be due to Tesomet, actually, but to their replacement with thyroxine, the thyroid hormone, which, due to the long half-life of thyroid hormone, couldn't be reduced fast enough in parallel to the weight loss. So they experienced shorter periods of some over-replacement. And thyroid hormone has an effect of increasing the pulse rate and getting palpitations. And these were resolved as soon as we got them down in their correct level. There were 2 serious adverse events. One was in the placebo group. That was, of course, unrelated to the medication. That was due to the patient's disease. And one in the extension period that was on active treatment, and it was abdominal pain, spontaneously resolved, and we never really found out what the reason was. There were no discontinuations during the extension period and no significant changes in lab results apart from what I told you about the replacements. Now these are the results. As you can see, this is the active Tesomet group, both in during the double-blind period and during the extension period, where you can see that they actually lost about 6.3% more than the placebo. And in the extension, you can see they actually continued losing weight. And until about 6 weeks later and thereafter, it was more or less stabilized. And by the end, they had maintained their weight loss basically. The average weight for patients when they entered the period was a little over 240 pounds. So in Europe, we would say 110 kilos, which is still, of course, quite substantial weight. But considering the fact that they started at a much higher level, this was very satisfactory for the patients. And this is the patient group starting on placebo. That is a smaller group, only 8 of them. And you can see they also lost somewhat from baseline initially because apart from the placebo or Tesomet, all the patients went into a program of getting dietary advice and advice on exercising more than they had done and turned out that placebo patients also benefited from that, of course. But they increased their weight just before the extension period. And you can see when they went on Tesomet, they had the fast drop in weight again. And they lost about 5% of their weight, which is just over 6 months. And this is just to illustrate the weight loss in a different way. This is the number of patients on the left-hand side who decreased body weight more than 5%. And on the right-hand side, you see more than 10%. And you can see on the far left, the Tesomet group lost, about 67% of the patients lost more than 5%. And when you go to the extension part on the 2 right panels of that figure, you can see that the placebo patients were about the same, around 67% of them lost more than 5%. And when you go to the far-right hand, you can see, of course, a bit fewer lost more than 10% but quite substantial anyway. And you can also see that no patients in the placebo group lost more than 10% compared to the Tesomet. Now we also looked at the waist circumference where, again, it's divided into the Tesomet for all 48 weeks and the placebo followed by Tesomet on the right panel. And you can see that the patients for 48 weeks lost about 5% of their waist circumference, whereas the reduction in the placebo patients was a bit smaller. But we have to consider here that this is a very small patient group, 8 and 6, respectively, you can see in the placebo and Tesomet part, which means that the statistics are very difficult and it's a small group. So you couldn't necessarily expect to see the same number of differences than in the active group. That's the problem, of course, of trials with small numbers, and that's why more studies with longer-term trials and larger groups are needed. Now when we look at the glycemic control, we had 2 patients with diabetes in this study. And the reason there were not more than 2 patients was that dysregulated diabetes was an exclusion criteria. So we had a number of patients we couldn't enter into the study. With these 2 patients, you can see a substantial improvement in hemoglobin A1c, both after 21 and 48 weeks, which means that corresponded to their weight loss that they had a better glycemic control. So our overall conclusion was that Tesomet was generally well tolerated in these acquired hypothalamic obesity patients throughout the whole period. There were no clinically meaningful differences in heart rate or blood pressure, and all patients who ended the extension period completed it. And those patients who received Tesomet for the full 48 weeks demonstrated statistically significant and clinically meaningful reductions in body weight and waist circumference, and they even improved their glycemic control. And those patients who started on placebo in the double-blind part and switched to Tesomet also achieved substantial reductions in body weight and waist circumference. And I can add, actually, all the patients that had this loss in body weight and which means they had a response to the treatment, which were most of them, at the same time felt a lot better and had a much better, let's say, daily quality of life. So they are and we are looking very much forward to having an extension in a larger study and across the world, hopefully, so that it's not only a single center issue. So I will now, with this, end it and pass on the, not the floor these days, but the screen to Rudi, please?

Thank you, Ulla. It's a pleasure to be here. I'll now share a quick review of our current thinking for a possible Phase IIb trial in Tesomet in HO patients. And we submitted a pre-IND package to the FDA, the Division of Diabetes, Lipid Disorders and Obesity. And some weeks ago, we received some written responses. And what we submitted was a proposed Phase IIb that you see in front of you is the design, basically has 2 doses of Tesomet with a control group of placebo and they're being randomized 1:1:1. And then after a 9-month double-blind period, it would be followed by a 6-month open-label extension. The FDA wrote back and they said a number of things. One is that we could pursue a 505(b)(2) approach. And what that means is that Tesomet is a combination of tesofensine, which, as Ulla explained, is the triple monoamine reuptake inhibitor that increases the levels of dopamine, serotonin and noradrenaline. And it's also coupled with metoprolol, which is a beta-1 blocker, which is there to abrogate or mitigate these cardiac side effects, which, as Ulla talked about her data, they were not seen in the heart rate or BP vital signs that were measured. So the 505(b)(2) approach, what it means is that we can use historical data to support the metoprolol in our file. The second thing they said is that we could open the IND with the proposed Phase IIb trial, the one that's in front of you. The third thing they said is because of concern for off-label use that they may require a preapproval cardiovascular outcomes trial, unless Saniona is able to robustly justify how we will limit access of Tesomet to rare patients only. So currently, we are a rare disease company. We have no interest in having Tesomet commercialized for patients other than PWS or HO. So we are currently in the process of working to clarify a path forward with the FDA and convince them that Saniona's intent is only to commercialize this for HO and PWS. And as part of this proposal, we are going to bring forth possible solutions which they recognize such as REMS, which is risk evaluation and management strategy, or RiskMAPs, which essentially mean that clinicians have to be certified before they can prescribe Tesomet, that the drug is not available at your retail pharmacy but only in specialty pharmacies. And these are all ways to ensure that Tesomet just stays relegated to the patient population it's going to be developed, which is rare disease. With that, I'll turn it back to the operator for questions. Thank you.

So I just want to thank everyone. I know a number of you have submitted questions online already. [Operator Instructions] Some of you also have already e-mailed questions. And so we'll start to go through some of those now. I think a good place to start is, we had some questions on just how to interpret these graphs. And specifically, when you see the decrease in 6.28% regarding the weight, what does that mean? Is that a percent decrease from baseline or versus placebo?

It's from placebo because it was higher when you compare it just to baseline within the same patients.

Okay. Great.

Does that make any sense? Yes.

And actually, well, I was going to say, actually, I think someone else actually asked, what does baseline mean? Does baseline refer to the beginning of the whole trial or does it refer to the beginning of the open-label trial? So I think maybe if Ulla or Rudi, if you guys could just kind of explain, just give a quick overview of how to think about the data, that would be helpful.

Sure. I'll be happy to go first, Ulla, if you want. So...

Yes. That's fine. That's excellent, Rudi.

Great. Thank you. So study baseline, it refers to Day 0 or sometimes Day 1, depending on the trials. And period baseline, which we are not using for any of these analysis, would refer to the beginning of the open-label extension. So when we use baseline, we're talking about the beginning of the double-blind period. The delta that Ulla talked about, 6.28% versus placebo, basically takes the change from baseline for Tesomet from the study baseline, the Day 1 or Day 0, depending on how you did the trial, versus the change from baseline of the placebo patients from that same day to the week 24. And that is how you get that 6.28%. So like Ulla said, this is a difference from placebo, and both of them were change from study baseline. The rest of the graph has a different number in there in the open-label extension. And that number, there was no placebo group there for you to calculate because all patients, once they switched from the double-line period, entered the open-label extension, they all went on to active therapy. So that number, the only way to calculate the percentage is also from study baseline, and that's what that is. Okay?

Yes.

Okay. Great. Thank you, Rudi. I think that's helpful. And if there are additional questions on that, please feel free to e-mail and we can follow up on that. Another question was, I see that there was good weight loss in the first 24 weeks. It seems like that it sort of leveled off in the second 24 weeks. So this person is asking why is it that the weight loss doesn't continue to drop in the second 24 weeks, so at the same rate that it did in the first 24 weeks.

Well, I can't exactly explain that. But that's because the patients followed. They were very compliant all the way through. They were following the treatment. They were following, all the time, a diet program and they were also following physical exercise. Whether it's the sort of the pattern that is often seen in weight loss studies that it will level out at some point, that could be the case. I don't know. Again, we are dealing with small numbers. So getting a very straightforward, a strong statistical significance is, of course, not possible in such a small cohort. That will require larger cohorts. So I can't exactly give any better explanation than this.

Yes. And I can add a little bit, Ulla. One of the things is that patients reach a steady state. So if you look at a lot of the obesity trials, and Ulla can tell you about this in vast detail. You would put the patient on a drug, and then the drug basically decreases their craving, their appetite, hyperphagia and increases their metabolism, and they eat and they exercise. At some point, they all have to reach a steady state. So when we looked at the number of patients who responded to drug, and we said, okay, you lost weight on the drug. You're a responder. And when you subsegment that group, you will see that the majority of patients who responded to Tesomet actually responded after the 6-month time period. And that's not in this data. This is different data. So patients do reach a steady state. And in Ulla's study, most of them reached it beyond the 6-month time point. And that's not, you don't see that in mean curves. You would have to subsegment the responders.

No. It drowns. Basically, it drowns in the mean. But it is true. I mean, some of the patients, again, if you subdivide, of course, it's always a little bit complicated to subdivide a group that's already small. But some of the patients lost much more than 6%. Some of them lost much more than 10%, up to 15% of their weight from start to end. And then, of course, there were, as Rudi mentioned, some that were unresponders or nonresponders. And they will, of course, skew the picture somewhat in the mean.

Thank you.

Okay. That's helpful. Thank you. And Ulla, there's a couple of requests in here specifically for you to just speak a little more from your expertise about what you observed in the trial and what your impressions were, just separate from the endpoints and the statistical analysis but just more anecdotally. I know you said already, at the end of the call, you said that you thought patients felt better. But is there anything that you can just expand on a bit there?

Yes. Well, yes, I can because we, first of all, I have followed these patients for ever so many years before we got to this trial. I have followed them through a lot of other different attempts to lose weight unsuccessfully or maybe briefly successfully a few pounds and then gaining weight again, and there are psychologically ups and downs with all of that. And we have also conducted other longer studies that were not near anything as successful as this but where they did lose some and were, well, out of politeness, compliant to the medication but didn't gain very much from it. And then seeing these same patients during this trial doing completely differently from what they've ever done before, many of them, except, of course, those that were not responders. They were not very happy, of course. But the majority felt and were actually happier and more able to cope with their daily life, both in their private life and in their work life. They were less prone to have a bad mood. And now when they are off the medication, which they are because we finalized the study, they are almost desperate because they ask me every time I'm in contact with them, what now? When can we get it again? When can we go on it again? Will there be a new trial? Will it be approved? I get all these questions, and I have to tell them, well, I understand what you're asking, but I can't do anything right now except keeping ears and eyes open for new options for future trials and so on with this medication. So they feel the difference being on Tesomet or not. I don't know if that describes it clearly enough.

Yes. Thank you, Ulla. Yes, I think that's very, very helpful. There was a follow-on question to that, that said, anecdotally, did you see any impact on memory impairment or impulse control or anything not related to weight?

Well, in some of the patients, yes, absolutely, most psychologically stable. But one also has to realize that this is a very heterogeneous group of patients. Some of them had their hypothalamic injury when they were children and some of them had it in adulthood. They were all adults, of course, but some of them had it when they were children also. And that means they also have had a lot of other challenges in their upbringing, in their growing up. And due to the hypothalamic, other affections they may not have developed as well as everybody else has. And some of them have not finalized any school final exam. Some of them are dependent on caretakers. Some of them live in home where there is some surveillance and together with other young people of the same disability. And those are, of course, a little bit more difficult to judge in terms of neurocognition and memory. But those that did not have all these disturbances, they were clearly better off.

Thank you for that context, Ulla. Another question here is looking for some context around 5% weight loss. Do you think that 5% weight loss is meaningful? And could it be enough for approval in an indication like this? Or is the fact that this is hypothalamic obesity, not normal obesity, how does that make a difference?

Well, do you mean how is this obesity different from normal obesity or how to call it, that part of the question?

Yes. I think they're referring to the FDA's guidelines on a 5% decrease and the slide we had where we talked about the 5% responders. And I think they're trying to understand specifically in HO.

Why is that different? Yes. Yes.

Is 5% meaningful?

It is meaningful for these people. But I'm pretty sure that these patients will need a longer treatment period to maintain the weight loss and perhaps, again, go into a further weight loss. One of the reasons being that normal obese people can, of course, feel hungry when they are on a weight loss program. But one of the very, very big differences is that normal obese people, like the rest of us, normally feel the full satiety when we've had a meal, right? But these people don't feel any kind of satiety. When they've had a big meal, they will ask to know when is dinner. When is dinner coming? I'm hungry. So they don't get any feeling of fullness, which means that they have a constant craving for food because they are constantly hungry, even though they're still eating. And that's due to the destruction of the satiety center in the hypothalamus. And that's not the same thing as a normal obesity because they don't have that. And on top of that, as I said, they have all the other challenges of damage to the hypothalamus of thirst issues, of temperature regulation issues, of a lot of other things, mood disturbances constantly. And this is also somehow alleviated by these monoamine reuptake inhibitors. So it is a different breed of obese people than normal obesity. And I have had also to do with a lot of normal obese people, and they react completely differently seen from a clinician's point of view.

So Ulla, do you want to comment on whether 5% is meaningful to your patients, a 5% weight loss?

Yes, it is. It is. It is meaningful to them. They feel it's meaningful because, well, first of all, it's a success that they haven't had before. I mean that's the first meaningful thing about weight in their life for many of them. So that does make a difference.

Yes. So from the FDA's perspective, I mean, there's guidance out there in the literature that applies to weight loss management. And the agency has determined that 5% weight loss is plenty meaningful. And I think that what people are trying to grapple with is that hypothalamic obesity is much more difficult to lose weight. So the weight loss in HO is so much harder to achieve than in general obesity.

Yes. It is.

In your mind, is 5% still the same metric as for everybody else or will you have a different metric for HO patients?

Well, that's probably difficult to answer because I think we would need a larger group because it is also a heterogeneous group. And the 5% we see here is a mean of those patients that were enrolled in this study. And as has been mentioned before, it has a range from nonresponders to very strong responders and then something in between. And if you want to find out what the difference is between these subgroups, you simply need larger patient groups because if you, I mean, you can see even the placebo group here is small to get any statistical significance in changes. And if we subgroup into responders or nonresponders, that will make it absolutely impossible to get any statistics out of it. It can only be descriptive. And that can, of course, be done, but that is not approved, not for FDA either. So in my mind, this is, you could say, a preliminary study demonstrating, in my mind, a big success in this patient group because they haven't had any success before. But it's not the end of it because you need larger patient groups and longer treatment in placebo control. What we need is really, you could say, the first part of the study that you have drafted for approval will cover more patients. So there you have the large patient group within it. And then, hopefully, the open extension can be a bit more than what's anticipated, the 6 months. Maybe it can be extended further. And then you have a longer follow-up. So that would, in my mind, be meaningful to see if you can identify subgroups within the groups in such a study.

Ulla, thank you. Thank you for that answer. And I just wanted to pause and say, I know we're coming up towards 3:00, but we're happy to keep going a bit longer. I know that we were a few minutes late getting started, and there's still a number of questions here coming in, in the queue. So if that's all right with you, Ulla, can we continue for just a few more minutes?

Yes. We can continue for a few minutes. I'm not 3:00 here. I'm 9:00 in the evening. And I started my outpatient clinic at 7:30 this morning, but I'm still going strong. I'm still fine. It's fine. I'm just joking.

Thank you. Thank you for being such a good sport. I know that you have already worked a more than 12-hour day, and we really appreciate you making yourself available this evening. I know some folks were curious why the call was so late in the evening, and that is because Ulla is very, very busy in seeing patients all day long. So just to get on to a couple more questions here.