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

[Foreign Language] Trista Morrison. Welcome, Trista.

Thank you so much for having me here today. And good afternoon to all of you. It's morning here in Boston where I'm presenting from, and thank you so much for taking the time today to learn a little bit more about Saniona and how we are working to improve the lives of patients who are suffering from rare diseases. So all right. I understand that we have a fair amount of Q&A that came in ahead of time, so I will try to keep this presentation as efficient as possible so we can save room for the Q&A. But if we don't get to all of the Q&A, I'll just go ahead and say now that you're welcome to e-mail me directly. My contact information is on our website, which is saniona.com, so feel free to reach out if you have any additional questions. And with that, we'll get started. I will be making forward-looking statements today. I won't read through this whole legal disclaimer. But again, this is also available on our website so feel free to read it at your leisure. I want to start out by talking a little bit about rare diseases. I know some of you are probably very familiar with investing in biotechnology companies, and so you're very familiar with the business model that is focused on rare diseases. But for those of you who are not, I just want to go back to the beginning for just a minute and define what is a rare disease. So in the U.S., a rare disease is defined as a disease that impacts less than 200,000 patients. In the EU, it's less than 5 in every 10,000. So these are smaller diseases. They're not the big diseases that you hear about like general obesity or general cardiovascular disease or Alzheimer's disease, not like those that affect millions and millions of patients. These are affecting a smaller group of patients. And there's a significant unmet need for treatment to address rare diseases. And so there've actually been more than 7,000 rare diseases identified and less than 10% of them have treatments. And I feel like I would be remiss if I didn't mention that this is February, and February is actually Rare Disease Awareness Month. The last day of February is Rare Disease Awareness Day. The reason that they chose that day is because of leap year. It is the least common, the most rare day of the year, and so whatever the last day of February is, is when rare disease awareness is celebrated. And if you want to learn more about it, there are wonderful websites, EURORDIS and NORD, who can provide a lot of great information about rare disease awareness and how you can support rare diseases. So Saniona is very focused on rare diseases because there's this incredible unmet need, right? 7,000 diseases, less than 10% have treatments, and unfortunately, more than half of people impacted by rare diseases are children. And you might say, "Well, how does it make sense for a biotechnology company to spend all of the money and invest all of the money to make a medicine for a rare disease when you will only be able to provide it in the end to a smaller amount of people?" But the governments around the world have actually recognized this incredible unmet need as well, and they've created incentive programs. So in both the U.S. and in Europe, there is what's called orphan drug designation. So these incentive programs provide the potential to do smaller clinical trials, faster clinical trials, which means that the company, a smaller company like Saniona would have to -- not have to have as much money to conduct trials as we would if we were trying to go after a very large indication. There's also tax credits and market exclusivity, so there's a lot of incentives in place. And I will mention that Saniona does have orphan drug designation for the 2 lead rare diseases that we're working on, which we'll talk more about in a moment. And I also just want to point out at the bottom here that the business model of developing medicines for rare diseases is proven. There are a number of companies, both in the U.S. and Europe and globally, who have successfully built a business by pursuing this business model of creating multiple medicines to treat rare diseases, companies like Genzyme, Alexion, Sobi, which I'm sure you're familiar with. And I'll just note that many of the executives at Saniona have worked at these companies, in particular, myself and also our President and CEO, Rami Levin, have both worked at Sobi, and so we have the experience in building companies like this. So moving on, I'll tell you a bit about the 2 rare diseases that we're specifically targeting with our lead drug. So the first I'm going to talk about is called hypothalamic obesity. So this occurs usually due to an injury in the brain. It's often caused by a rare type of brain tumor called craniopharyngioma, and this brain tumor sits in an area of the brain next to the hypothalamus. And what happens is when patients undergo surgery to remove the brain tumor, sometimes the hypothalamus can also be damaged and that results in this disease, hypothalamic obesity. So what happens is these patients who, prior to the development of HO or hypothalamic obesity. Prior to that, they were of normal weight, many of them were athletes. They will very quickly gain a lot of weight. They also suffer from hyperphagia, which is a constant hunger, a desire to eat even if you've just had a meal and then a number of other complications, memory impairment, attention deficit. There are no FDA-approved therapies for hypothalamic obesity. And in fact, so far, Saniona is the only company to have ever received an orphan drug designation from the FDA for hypothalamic obesity. So we've really been pioneers in researching ways to treat this disease. And I'll just show you here on the slide, we have some pictures that some of the caregivers in the HO community were kind of share with us and to allow us to share with you. You can see Allie and also Cylis, and you can see their before and after pictures. And so these pictures, I think, really show how quickly the body composition changes for these children. And we also have a quote from Cylis' mom Chelsea. She said, "We had to start locking cabinets, locking our fridge, restricting food, because if he got his hands on it, he wouldn't stop eating it." So very, very difficult disease, no treatments, high unmet need. I want to talk to you a little bit about Prader-Willi syndrome as well. So Prader-Willi syndrome is a genetic disease, so these patients are born with this disease. But even though it occurs differently, you see here on this slide some similar symptoms, right? Again, the hyperphagia, the uncontrollable hunger, the weight gain, also social, emotional cognitive deficit. So no FDA-approved therapies for the hyperphagia, which is the most difficult part of this disease according to surveys that have been completed by caregivers. And you can see here in these photos, again, some of the members of this community who were kind enough to share these photos and allow us to share them with all of you. And I'll note here, John, Erik and Erin on the left, they live in a home for adults with PWS. And unfortunately, that is often the trajectory for this disease. Because of the constant hyperphagia, the constant desire to eat, it's very difficult for these patients to live independently. It's also very difficult for them to hold down a job. I mean, you can imagine, they couldn't work in a restaurant. But even in an office environment, there's always food around, right? It's always a birthday cake in the kitchen or whatever. So it's very, very difficult for these patients. And there's a quote here from a younger patient, William. He says, "It really affects me a lot. I can't really control my hunger, and it's just really hard for me to not eat every single second." So what are we doing about this at Saniona? I'm going to tell you a bit now about Tesomet. This is our lead medicine in clinical development that we are developing for both hypothalamic obesity and Prader-Willi syndrome. So what is Tesomet? So Tesomet is a novel medicine. It has never been approved anywhere in the world before. It was actually discovered in the labs of Saniona's own scientists. They've been working on this molecule. It's a capsule formulation. And when you take it, it works in the reward center and the appetite center of the brain. So it's designed to increase the levels of 3 hormones: dopamine, serotonin and noradrenaline. And what that is designed to do is to reduce that craving for food, reduce the appetite and increase the metabolic fat burn to help reduce the weight. So that is how Tesomet is designed to work. Now we have already conducted small Phase II studies in both HO and PWS. So in HO, this is the data from our Phase II study. Again, so you can see by the Ns, the N is the number of patients in each arm of the trial. So these are small numbers. And this type of a study is designed to see, can this drug work? Could it show efficacy in these patients? And is it worth, then, making the larger investment to conduct a larger trial and get the kind of really robust data that the FDA and other agencies are going to require for approval? And what we saw in here is, yes, it's worth the investment, because as you can see, the gray line that starts at the top there that says double-blind, DB: Placebo, so it dipped a little bit at the beginning of the trial, and that's because everyone in the study was also receiving diet and lifestyle support and counseling. And that had a little bit of an impact on the placebo group in the beginning, but then you can see that curve. It goes right back up. It's just not sustainable. Whereas the group who received the Tesomet, you can see that, that line decreases. It keeps going down. And when you get to the middle where the dotted line is, that's the end of the double-blind placebo-controlled period, you can see a statistically significant reduction of 6.28% in body weight. Now that is a significant amount according to the FDA. The FDA has created guidelines for obesity drugs and weight management drugs in Phase III trials, and they have determined that 5% is the mark that's meaningful. So a reduction of 6.28% is greater than that meaningfulness marker that they've set. So what happens at the dotted line is the patients who originally received the placebo, now they, too, have the opportunity to have Tesomet. And that's something that we have also designed into the current trials that we're conducting, so that if they do get the placebo in the double-blind period of the trial, they at least then have the opportunity to get Tesomet in the second part of the trial. And you can see then, once they've switched over to Tesomet, how that line drops right down. The most common adverse events in this study were sleep disorders, dizziness, dry mouth and headache, and there were no significant differences in heart rate or blood pressure. So we looked at this data, and we said, yes, this data tells us that it is worth making the investment to do a larger study and see if we can get the kind of data that would support moving forward with the FDA. And that's what we're doing now. We're now conducting a Phase IIb study in hypothalamic obesity. We're looking to enroll about 110 patients. This is a global study. We have sites all across the U.S. and across many countries in the EU and other countries as well. And we are expecting to get top line data from that study in the second half of 2023. So a little bit about PWS. So this is some of the data from the adults that we studied. Again, this was a very small Phase II trial geared to say, could this work? Is it worth making a larger investment and moving into a larger trial? And again, what we saw indicated yes. You can see in the first graph here, we saw, again, greater than 5% reduction in the body weight. And then in the second graph here, a very meaningful, statistically significant and clinically meaningful reduction in hyperphagia, which is a constant desire to eat. So we are now conducting a Phase IIb study also in Prader-Willi syndrome. This study, again, looking to do 120 patients. We have a variety of trial sites across the U.S., across the EU, across other countries. And for this one, the design of the study is a bit shorter so we're expecting the top line data in the first half of 2023. So now I want to tell you about Saniona's ion channel drug discovery engine. And this is honestly why I was excited to join Saniona and why many of my colleagues were as well. Because oftentimes in the biotech industry, you'll find younger companies and they either have 1 mid- to late-stage clinical asset like, let's say Tesomet, but that's all they have and it's their only shot on goal. Or they'll have a very early-stage, possibly preclinical drug discovery program, has a lot of promise but it's very early. It's not that often that you come across a company that has both, and that's exactly what Saniona has here. So in addition to Tesomet, we have this incredible ion channel drug discovery engine to further build our pipeline. So what is an ion channel? It's a very important target in the body. They move ions like sodium, calcium into and out of cells. They're incredibly important. And in fact, there's a number of drugs that have already been approved for -- that are ion channel modulators that have already been approved. It's an $11 billion industry. Valium would be an example. But only 20% of the ion channels have been tapped, so there's 80% out there that there's no commercial drugs yet that are targeting these. So again, huge opportunity there. And Saniona, we have some of the most world-renowned scientists in ion channel research. They've been working together, studying ion channels for more than 20 years. We have a database of more than 130 compounds, and of that, 20,000 are our proprietary ion channel modulators that have been optimized. And that is where our future, the additional drugs that we're going to bring forward after Tesomet, that is where they're going to come from. And in fact, we already have SAN711, which is in a Phase I clinical trial right now, and SAN903, which we're going to be advancing into a Phase I clinical trial later this year. So we've already proven that we can do this, and we're positioned to advance multiple new drug candidates. We expect to bring another into the pipeline this year as well. And so this is a quick summary. Here's what our pipeline looks like right now. You can see Tesomet in HO and PWS in Phase IIb. You can see SAN711 following right behind it in Phase I. And we believe SAN711 is going to be applicable in rare neuropathic disorders. And SAN903 behind that, in preclinical moving into Phase I this year. So we see great potential there for rare inflammatory and fibrotic diseases. And a new molecule will be coming into this chart later this year, so stay tuned for that. Just a few quick milestones and then we'll wrap up because I know we want to leave time for questions. So 2021, as you can see, was an incredibly busy year for us at Saniona. In addition to getting the orphan drug designation for Tesomet in both Prader-Willi syndrome and in HO, and again, HO, first time any company has ever gotten that designation from the FDA. In addition to that, we initiated the Phase IIb trials of Tesomet in HO and in PWS. And we also initiated that Phase I trial of SAN711 and that's Phase I, which is always in healthy volunteers. So very busy year last year and a lot to look forward to this year. I think I mentioned top line data from the Phase I trials of SAN711 is expected in the first half of this year. We'll be initiating a Phase I trial with SAN903 in the second half of this year. We also have a number of partnerships for our ion channel drug discovery programs with companies like Boehringer Ingelheim and Novartis. And one of our partnerships is for tesofensine in Mexico for general obesity. Our partner, Medix, there has actually completed Phase III trials and submitted for regulatory approval. Hope to hear more on that this year, and as I mentioned, new ion channel modulator coming into the pipeline. And there could be other important milestones this year. I've said in other presentations, and I will reiterate, business development is a big priority for us. We wouldn't have put that on the chart because that takes 2 parties, and so thus, the timing can never be guaranteed, but it is a priority. It is something we're working on in order to generate non-dilutive funding into the company. And then 2023, we'll have those Phase IIb data readouts.

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So just -- sorry, just a quick look. Sorry, I know we need to move it along. I said I was going to keep this short, sorry, how we're building a successful rare disease company. Again, this slide, if you want to read it in more detail, if this is -- I believe everything is available on our website. If not, reach out to me and I'll make sure that you get whatever you need. But we see incredible potential for each of these programs. Analysts have estimated peak sales annually of Tesomet could be more than $1 billion. SAN711, targeting a market that is well over $1 billion. SAN903, even just one of the possible indications there. Idiopathic pulmonary fibrosis is a rare disease that had a market of $2 billion in 2020, so incredible potential here. And I will end here on our investment rationale, and then let's take some of those questions.

Thank you very much, Trista, for that presentation. Like you mentioned, we do have a lot of questions. But you said in your presentation that the -- a big part of Saniona's future lies in the ion channel drug discovery engine. I find that -- could you maybe try to explain that a bit more? Because it's one of those things that caught my attention and I want to know more about it.

Sure. So ion channels are -- ion channel modulators are a class of drugs. And our scientists have been working together. Our research scientists have been working together since Saniona was formed. But actually, even before that, at another company, the same group was working together and they were studying these ion channels the whole time. And so they've basically built 20 years of expertise and knowledge in this, and they've built a huge database of potential compounds, including, when I say 20,000 proprietary ion channel modulators, that means 20,000 potential medicines, right, that we own 100% of the rights to, that we are evaluating and picking the ones that we feel are the very best to advance into our pipeline. And so it just really gives us a huge potential to continue to find new molecules that work on new diseases and keep bringing them into the pipeline and really create a sustainable stream of medicines that we're bringing to the market. Does that help?

Yes, it does. Interesting. And we've got lots of questions as well in the live chat. I have one here. He wants to know, "Out of all the clinical programs, which one have been most affected by the pandemic? And which has progressed closest to plan?"

So we've actually done a lot to mitigate the impact of the pandemic on our clinical trials, particularly on the 2 Phase IIb clinical trials that we just started. We have designed those trials so that as much as possible, the data can be collected through home visits to the patients' own homes. And we've tried to minimize the number of times that they need to actually come into a hospital setting and thus, have more exposure possibly to COVID-19. I do think the regulatory agencies around the world have been incredibly busy trying to deal with COVID-19. But they've continued to be very, very good partners to us and continuing to engage and provide feedback along the way. So I think we've put good steps in place.

Is it extra difficult to recruit patients to -- I mean, these types of studies with rare diseases compared to more general diseases?

That's an excellent question, and yes, absolutely. Because there are fewer of these patients out there, it is more difficult to find them and to find patients who meet the criteria to participate in your trial and get them enrolled in your trial. And so we actually work very, very closely with the patient advocacy organizations on this because the wonderful thing about both PWS and HO communities is they have very, very strong patient advocacy groups who connect them. And they maintain Facebook groups and they maintain various newsletters and social media groups, and so they have a wonderful ability to reach those communities. And they're, of course, incredibly supportive and interested in trying to help us raise awareness so that the right people can get into the trial. So partnering with the advocacy groups is an incredibly important part of recruiting any rare disease study.

And Trista, what can you say about the competition out there today?

So in HO, as I mentioned, to my knowledge, I don't think there's anyone as advanced as Saniona. I'm aware of one other program ongoing, but there just hasn't been a lot of research in HO. Like I said, we're the only company who's ever gotten orphan drug designation there. So PWS has been a much more crowded field. As I mentioned, there's one drug approved, which is a growth hormone, but there's nothing approved that can address the hyperphagia. There have been a lot of companies trying though. There have been a lot of setbacks, unfortunately, and failures in that field. It's very difficult, but I think we've had the opportunity to learn a lot from those who have gone before us and designed our trials with that in mind.

And I have another question here in the live chat. He wants to know if you will release results from the Phase IIb HO and the PWS after the blind part and then the complete data after the open part.

Yes. So let me clarify on that. When I say that the data are coming in the first half of 2023 and in the -- for PWS and in the second half of 2023 for HO, that is referring to the top line data from the double-blind portion of the trial. That is the data that the regulators are going to be the most interested in. It's the most rigorous part of the study so we certainly would anticipate enough in that data, and then later, after we finish the open label extension portions, providing additional updates.

And then another viewer wants to know about your way to market with Tesomet. Are you planning to bring that all the way to market by yourselves?

So yes, we are. That's one of the reasons that Saniona, a few years ago, decided to focus on rare diseases. Because in addition to the fact that the clinical pathway tends to be smaller and shorter trials, which makes it more appropriate for a smaller company such as Saniona, there tend to be fewer doctors out there who specialize in treating these diseases, which means it is easier to reach them with a very small sales force. And so that's exactly what Saniona intends to do. Now we have not started to build our commercial organization yet. We will do that when we are closer to the market and it makes sense to start making those types of investments.

And have you considered applying for a priority review voucher? And if so, when?

So for that, I'll just say we are evaluating all of the applicable pathways, all of the applicable programs that are offered both in the U.S. and in Europe, and we will continue as a publicly traded company. We'll continue to provide updates whenever we have advances to share on that front.

And another person wants to know, how much of your work do you think can be financed by non-dilutive funding?

So I would say I'm not sure that we think of it exactly that way. We think about what we need to do to move our programs forward, right? We need to continue to advance the 2 Phase IIb clinical trials at Tesomet. We need to continue to advance the ongoing Phase I study of SAN711. We also need to continue to fund the advancement of 903 to bring it into preclinical development and into our pipeline. And we need to continue to fund the earlier-stage research, which is generating those next-generation compounds. So all of that is important to do and all of it is part of our operation strategy. And as we have said, we evaluate all appropriate ways to support that with funding. We -- and among that, we certainly are looking at non-dilutive funding. We -- I mentioned in previous presentations, and I know you guys have seen the press release, that we hired a Chief Business Officer, and she is very much focused on business development deals. So hopefully, more to share on that in the future.

Trista, what value-driven milestones and triggers do you think that we can expect from Saniona in 2022 and 2023?

Right. So I mean, I think the most -- the milestones that I know everyone is very interested in and looking forward to, ourselves included, is that Phase IIb data from those trials of Tesomet in PWS and HO. And as I've mentioned, that will be coming in first half and then second half of 2023. But in the interim, I do think there's a lot of exciting milestones to look forward to, right? I mean, SAN711 is the first program to advance internally out of that ion channel drug discovery engine, so very excited to see the Phase I data on that, and then to continue to progress the additional programs forward in the ion channel discovery engine. And as I mentioned, we have the partnership in Mexico with Medix. Hoping to hear back, hear an update from them. And then in addition to that, I mentioned there's a possibility for business development. You never make any promises on exactly when that will happen because it's a negotiation between 2 parties, but something we're very focused on.

Thank you very much, Trista, for joining us today. It sounds like you've got a lot of exciting things in the pipeline.

Yes, definitely. And thank you so much again to everyone for taking the time to learn more about Saniona. And if we didn't get to your question, again, feel free to reach out to me directly. My contact information is on the website. Thank you.

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