SynAct Pharma AB (SYNACT) Earnings Call Transcript & Summary

Here at Investor Studios, we are joined by SynAct Pharma, who today have announced the top line results for the Phase IIb ADVANCE study. And joining me here today is the company management, including Jeppe Ovlesen, who will open up with a presentation and then afterwards, we'll return to ask some questions? So go ahead.

We are excited to show the positive top line results of the Phase IIb ADVANCE study. This is a result of several years of hard work and support from investors, colleagues and the rheumatology community. We are very much looking forward to moving the product and the company forward based on these excellent results. I will hand over the presentation to Mads Bjerregaard, CBO of SynAct Pharma.

Thank you, Jeppe. I am very excited that the top line results from the ADVANCE study supports our key business objectives to reach a competitive profile in rheumatoid arthritis. This is what will fuel the business development discussions moving forward. We want resomelagon therapy to enable patients to avoid disease escalation. To do this, we want to see a response of ACR20 scores above 75% after 12 weeks of therapy. This is the effect that has been demonstrated by TNF-blockers on top of methotrexate and JAK inhibitors as stand-alone and combination therapy. The ADVANCE study delivers this level of performance. Response will deepen from ACR20 to reach ACR50 and ACR70 over time. We want to see a trend of response to resomelagon that continues to deepen response for 6 to 12 months. This is what physicians and payers will be looking for when assessing whether to adopt the concept. The ADVANCE study provides this trend. We want resomelagon therapy to provide a clear impact on inflammation markers. This will support the translation of how the pro-resolving mechanism of resomelagon actually works in a clinical setting. With a clear impact on inflammation, we believe this will apply across multiple indications. The ADVANCE study provides a clear reduction on inflammation markers. Lastly, we want resomelagon to be very safe to be used as early as possible before the use of immunosuppressed therapies associated with higher risk for patients. The ADVANCE study delivers on this point, too, demonstrating resomelagon as a very well-tolerated therapy with no immune suppressing features. From a business development point of view, the clarity that this data provides in terms of competitive profile relevant for healthcare practitioners and payers in the U.S. should be highly interesting for strategic players looking for potential paradigm shift in the treatment of RA. With that, I will hand over to our Chief Scientific Officer, Thomas Jonassen, who will walk us through the data and reflections on the data set. Thomas.

Thank you, Mads. I'm very pleased to present the data, high-level data, the outcome of the ADVANCE study. The study was set up testing 3 doses of resomelagon, 40, 70 and 100 milligram given as a tablet once daily versus placebo matched tablets given in combination with methotrexate in newly diagnosed rheumatoid arthritis patients, that means patients who have the RA diagnosis within 6 months of inclusion into the study, who had high disease activity evaluated by CDAI and DAS28 and importantly showed sign of systemic inflammation as CRP should be outside normal range. The compound and placebo was given once daily as a tablet and methotrexate was given at a predefined dose escalation approach, starting with 10 milligram once weekly, reaching 20 milligram once weekly after 8 weeks dosing. Glucocorticoids was prohibited and could only be given as rescue medicine according to predetermined rules. Reduction in DAS28 was used as a primary readout as it according to recommendation from FDA gives better opportunities to discriminate between doses that the ACR scoring system. However, ACR20 was set as a key secondary endpoint and outcome of this study to be considered just as important. And the ACR scoring system will be used for primary readouts moving forward in larger late studies. Other secondary readouts included ACR50, ACR70, CDAI, SDAI and HAQ. The study was conducted under U.S. IND at sites in U.S. and Europe. Next slide. To the left, we have an overview of the distribution randomization of completion in the 4 treatment groups. Overall, the study was well conducted with relatively few discontinuations. The most common reason for discontinuation was withdrawal by the subject. The table to the right shows baseline characteristics. There were no major differences in baseline characteristics between the 4 groups. The majority of participants were women, in mean age in the late 50s and for the 40-milligram group early 60s. For all 4 groups, time from diagnosis was around 2 months and the majority of the participants were classified according to ACR/EULAR Class II and III. With regard to disease activity based on DAS28 and CDAI, the participants showed slightly higher scores than was seen in the BEGIN and the EXPAND study and confirmed high disease activity. This slide summarized the major efficacy part, presenting data from the methotrexate placebo-controlled group and the group treated with 40-milligram resomelagon in combination with methotrexate as this turned out to be the most effective dose of the 3 applied in the study. The 40-milligram showed to be superior to the other 2 groups, who both as a 40-milligram group showed higher response rate compared to the controls, a finding that strongly supports the common recommendation that compounds with [ true resolving ] capabilities don't show classic dose response linearity and highlight that the compound even relatively low dose induce pharmacological effects. Overall, as shown, the reduction in disease scores the compound's ability to induce ACR20 is very much in line with what we saw in the subgroup analysis in the EXPAND study. However, for most readouts, the control group had markedly higher response rates. Consequently, the primary readout based on reduction in DAS28 was not reached. However, the compound showed a very strong ability to induce ACR20 reaching 76.4% compared to placebo-treated groups reaching 60.8% with a p-value reaching 0.06. This clinical meaningful ACR score was supported by significant reduction in simplified disease activity index that for many reasons, could be used interchangeable with the other clinical scores for evaluation of the RESPONSE study as present. Further and very importantly, resomelagon significantly reduced CRP in all treatment groups compared to what was seen in the control group. Finally, the compound also had the ability to reduce the neutrophil-lymphocyte ratio. Again, this was seen at all dose levels compared to what was seen in the control group, a finding that strongly support the compound's ability to modulate the immune system without induction of immunosuppression. The graph to the left shows ACR20, ACR50 and ACR70 scores at the end of the 12-week dosing period. As mentioned, ACR20 went as high as 76.4% in the most active dose of resomelagon compared to 60.4% in the control group treated with methotrexate and placebo. ACR50 reads almost 40% and was numerically higher than what was seen in control group. The graph to the right shows the time course for ACR20 during the 12-week dosing period, suggesting that the compound's treatment potential kicks in after 8 weeks, and it is therefore our interpretation that continued treatment with the compound beyond 12 weeks would have the potential to induce further increases in disease modulation most likely to be shown by increases in ACR50 and ACR70. This to be shown in longer studies, which according to current development guidelines should be conducted in Phase III. This slide shows the ACR scores in the subset of patients who at inclusion qualify as Class II and III according to ACR/EULAR classification. In the patient who compared to those in Class I are more affected to the disease -- by the disease. In the Class II and III patients, which is the majority of the participants, ACR20 in the 40-milligram group had a significantly higher response rate, reaching 76.8% compared to 56.1% in methotrexate placebo-treated controls, as shown in the graph to the left. And shown to the right, the discrimination relative to control was present throughout. This findings strongly support that resomelagon retains its activity in the more severe patients, whereas methotrexate seems to be specifically active in less severe Class I patients. This slide highlights resomelagon's ability to induce CRP, the graph to the left, which strongly supports further evaluation of the overall effect of the compound on biomarkers that will be conducted in the coming weeks. And just as importantly, highlight the ability of the compound to reduce disease activity as shown by the significantly higher reduction in SDAI when compared to control group. Together, these findings support -- further support the potential of the compound and support a further modulation of disease activity could be expected with continuous treatment beyond the 12 weeks as applied in the current study. The side effect profile is presented on this slide. Overall, the safety profile support that the combination treatment with methotrexate and resomelagon is well tolerated with a few most transient adverse events with mild intensity. Numerically higher number of adverse events in the 100-milligram group was found compared to the lower doses in 40 and 70 milligrams. No serious adverse event was reported in the resomelagon treated patients. The most common adverse event was related to transient increases in liver enzymes and gastrointestinal discomfort. These adverse events were, in most cases, by the investigators attributed to methotrexate treatment. And consequence of that was that they decided either to stop further increases in methotrexate dosing, reduce in the methotrexate dose and in acute cases, resulted in discontinuations. No sign of immunosuppression and no increases in infection rates and laboratory finding was identified. This slide shows results from larger clinical trials with -- to the left, AbbVie's JAK inhibitor upadacitinib, Rinvoq, it's from the SELECT early study, testing the compound with methotrexate treated as control in previous treatment naive, in majority newly diagnosed patients with high disease activity very comparable to what we saw in our ADVANCE study. In the middle graph, we have data from Eli Lilly's JAK inhibitor, baricitinib, Olumiant, testing the compound as monotherapy or in combination with methotrexate treated as control; again, in newly diagnosed previously treatment naive patients with high disease activity. and to the right, we have data from a clinical trial from Karolinska, testing the TNF inhibitor Etanercept as monotherapy on combination with methotrexate with a methotrexate-treated group as control. In all 3 studies, the maximum effect of ACR20 after 12 weeks dosing was in the range of 75% to 80% and the ACR20 reached -- in the control group reach with methotrexate was between 56% and 62%. Interestingly, Etanercept had to be combined with methotrexate to reach beyond 70% following 12 weeks dosing, whereas at the studies with JAK inhibitor showed that the potential of the compound to reach -- could reach above 75% as monotherapy and addition of the compound on top of methotrexate did not have any further treatment effects. What is also shown is that the ACR20 response at 12 weeks are very much on par with what we showed in the present study, shown here by the overlay from data from our current study, strongly supporting that the potential of resomelagon as a potential new treatment option to induce disease modulation without immunosuppressing effect is a very attractive opportunity moving forward. And with this, I will give the words to Mads.

Thank you, Thomas. I want to try to provide a little bit of business context to what you've just seen. In the U.S. alone, more than 1.3 million people are treated for rheumatoid arthritis. 40% of patients are currently not experiencing adequate response to the first-line therapies and are treated with novel biologic Disease-Modifying Antirheumatic Drugs or DMARDs such as the TNF blockers and synthetic DMARDs like Janus Kinase inhibitors or JAK inhibitors, as you just saw on the slides that Thomas presented. This is a major burden on the cost to the healthcare system with the majority of the value of the market really stemming from the use of these novel compounds. All of these novel compounds are associated with risk from immunosuppression as well as with cardiovascular risk related to the use of JAK inhibitors. The current U.S. market's value for rheumatoid arthritis drugs is estimated to be more than USD 21 billion. This is the market that we are addressing with resomelagon. The ADVANCE study is really confirming the opportunity to expand the use of novel mechanisms of efficacy as you've seen with the introduction of JAK inhibitors and the biological cytokine block mechanisms such as TNF blockers to newly diagnosed patients without the burden of immunosuppressants. On this slide, what you see is you see the patient flow from newly diagnosed patients treated with methotrexate, perhaps getting corticosteroids established effect a little early on. And then if that is not adequate in terms of effect, you need to do something more, either you add more conventional DMARDs to your regimen, more glucocorticosteroids or you change biologic TNF blockers or IL cytokine blocks and so forth. If that does provide adequate results, you may try the JAK inhibitors. All of these therapies, again, comes with immunosuppressive features and concerns around infections associated with that. JAK inhibitors are associated also with the cardiovascular events. So we see that resomelagon being positioned very well into the early treatment because of our safety profile being very benign and highly tolerable, and we can apply a novel mechanism of potential effect really to the early -- or to patients early on and trying to avoid them from -- to establish effect and avoid escalation in the disease. We have tested this profile with a representative group of thought leaders in the U.S., all physicians who will treat a lot of patients with rheumatoid arthritis in the groups that we are talking about. They point out to 4 key items: truly novel mechanism of action, back to resomelagon. It's highly differentiated from the existing therapies. That's one tick mark for why we should use this. The non-immunosuppressant is perceived as a highly attractive feature. That's a differentiator to everything else that is used in the market. And then very interestingly, what comes across is the possibility of providing upstream action rather than just blocking downstream inflammation. So treating early with a compound like resomelagon could really point to upstream action instead of downstream blocking. Of course, physicians need to see data to prove these findings and to use it in clinic, and this is exactly what can be produced in a Phase III program to show that in a confident manner. We are very confident that the profile that the ADVANCE study supports will be a highly attractive and competitive therapy with the potential to change treatment of newly diagnosed rheumatoid arthritis. With that, I will hand over to our Chief Executive Officer, Jeppe Ovlesen, for a final comment.

Thank you, Mads. We are very happy to show promising results in the resomelagon in the treatment of RA. The advanced data support both business development and moving forward towards Phase III development. We believe that we are going to have a very constructive business development agenda ahead of us in the coming time. We will start with a busy agenda on BIO International in the U.S. in the coming week, and we are going to speak with many pharma companies of their interest and the possibility for including our project in their portfolio. To conclude, the clarity on the safety profile, the duration of treatment and expected dosing enable us to move forward towards a Phase III design with great confidence. The clarity on competitive profile, outcome relevant for healthcare professionals and payers enable us to engage with strategic business partners in a constructive and fact-based manner. Our next steps are to plan for end of Phase II meetings with FDA and EMEA. And as our priority 1, 2 and 3, we will establish partnership around clinical development and commercialization. With that, I will close the presentation and we'll open the call for questions. Thank you very much.

Thank you very much. And we are now opening the Q&A, and we also do so to viewers who may ask your questions in the live chat during the Q&A session here. And I will start off by asking you, Thomas Jonassen, resomelagon is built around resolution rather than suppression. And now with ADVANCE IIb top line readouts in hand, what does the data tell us about that mechanism in practice? And what stood out most to you?

I think that the data we have generated in this study strongly support the concept of resolution therapy. The concept that you can induce disease modulation without suppressing the immune system. With the data reaching ACR20 of 75% without inducing immunosuppression is actually is actually very, very interesting finding as it's that such large numbers only have been reported, as we said here in the presentation, the JAK inhibitors, TNF blockers and then, of course, with glucocorticoids. So I really think -- we really think that it highlights the potential of resolution therapy and look very much forward to further development of the compound. In addition to that, of course, the signal of CRP is a very, very -- is a great important as well as it shows -- highlights the potential not only to modulate the inflammatory system by inducing resolution, but also to drive it to another set point with lower inflammatory activity. So based on that, and we have already got the question about what about -- then about the primary readout. Why did we not reach that? And the answer is, well, we did reach a reduction on all the clinical parameters of DAS28, CRP and SDAI as we had -- that we had expected from previous study. But the response rate in the placebo -- in the control group that was treated with methotrexate and placebo was somewhat higher than what we had planned for. Nevertheless, we did see -- and therefore, we did not reach significance. That -- nevertheless, we did see significant effect on just equally important SDAI. And then, of course, we saw the response on the -- ACR responses, which surely are the most important for the further development of the compound.

The chat is very, very active, and I'll try to get all of the questions that are asked here, but I believe this one is for you, Thomas. Placebo response in ADVANCE was materially higher than in previous studies. What factors may have contributed to this? And how will this influence the design of a Phase III program?

I think we have addressed some of it already in the presentation as well as in the press release that we did -- when we looked at the patients, you could say based on the ACR classification score, ACR/EULAR classification score, those in Class I, which everything else, you can have high disease scores without -- but still are -- still be in an early, if not really devastating state of the disease. If we took them out of the analysis, which in many ways could be very relevant moving forward, then we -- then the response rates in the control group with methotrexate placebo treated was reduced to 55% on ACR20, which were, you could say, more in line with what we had expected from the previous study and what you could argue would be a relevant response rate in patients where you do not co-administrate glucocorticoids in it. So that's part of it. The other thing is that we did have a higher response or we had a higher disease activity at baseline, meaning that the statistical phenomenon of regression to mean plays -- probably plays a larger role in this study than in previous one. So even though that, of course, it is a bit disappointing that we did not reach the primary readout based on the data, I think that -- we think that the overall response especially evaluated through the ACR scores and the effect on SDAI and CRP are strongly supporting the treatment effect of the compound. Yes. So I think that's the answer. Slightly higher disease activity, slightly a number of patients who were very early in the disease and therefore, have a higher likelihood to respond to methotrexate.

And the question which might be adjacent to that. Do you believe this data set to be strong enough to support Phase III initiation? Or does it fundamentally require additional clinical validation first?

I think we can agree that the compound is well tolerated, has shown relevant clinical effects during this 12-week study -- I am sorry, in combination with methotrexate. And therefore, it would be logic that the next step would be a longer study to show the full potential of the compounds not only on ACR20, but also on ACR50/70 scores after typically 6 months treatment. So the next step logically would be to go into larger study, which again, logically would be Phase III.

Thank you very much, Thomas. I will return to you in just a moment, but first I wanted to visit Mads as well. Before the data arrived, you encourage investors to look beyond the headline numbers to the fully efficacy and safety picture. With the results now in hand, what does that fuller picture tell us about the value of resomelagon?

Thank you. Well, now I'm happy and I'm glad that I started and initiated that discussion early on to really look for what's the total picture of what we're going to get here. I think the -- what I was framing or was alluding to and I will very much do today is the fact that what is that you need to show physicians and payers down the line for why should you use a compound like this and why should you pay for it? And those 2 elements are very much linked to performance on ACR scores. So the ACR20 scores reaching a good effect on -- as we see in this study, as we seen in previous study. And to Thomas' point on Phase III design, this is really right for a longer duration of treatment where we're going to see the full effect on this. Once you reach with ACR20, then that kind of that deepens the response into ACR50 and ACR70 and really the ACR50 scores with this study showing 39% is much, much better than what we saw in the EXPAND trial. That bodes really well for what a long-duration trial would do. And that does tell you whether you're going to change to a TNF blocker or whether they're going to stay on resomelagon. So the kind of looking broader in terms of what the business logic is, that's -- I think that's what the ADVANCE study here really honed in on. So ACR scoring, the deepening in effect, the fact that we can go into a longer duration of therapy with -- in the Phase III trial, that all bodes very well. I think just one more comment to kind of the totality of this is the fact that we show these highly significant data on inflammation markers, which really tell us something about the mechanism of action, how that works in the clinic or in clinical setting, which not only benefits how the logic is in rheumatoid arthritis, but really also in other indications that might come down the road. So I'm happy that looking at the totality of what is needed from a business logic really is what this study actually is supporting very well.

And Mads, as the Chief Business Officer of SynAct Pharma, I believe this question is addressed to you. Given the advanced results, do you see SynAct primarily progressing as a stand-alone Phase III developer? Or do the data strongly support a partnering or an M&A strategy ahead of the next development stage?

I'm not going to speculate on M&A, but definitely on the partnering strategy, I think I've been -- and Jeppe has been quoted as well and I've been quoted on our priority #1, 2 and 3 are basically to find the right partners to work with us on clinical development and commercialization of this compound. What we have with the ADVANCE study really hones in on that because back to the logic in the first question you have here, the business logic is sound. This is what the ADVANCE study is going at. We know what we need to do for the Phase III. And I think that's the logic that we're going to present to partners at, first of all, the BIO International meeting next week, but really continuing the dialogue with the many companies we've already had a good dialogue with, that's the business logic that needs to hold in and getting a partner on board to work with clinical development and doing that right fitting for a commercially good and sound product, that's the best situation, and that's our priority, I would say, 1, 2 or 3.

We have to talk about the primary goals as well. There is a viewer in the chat who is curious about the prospects of a Big Pharma deal. You don't have to specify the probability, but just tell us considering that you had positive results but didn't meet the primary endpoints, how should investors look to that considering a Big Pharma deal before the results and after the results. Have the probabilities increased, decreased? Or do they stay the same?

Basically, from all the discussions we have had during the last 18 months with Big Pharma and big biotech, we have a pretty precise picture of what they want and what they're looking for. With today's results, we are convinced that we are in an even stronger position to enter into this dealmaking. We have several partners that have been in due diligence for quite some time, and they have been reaffirmed by today's data for sure. Primary endpoints is one thing. But Big Pharma and big biotech, they understand really the need to look at the full package. And there, we are quite convinced that we tick the boxes that we need. And we are sure that our main assets will tick those boxes. But as you all know, this project is our lead compound. It's our main asset, so to speak. So therefore, we need to make sure that we optimize on the dealmaking as much as possible. And that is what the next many months will address for sure.

And Jeppe, I think I will continue with you. How does this readout shape the business development agenda over the coming year? Could you elaborate on that?

Yes. Basically, we are having a full focus on, of course, the dealmaking. We can, in the meantime, and alongside doing the business development, we can do a lot of other things to shape up the project. As you saw last week, we got an extension on the IP. It is 2 years extension in the U.S. And that is a really critical one because they do a lot to the valuation of the project. We can also do quite a bit of work on getting more documentation done in order to make the project even more Phase III ready. And that is something that we're doing in parallel. That's something we always discuss with Big Pharma, how ready are we? How fast can we move into a Phase III? So that is sort of the main topic of that discussion. Another element in that one is that we will have end of Phase II meetings with both FDA and EMEA. And that's another box that we are going to tick. So we are very focused on ticking as many of those as possible in order to optimize the deal potential. And as many of you know, we have been down that road quite a lot of times before amongst us. So I think we have a pretty good picture of what to do.

Thank you very much, Jeppe. I will continue to ask Thomas a few questions about dosages. ADVANCE confirmed nonlinear dose response with 40 milligrams emerging as the lead dose. What does that tell you about the biology as you look to Phase III with efficacy endpoints, ACR20 among them? Do you see anchoring the program?

I think that the nonlinear dose response as we have shown in this study is in line with what is the overall interpretation of what would be seen with a compound that induced resolution. It's not practical dose response. And actually, very importantly, you have to -- not to have full occupants of the receptors as that everything else would increase the likelihood of what is called [ de-sensibilization ] and thereby, you would lose the effect of the compound. So basically, what we have learned from the compound -- of the compound with this study, together with the other studies we have been running and the laboratory finding and so on, is that we probably can start with a higher dose and then the -- for longer continuous treatment, you are going to a lower dose where 40 milligram seems to be very attractive and where I also, during the morning, got the question, would it be possible to go to even lower. That is for the future to tell us, but 40 milligram from a safety profile as well as from an efficacy profile seems as well as what we know about exposure in plasma seems to be very, very attractive for continuous treatment. And then the shorter treatment, the shorter -- the higher doses as we are using in our viral program is more effective to -- could say, to induce a fast change in a hyperinflammatory state. So this tells us a lot and gave us very, very -- this study gave a lot of information on dosing and confirmation of the nonlinearity dose response.