Syntara Limited (SNT) Earnings Call Transcript & Summary

All right. Good afternoon, everyone. We've just hit 1:00, so we'll start the briefing. Just a few more people are joining, from all over the world, it seems as well, which it's great. My name is Samantha Freidin from Principal IR. I'll be hosting today's Pharmaxis investor briefing. We are joined today by CEO of Pharmaxis, Gary Phillips, who will provide a general business update following the release of the quarterly results this morning. We'll then open the floor to questions from both investors and analysts. [Operator Instructions] So Gary, as always, there's been plenty going on at Pharmaxis for a very productive quarter. So I'll hand over to you now.

Thanks, Sam. I'll just share my screen. We can get going. Okay. So for those of you perhaps who don't have a background with Pharmaxis, I thought I'd just start with a very high-level overview. Pharmaxis is a clinical-stage drug development company. We're targeting 2 main therapeutic areas in fibrosis and cancer. And we've got 2 drugs which are in clinical studies, which we hope will give clinical proof of concept by the end of next year. The first one being 5505, which as well as being in a Phase II study in myelofibrosis, a rare kind of bone cancer. Has also recently in the last quarter demonstrated some evidence in other tumors as well, which I'll explain a bit about when we go forward. And then 6302, our topical anti-scarring drug, which is about to start Phase Ic studies in patients with established scars. We've also a company that has a source of nondilutive cash in the commercial business we call the mannitol business. It's 2 drugs, one in cystic fibrosis, the other one in asthma diagnosis, which deliver cash back to the company. And we've got a specific corporate strategy to continue to deliver nondilutive cash and cost savings to shore up our cash balance. So we're in a strong position to fund our focused clinical trial programming. If I could just address the question of the investment proposition for Pharmaxis, about getting a return on your investment. For us, it's all about value-transforming data from the studies that are designed to give clinical proof of concept. This is classically the way that biotech companies generate big improvements in their market price. And we've got 2 of those ongoing, and both of them due to report by the end of next year. And the majority of today's quarterly update is really about giving you the progress report on those 2 studies and how we're getting on with them. So first off, we'll return to PXS-5505. This is our oral drug, which is being used in myelofibrosis, this rare kind of bone cancer. And it's the company's key focus. It's where the majority of our investment is going, where we've just completed a Phase Ic dose escalation study, which looked at 3 different doses in patients with myelofibrosis. And I'll go through to the results of those in just a moment. But that study now, based on the decision of the safety committee, is moving through to the second part of that, which is a Phase II study. And we've already started recruitment. So just dwelling on that study just for a moment. And just to remind you, myelofibrosis is a disease of the bone marrow. And it's where we get scar tissue or fibrotic tissue taking over progressively the bone marrow in these patients, which means they lose the ability to produce red cells, white cells and platelets. Other organs in the body, notably the spleen and the liver, try to take over that process and cause their own problems in doing that. And these patients have a life expectancy of around about 5 years. So we got into this via some preclinical work that was done with a scientific and clinical group in Boston. And that's represented on the left-hand side of this chart here I'm showing. Just to explain, so this looked at what happens when you have a myelofibrosis model in these mice. And the 2 bars on the left show that in normal mice, the bar height shows the level of fibrosis in their bone marrow. In a normal mouse, you have very little fibrosis. In a mouse that's genetically bred to have myelofibrosis, you see a very high level of fibrosis occurring in the bone marrow. The 2 bars on the right are what happens to both a normal mouse and that genetically modified mouse when you add in our drug. And obviously, in a normal mouse, it makes no difference at all. But in the mouse that's got predisposed to develop myelofibrosis, you can see a huge reduction in the level of fibrosis when you give our drug. So this gave us the confidence, and the clinicians in the U.S. as well backing this, the support to go ahead and go into the clinical studies. And the way that our drug works is by inhibiting an enzyme called lysyl oxidase. There's a family of these enzymes. We block all of them with 5505. And in doing so, we stop the cross-linking of the collagen fibers and reticulin fibers within the bone marrow, so we stop the fibrosis. So it's really important in the first Phase Ic study that we did in these patients that we demonstrated that the drug could do that. And the chart on the right shows what happens with 3 different doses. So in these patients who were myelofibrosis patients, they were given 3 different doses escalating one after the other. And we could not be more pleased with the results. At the highest dose level, dose 3, we reduced the activity of lysyl oxidase in the -- in these patients to more than 90% reduction in the activity. So the activity was less than 10% in these patients. And that was at trough. So just before we give the next dose, we measured the levels of LOX inhibition. And it was all -- it was still above 90% inhibition. So we were really, really pleased to see that. The other thing that we were really pleased to see was a very good safety profile. Even at the highest dose, we had no adverse effects at the highest dose in these patients. That's really important. These patients are likely to be on combination therapy in the future. The existing drugs that are used in myelofibrosis don't have a particularly clean tolerability profile, so they have lots of side effects. So it's really important that any drug that's going to be added on includes not only an improvement in efficacy but doesn't make the combination any less tolerable for these patients. So as I said, I couldn't be more pleased with the Phase Ic. And this chart, which we've shown before, is just the progression of the study and explains the design of the study. I just wanted to use this to explain that we are now -- we have now moved on to the cohort expansion, the one there on the right-hand side, which is circled in red. So the patients that were in the dose escalation study at the highest dose have all rolled over into the dose expansion study. That was very pleasing to see. They were all feeling well and wanted to stay on drug. We don't read anything into that in terms of efficacy, but it's certainly better than the converse that they didn't want to progress. So all 3 patients rolled over. So we've already started recruiting this expansion study, which will be a total of 24 patients. It's open label and will run for 6 months. The end points of that study are primarily safety. So we're looking at what happens if you dose this drug for 6 months in terms of the safety. Are there any adverse effects? But importantly, there are a host of secondary effects that we're looking for, which look at the fibrosis grade. So are we actually changing the fibrosis in the bone marrow? Are we -- we're also looking at spleen volume. So we're looking to see that the spleen, which is enlarged in these patients, is reduced in size. And we're looking importantly at hematology. So we're looking at their blood counts, their red cells, white cells and platelets to see what happens. So this study is on its way. It's recruiting, and we expect to deliver a result by the end of next year. Now just returning to the update and the other 2 points on here that happened in the last quarter. The first one being that the University of Rochester in New York released the first data showing preclinical evidence of the same drug, 5505, approval of survival in liver cancer. So by changing the fibrotic nature of some tumors, and we're talking here specifically about liver cancer, but it also includes pancreatic cancer and other forms of solid tumor, where the fibrosis in these tumors stops the access of existing chemotherapy. And it has pretty poor outcomes in these patients. This is the first data that where we've had shown that by reducing that fibrosis, these -- the animals in this study showed increased perfusion of the existing chemotherapy into the tumors. It should reduce tumor growth, and importantly, improve survival. So that's a really strong result and has certainly attracted the attention of clinicians in a number of different oncology areas across the globe. Thirdly and last, the progress of our anti-scarring drug, 6302. So that, in the last quarter, cleared Phase I. That's a healthy volunteer study. This is a topical drug. Again, it inhibits the lysyl oxidase enzymes. But in this case, by stopping the activity of lysyl oxidase in the skin, we can stop the scarring process. We're doing this in collaboration with the University of Western Australia in Perth. And the Phase I demonstrated that 6302 was well tolerated. Again, we used it at 3 different doses. And at the highest dose, we produced a very large inhibition of the target enzymes in the skin and, at the same time importantly, didn't produce hardly any inhibition of those same enzymes in the rest of the body. And that's very important for its safety profile going forward. And that drug will now progress in quite short order now into studies in patients with scars in this next quarter. So just to finish up this on the question of the cash. So we finished September with AUD 16 million in the bank. I would say that the other aspects that are relevant to cash flow here is we're keeping a very close eye on the development of the Bronchitol sales in the U.S. launch by Chiesi. That has been impacted by the COVID-19 pandemic in that it reduces the access of patients going into the clinic very significantly, which makes it very difficult to prescribe new drugs. So that's obviously delayed the launch of the product in the U.S., and that does have a potential long-term impact on our cash runway. So in the meantime, we are looking at deferring any unnecessary costs. We're still looking at potential cost savings across that mannitol business. And you may have noted in the last quarter, we also sold the -- an option for an inhaler that we've been developing as a life extension for Bronchitol. We sold it to a global device company called Aptar. They paid USD 250,000 for the option. And there's a prospect of them taking up that option before August of next year, and that would return us another USD 2.5 million if they do that. I can characterize the discussions ongoing with Aptar as they complete their assessment of the Orbital inhaler. Thus far, I've been involved with them on a biweekly basis, and I would characterize those discussions as being very positive so far. So just to finish then on the news flow. In the second half of '21, we expect quite shortly to be talking about the next study in our topical drug trial, looking at patients with established scars. The objective there being to melt those scars away. There'll be more further announcements on the mannitol business simplification and realizing some annual -- further annual cost savings in that business. And we're expecting some further publications in 5505 in other cancers. I've talked about the one in liver cancer. We also expect some further data to be released in myelodysplastic syndrome, which is another form of blood disorder cancer; and another one in pancreatic cancer, which we're very excited about as well. Next year, it will be all about those 2 studies. The ones that I talked about at the beginning as the ones that are really going to realize value for Pharmaxis shareholders if we can produce clinical proof of concept in one or both of those studies. And both of them due to report before the end of the year. So with that, I'll finish up and then I'm happy to address any questions here at this point.

Thank you so much, Gary, for that detailed briefing across all of Pharmaxis' projects. We haven't had any questions come through just yet during the presentation. [Operator Instructions]

Thank you, Sam. Yes, it's been a very productive quarter for the company. And I'm pleased to say that we are also all back in the office now as well, following the reduction in restrictions in New South Wales in Australia. We have kept our laboratories and factory going throughout the process by some very diligent safety precautions that we've taken internally and trying to keep staff healthier and on their way. So that bodes well for the future. And we're looking forward to this next quarter. And I think we're going to see probably 2 quarters of quite good news flow with plenty of stuff going on.

Great. I've got some questions that have come through. [ Colin ] says, "Is there any progress in relation to kidney fibrosis?

Yes. So the -- we had some publication earlier in the year from a renowned nephrologist in Sydney, Professor Carol Pollock, demonstrating that one of our drugs, the LOXL2 inhibitor, PXS-5382, was very effective in a kidney fibrosis setting. And further to that, we've been working with the transplant clinicians, kidney transplant clinicians, in Australia and have developed a protocol. So that potentially could go into a study looking at reducing -- or stopping the ongoing fibrosis in those patients, and thereby saving transplanted organs from sort of long-term rejection that they sometimes have. So that discussion is ongoing. The protocol is still being developed. And we are looking at some grants, which could potentially fund that study going forward. So hopefully, some more news there in the next quarter to come.

Fantastic. I've got another question. "Are you selling any more Bronchitol rights?"

The 2 main territories which were -- had existing sales in them were Russia and Australia. And both of those we have already sold within the last 6 months. So there we have other territories, notably in South America, which where we have approvals, where we still own the rights. But I would expect to characterize those arrangements as more like standard distribution agreements rather than the sale of an existing turnover for upfront payments coming forward.

Another one here, "Could you discuss the sales potential of the products you are pursuing, particularly in the U.S.? Please share some assumptions around patient population and product pricing."

So the cystic fibrosis population in the U.S. is just over 30,000 patients. An increasing number of those are adults. We have an adult label in the U.S. So we're looking at something like 55% of those patients are adults and therefore, part of the market opportunity. And based on the sales that we've achieved in other markets, which you can use as a perhaps a similar style to the U.S., a very focused attention to cystic fibrosis patients who are brought into specialist clinics. We would expect and our partners, Chiesi, forecast long term a sales potential of USD 50 million in the U.S. So that's where we sit at the moment. As I said at the outset, the issue at the moment is that those patients are not being allowed to go into those centers. So it makes it very difficult for the clinicians there to put them on to new drugs. So the launch in the U.S. has been somewhat deferred, but we expect that to improve. The Chiesi report that clinics are beginning to open up. And we're keeping a very close eye on that and talking with them on a regular basis to see about how that -- long term that looks.

Great. Another question's come through saying, "Could you discuss the same for the pipeline products?" Just the same as the last question about the U.S.

Yes. So if we take it from the top, the 5505, if we just look at myelofibrosis as an opportunity, the 2 drugs which are sold that are already approved in myelofibrosis, are selling around about USD 1 billion per year just to the myelofibrosis patient segment. There are other drugs in the pipeline that potentially could come through as well, but certainly, that's the size of the opportunity there. And we believe from the preclinical work we've done and talking to the opinion leaders in this area, that the most likely treatment protocol going forward is where our drug is used in combination with the existing drugs, the JAK inhibitors, but also maybe on its own as well. So the existing study is in patients who are not on JAK inhibitors. The study after this one may well include JAK inhibitors if it follows the normal line of thinking with the FDA in terms of their regulatory approach. So that one, it's a very large market. If the drug proves effective in other kinds of cancers like liver cancer and pancreatic cancer, then I would say the market potential doubles and triples at that point. So we are looking at some very high-value markets with a drug with disease-modifying potential. So it has significant upside if we can show this clinical proof of concept in the first indication by the end of next year and also perhaps maybe looking at the liver cancer indication as well. 6302, the scarring one, it's a slightly more difficult one to assess in terms of potential, only because there are no other drugs pharmacological approaches to treating scarring. And that in itself presents us with some issues. But I have taken the trouble to talk to some of the large pharma companies that are active in the dermatology space. And they tell me that particularly in scarring, like keloid scarring and scarring that occurs after surgery, there is a huge unmet need. So I think we'd be looking at, at least $1 billion or more in that market, probably more. It's quite difficult to put your finger on. I mean initially, you would look at that drug being used in indications, perhaps like keloid scarring. But if it demonstrates the ability to melt away scars, then the option for long-term use in cosmetic scarring is significant and again, vastly expands the market size I just talked about.

Fantastic. I've got one here. "Could Gary outline the funding requirements for PXS-5505?"

So the study cost for MF-101, which is the myelofibrosis study, we've estimated at USD 6 million. And that would be -- the majority of that would be spent by the end of next year. So that's the amount of cash that we require to finish that study.

Perfect. Another one here, "Can you foresee PXS being viewed as a takeover target, after Phase II trial results were released from big pharma?"

Yes, it's always a good question, isn't it? At what point do you become the hunted rather than the hunter? I think we have a wide portfolio with many different assets and opportunities. So whilst I think we might be interesting as a takeover for the holder, I -- my estimation would be that pharma companies would be interested specifically in a drug within Pharmaxis and looking at a large deal for that once we have clinical proof of concept, rather than a takeover of the whole company. But I may be wrong. It depends on the impact that those results have and what the appetite of those companies is at that point. We certainly are exploring, and I continue to update the companies that are active in fibrosis and inflammation with our progress on a monthly basis. I've been very active this week at one of the partnering conferences, which is BIO-Europe, which has a lot of companies going to. And there's been a lot of interest in both 6302 and 5505. And I talked to them not to sell it to them now but to explain to them what we're doing, get their feedback on the clinical trial designs we have, and make sure that what we're doing is actually fitting with what they would attach value to. So that's an important part of the scope of the role that we do.

Brilliant. That's all the questions that we've gotten for now. And we are starting to run a little bit tight on time. So if there are any more questions, please feel free to e-mail them in to Gary, and he can respond via e-mail. A recording of this webcast will also be made available in the coming days. And Gary, on behalf of Pharmaxis shareholders and everyone here today, thank you so much for your time. And we look forward to hearing it from you and Pharmaxis soon. Thank you.

Thank you, Sam. Thanks very much.