Syntara Limited (SNT) Earnings Call Transcript & Summary

Good morning, everyone. So just on 11:00, we'll get going with the briefing just while a couple of people are still joining. My name is Samantha Freidin, I'm from Principal Investor Relations, and I'll be hosting today's Pharmaxis' investor briefing. We're joined today, as always, by Pharmaxis' CEO, Gary Phillips, who will give us a general business update following the release of Pharmaxis' quarterly results. After that, we'll open the floor to questions from both investors and analysts. Throughout the presentation, if you do have any questions, please type them into the Q&A box on the left-hand side of your screen. That's on the bottom of your smart device. We'll read them out after the presentation. There's been lots of news out of Pharmaxis recently with a very productive few months. So I will hand over to Gary to talk us through it all now. Gary, over to you.

Sam and welcome, everybody. I realize today with the issuing of a lot of companies quarterlies is big morning. So I really appreciate those who are joining us this morning to listen to our update. As Sam said, I'll give a short presentation on the things that have happened in the last quarter, bit of a look forward, and then I'm very happy to take any questions after that. So the quarter, just in outlined, it was a big quarter for Pharmaxis. A lot of moving parts, but a lot of progress during those -- the last 3 months of the year. Our cancer drug, 5505, started its recruitment in its Phase II study, which is due to finish recruitment midyear and produce data by the end of the year. We've got a second IND for 5505. When the University of Rochester filed an IND for the use of 5505 as first-line therapy in hepatocellular carcinoma, and that was approved by the FDA in the last quarter. And then I think news even from this morning, 6302, our topical pan-LOX inhibitor, dosed its first patients in a Phase Ic study at the University of Western Australia over in Perth. And finally, to mention in the last quarter that we did a placement and SPP and that raised $9.6 million. So just before I dive into the clinical trials that we're running, just a reflection on, I guess, what we're learning and understanding as we go into these studies. And that is -- our research program into lysyl oxidase is a multiyear program. And it's been leveraged right the way through with an extensive scientific collaborations worldwide. And we've been able to do that because we are leaders in lysyl oxidase chemistry and biology. So when anybody wants to investigate the role of lysyl oxidases in disease and they want compounds to test, they more or less have to come to us. And we've generated a bank of compounds, which has been very useful for research as worldwide them. In terms, we're learning a lot from what they are doing in their studies. And on the left-hand side of this chart here, I've just given the -- just an overview of the fibrotic process because it underpins all the studies that we're doing at the moment. And that is the whilst fibrosis has a lot of instigators, chemicals, mechanical injury metabolism, genetics can all lead to fibrosis. And there are lots of pathways that companies are trying to attack in order to reduce fibrosis. lysyl oxidase is the final stage in fibrosis. It's where the collagen, which is secreted by the fibroblasts in organs and skin is cross-linked, and that cross-linking of the collagen via the enzyme, lysyl oxidase, causes that scar tissue, fibrosis, the increased stiffness in the tissue. And that, in turn, is a feedback loop, which causes the fibroblasts to secrete more collagen and more lysyl oxidase. So it's a vicious circle. And what we do with our pan-LOX inhibitors, and we have 2 of them, 5505 and 6302, 5505 being oral and 6302 being topical is to cut through that loop. And by reducing -- inhibiting the lysyl oxidase, we stop ongoing collagen cross-linking. That leads to a reduction in the stiffness of the tissues and therefore, less collagen being secreted. So it really is a, we think, a very neat and effective and the most direct way of inhibiting fibrosis. 5505 is oral, 1 tablet -- 1 capsule twice a day is patented in 2018. So a very new compound with lots of patent life there. Lots of preclinical evidence in models of fibrosis and cancer and INDs approved in both myelofibrosis and hepatocellular carcinoma, which is a real tick for the drug from the FDA in terms of their review of where we're up to with it and its ongoing development potential. Potentially in lots of multiple cancer indications, which we're beginning to explore. And not least Phase I data in both healthy volunteers and in myelofibrosis patients now that this is a self, a safe and well-tolerated drug that gives more than 90% inhibition of the LOX enzyme. So it's a really good-looking drug at this stage. I'm very eager to see what it can do next. 6302 is a different compound. So it's new IP is patented in 2019. It's a cream and it's given as a one application per day. Lots of strong preclinical evidence in models of skin fibrosis and scarring that this will modify ongoing scarring. And it's obviously got potential there in terms of both preventing scar formation and also modifying existing scars to 2 ways of tackling scar tissue. And again, Phase I data this time just in healthy volunteers, but it shows a drug which is well tolerated, is full inhibition of the lysyl oxidase enzymes in the skin, but with minimal systemic exposure, which is good for its safety profile. So I thought I might dwell just briefly on the scarring indication, given that we announced this morning that the first patients have been dosed in this study. Scarring is a global problem. The numbers are staggering. 100 million patients develop scars in the developed world alone as a result of elective operations and operations after trauma. Many of them develop hypertrophic scars and keloids. These are fibroproliferative disorders that often arise after deep cutaneous injury and where the fibrotic tissue has that scar -- picture in the middle of the screen shows and on the far right as well. These hypertrophic scars and keloids are both a cosmetic problem, but they're also a problem functionally so they can prevent often free mobility of the joint -- or the skin area that's affected. And that 2 things significantly affects patients' quality of life. And the work we've done with the University of Western Australia has helped us understand that actually scars even though they may look stable and they may be many years old. They are, in fact, the tissue in them is being replenished, a significant amount of that being replenished in a matter of just a few months. So when you look at your scar, it's not the same tissue that it was when the scar was formed maybe many years ago. That's being renewed all the time. And if you can stop that renewal process, then you can effectively look at melting the scar away, and that's what we see in the animal models. Current standard of care here is a mixture of corticosteroid cream, which has its own side effect profile, makes the skin very thin. Surgical excision of the scar. So you replace one scar with another one and very often, the problems come back. You can try and burn the scar off by cryotherapy or laser therapy, again, modifying the scar, but again, that often leads to the scar coming back. So there's very little at the moment, which really addresses the ongoing scarring process. And the preclinical evidence with 6302 from UWA has demonstrated both cosmetic and functional improvements in scarring. And as I said, the Phase I study is already showing this is a safe product. The market for this is enormous. So the commercial opportunity here is large, the total scar market is approaching $20 billion worldwide. But if we just look at that keloid and hypertrophic scar segment, then that on it's own is about $3.5 billion worldwide. So a significant market there with a high unmet need and a significant amount of interest in what we are doing because we're almost alone at the moment in trying to modify this process with a pharmacological approach. So just then -- just a summary of the 4 trials. I think if you look around in terms of our peer group and other biotech companies, we are at the top area here with 4 ongoing studies, all of them looking at safety and efficacy of our drugs in markets with really high values behind them. All of these trials due to deliver, I think, near-term value for the shareholders. 5505 in myelofibrosis and hepatocellular carcinoma, the myelofibrosis market is about $1 billion at the moment with existing care. We've got a Phase II open-label study, which is currently recruiting. We're aiming to recruit 24 patients. We should have them recruited by midyear. We're on track at the moment. And we're getting, hopefully, data by the year-end. Obviously, that's the key study for the company. It's the area that we've chosen to prioritize and invest in. We have sites open in Australia and South Korea. We have sites in Taiwan opening up in the very near future and in the U.S. shortly after that. So making good progress with that study and very optimistic about the data we might see by the end of the year. As I mentioned, it is an open-label study with patients with 6 months on drug. The hepatocellular carcinoma is when we made a fair amount of noise about -- in the last quarter when we got the IND through from the FDA. This is a study where the patients will be newly diagnosed patients with unresectable hepatocellular carcinoma or liver cancer. And our drug will be given on top of standard of care straight up. So when the patients come in, they're diagnosed, only about 1/3 of them are eligible for surgery, so the other 2/3 aren't. And those currently go on to a mixture of a PD-L1 inhibitor and an anti-VEGF treatment. The hypothesis here is that adding 5505 in here will break down the fibrosis within the tumor that's there and allow these 2 drugs to do much better in terms of their antitumor effectiveness. The 1c which we are currently finalizing negotiations with Rochester, the University in New York, to start is 18 patients. We're expecting the first patients to be recruited in the next quarter, and we'd expect data in the second half of next year. So this trial on its own opens up a wide number of different potential options for the drug. If it works in hepatocellular carcinoma, then the likelihood of it working in other solid tumors is really high as well. So an important study. And then 6302, two studies here, addressable market, as I said, $3.5 billion for these 2 together. First one, looking at modification of established scars. So the 1c which we started dosing, we announced this morning, that is a 3-month, it's a placebo-controlled study. We're expecting 50 patients. It's currently recruiting, and we should see data before the end of the year. These patients all have to have a scar, which is at least 1 year old, and we're dosing adults with this. Once we've got the established scar study underway, and we've started to see the first effects of the drug from -- with these patients on the drug for a month, we'll have a much clearer idea of the safety profile of the drug, and that will allow us to kick off and start a second study, which is in scar prevention post surgery, and this is in burns patients. So the burns patients will -- once they've come into clinic and they've had their initial treatment, probably a short time after that, maybe a period of 3 weeks when the wounds that they have healed, then our drug will be used, again, placebo-controlled to look and see and whether it can modify the development of scars in those patients. We're expecting the first patient midyear and again, data in the first half of next year. So 4 trials, which we hope will deliver near-term value. I'm talking about value. So our cash on hand at the end of December was $ 21 million, obviously supported by the capital raise that we did in the last quarter. The capital raise, I should say, was very strongly supported by our existing share -- major shareholders; BVF, Karst Peak, and D&A Income. And the $21 million represents more than a year's worth of cash. And we expect that the enterprise value of the company, the market will be sensitive to the ongoing data coming from our clinical studies during this year, and we should see a significant increase in that if we produce positive data. So with that, I'll finish my briefing and I'm happy to go on and take questions from anybody that's listening...

Thank you so much, Gary, for that detailed update across all of Pharmaxis' projects. It's great to see progress across the pipeline. We have had a couple of questions come in just through the presentation already. If anyone has any that they would like to be addressed, just put them into that Q&A box. So the first one I've got here is do you foresee M&A interest in 5505 by the conclusion of the Phase II trials.

Yes, that's a good question, actually. So I -- the -- I guess, the environment here in myelofibrosis, which is the study that will produce the first data is that you have 2 existing companies, major companies with drugs that are JAK inhibitors that are the current standard of care. JAK inhibitors cause an improvement in symptoms of myelofibrosis, but they don't do anything about the underlying disease, and they don't lead to disease modification. From the preclinical data, we can see that our drug is a disease -- a potential disease-modifying agent. So these companies with very large franchises are on the lookout for the next treatment to add into myelofibrosis. So it's very likely that standard of care here in the future will be a combination of drugs, a JAK inhibitor plus something else which addresses the fibrosis, it's ongoing or other mechanisms in myelofibrosis. And they've got a choice. So there are a number of companies which -- Kartos, Geron, which are very well valued at the moment. They've got Phase II data already. Their market caps are probably north of USD 0.5 billion. Now we are joining that club. And the advantage that I can see that we have at the moment, our efficacy is not yet proven, so we have to wait and see the data that comes from that at the end of the year. But what we can already see is that in terms of the drugs that are available to be potentially combinations with the JAK inhibitors, our safety profile looks to be pretty optimal at the moment. The other drugs in the clinic don't have clean safety profile. So you're potentially taking a drug with a less than optimal safety profile and adding it on to a JAK inhibitor, which already has safety problems in themselves. So not to break any secrets, but we are already receiving interest and calls from those companies with JAK inhibitors to explore what we might do in the future. And the company is keeping its cards very much open at the moment. We don't need to make any decisions right now. But clearly, we will have increasing interest in us as a company and 5505 in particular, when we start to see data from this study in the second half of the year.

Brilliant. Next question here is data in established scars in Q4. Will this be all 50 subjects?

Yes. I think the advantage of the established -- so I should caveat with this, right? So this is a study which is an independent study being run by Fiona Woods -- Professor, Fiona Wood Group over in Perth. It's not a Pharmaxis controlled study. It's their study. We are providing funding for them. So we don't have direct control over the investigator. Obviously, we are really pleased, we have a great relationship with the people in Perth, Fiona and Mark Fear in particular, who are running the study. The advantage that I understand we have with established scars is that the clinic in Perth already has a list of all the people in WA that have problematic scars. So in terms of recruitment, one might expect that to be a faster recruitment than, say, patients with burns. Patients with burns, we have to wait until somebody has a burn injury and they present to clinic, and then they're eligible for the study, whereas the screening process of looking at patients with established scars should be a lot quicker. So we are expecting to see a relatively quick recruitment on that and hopefully data by the end of the year.

Fantastic. There's another -- 2 questions here, I'll combine. One was, can we get some comments on the progress of Bronchitol sales and someone else also asked why were sales in the EU down and will they bounce back?

Yes. So very much a mixed bag. Obviously, the biggest issue that we faced with Bronchitol is a delayed launch in the U.S. We felt that we were out of the woods at the end of last year with COVID in the U.S. beginning to get under control and life getting back to normal. And then the Omicron variant has pushed that back further. And it's at this point, difficult to know when the cystic fibrosis clinics in the U.S. will open up again to allow our partner, Chiesi, to both go in and educate people about the drug and also patients to come in so they can be prescribed the drug. So I think if you look at this from a high level, the biggest issue here is the U.S. launch. We're still forecasting that the Mannitol business will break even this year, but clearly, it won't be as profitable as we expected because we're not seeing sales from the U.S. market. In Europe -- we see different stories between different countries. So overall, Bronchitol, I think, is still suffering a bit with COVID. Clearly, one of our biggest markets was in the U.K., and they probably have been leading in terms of COVID numbers in the last quarter. So it's, again, been difficult. One of the interesting things we're seeing actually is that patients with -- because of the amount of COVID what we're seeing is cystic fibrosis patients are protecting themselves even more than usual, so they're staying home, staying indoors. So they're not getting sick. And because they're not getting sick, they're taking less of their drugs. So their compliance to existing medication goes down. And obviously, you're not seeing new patients go on. So I think we can expect to see a fairly weak outlook for Bronchitol sales for the next 6 months and then hopefully, the level of vaccination everywhere and then the people getting back to normal means that we will start to see a bounce back. It will bounce back. I mean there's no question about them. The patients are still there, the need is still there. The markets haven't changed. And the U.S. will eventually launch and I'm sure it will be a success, but we have to be patient. And I mean this is one of the reasons why we went for a capital raise at the last quarter because we can't rely on the profitability of Bronchitol until we see an end to the COVID pandemic.

Of course. Another question here says, do you have any sense of the synergy and safety that PXS-5505 offers once you combine it with a JAK inhibitor. Do you see PXS-5505 as ever being used first in line with JAK-naive patients.

It's a good question. I think that what we see in terms of can we anticipate what the tolerability would be if it was combined with the JAK inhibitor. I think we can, from a mechanistic point of view. So JAK inhibitors and lysyl oxidase inhibitors work on very different pathways. We've got extensive drug panels that we look at when we're developing drugs and particularly before they go into Phase II, a lot of that data is presented to the FDA as well before they give approval. And we don't see any drug-drug interactions, which cause us any cause for concern. And we've now had patients on drug for several months. We don't see any existing -- any real tolerability issues that causes any cause for concern. So I think everybody at the moment is looking at the lysyl oxidase and thinking that that's not likely to add to the side effect burden that these patients have. Will they ever be used first line in JAK naive? I think from a mechanistic point of view as well, I think a JAK inhibitor plus a lysyl oxidase makes more sense than either drug on its own. So I expect it to be used first line, but I expect that to be a first-line combination therapy as opposed to first-line monotherapy.

Yes. Great. Another one here, do you expect Fiona Wood to draw some mainstream media coverage around PXS, given her public profile?

That's a question for Fiona. But -- yes, I'd be surprised if we don't get some attention from mainstream media because of the work that we're doing with Fiona Wood. We very much appreciate the scientific collaboration with Fiona. And -- but I think her profile does mean that the -- has benefits to us in terms of the clinical recruitment as well and getting support for the trial that we want to do. So yes, we'll wait and see.

Great. One more here. Do you see potential for this drug to be used in the treatment of lung tissue scarring and or fibrosis resulting from conditions such as pulmonary sarcoidosis.

Yes. So I think we have a view at Pharmaxis that fibrosis in some of the soft tissue organs like the lung, the liver, the kidney. We'll need chronic treatment ongoing for a long period of time, whereas the treatment of cancers often needs a very -- a much more effective drug acutely and your immediate concern is saving the patient extending life. The lysyl oxidase 2 and 3, we believe, are good targets for fibrosis in those soft issues in the lung, liver and the kidney and the heart. So we would prefer to go that route, and we're actually exploring that with one of our compounds at the moment in kidney fibrosis, where we've got active collaborations ongoing with a number of universities and grant bodies, and also in IPF as well pulmonary fibrosis. So in fibrosis sarcoidosis of the lung, potentially, there's an opportunity there. But again, we need to be careful how many different indications we try with 5505. And I think the ones which are -- give the -- perhaps where the medical need is greatest, we see the most commercial opportunity, if you put those 2 things together, then myelofibrosis and the solid tumors at the moment would be where we probably focus our energies. But that's not to say in the long term, that once 5505 has established itself as a safe and effective antifibrotic that it doesn't get used in some of these other fibrotic conditions. And I know lots of patients suffer greatly with some of these fibrotic conditions. And there is a real lack of effective drugs in this area. And we're -- I think we understand I said at the beginning, we believe we're -- well, I know we're a global leader in lysyl oxidase. And we think it's the final and the most important stage in fibrosis. And yes, we've got great hope for these drugs going forward in a number of indications, and maybe that would be one of them.

Of course, it's really good to hear. So that was all of our questions that have come through. But if anyone else has any other ones, please feel free to e-mail them in. Gary or someone from the Pharmaxis team can respond via e-mail. Just a reminder as well that a recording of this webcast will be made available in the coming days. Gary, on behalf of all Pharmaxis' shareholders and everyone here in attendance today, I'd just like to thank you so much for your time. And of course, we look forward to hearing you again from Pharmaxis soon.

Thank you very much, Sam. Thanks for everybody for listening as well. I appreciate your time this morning.