Syntara Limited (SNT) Earnings Call Transcript & Summary

Good morning, everyone. We're just at 11:00, so I'll get going with the briefing while a few more people are still joining. My name is Samantha Freidin from Principal IR, and I'll be hosting today's Pharmaxis' Quarterly Investor Briefing. Today we're joined by CEO of Pharmaxis, Gary Phillips, who will give a general business update of progress through the quarter. And after that, we'll open the floor to questions from investors and analysts. [Operator Instructions] It's been a very productive quarter for Pharmaxis with plenty going on as usual. So I'll hand over to Gary to talk us through it all. Gary, over to you.

Thanks Sam, and Good morning everybody. Nice to be with you again. Just going to share my slides a moment so you can -- okay. So this is the review for the first quarter this year. And so I guess there are -- there when I was thinking about what I should share with you this morning [indiscernible] ongoing that I think are core to the value proposition of the company and also reflect a little bit on what we heard from the clinicians and scientists that presented the R&D showcase webinars that we held earlier in the quarter. So just starting with myelofibrosis study, this I think is -- this is where the company is investing the bulk of its cash at the moment. We see it as the biggest value driver for the stock, and we've continued to make good progress here. So with the -- this if you remember is a study that's got to recruit 24 patients. It's open label. And I'm pleased to say that the number of open sites that are now recruiting increased to 60 in the quarter. We brought on an extra 5 sites in Taiwan, and that's deliberate. We've got sites open now in Australia, Korea, and Taiwan, and that was a direct reaction to the impact that COVID is having worldwide on hospitals' ability to recruit. The sites in the US have been particularly slow in getting through, they've suffered with staff shortages, backlogs, and ours is a small study in an orphan population so sometimes we get bumped to the end of the queue. So -- but we still expect the 4 US sites to come on stream, yes, later this month actually, but certainly by the end of the quarter. And I -- as it's open label, we can see some of the responses of the patients as they come through. And we're already can see that what we've got is a very good tolerability profile that -- we saw that in the phase 1c study where we had patients on drug for a month. We've now had patients on drug for 3 months, and we can see that the tolerability profile, which is so important and pivotal to the value of the drug, it's one of its unique propositions, has been maintained. So that's been really pleasing to see. The other study in established scar patients that's going on in Perth with Professor Fiona Wood. So we've completed the first month's treatment on active of the first cohort of patients. So this was 8 patients that we were looking to recruit to see how they responded in the first one month from a safety perspective. And then once we were sure that we were seeing both a drug that was well tolerated, but also that we were seeing good inhibition of the LOX enzymes in the skin, from the skin punctures that we were taking, that would give us the confidence to then to go on and recruit the second cohort, which is placebo controlled. So that recruitment is now commencing and in [ parallel ], again because of those -- the response that we've seen in the first few patients going into the established scar study -- the protocol for the second study, which is looking at prevention of scars in patients with burn injuries is now being developed, so that's actively going on in Perth with Fiona Wood and her team. So that's where we are with those 2 studies. And then, as I said, just a reflection on the webinars we held earlier in the quarter. And we heard from Gabby Hobbs, who's Harvard Medical School and Massachusetts Gen, Mass Gen, really significant cancer center over in the US. And I think it was really interesting, I was reflecting on what she said, and I looked back at her presentation. I think what she really placed value was, she could see that there was disease-modifying potential with the drug, but really importantly that the tolerability profile of the drug means it can be used in many of these patients who currently, they're struggling to use existing drugs because of the poor tolerability profile. So if you're looking for combination therapy on top of a JAK inhibitor, or as monotherapy, then having a drug, which is really well tolerated is really core to them. Many of the drugs that are in the development pipeline and also in the clinic, in being used in the hospitals at the moment, make the blood counts, which is a fundamental problem with the disease, get worse rather than better. So as she said, she expressed her almost indignation that the existing therapies made what was a core element of the disease worth rather than better. So how can that be? So that was really interesting to hear her perspective on it. We also heard from the group in Rochester about the upcoming study that they're going to be doing in liver cancer. And again, tolerability came through as a really interesting thing, so they're looking to add efficacy onto the current standard of care. And having a drug which doesn't have a poor tolerability profile is really important to them because if it did, then they couldn't add anything else on because the drugs they're using at the moment, they don't work well enough. And also, they do have side effects. A lot of drugs in -- we're using for cancer, they're cytotoxic, they kill cells, and they come with their own set of problems as well as the potential solutions that they bring. And then we heard from Mark Fear and Fiona Wood over in Perth on 6302 and the pre-clinical work they've done in scarring. And I think when I look back at that, I think what I heard was a high degree of confidence. They really think from the work that they've already done, the pre-clinical data and looking at the mechanism and their knowledge of what the [ lysyl oxidase ] enzymes do, their role in scarring, there was a high degree of confidence that they will see an impact on scarring in the skin, and that these studies that they're currently running will really help them and us understand the way the drug works in perhaps different skin types. If you only even talked about differences between males and females, obviously those different racial types as well in terms of skin and different scars as well, whether they're scars that have been caused and you're trying to prevent the scar emerging, or whether you're trying to treat an established scar. So I heard a high degree of confidence that these studies that are ongoing will really help them understand how -- where the drug fits into clinical practice. And the last, I think, thing just to point out from the quarter is that the Mannitol respiratory business, our sales of Aridol for asthma diagnosis and Bronchitol for cystic fibrosis, that business was break even up until the end of March. And it's just a note that COVID-19 continues to impact the sales of both. We had hoped that our situation in terms of the profitability of that business would be better at this point of the year, but we still haven't seen much in the way of sales coming from the US, in particular for Bronchitol because of the impact that COVID has had on cystic fibrosis patients in particular, and the fact that the centers where they treat them are really not receiving patients and been not receiving commercial people either, so Chiesi, our partner in the US, has been unable to launch the product as yet. But our last discussions with them were quite positive. They're still very much committed to the launch of the drug, and they're starting to see those centers beginning to open up again, so we're expecting to see our situation to improve certainly the second half of this year. Just before I kind of wrap up, I showed this slide before on the mechanism of [ lysyl oxidase ] chemistry and biology. But we had a question before the -- today's session from one shareholder who was asking about 6302 and how it penetrated into the skin and whether you could treat scars in the deeper tissues. So I just wanted to remind you that [ lysyl oxidase ] is involved as an enzyme in -- it actually oxygenates the collagen and causes this cross-linking between the collagen fibers, and that is the final stage in the process of scarring of fibrosis in both the skin, but also in organs -- like the bone marrow or the liver or the lungs. So if you can inhibit that, then you stop this cross-linking. Now both of our molecules, 6302 and 5505, are very small molecules. They have a very well-balanced hydrophilic, lipophilic character. So in terms of their solubility both in oily solutions and water--based solutions, it's -- they're both very well--balanced drugs. And that's deliberate, that's part of our drug development process where we screen a lot of compounds before we choose ones to go into the clinic. And we're trying to pick compounds that fit a certain profile that give them good properties like this. Now because of that, the drug, really both drugs, easily penetrate skin tissues, and we've confirmed that with all of our InVivo work we did before we went into human subjects, and 6302 is a good example. It does penetrate through the outer layer of skin, the epidermis, and then reaches the deeper layers of skin called the dermis where scarring occurs. So penetration into that is not a problem. We've confirmed in the studies we've done in healthy volunteers, and now in patients, in the first 8 patients that have gone through in the established scar study, and we can show inhibition of those [ lysyl oxidase ] enzymes in that. 6302 does not go through and then become -- is significantly absorbed into the systemic circulation because we're giving it in quite small amounts onto the skin. It works in the skin, but then gets metabolized very fast. So you don't see good -- any -- almost any levels of inhibition of [ lysyl oxidase ] enzymes systemically. Whereas 5505 given orally, we see good inhibition of the [ lysyl oxidases ] throughout the body and very good tissue penetration. So just ending on that, to wrap up on the studies, just a reminder. So the myelofibrosis study, that market is a billion-dollar market where we're looking to recruit 24 patients -- is recruiting. We expect to get meaningful data by the end of this year. The [ hepatocellular ] carcinoma study is due to be recruiting first patients around the middle of the year. And the scarring study, the established scar study, is underway already, and the burns, scar prevention post-surgery and burns patients, we expect to see first patients again around the middle of the year. So these studies all in markets which are very valuable, where there's a high unmet need and data coming from 2 of them by the end of the year. So we finished the quarter with $15 million in cash. We saw a bit of an uptick in the share price from the -- during the quarter. I think we bucked the trend in biotech overall, and I just note that Morgan's started coverage on us in the last month. I think they came in around $0.58 a share, and we also have coverage from Taylor Collison and MST Access as well. So with that, I'll hand it back to you Sam, and see if there are any questions for us.

Great. Thank you, Gary. It's great to see so much progress across the pipeline. We just had a couple of questions submitted during the presentation already. [Operator Instructions] So first question I've got here from Dennis is regarding the myelofibrosis expansion cohort and meaningful data by the end of 2022. What data should we be expecting? And would it be 6 months follow-up on all subjects, or something a little bit different?

Sorry, what was the last part of that question?

Would it be a 6-month follow-up on all subjects or something a little bit different?

No, I -- we said that's -- we've -- this is a study where the patients are going to be on drug for 6 months. We've got -- we will have -- we're looking for 24 patients, and by the end of the quarter we'll have 20 sites opened. This is a rare disease, and these patients are also the sicker end of the patient groups. So we're looking for patients who have basically failed on the standard of care being the JAK inhibitor. So we're looking for rare patients in a rare disease. But nevertheless, we don't -- because of the mechanism action, we expect to see results from the drug at the 6-month period. So we're very encouraged by the safety thing that we're seeing at the 3-month end, but we need to wait and see a significant number of patients with 6-month data. So by the year -- end of the year, we will have a -- we may not have data from all 24 patients, but we should have a significant number of patients that have completed 6 months where we will have data both on the safety of the drug and on the efficacy of the drug. So that's what -- when I say we're expecting meaningful by the end of the year, that means a significant number of patients with 6-month data.

Yes. Brilliant. Next question here, is there any international interest in the scarring drug or is it just domestic?

No, it's very much international. So, we've talked to clinicians in the US. We've actually talked to the US military on and off as well; they have a strong interest in scarring. And I've also talked to the key large dermatology companies, so that would include companies like AbbVie, Galderma, LEO, Almirall; they all have franchises in dermatology products. They're all looking for pharmacological treatments for scarring. So at the moment, the majority of treatments for scarring are done through either devices, so laser therapy, or treatments, such as silicone sheeting and pressure bandages. So very much on that end of it. And obviously the drug companies that have got steroids and things like this, which are used in scarring, but as Fiona explained on the webinar earlier in the last month, not very effective. To have a pharmacological treatment that really addresses the key mechanism within a scar and can both change the appearance of an existing scar and stop the -- or stop the formation of scars after a surgical procedure would be a real breakthrough. There hasn't been anything new here for many years. And the last treatment, I think, was from a company that had a TGF beta inhibitor drug, which was given by subcutaneous injection and that was back in about 2013. It's a company called Renova. They sold that asset to Shire at the time for about $600 million based on some phase 2a data. Shire went on and the drug failed as it went forward in the clinic. But I think even that just showed the value that can be ascribed to something which can address scarring. And that was, there really hasn't been much since then that's really been effective. So we feel that we've got a really competitive program. As Fiona talked about, this is quite an exploratory study we're doing at the moment to understand more about which patients the drug is most effective in, what kind of scars, what kind of skin type. But any data that shows efficacy in this will be hungrily mopped up, I think, by the international community. So yes, very much an international global program that we have.

So exciting. Are there any R&D grants pending and how much would they be worth? [ That's our next ] question.

We do have one significant grant pending for one product in our pipeline where we've reached a quite an advanced stage in that. I would expect to have more information on that in the next quarter. But it is clearly -- Pharmaxis is a company that's quite unusual in the biotech sphere in that we do have a pipeline. We are an established company with a factory. We produce -- we have products on the market producing a revenue, and we have a drug discovery team that have -- that are generating new opportunities, new drugs that take advantage of the R&D tax credit. It is a very efficient way of doing it. And we've built a -- drugs which are either ready to go into phase one or already completed phase one that are ready. Now that gives us the ability to then look for non-diluted funding. So we're not aiming to support the whole pipeline via the financial markets. We are looking for non-diluted ways of doing that, and I think because the quality of the work we've done, and the quality of the scientific practices, we stand a good -- we're in a good position to leverage some of that. So yes, that will be a continuing ongoing focus of the company. We do put quite a bit of effort into grant applications. We had a lot of success in the last round of the NHMRC. The group in Perth had, I think, over $600,000, and Tom Cox at the Garvan with his work on pancreatic cancer also over $500,000 for programs that are specifically about our compounds in the scientific models that they're running. So yes, that all benefits shareholders. I mean that's $1 million of, more than $1 million of funding that's come from the government through NHMRC for programs that are associated with us. And we've got some big applications in at the moment, which is -- I hope we'll be able to report more on next quarter.

Yes, fantastic. We've also got our CFO online as well that can probably comment on that as well.

Thanks Sam. Just one other point that's not quite a grant, but we are eligible for the R&D tax credit, which is about 43% of eligible expenditure, and we book that at the end of the year when we've done the calculation. But if you look at what we spend on new drug development, and [ spending at the ] 9-month mark, then most of that expenditure, subject to the usual kind of tax ins and outs, but most of that should qualify for a 43% cash injection that we see in the second half of this calendar year after you've filed our [ tax returns ]. So additional sales [ are funding ] not quite a grant but very relevant.

It, yes -- Thanks. Thanks, David. Yes.

Thanks.

Just onto the Mannitol business, I've got a question here. Can you give some color on Bronchitol in Russia and the US for the rest of the year?

Yes. Well to start with, they're both somewhat in the problematic character -- characteristic, aren't they? It's -- the US, I guess, is difficult to read. We felt that we were -- an opening of the clinics at the end of last year, and then the Omicron variant came and wiped that away as an opportunity. I think we are -- we're in ongoing discussion with Chiesi. They've seen an uptick in both sales in the last month and access to market, access to the clinics, and the CF patients coming back to the clinic again. And as the world returns to normal, and CF patients start to emerge from their self-isolation where they've been for 2 years. Conversely, we also see them exposing themselves to the risks in the world and they'll be getting sicker again and the need for the drug increases as well. So I do expect to see, as I said, the sales in the US improving quite dramatically in the second half of the year. But as always, we're one step away from another variant perhaps, or -- what that will throw at us, we don't yet know. Russia is obviously an ongoing situation. We're all trying to understand what's happening there and where it's going. We did sell the rights to Bronchitol in Russia to a Turkish company, Gen, about a year ago. Gen are a company and Turkey as a country still have active links with the Russian government and are able to sort of navigate some of the problems that are occurring there because of the war with Ukraine. We view -- we have considered it and talked about it. We view Bronchitol as an essential medicine for the CF patients in Russia. So it's the only CF medicine which is on the essential drugs list in Russia. None of the more modern recent drugs in cystic fibrosis are reimbursed or are available at all in Russia. Even some of the drugs which are widely available in antibiotics are not available in Russia from their normal suppliers. So I think, conversely, Bronchitol's done very well in Russia, and there's a lot of patients on it, but that's because of the scarcity of other drugs. So we feel that continuing to supply it there is a humanitarian position. We're not investing in any studies, we're not investing in any -- directly in any promotional activities there in Russia or in any way supporting the economy. We're just supplying drugs for the CF patients that are there. So that -- we're going to continue to do that. And we have an ongoing dialogue with both the Gen team in Turkey and in Russia just to monitor the situation on a monthly basis.

Great. Thank you for that. I have a question here from Chris, just regarding the cash run rate given the current cash burn.

Yes. So we still expect that we have enough cash to get to data in the studies that we're running. We've got, as David says, we're expecting an R&D tax credit to come through in quarter 3. I'd also note that we have an option that comes up in the next quarter as well from Aptar. So Aptar are a large device -- global device company. They took an option on Orbital, our large high payload dry powder inhaler in August of last year. And that gave them 12 months to do tests and further market assessment of the inhaler. And if they exercise the option in -- which will happen in quarter 3 -- then the company also receives USD 2.5 million at that point for them taking up the option. So that's -- there's 2 points of further cash that could potentially support the existing balance. But in any case, even without that, we have plenty of cash to take us through to data in these -- with these 2 studies, which is obviously the key thing that would drive value in that time.

Great. I have another question here, just back to myelofibrosis. The patient passes away during the trial from their cancer, would this cause delays with the FDA application process?

Well, I think it's with all cancers you expect, and as I said we are dealing with patients who have already failed the cancer’s current standard of care, so we do anticipate that some patients will get worse even if they're taking our drug during the trial just because of the stage of the disease they're at. But the FDA understand that, and they acknowledge it. It was interesting in the -- we have an IND approval so the investigated new drug status with the FDA. So they look at all of your pre-clinical data, any human data you've got, everything around the manufacturing of the product, the top studies that you've done before they give you a nod to go ahead and do the study. And in doing so, they assess what kind of numbers of patients that you need in order to gather enough data irrespective of the ongoing disease and the fact that some patients, as the question suggests, are actually dying while they're on -- while they're in the trial. In the liver cancer study, they've also assessed the amount of toxicity that the existing standard of care has and sort of put a level in there saying "look, we already expect about 30% of patients to be experiencing these levels of side effects. So what we're looking for is, does the addition of 5505 make that worse? And if so, how much worse?” There's a baseline that's there. So yes, it's something the FDA understands and takes account of when they look at the number of patients that you've got to put in and the length of the study that you're running.

Yes, of course. We're just running a little bit tight on time. [Operator Instructions] The next one I've got here is from Dennis saying, "will long-term use of [indiscernible] 5505 adversely affect formation of normal body fibers?"

That's a really good question. So clearly LOX is an enzyme which is involved in the cross-linking of collagen, as I've said. And that is an important process. If you've used 5505 for years, you may well end up with weakening some of the body's structures, like ligaments for example. That's been part of our [ tops ] program, so we've looked at those -- we've studied 6-month toxicity at very high doses, many more, multiple times more than the ones being used in the clinic. And we haven't seen any of those changes within [indiscernible] in quite a short period of time so we don't expect that any longer-term effects would be relevant at all. And in any case, the need is to stop patients dying, so the risk-benefit balance is weighted in favor of, do you do anything? Can you help these patients? That is worth almost any risk to do it. And that is why patients take these very toxic drugs in order to help themselves. But beyond that, we've also looked at models of tissue strength, [indiscernible] and of the drug, particularly in animal models where you're using mature animals. So we think that the turnover lies a lot today, and the turnover of collagen is really only quick in humans and in animals when they're developing. So once they reach maturity, that's no longer an issue. So we're confident, and the FDA have accepted our position, that this is a safe drug to be used particularly in adults working [indiscernible]. And in the skin, we don't see systemic absorption of the drugs so therefore that -- it doesn't affect other structures in the body, but so yes, we're very happy that we've got a really good profile. But it's a very good and insightful question. But yes, we've thought of that, we've looked at it, the FDA have also thought of it and looked at it. We don't believe that will be an issue for us.

Great. Our next one here, is how many patients have been recruited in the myelofibrosis dose expansion cohort thus far?

So we've been -- we think that we’re by the end of this month we'll be at 40% recruitment. And as I said, we've got -- we'll have also 20 centers open by the end of the month as well. So that's where we are at the moment.

Fantastic. We did have another question from Paul just about the Russia/Ukraine situation, but that's already been covered by yourself. We don't have any more questions that have come through. So if anyone has any they think of afterwards, just send them through via e-mail and Gary can respond there. Just a reminder a recording of this webcast will also be made available in the coming days. So I'll wrap up there Gary. On behalf of Pharmaxis' shareholders and everyone in attendance today, I'd just like to thank you so much for your time and we look forward to hearing from you again soon.

Thanks Sam. Nice talking to you.

The webinar has ended. Thank you for joining. Good-bye.