Syntara Limited (SNT) Earnings Call Transcript & Summary

Good morning, everyone. We have just hit 11 a.m., so we're going to get started with today's investor briefing. There's still a few more people logging on. But my name is Alfred and I'm part of the Pharmaxis Investor Relations team. I'll be hosting today's webcast briefing. We're joined today by Pharmaxis CEO, Gary Phillips, who's going to provide a brief presentation on the June quarter results, and then we'll open the floor to questions from attendees. [Operator Instructions] As many of you are aware, it's been a very busy quarter for Pharmaxis with clinical trial programs running all over the world. So Gary, I won't take up any more time, and I will hand over to you.

Thanks, Alfred, and good morning, everybody, from where you are. Yes, as Alfred said, it's been a busy quarter and a busy year for the team here at Pharmaxis. So I'm just going to go over a little bit of the highlights of what we've been doing in the last quarter and just looking ahead to the next quarter. So as many of you know, the 2 things which we're really pushing and pursuing here are these 2 clinical trials ongoing. The first 1 is in a cancer drug, PXS-5505, that's a study in myelofibrosis. It's a Phase IIa study. We've been recruiting that. And we're still on track for meaningful data by the end of the calendar year '22, but the recruitment has been challenging. I think all companies in the space that we are, which is looking at recruiting patients into orphan drug studies where you're looking for rare patients have really been struggling to find patients. And that's largely particularly in the U.S. So we've seen significant delays there in opening up the sites we had in the U.S. And we've got 2 U.S. sites that opened only in the last month. We've got an additional U.S. site to come on stream in August and 2 more to follow. But that's really been an issue for us up until this point. But we have made significant progress there in the last quarter. We finally cracked the U.S. in terms of sites. We've got 11 out of 24 patients recruited and the total number of sites now recruiting is 18. I think the things we can say so far about the study as well is that we've -- the good tolerability profile that we saw in the Phase Ic that's been maintained. So that's good news coming out of that study given that this drug is going to be used in patients who are on standard of care, which causes already a lot of tolerability issues and a lot of drugs in the pipeline -- development pipeline also caused tolerability. So the fact that we are clean really distinguishes it at this point. Now the other study that we're going to talk about a bit is the SCAR study, going on over in Perth with Professor Fiona Wood and the recruitment of placebo-controlled cohort there has commenced, and we've seen some social media and mainstream TV awareness, which I'll touch on briefly as well as we get towards the end of this short presentation. And the other thing I wanted to mention in this update is the Mannitol respiratory business. And we continue with our strategy there of trying to reduce costs and deliver non-dilutive cash back into the business. You can still see that washing through into our accounts, even in this last quarter with reductions in employee and marketing sales costs that we can see that come from actions that we took during the last 12 months and there's still some more to come here. The other thing here is that we've mentioned before, COVID has impacted Bronchitol and Aridol sales. I mean both of these drugs are in the respiratory sector. We've seen a lot less patients presenting at hospitals for respiratory tests, which were [indiscernible] comes in and cystic fibrosis patients as well have been largely kept at home during the whole COVID pandemic. Now that's also had a knock-on impact in the U.S., where we had an approval for the drug in the U.S. And then our partner, Chiesi launched but have been unable to really physically launch the product because of the impact of COVID-19 on the hospitals there and the fact that no cystic fibrosis patients were presenting themselves into clinic. Now they've quite recently given us information where they've downgraded the long-term U.S. forecast as well based on what they're seeing. And that's largely due to these post-COVID clinic procedures. So CF patients used to go into clinic 4 times a year. They believe at this point in time, that's likely to be reduced to only 2 times a year, which reduces the number of opportunities to prescribe the product, which slows the ramp. And also as they're seeing the impact of some of the new therapies in cystic fibrosis reducing the need for drugs overall in that area. And it's -- I have to say, it's very difficult to predict at this point where this will end up. At the moment, they've given us a long-term downgrade in the forecast, which leads to us reducing our long-term forecast in terms of EBITDA that we can get from this business. It's still very much positive, but it's reduced from where it was. But as I say, this is Chiesi's opinion. They're our marketing partner, and we have pass that through in the information that we've given in the quarterly report, where you can see more detail. And last thing for the quarter really is we've also appointed a new Chief Medical Officer. Dr. Jana Baskar joined us in June, and we very much welcome him. And Jana had has recently come to us from IQVIA, where he spent all of his last 4 years running clinical studies, early-stage and later-stage products. But then the 4 years before that, he spent as the Medical Director for Novartis Oncology here in Australia and the oversight of some 70 different studies in oncology. So he comes with a lot of relevant experience. And with that, I also just wanted to mention at this point the passing out of Dr. Brett Charlton. Brett's been with the company since the beginning. He was the founding scientist, and he's given more than 20 years' service to the company. So I just wanted to recognize that today in the service that he's given to the company, and he's going on to retire in the next 6 months. So just a brief reminder that both of our drugs that are in the clinical studies, and this is where the real value is coming from in the future of Pharmaxis. There are both drugs that target the inhibition of lysyl oxidase. Lysyl oxidase is an enzyme, which is involved in the cross-linking of collagen. On the chart on the left-hand side of the screen now, you can see is the -- is where you can see the impact. So this enzyme causes the fibroblast are secreting collagen fibers into areas that are affected by wound mechanical injuries, metabolism, genetics, whatever causes it the enzyme cross links those collagen and causes the stiffness in the tissue, which has a feedback loop, which further increases the secretion of collagen. And that overall builds up scar tissue, and that has an impact on a number of diseases. Now 5505, as I've mentioned, we're going after cancer mainly, myelofibrosis and hepatocellular carcinoma are the 2 1st indications for that drug, but it has potential in others. 6302 is our topical form of that drug. It's a different chemical compound, different patent and that 1 is being used in skin scarring. In terms of where those studies are at, as I mentioned at the outset, the myelofibrosis study, it's Phase II. It's open label. It's a 6-month study. We're doing it in patients who are intolerant of JAK inhibitors. The JAK inhibitors are the standard of care for these patients. Their drugs which reduce relieve the symptoms of myelofibrosis, but do very little for the underlying disease and particularly the fibrosis in the bone marrow. It's very likely that the next step for 5505 will be a combination treatment with the JAK inhibitor in the future, but the FDA mandated route for this is to, first of all, look at this drug as a monotherapy and that means these patients have to have already failed. They have to be intolerant or ineligible to be on a JAK inhibitor. That often means these patients are extremely sick, we've seen the patients coming into the study. They're very heterogeneous group. Some of them have large spleens, some of them are small spleens. Some of them have low blood counts, some of them have higher platelet counts, some of them have just had transfusions. So I'm a real mixed bag of patients coming in, but they're all really quite sick. Patients who come off a JAK inhibitor only have about 12 to 18 months to live. So that gives you some idea of the kind of patients that we're recruiting into the study. We're expecting interim data in the second half of this year and then full data in the first half of next year. The hepatocellular carcinoma study. This is a Phase Ic in patients who have newly diagnosed hepatocellular carcinoma or liver cancer and it's going to be used on top of standard of care, which is, in this case, a PD-1 inhibitor and an anti-VEGF drug. This is really state-of-the-art in hepatocellular carcinoma at the moment. This study is being run by the study group in Rochester in New York. It's an investigator-led study, looking to recruit 18 patients. And I'm pleased to say that the agreement that we have with Rochester was finally signed in the last quarter. The same issues that we've had with recruitment and myelofibrosis and getting U.S. centers through the administrative process of getting studies started off, impacted the start of the study as well in terms of the slowness in getting the contract done. But that's now done and we're expecting the first patient in this quarter now -- data in the first half of '24. And then 6302, so there's 2 proposed studies there, 1 of them is ongoing, which is the modification of established scar. So if you think of a scarring process in the skin, there's really 2 ways of addressing it. One is to look at whether we have a drug which can alleviate and reduce an existing scar. So can you reverse a scar, which is already there on the skin. And the other way, modality of using a drug in this area is to stop a scar forming after an injury. So the first of those modalities are really changing existing scar. In this case, we're looking at patients who've had a scar for more than 1 year. That study is recruiting already. We've already had the first 8 patients go through this on active drug and to check that we were seeing the same kind of inhibition of the enzyme in the skin biopsies that we were taking and that looks really good. And that we're now expanding that into the stage where we're recruiting both patients on to an active arm and a placebo arm. So by the end of the year, we're hoping to report results here in a placebo-controlled trial of this drug in skin scarring. And I just -- this was a subject of some social media and some TV stories in the last quarter. So I thought it might be useful just at this point to show the story that appeared on Channel 9 earlier. [Presentation]

Now the other trial here that we're working on with Professor Wood is in scar prevention post-surgery. And there's a number of different ways. I think we've flagged before that she's particularly interested in looking at this in patients who've had a burn injury and she's developing a protocol at the moment, looking to get first patient in before the end of the year. But we have an open discussion with Professor Wood on what is the best patient group that we might look at here and there a number of different surgeries that lead to scarring that we could look at here. So -- and that's done in combination with I guess, my discussions with pharma companies, which will -- we'll go on a bit later during the Q&A. So those are the 4 trials ongoing. I think 2 of them, clearly, the myelofibrosis in the established scar studies are the ones that we're expecting some data from by the end of the year. And that's really where the value lies in the stock at the moment for the future. So we ended the quarter with a pro forma cash. So we're expecting an R&D tax credit of $4.9 million later in the year. So that puts our pro forma cash at the end of June as at $14 million. And yes, that's where we're line. So with that, Alfred, I'll just finish there, and I'm happy to take any questions that come up.

Excellent. Thank you very much, Gary. I hope everyone was able to see and hear that video fine. We have had quite a few questions coming already. No surprises quite a few about at -- about your scarring drug. [Operator Instructions] Gary, the first 1 comes from Joseph, if Fiona Woods trial is successful as planned, is it Pharmaxis' intention to maintain full ownership of the product through its commercialization?

Yes, that's a really good question. And it's a topic of -- that I've discussed. I was at Bio in San Diego, which is the world's largest partnering conference that takes place once a year in the U.S., I think there's 13,000 people were there and hundreds of different companies. And I talk to probably all of the major dermatology companies that are active in doing clinical development of drugs. I think it's -- I've looked very carefully at the history of drugs in this space and in scaring. There's very little in the clinical pipeline. That tells you 2 things. I think 1 is that developing drugs for scars isn't easy. So that's 1 thing to note. On the other hand, there's a lot of big companies there that are very, very hungry for assets that actually work. So I think the Board and the management team at Pharmaxis are very cognizant of those challenges going ahead. I think we'll look very carefully to see what the level of evidence is for the efficacy of the drug when we get to the end of the year. And then we'll be discussing it with some of those potential partners to see whether it makes sense for us to hold and go further with the drug or whether to do that in collaboration with somebody who's got a clinical experience in developing drugs in this space. As I said, I don't think that the development here is necessarily straightforward. Some of the challenges, for example, are everybody's skin is different. Everybody's individual scar is different. You need to control the kind of scar that you have in order to get efficacy you want. And then there's the endpoints that the FDA might ask us to prove as well. So a lot of the endpoints in scarring are more subjective. They're driven by patient and clinician questionnaires on what they see about the study, and we're working very hard with Professor Wood to try and find and identify objective measures of scarring that can be used with the FDA. But it's quite honestly, it's quite interesting that we are still -- we're actually pioneering this area at this point of the company's life cycle and the drug.

Thanks, Gary. Another question here. Big Pharma has been acquiring a lot of small drug developers over the past 2 years. Have you had discussions with them? And if not, when might they start looking at Pharmaxis more seriously, do you think?

Yes. We are world leaders in lysyl oxidase chemistry and the inhibition of lysyl oxidase. So there are a number of companies interested in going down this field, but we are, at the moment, global leaders and the most advance in the clinic. That does, by definition, bring us under the purview of big companies globally who are interested in the approach. Fibrosis, it remains an overall disease driver, which is interesting and drives really high valuations. We are being watched by a number of companies. And in particular, they're looking to see the clinical data that would come out at the end of the year. So yes, there's certainly interest in what we're doing and a high degree of interest in the target that we've gone after. And I think there's both scientific and clinical and commercial interest in what these drugs might be able to do if we do see clinical proof of concept at the end of the year.

Thanks, Gary. Another follow-up question. But from Hashan, what level of data is required by Big Pharma to license either of your candidates?

I think data from the studies that are currently ongoing. I believe that talking to companies that are interested in myelofibrosis. They have really 2 things in mind. One is do we have a drug that's well tolerated? People routinely, I mean, the companies and clinicians routinely refer to the drugs being used in myelofibrosis as poisons. They're really [indiscernible] certain cells within the body to reduce the symptoms of what we're seeing with these patients. We hold a pretty unique position with a well-tolerated drug, we believe. So data coming out of the existing study, proving that we're well tolerated will be, I think, is very well received by the companies they're watching us. And then I guess they're also looking for something that will combine well with an existing treatment as well. So combinations with the JAK inhibitors is something which they are obviously looking for. Whether we will need to prove that it works well with a JAK inhibitor or whether the data from the existing study will be enough? I think, remains to be seen. But my guess is that the existing study and the data from that will be enough to drive a company to jump if we were in the market and wanted to sell the asset at that point. I think the -- on the scarring side of things, it -- there is nothing that works in scarring almost from a pharmacological point of view. So I think even though the data coming from these studies will be more subjective than really objective end points something we are discussing with Fiona Wood and our team and seeing what we can do with the second study to make it more -- putting more objective end points. I think that may well be enough. In an ideal world, we'd be delivering endpoints that the FDA would already classify as being enough to get an approval but that may well be for the next study. And in the meantime, I think showing that the drug works and having patients who've responded well, will be -- put the drug in quite a unique position in terms of its partnerability.

Gary, question from Dennis that I think you touched on during the presentation, just get you to reiterate. When do you expect the data on all 24 subjects to be available in reference to the myelofibrosis trials?

Yes, it will be first half next year. I mean, we have targeted to get full recruitment by the middle of the year, so about now. And clearly, we haven't been able to do that. And that's largely been moved because of the U.S. sites. They -- just to give you an idea, I think they've taken something more than 12 months to get from initial contact through to a contract with them that's approvable. And that is not because of a lack of interest from the clinicians. It's getting the administrative groups within these hospitals to prioritize the study, which in the end, each of these centers will only recruit 1 or 2 patients for. So they prioritize studies where they're getting a lot of patients and therefore a lot more income. So that's been a real problem. And we focused on the larger centers in the U.S. but we're starting to expand that to look at smaller centers as well around the U.S. to see if we can add that and get more centers in.

Thanks, Gary. Another question for Dennis. Bronchitol EBITDA positive in FY '23, would that require an additional $3.7 million to $4 million of revenue will most of this additional revenue come from the U.S.?

Can I jump in there? It's David -- David McGarvey, the CFO. Hi, Dennis. Your math is right in terms of we're needing something like $3 million to $4 million in extra revenue to do that. We would see that coming both from the U.S. and Russia. So the U.S. is a large opportunity, but Russia is also a large opportunity and about half-half between the 2 of them.

Thanks, David.

Question from Adam. How many patients do you expect to recruit in the myelofibrosis trial this current quarter?

Well, we do have some site of the pipeline coming through because we see patients that are due for screening whatever. So with the sites -- those 2 big sites, I mean, 1 of the sites that come on stream in the U.S. is MD Anderson, which is the world's largest cancer site. So we probably, I guess, expect to see around about 6 patients come through in the next quarter.

Excellent. Thanks, Gary. We are starting to run a bit tight on time. So anyone does have any more questions, please pop them in. Otherwise, we'll take them offline. I'd like to run through 2 or 3 more, Gary. Another question from Adam. What non-dilutive funding options are you considering? And what would be the time frame?

Well, we are working on a number of initiatives in this space. And I would expect some more news on those to come in this quarter. I can't really talk more about them at the moment because they're still subject to ongoing negotiations. But there are a number of different things that we're looking at. And I would expect a couple of them to come to fruition in this quarter.

Just 1 last question from Adam. What percent of myelofibrosis patients would meet your trials inclusion criteria?

It's a small percentage. So we're looking for patients who are ineligible to a JAK inhibitor. So at any 1 time, I mean 75% of patients fall off of a JAK inhibitor within the first 5 years of treatment. So you're looking at that. And then there's other entry criteria as well the FDA have put upon us. So they're not going to be taking on other drug as well. We are free to have patients who have pretty low drug blood counts which helps us. But in the end, we're probably looking at around 5% of myelofibrosis patients are the sort of target group that we're trying to work within. And I think -- so the total number of patients here isn't necessarily an issue. I think we are, though, having some competing studies in this area. So there is 1 large study globally ongoing that's run by Novartis, for example, that's looking for exactly the same group of patients that we are -- that's in Phase II for example. So it's -- we're not alone looking at that group. So although that patient group, there are patients exist, we're also in a fight with other companies looking at recruiting patients in the same -- those same JAK intolerant [ ineligible ] patients.

Excellent. Thanks, Gary. All right. If anyone does have any more questions, please feel free to e-mail them through and we can get Gary or David to respond via e-mail. A recording of this webcast will be also made available on Pharmaxis' website in the coming days. On behalf of all Pharmaxis' shareholders and those in attendance. Gary, I'd like to thank you for your time today, and we look forward to hearing from you again soon.

Okay. Thanks, Alfred.