Syntara Limited (SNT) Earnings Call Transcript & Summary

Good morning, everyone. The clock has now just ticked past 11 a.m. So we'll get started with this morning's special investor briefing with Pharmaxis' CEO, Gary Phillips. It's been called on relatively short notice. So thank you, everyone, for attending. My name is [ Alfred ] and I'm part of the Investor Relations team who will assist with running the briefing. Just a quick run-through on some formalities. After the presentation, Gary will be taking questions from attendees. [Operator Instructions] Obviously, there's new interim data released by Pharmaxis this morning. So it's been a very busy few days. Gary has been very generous with this time, so I won't take up any more of it. Gary, let me hand it over to you.

Thanks, [ Alfred ]. And good morning, everybody, delighted to be here this morning talking about the data that we've just put out. So just in the way of just high-level overview, just to put what we're doing this morning into context. Our lead asset is PXS-5505. And as you know, that's been in a multinational Phase II trial, still recruiting. We're at 15 patients out of 24 patients now as a target. So that's quite accelerated in the last couple of months. I'm really pleased to see the progress there in what's been a difficult to recruit trial with very rare patients. We're still waiting for a patient to be entered into our liver cancer study, but that's ready to go now in Rochester, New York. And our 6302 trial with -- in scarring is also making good progress in recruitment. I actually had an update this morning, and that's over 75% recruited now. So that's well on the way to getting fully recruited and seeing data out in the beginning of next year. So this morning, though, it's really about PXS-5005 and the interim data results we've got from our study. But just as a reminder, 5505 is a pan-LOX inhibitor. It blocks an enzyme, which is involved in the cross-linking of collagen. And that crossing of collagen is fundamental to the fibrosis process. Once that fibrosis forms the tissue, and in this case, the bone marrow gets stiffer, and that microenvironment causes the further increase in activation of the fibroblast, more LOX, more collagen and more fibrosis. Now by blocking the lysol oxidase enzyme, what we see is a reduction in that -- in the amount of fibrosis that you should see, a reduction in the stress within the tissue, a softening of the tissue, and therefore, reduced activated fibroblasts and that virtuous loop goes through to see reductions in fibrosis. And hopefully looking for an impact then on the disease, and that's what this study is all about. We've got INDs approved by the FDA in myelofibrosis and hepatocellular or liver carcinoma. It's got potential in multiple cancer indications. And this is a drug which has got a patent filed over the prior day of only 2018. So it's a young drug with a lot of patent life ahead of it and a huge potential. So myelofibrosis, it's a rare cancer of the bone marrow. It's caused by the buildup of scar tissue or fibrosis within the bone marrow, which reduces the production of blood cells. That causes a variety of symptoms, including extreme tiredness, shortness of breath, increased number of infections, bruising. The spleen often becomes enlarged. And they have symptoms such as fever, night sweats and bone pain. The current standard of care for this disease are JAK inhibitors. There are 3 of them now on the market. And they cause mainly symptomatic relief of the disease. So they get rid of the symptoms. They reduce the spleen size, but they don't know anything about the underlying fibrosis. And actually, one of the adverse events you commonly see with JAK inhibitors is an increase in cytopenia, so the blood counts actually get worse. Despite all that, the balance, these drugs are clearly helpful for patients for myelofibrosis. And their sales at the moment in this indication exceed $1 billion a year. So this is a rich commercial opportunity that's caused by still a big unmet need that exists within this disease for treatment, for disease modification. Now the study that we're presenting data on today is a Phase II trial. We've already gone through the dose escalation phase where we tested 3 different doses of 5505. We took the highest dose into the clinic because we saw no tolerability issues in the dose escalation stage at any of the doses. These patients are all JAK inhibitor and suitable. So that means that they've already trialed a JAK inhibitor, and they've come off of it for some reason. Out of the 15 patients that we've recruited into the study, 14 of them have had previous experience with a JAK inhibitor. Only one of them was actually ineligible for a JAK inhibitor in the first place. So this study is testing our drug in a monotherapy sense. So it's not being added on to the existing standard of care, which is probably the hardest test for a drug to be put through. And these patients, when they come off of a JAK inhibitor, their life expectancy is pretty poor at that point. So the average life expectancy of patients once they come off of a JAK, these unsuitable patients, it's around 12 months, so a sick group of patients. So moving straight on to the -- what we found so far. So the results we're releasing today is an interim data set. This is an open-label study, so we can look at the data coming in from these patients as it comes in. As I said, these -- we've enrolled 15 patients. We have 18 sites open worldwide and another 2 coming on stream. So you can sense from that the difficulty in patient recruitment and the rarity of these patients. 6 patients have completed a full 24 weeks of treatment. 4 patients, out of those 15, have dropped out. That's due to a lack of clinical response. So that's not unusual. We're expecting to see quite a reasonable number of dropouts given that these patients are often very sick coming in, and they progress quite quickly. I think we had one drop out recently, where they've only been on drug for a month and the patient was deteriorating. There's not enough time for our drug to work. So inevitably, the clinician makes a choice about moving them on and treating their symptoms as they sit there at that present time. So I think the things that we are -- we've noted in these first 6 patients and that we're actually really pleased about. The first is that in these 6 patients, it's been very well tolerated. We haven't had any serious treatment-related adverse events reported. There have been no dropouts related to the drug. And that's a [ standout ] for a drug within this disease. As I mentioned, the JAK inhibitors have a very poor tolerability profile with a lot of patients experienced cytopenia or reductions in blood counts. And many of the drugs that are in clinical development also have quite a poor tolerability record. Moving on to efficacy. Now this has to be viewed against the background of these patients with -- when they come into the study, have an average of 12 months life expectancy. So within a 6-month period, you'd obviously expect to see a further deterioration of these patients. I think the things which we -- we've shared this data with key opinion leaders globally to make sure that we understand their interpretation of what we're seeing. Now basic facts. 2 out of the 6 patients showed a clinically important improvement in symptoms, so not in maintenance, but an improvement of symptoms. 5 out of the 6 patients have shown either stable or improved bone marrow fibrosis, scores of greater than 1 grade. And 5 out of the 6 have had either stable or improved platelet counts or hemoglobin scores. Now if you combine those things together, this puts a 5505 into a very favorable position. We haven't seen any reductions seen in spleen volume there yet. We expect to see that if we combined it with a JAK inhibitor or we extended the length of treatment, and from the mechanism, what we're seeing is an improvement in the bone marrow, an improvement in the blood count. We'd expect to see a subsequent reduction in spleen volume from the mechanism of action of this drug. Professor Gaby Hobbs from Harvard Medical School, Clinical Director of the Leukemia Service at Mass General in the U.S., reviewed the patient data on an individual basis of all the data points. And the thing that she commented on, I put her quote at the bottom of this slide. But the thing that's really impressive was the fact that we were seeing a tie-up between the improvement in symptoms and the improvement that we were seeing in the blood scores from these patients. That's relatively unique and stacks up very well with any other drug, which is currently in development and particularly in this particular group of patients. So she felt that this was a really important finding, albeit only in 6 patients. And obviously, we need more data from the study before we can draw firm conclusions from it. But I think the position we're taking at the moment is this is a very good early sign of both efficacy from this drug in this particular patient group and against the background of sustained, very well tolerated, which we've seen in the healthy volunteers and in the dose escalation study as well. So a really promising findings from this study thus far with 6 patients. So putting that into context, the company as a whole, we have 5505 in myeloid fibrosis and hepatocellular carcinoma. So we're expecting to finish recruitment of the myelofibrosis study by the end of the year and have the full data set by the middle of 2023. I'll remind you that this is an open-label study so there may well be more data updates as we get through to that point. The hepatocellular carcinoma study, we're expecting to recruit the first patient in this quarter. The scarring study, which is being done with Fiona Wood in Perth is currently recruiting. I've updated you on that, that more than 75% recruited now. And that's a study we expect again to finish recruitment by the end of the year and have data in the first half of next year. And a follow-up study to that is already being planned with Fiona Wood and her group there. And then there's the study that we are due to start at the beginning of next year, which we attracted $5 million from Parkinson's U.K. recently in a patient with a sleep disorder, which leads to Parkinson's. Now in terms of capital structure, you've seen today that we've done a capital raise. We've raised $10 million. So pro forma cash now, including that capital raising stands at $30 million. With that amount of cash, we have enough to move this study, the myelofibrosis study, through the full data and give us time at the end of that to have the regulatory discussions that we would meet with the FDA about the further development of the drug and to engage with potential partners in this market who would want to see the full data set. So with that, the -- I'm delighted with the capital raise as well. We've strengthened the register. We have 2 new institutions, specialist institutions coming on. The total institutional ownership will rise to around about 50% as a result of the capital raising that we've done today. So with that, [ Alfred ], I'm happy to take -- open it up and take any questions.

Excellent. Thank you very much, Gary, for that nice brief and quick informative presentation on the data. It looks like you've been very succinct with the presentation because we've only had one question come in. [Operator Instructions] Gary, the first question that comes from [ Ret ]. Assuming all gets through to FDA approval, how much of that $1 billion market do you think is achievable for Pharmaxis?

Well, as I said, the -- at the moment, there's a very high unmet medical need. The patients that are on standard of care, that are all on that $1 billion set of drugs, don't get any long-term life expectancy improvements or very little from that drug. So actually, although this first trial is in patients who are -- have failed on that drug, the next study and the one that would open up the label is likely to be in patients who are as a combination with the standard of care. So certainly, there is a market segment, which I think is around about 30% of the myelofibrosis patients, which would fall into this group of patients who are ineligible for a JAK at any one period in time. But the rest of the market also is in desperate need of additional drugs that can be added on.

Thanks, Gary. Question from [ Adam ]. Are you able to provide any individual anecdotes about the impact 5505 is having on patients in the trial?

Yes. We -- obviously with -- having 6 patients in terms of what we disclosed, we don't want to overreach and -- with the data that we've got. But the -- some of the -- what we are hearing back from the clinicians is the patients that -- there clearly are patients who are responders, so as well as the overall feeling that the patients were managing to stabilize disease when they go through this group. We're also seeing individual patients who are seeing quite dramatic improvements in their platelet blood counts, and that ties in with an improvement in symptom scores as well. So those patients are feeling better. And the clinicians are extremely happy with their progress. So as I said, I don't want to overreach on the anecdotes. It's always good to see the data, but we are seeing some significant improvements here. It's interesting, talking to the key opinion leaders. They've got -- there's quite a lot of drugs in development and the -- I go back again, this combination of a drug with a good tolerability profile that can improve the blood counts that we're seeing in platelets and hemoglobin and improve symptoms, whilst the underlying fibrosis is reducing, that's quite a unique set of attributes for a drug to have at this stage. And it promises extremely well for the future. And I'm sure we'll get interest from not only the clinicians, but from a lot of companies based on the profile that we're seeing with this drug.

Thanks, Gary. A question from [ Steve ]. What is the thinking behind the timing of the capital raise? Why now?

Yes, it's a good question and one that the company has considered really carefully before going out. So as you know, we had a pro forma $20 million in cash at June, but that $20 million was enough to see us through to the beginning of next year before we would have seen a declining up to the point we've been forced to go to the market. Markets, as you know, are extremely volatile at the moment. It's a tough market. The discounts we're seeing at the moment are increasing rather than decreasing. And the average for health care rates this year is already over 20% and increasing. Now we've managed to do this without including any options. The advice from the joint lead managers on this, Morgans and Bell Potter, was also that it's very strong actually. The retail offers that we've been put out there at the moment have all traded at discounts after the raise, and that's due to the shortfalls they've seen on the rights issue in the order of 80%. We couldn't do a share purchase plan because we've done one of those in the last 12 months. So this really was the right option for us in terms of structure. And in terms of timing, we have not seen companies getting much of a -- banks from any of the data they have at the moment. So we've used this as an occasion to attract significant institutional investors into the stock to give us that runway so that the -- hopefully, the market will respond well to the data now. The aftermarket will be strong, and this will see the company through to a point where we really have something that will be suitable for, not only regulatory review in terms of what comes next, but also potential partnering. So that was the thinking behind the timing.

Thanks, Gary. Kind of a follow-up question from [ Adam ]. When is these -- when do you think the ideal time might be for someone to partner with 5505?