Syntara Limited (SNT) Earnings Call Transcript & Summary

[indiscernible] University of Western Australia. My name is Alfred, and I'm part of Pharmaxis Investor Relations team, and I'll assist with running today's briefing. Just a quick run through the formalities. After the presentation, Gary will be taking questions from attendees, and a few that have been e-mailed through already. [Operator Instructions] Having been in a trading halt for the past couple of days, while data was being finalized, it's been a very few busy days for Pharmaxis, and I'm sure Gary is very excited to present this new data. So Gary, I won't take up any -- more of your time. Let me hand over to you.

Thank you, Alfred. And good morning, everybody, and thanks for taking the time. I know it's a bit early than we normally do these things, but that was important that we get out there and start talking about this as early as we could. So as Alfred said, we're here today to talk about a study that's just reported on skin scarring and one of our drugs in -- that's a pan-LOX inhibitor. So I want to start just by reminding you how the drug works, and then we'll get into the guts of the study itself. So the chart here on the left-hand side shows sort of a stylized version of what happens in fibrosis, and this doesn't matter whether it's fibrosis in the skin or it's fibrosis in an organ. The mechanism is more or less the same. And it starts with cells called fibroblasts that reside in our tissues. Now in the skin, you find these fibroblasts in the epithelial layer, and they can become activated, and they can become activated by mechanical injury or chemicals. So in a scarring sense on the skin, this is from falling over, from cutting yourself. It can be from surgery. It can be from growth on the skin, any number of things that can cause these activation of these fibroblasts. And when they do, the fibroblasts start to secrete collagen, which is a protein, from strands and also an enzyme called lysyl oxidase. And the lysyl oxidase enzyme causes those collagen strands to become cross-linked. Now before the collagen is cross linked, it really is -- doesn't form much of a structure. But as soon as it becomes cross linked, it forms a firm structure and then a kind of matrix of cells, which then get increasingly stiff. And you'll notice this if you've seen your scar in your skin. It does have a different level of pliability normally to your normal skin. And as that stiffness increases, that's a feedback loop to give more activation of the fibroblast, which gives more collagen, more lysyl oxidase and more scarring. Now in a normal healthy skin, that scarring process is a perfectly normal process, leads to a small scar, which all of us would have seen. But there are certain circumstances where that scarring can get out of control, whether fibrosis and the scarring process keeps going, and the amount of lysyl oxidase in the skin is above what you would consider to be normal. And then you see an excess scarring. And that has ramifications for the patient in terms of the appearance of the scar but also the functional properties of the skin that it's on, which leads to further problems. Now I'll go into some of those later, but let's talk a little bit about the study. So this was a study that was run by the research group of Professor Fiona Wood in University of Western Australia in Perth. It's an investigator-initiated study. So this is one that's been controlled and managed by the university, not by Pharmaxis. So it's part of a collaboration, a long-term collaboration that we've had with Fiona Wood and her research team. You would have seen Fiona and her colleague, Dr. Mark Fear, talking on our webinars before about their work and what they're doing. And indeed, they had a publication in Nature Communications quite recently, which summarized all of the preclinical work they've done on our pan-LOX inhibitors and their role in the scarring process in the skin. Now this study was a Phase Ic study. It was 3 months in length. And the objectives of the study were to confirm, first of all, what the drug was doing in the skin. We already run a Phase I study in healthy volunteers, so we knew that it penetrated the skin layers that we needed it to in healthy skin, and we knew that it inhibited the lysyl oxidase enzyme as we wanted to. But we wanted to see what it did in scar tissue. So we wanted to confirm that it was still managing to penetrate the tissue where it needed to go, and we wanted to understand what it did when it inhibited the LOX enzymes. What was the result of that? What happened to the structure of the scar? And this was a double-blind placebo-controlled study. So really, what you'd like to see at this stage in terms of really trying to understand what the drug is doing and separating that from placebo as a control group. Now the patients that we ended up recruiting to the study that Fiona and her team recruited, there were 42 of them. They were aged between 18 and 60 years of age. And they all had a scar, which was more than 1 year in age. Now in the end, we ended up with scars, which were quite a bit older than we'd expected in the study. So the average age of the scar was almost 13 years. I think the oldest scar was over 50 years in age, and the youngest scar was just over a year. The scar types were of low to moderate severity and included scars from all kinds of different surgeries. So this was -- we didn't -- we have a very heterogeneous group of patients with a wide variety of scar types and have of quite different severities and of different ages as well. The scar to go into the study needed to be of 10 centimeters square in area, but we excluded patients with acute skin conditions or a history of keloids because they're a slightly different kind of scar. And we weren't quite -- we wanted to make sure that we were getting sort of a clear signal from this, so we excluded some kinds of scars. The endpoints in the study were primarily safety and tolerability. So at this stage of drug development, the first thing that we try and do is show is it safe to use. The secondary endpoints were to characterize the pharmacokinetics and the pharmacodynamics as I've just talked about in the skin. And then we had an exploratory endpoint, which was to look at the physical and visual skin and scar assessments. And that was exploratory because, going into this study, obviously, we had data from animal models, in animal skin as to what happened when you dose this drug for a month or 2 months or a week. But we had no idea about how long you would have to inhibit LOX in order to make a change to the appearance of -- and break down the fibrosis in the scar. So as I said, it was an exploratory study. So on to the results. And we were really pleased to see this. First of all, the drug was extremely well tolerated and had a good safety profile, so that's an extremely good start. We didn't have any serious adverse events. We had 2 patients on active therapy that withdrew from the study. They had a -- the easiest way of describing it, as a rash at the site of application of the drug. That was reversible, so when they stopped application of the drug, the rash disappeared. So overall, we were very comfortable with the safety and tolerability profile of the drug in the study on these patients that were randomized on to the active. The next thing was to look at the pharmacokinetics. So did it inhibit LOX in the scar tissue? So really, the question here, I guess, was did it penetrate into the skin and did we see that reduction now. All of these were done by taking skin biopsies from these patients. So the skin biopsy is around about 3 millimeters in diameter, and it goes quite deep. It's around about 8 millimeters deep. So it goes right through the scar tissue. So you really get a good idea of the inhibition of the drug in the layers of the skin, which are implicated in the scarring process. And we had -- we saw an inhibition of LOX activity at 66% active versus placebo compared to the baseline. And this was from a biopsy that was taken, on average, around 2 days after the final dose was given. So this would represent the lowest inhibition that you would see throughout the study given that the drug was last applied 2 days before, and so the levels you were seeing before that would have been considerably higher. So we were quite comfortable with that as a level. For us, that's a good test. And then the LOX -- that LOX is responsible for the cross linking of the collagen fibers, which are implicated in the scarring. So it was important to understand not only did we inhibit them and what they do. Now the -- as this is a placebo-controlled study, so we're able to statistically analyze the results, and this was highly significant, so a p level of 0.001 is highly significant. So onto the meaningful changes in the composition of the scar. So here, I think we were -- certainly, I was positively surprised by the extent at which we reduced hydroxyproline in the biopsy tissue. Now hydroxyproline is a marker for collagen. So when we say we've reduced hydroxyproline by 30%, that's -- you can take the same reading for collagen. Hydroxyproline makes up a great deal of the collagen molecule. So the patients in the active arm had a mean reduction in hydroxyproline of 30% compared to the placebo over 3 months of treatment. Now if you think about what's actually happening there, the scar tissue around that normal skin contains a level of collagen within it. And to reduce that by almost 1/3 within 3 months is a really significant finding. In fact, the p-value was 0.01. So again, a very significant finding. This is not by chance. So I think that was -- so what we've seen is the drug is safe. It's inhibited the LOX enzyme, which we expected it to, and that's led to a really big change in the composition of the scar. But we didn't then see a change in the appearance of the physical nature of the scar. And the endpoint there is the POSAS score, which is the Patient and Observer Scar Assessment Scale, so both the patient and an observer look at the scar before and afterwards and try and assess what it is. And we didn't see any significant difference. And I guess I was a bit disappointed with that, but maybe not surprised given the age the scars we had. So we've ended up with a population with a scar age, as I said at the start around at 13 years. So this is a well, well-established scar, and we're relying here on the turnover of collagen within the scar and the remodeling process before we see an outcome from it. So I'll touch back on this in a minute because we've got Professor Wood's comments on this as well as to how she thinks about this. But as I said, we didn't see a significant difference there, but everything else in the study showed that the drug from a mechanistic point of view was really having a profound effect on the scar tissue. So we've gone through with Professor Wood and her team the results over the weekend after we saw the study results at the end of last week. And her view was this was -- in her view, this was an exploratory clinical study. As I said at the outset, we didn't understand a lot about LOX in human tissue and scarring and the process itself. We had ideas based on the models that we had, but this was the first time we've seen it. So in her view, this has significantly enhanced our understanding of the role of LOX enzymes in scarring and the scar process itself. 6302, in her words, leads to an unprecedented change in the scar composition. She had not seen this kind of impact on scars from anything else that's been used in the clinic before. And she estimated that, in actual fact, what we've done was to remove about half of the excess collagen in these patients. So if you compared a normal patient with a patient with a bad scar, a hypertrophic scar, you'd expect them to see about 50% more collagen in the patient with a scar than in normal skin. And so we've reduced the overall amount of collagen, the total collagen by 30%. So that's more than half of the excess collagen that's there. Now we -- the aim here is not to reduce the collagen below what you would see in normal skin. We wouldn't want to do that. So to remove half of the collagen -- the excess collagen in the scar is absolutely profound effect. And it really was exciting to listen to Professor Wood and her team talk about the implications of this and the novelty of this finding, and it's a unique finding. It's the first finding of this kind in scar tissue that they've seen. So again, just wrapping up and going back to the appearance and what we're seeing. Her view, again, was that the length of this study was probably not sufficient to change the appearance of an established scar or at least one that's the age that we ended up recruiting. But the remodeling process goes on. And she made an interesting comment that when they do laser therapy on scars, you don't produce an immediate impact on the scar when you use the laser. That kind of intervention starts a remodeling process, which goes on after the laser therapy has finished and can go on for weeks and months afterwards. So when you see a patient much later on, their scar will still be improving. So she was confident that if we treated the scar for longer or in fact, even if we got these same patients back and looked at them again in the future, we might see changes in appearance and physical characteristics from this ongoing remodeling process. So overall, we were -- all of us is the research group, the team at Pharmaxis and the team at the University of Western Australia, where we've learned a huge amount about the drug, the scarring process itself, and we think we've really opened up something for the future. So what does all this mean? What's the implications of this? So I just wanted to go back to the patients here. This is what we're here for, is to try and aid patients with -- that have no other viable treatments. And scarring is one of the most widespread conditions for humans, right? I mean there are 100 million patients who develop scars in the developed world alone each year just as a result of elective surgery and after trauma. So this is a very common element that all of us have scars. Not all of us have bad scars. Hypertrophic and keloid scars are both scars where you see a real proliferation of the fibrosis in the skin, can be caused by trauma, burn, surgery. They're cosmetically and functionally problematic. Patients suffer from these scars for years and years and years. And I've seen some of the reports from the patients who are in our study. Some of them, as I said, with the scars that they've lived with for 50 years, and they're still going back to Fiona's clinic seeking help because of the problems that they have with it. And currently, the treatments available are steroid creams, which apparently don't help a great deal. They do have side effects. They are still used because they're widely available. Many patients with scars have to revert to further surgery to have the scars excised or removed. And then the scar comes back again, but they're trying to improve or release the tension in the scar to reestablish functionality within the skin that the scar is on. Cryotherapy, laser therapy, laser therapy is probably the most widely used treatment. It's an expensive treatment. And as I said, it does lead to some improvements in scars, but very often, these treatments have to be repeated again and again and again. So we'd already seen the preclinical evidence from 6302 in the paper that was published in Nature Communications recently and the Phase I study that had showed in healthy volunteers and then a preliminary study in patients with scars. So this study now is very relevant given that the total scar treatment market is approaching $20 billion. So it's a huge amount of money spent each year and procedures and surgeons and dermatologists involved in helping patients with scars. And just the keloid and the hypertrophic scar segment alone is about $3.5 billion. So this is a very big clinical unmet need. And I know from talking to Professor Wood and her team and other surgeons and dermatologists globally that this is a much wanted treatment if we can demonstrate some effect in patients. So what next? Well, the first thing is I think this has encouraged us. It's encouraged Professor Wood. So I'm delighted to announce that we'll be extending our collaboration with her and her team into the future. We'll be reintensifying our work in this area. And this finding that we've made, this dramatic change in the collagen in the scar, we're changing the structure of the scar, has opened up a wide vista now of potential skin fibrosis indications for development. And we haven't decided what indications we will pursue yet. Having seen the data now, and I've said we've learned a lot from this study, there will now be a period of consideration, where we discuss both with Fiona Wood and her team and other people globally on which are the indications we can go after. And for example, we could look at younger scars. So I think all of us were thinking about the age of the scars we were treating felt that we would probably have a quicker impact if we treated younger scars. Likewise, if we treated older scars, but we treated them for longer, we would probably see a positive outcome. We could look at scar prevention. So if you can intervene in the fibrosis process and the activation of these fibroblasts and the cross-linking of collagen, then patients that have bad scars that emerge after surgery, you should be able to prevent them. And this -- again, this dramatic change in the collagen in the scar would point to a high probability that you could see a result there. Keloid scarring, I've mentioned that before as being a different kind of scar. I think now we've seen the results. We'll be looking at the biology behind keloid scars and seeing whether there is a way that we can approach that as an indication on what the best kind of clinical study and endpoints would be for that study. Dupuytren's, which is a fibrosis in the palm of the hand on the -- affects the tendon and leads to a -- one of your fingers -- one or more of your fingers curling up and not being able to be extended, is also something, which there's no -- almost no approved treatments left on the market at the moment. There was one that was available before but was withdrawn. And now surgery is one of the few things that can release this. And that's another one, which we're looking at closely to see whether they're -- again, it's a big unmet need and a big commercial opportunity. So we'll be looking at that. And we could even look at surgical adhesions. So there is fibrosis after abdominal surgery, for example, which leads to the tissues within -- inside the abdominal wall adhering to each other after surgery, and that's caused by fibrosis. So if you could release that, again, there's an unmet need there. So we'll give a further update on our plans for skin scarring, this whole franchise within Pharmaxis around the middle of the year after we've taken time to talk with Professor Wood and her team and others about what the right thing is to do next. So just a brief recap on Pharmaxis. We've got 5 trials delivering near-term value. Our myelofibrosis study has already reported preliminary data at the end of last year, and we've got another update coming, a significant update coming at the middle of this year and then looking to start a 6-month combination study with the standard-of-care JAK inhibitor at the end of the year after, a very positive meeting with the FDA earlier in the year. So that one is progressing quickly now. The scarring studies, we've got another one planned, which is going to look at the scarring subsequent to burns injury. We'll talk more about that in our overall update around the middle of the year, but we're expecting the first patient in that before the end of the year. And then finally, our drug in Parkinson's disease and in sleep disorder, iRBD, which we're again expecting our first patient around the middle of the year. So the news flow has already been busy this year and the second half of the year, proves to be -- even the rest of this quarter, we'll be busy with updates on the myelofibrosis study, the full recruitment of that monotherapy study and the starting of the recruitment in the iRBD, Parkinson's study. And then the second half of the year, reporting on the myelofibrosis study starting the recruitment in the combination study and starting recruitment in that topical pan-LOX inhibitor 6302 study in scar prevention in burns patients. So lots of value inflection points coming up, a really encouraging result from this clinical study today. And I'll stop there, and I'm very happy to take any questions that you've got.

Excellent. Thank you, Gary, for that very informed presentation and congratulations on the data and scar remodeling observations. We've already had quite a few questions come in already, so we'll get to them. [Operator Instructions] There's quite a bit of an overlap around some of them, so I might merge a few into one question. Gary, the first question comes from [ Juha ] and a few others. What next are the results going to be shared with the FDA for analysis? And are you seeking further guidelines to propose more exhaustive human trials?

Yes. So a good question. So from a regulatory perspective, what's next, so this study is a Ic. So if we now progress into a Phase II study in this indication or others, then we would reach out to the FDA and the TGA and the European authorities to get some guidance. Now we already have talked to the FDA about scarring and about our drug. And they were positive about the profile of the drug. But it was a very interesting discussion about endpoints, and I know many people will be interested in the POSAS scoring and the things we know. So this is the Patient and Observer Scar Assessment Scale is the gold standard in scarring at the moment. It's been subject to several publications. But it's not a validated endpoint, and the FDA were keen to point out to us that if we were to use POSAS as an endpoint going forward, then it would need to be validated in some sense. And I think our experiences from using it in this study with these patients, also highlighted a number of problems in the way that it was interpreted and understood by both the patients and the observers. So it will be -- I think it can still be the basis of an endpoint going forward, but we'll be very careful about how we use it and the amount of education that we give to people before it goes in place. And we will certainly be -- that will be a topic of conversation with the FDA in the future. Scarring is not a straightforward clinical development path because we are there in the vanguard, we're the first company to do this. There haven't been any studies with drugs in scarring for many years. So finding a way forward is a matter of consultation, sharing the data we've got and the learnings we've had and developing a joint understanding with the regulators about how to proceed.

Thanks, Gary. A question from Derek. You showed a significant reduction in LOX activity and changes to scar composition, yet you didn't see any changes in POSAS after 3 months. You say you're confident you'll see improvements in scar appearance if the trial is run for a longer time. What gives you this confidence?

Well, I think talking to Professor Wood and her team, I can't judge whether 30% reduction in collagen within a scar is -- what does that mean? But it was clear from talking to Professor Wood and her team that that's an almost incredible finding that, that level of collagen removal and the change in the structure of the scar, they haven't seen it before. And they -- so their belief is with that level of change, it's inevitable that the scar will improve. Now the scar improving relies upon the body's normal physiological process remodeling the scar. So as your skin ages, the tissue there gets chewed up by other enzymes that are present in your skin, and then new skin is laid down. Now in a normal healthy skin, obviously, the skin gets turned over and you get normal healthy skin put back. In a scar, what we're seeing is that turnover process of the tissue is quite slow. So the remodeling will be happening, but it will take process over a longer time. So this is why we need to look carefully at the different age groups that were in the study. We'll look deeper at the subgroups and the patients that were -- that had a younger scar and look to see what we're seeing there because we suspect that what's happening is that as the scar is older and the patient maybe is older, then the turnover in the skin is much, much slower. So therefore, you need to go on. So as I said, it's a very good question, but I'm really drawing on the experts of the key opinion leaders in this area and their belief that this removal of half of the excess collagen within the scar tissue is a fundamental change, which will lead to remodeling of the scar in the future.

Thanks, Gary. Another question from Derek. I know it's early, but any subgroups analyzed -- analysis conducted to see which patients benefited the most given the heterogeneous of the patient population. Just trying to figure out what patients are most amenable to PXS-6302 as a treatment.

Yes. We haven't really delved into that yet. But I would caution that this is a -- there were 21 patients on active, 2 drop-downs. We've got 19 patients with a very wide variety. So any subgroups are going to be pretty small. So there's a danger in looking too much at this amount of data and over-interpreting it. But hopefully, we'll see some overall directional things which will help us in terms of deciding what scars going to. I think there's an understanding of the mechanism and the scarring process now, which will allow us to maybe predict which patients are likely and which kind of scars are going to work the best. And that will certainly be the basis of guiding our clinical studies, but we'll also be looking at derisking some of the work that we're doing as well. So we're analyzing the amount of LOX, for example, in different scar types at the moment with UWA and taking skin samples from different patients and saying, okay, how much LOX is here, is that different in different types of skin and different types of injury on the skin or abnormalities?

Just a follow-up from that one. You've extended your collaboration with the UWA. What does that entail in terms of clinical development time lines and capital requirements for 6302?

We've done this -- the work up till now with Professor Wood and her team under an investigator-initiated study. And there's still a great deal of, I think, enthusiasm from both sides to continue that. I think the team there have proven themselves to be able to recruit patients extremely quickly. And that's one of the major handicaps sometimes of industry partners working with academic and hospital partners is there sometimes the objective don't quite align and you end up with studies that are slow to recruit or the objective change as you go through, the objectives aren't aligned. So -- but we're very, very happy with our collaboration there. So -- and it's a very cost-effective way to pursue this. And I think it's a very rewarding one, hopefully, for Professor Wood and her team as well because they get access to the drug and the data from it, which allows them to publish and help their patients quite quickly. So it doesn't have immediate funding implications for this, but that's certainly something that we'll update in the middle of the year. We'll be looking to involve other centers as well probably as we go forward. So as I said, midyear, we'll come -- and I hope that I'll be able to get on another webinar like this with Professor Wood and her team, and we'll talk together about what our hopes are for the future and how we're going to progress together.

Gary, a question from [ Kai ]. What's your overall comment after the trial comparing with your expectations? Did it beat your expectations?

I think I was -- it's a good question. I was positively surprised about the change in structure of the scar. I don't think -- I certainly didn't expect that 3 months' treatment with a topical cream would really lead to that, really significant change in the scar structure, so that was a positive for us. And I would say about the appearance, I was disappointed that we didn't see some changes in the POSAS scoring but maybe not surprised once I saw the age of the scars there and I've had the opportunity to look at some of the photographs of the scars from the patients there, they really are quite severe. So whilst we were treating 10-centimeter square, some of these patients had scars that were at 25% of their body surface area, and we're treating one small area. And whilst you're treating one small area of a larger scar, again, there are all these factors that come into play that would have made it may be difficult for that remodeling process to really progress. So yes, disappointed but not surprised by that, but really excited about the fact that we've really got -- we've nailed the mechanism and that we're actually doing something physiologically fundamental to the scar.

Excellent. Thanks, Gary. There's a couple of questions that have come through, which you mostly touched on. But if we haven't, we will respond offline because we are running out of time now, and Gary's got a few other calls this morning. So Gary, I might wrap it up there, and we'll respond to everyone else off-line. Firstly, thank you very much for taking the time out of your day to present this data to investors, analysts and attendees today. If there are any further questions, please feel free to e-mail them through, and Gary will get to them later this afternoon. A recording of this webcast will be made available shortly on the Pharmaxis website. So Gary, on behalf of the investors in attendance, thank you very much for your time today.

Thank you, and thank you for listening in.