Syntara Limited (SNT) Earnings Call Transcript & Summary

Good afternoon, everyone. The clock has now ticked past midday, so we'll get started with today's quarterly investor briefing with Pharmaxis CEO Gary Phillips, who also have some updates from the FDA. My name is [ Alfred ]. I am part of Pharmaxis' investor relations team. I will assist in running the call. Just a quick run-through of formalities. After the briefing, Gary will be taking questions from attendees. [Operator Instructions] It's obviously a very busy day on the ASX, being the last day of the month. And there's plenty of information for investors to dissect, including these new FDA developments with Pharmaxis, so Gary, I won't take up any more of your time. Let me hand over to you.

Thanks, [ Alfred ]. And good afternoon, everybody. I've presented at a couple of investor meetings in the last few weeks. And today is a good chance to pull some of the threads that have been going on together and draw some conclusions about where we are as a company right now, because obviously we've released quite a lot of data in the last couple of months. So I'm just going to go through the highlights of the -- of what we've announced. And then as [ Alfred ] says, I'm very happy to take questions at that point. So just let me get my screen up a minute so we can -- all right. So yes. So I think the things in this quarterly update are -- that I wanted to sort of draw attention to were, first of all, that as a company we've been leading the way in fibrosis and in particular lysyl oxidase chemistry and biology for a number of years now. I think -- I don't think I'm going too far when I lay claim to being global leaders in this space. And in the last few months, we've got clinical proof of concept. So we proved in the clinic, in patients, that inhibiting lysyl oxidase or LOX does reduce fibrosis. And we've done that in 2 different diseases, this is a really huge leap forward for both the field of lysyl oxidase biology, fibrosis and also for Pharmaxis. And I think that's directly related then to the FDA's view on where we're at as well. So they've supported us to carry on development in myelofibrosis, after reviewing that data from this first-in-class LOX inhibitor that we have. And we are the only company with an inhibitor that blocks all of the lysyl oxidase family of enzymes in the clinic. And then very recently, they've just cleared the protocol for us to go into the next stage of clinical development with 5505 in myelofibrosis, where we'll be using in combination with the leading JAK inhibitor ruxolitinib. So some really important steps forward and just I just want to unpack that now as we go forward. So this first point is the what does blocking lysyl oxidase do. So it's all around blocking the last stage of fibrosis. I know many of you will have heard me say this before, but it just bears repeating, that the -- what we're doing with blocking lysyl oxidase is stopping the very, very last stage of fibrosis, the bit where the collagen that's released from the fibroblasts that are activated in cells in the bone marrow, the skin -- they can be in organs like the liver, the lung, the kidney, the heart. So that last stage of fibrosis, where those collagen fibers are cross-linked. They are cross-linked by this enzyme called lysyl oxidase, and that's what we block. So the very final stage of fibrosis. And by blocking that, we stop the scarring continuing, and in doing so, we reduce the amount of stiffness that's in the tissue. And then that blocks the feedback loop to the fibroblasts which normally leads to more collagen and more LOX. So that was the theory. That was the biology that we put out and has been published in several preclinical journals and some prestigious publications, and we've now demonstrated it in patients as well. And the 2 drugs that we're talking about here are 5505, which is an oral pan-LOX inhibitor which was patented only in 2018; and 6302, which is another pan-LOX inhibitor but this time topical, to put on the skin. And that was a patent filed in 2019, so we're talking about 2 drugs with a lot of patent life ahead of them and wholly owned by Pharmaxis, no royalties or licenses to pay for anybody else and which gives us a great position to go forward too into the clinic. So that data from the 5505 myelofibrosis study. So this, if you remember, was we were using it in patients who had basically failed all of the other treatments available for them in myelofibrosis, the JAK inhibitors. These were patients that were finished at that stage. They were more or less, at that point, having about 12 months or less to live, so they're kind of end-of-life patients; and some of them in a very serious condition, some of them with life-threatening thrombocytopenia or low platelet counts, coming into the study actually. So we've -- this study was an open label and it studied these patients for 6 months. We've enrolled 21 out of the 24 patients, and we just released the data from a further 10 who've completed 6 months or 24 weeks of treatment. From a safety perspective, the drug continues to be extremely well tolerated, with no serious drug-related adverse events. The majority of the adverse events noted were mild, and the majority of those were not related to the drug either. We've had 10 patients drop out of the study, but that is to be expected with this particular group of patients because, as I mentioned before, they are still very much towards the end of their life. And the disease does progress sometimes quite rapidly at this point for these patients and then the doctors have no other option but to take them out of the trial and start treating them with other forms which are more suitable for that stage of the disease. But in looking at the efficacy, we were really, really pleased this time around. I mean we had -- 9 of the 10 patients were evaluable for bone marrow fibrosis. 1 of the 10 had a -- didn't have enough tissue collected in the first bone marrow biopsy, so we couldn't assess what level of fibrosis they had, so we couldn't evaluate them, but for the other 9, more than half, 5, of them had improved bone marrow fibrosis scores. And this is graded from 0, 1, 2 and 3. So these patients all had either grade 2, grade 3 fibrosis, coming into the study. And they've all dropped by at least 1 grade, so that's a really stunning finding unprecedented in this field. And of those 5, 3 of them also reported symptomatic improvement as well, so it's a really good sign that we're having an effect both on the underlying disease and on also the effects of the disease as well. 4 overall had an improvement in symptom score. 7 had improved or stable hemoglobin counts, which is an indicator of red cells. 8 had either stable or improved platelet counts. And as I said before, 3 of those 8 came into the study with life-threatening thrombocytopenia or low platelet counts, so that's a really big step forward. We haven't seen changes in the spleen yet. These patients often have increased spleen sizes because, as the bone marrow stops functioning as a producer of the red cells and white cells and platelets, the spleen tends to compensate and gets bigger and tries to produce red cells on its own and which causes it to enlarge. The JAK inhibitors do cause -- act directly on that and cause an immediate reduction in spleen volume, but we expect our drug to have a longer effect on that. Once the bone marrow becomes functioning and starts to produce more red cells and platelets, then that reduces the pressure on the spleen, so it's something we would see later on down the track. And we've gone to the opinion leaders. And Dr. Masarova is assistant professor at the MD Anderson Cancer Center, the largest cancer center in the world, in Texas. She's an investigator on the study and we've shown her of all the data. She's -- available -- and see all of the granularity of each individual patient that came into the study and out of the study [ on ]. And she again noted the safety profile. I think, from her perspective, the next stage is obviously to combine this drug with a JAK inhibitor so you've got something that controls symptoms as well as having something that's giving a disease-modifying effect on top of it. And she knows that these patients on JAK inhibitors suffer with the tolerability of those drugs. Often, they get cytopenias themselves. Many of them drop off because they can't tolerate the drug. So any add-on drug into this area must be well tolerated. And our drug stands out amongst all of the drugs in clinical development at the moment as being something that has got a really, really clean safety profile. Having said that: She was also impressed with the -- or encouraged to see the number of patients who had improvements in symptoms and stable or improved blood counts, so again I think what we're hearing back from the physicians in the study is that they're very comfortable with the profile of the drug as it stands. It's certainly worthy to go forward [indiscernible]. And the lack of overlapping hematological toxicity; or the cytopenias, the reduction in blood cells and platelets, it makes 5505 an ideal add-on candidate. So with that as a background, we've gone to the FDA. And I'm really pleased to update you on the progress we've made there. I think we've previously announced that we've had a Type C meeting and that the FDA had encouraged us to submit a protocol for a combination study of our drug plus ruxolitinib. And that's now been -- that protocol has now been accepted by the FDA and cleared for us to go forward into the study. This is an open-label study. It uses the existing trial sites that we have opened. So we have 20 trial sites already opened for the monotherapy study which is coming to a close, so that [ leads ] to a really fast start-up. The thing that really slows trials down at the beginning is often signing up those sites and getting the contracts in place. That can take a year to even 18 months at times, particularly with sites in the U.S. with orphan studies at the moment, so to be able to use existing sites is a huge bonus. We can go straight into the study. It gives us minimal site initiation costs. The FDA also accepted that we didn't have a dose escalation. So for those of you following us: You noticed that, at the beginning of the monotherapy study, we started with 3 different doses. And we gradually escalated that dose until we were happy with the safety and efficacy we were seeing. The FDA, having reviewed it, said, "You don't need to do that again," which often they would do when you're starting a study in a new clinical setting in combination. They would ask you to do an escalation again. We've been allowed [ to go straight in again ], so we've selected the highest dose, the one that was used in the monotherapy study for studying those patients for 6 months, because we've seen no safety issues with it. And at the same time, we've seen more than 90% inhibition of the target enzyme that we're going after. So with that, we know that, that drug is an effective antifibrotic and is safe, so we can go straight into the study with no escalation steps. So that gives us the fastest route to meaningful data. We'll be recruiting 15 patients who have already received ruxolitinib, and then we'll be studying this -- them this time for longer. So having seen the data coming out of the 6-month study and noting the trends, we believe it's worth tracking these patients for longer to see what happens. We still believe we'll see that clear antifibrotic effect, obviously, before the end of the 12 months. And we'll have data available at 3 months and 6 months and 12 months as we go through the study, which we're expecting to recruit later this year. So really, really pleased to let you all know that we're moving fast on this. And we'll be quickly into the clinic now with that combination study. And the combination study is the one that unlocks the commercial value in the product given that 90% of myelofibrosis patients are receiving a JAK inhibitor. Most of them are on ruxolitinib, which is the market leader in this field. So with that, we will have clear data which transposes to the -- most of the clinical population that's out there, which as I said unlocks both clinical value for the drug and also commercial value as well. The other thing we announced this last quarter was our results in the skin scarring drug. So I've talked about the effect of blocking lysyl oxidases in patients who have myelofibrosis, but there are patients out there with scars where fibrosis forms not in the bone marrow, as we were talking about before, but this is fibrosis in the skin. Now the skin is an organ in itself. And when we put our cream on the skin -- we've already demonstrated that we produce, again, a very, very significant block in lysyl oxidase, the enzymes. So this study was designed -- it was a placebo-controlled study ran by Professor Fiona Wood in Perth, UWA. And so she looked at patients; all of them with an established scar, had to be more than 1 year of age and more than 10 square centimeters in size. 50% of them are on active. 50% of them are on placebo. Patients were dosed 3 times a week. They put the cream on their skin. And again we saw a good safety and tolerability profile here. We have no serious adverse events that were reported. We did have a couple of patients who developed a rash having put the cream on their skin, but that was reversible. So as soon as they stop, then the rash goes away. And 3 things. First was, as I said before, we showed inhibition of lysyl oxidase in the skin. So we took skin biopsies at the beginning of the study and after 3 months when they finished. And we compared the baseline to what we got at the end, and active versus placebo. So we saw a 66% reduction in the enzyme activity in the skin in the active arm compared to -- relative to the placebo group, with a really, highly statistically significant result. And that's what we were expecting to see. And this was taken 2 days after the final dose was given. So for the majority of the study, when they were taking the cream, we were expecting 66% or more inhibition. This was very much a trough measurement and we think that's enough to have an effect on scarring. And the next result confirmed that in that we measured the amount of collagen in the scar tissue in these patients and we saw a 30% reduction in collagen in the scars of the patients on active versus those on placebo. And that's a fundamental change in the structure of the scar. We didn't show a change in the appearance of the scars. And so obviously we -- this was something that we discussed with Professor Wood at some length, as to the link between the structure of the scar and the appearance of the scar. And she pointed out that this is -- clearly the study is -- greatly enhanced our understanding of the process of scarring and the role of the LOX enzymes. She called the amount of change in the scar composition unprecedented. She pointed us towards the fact that patients that have hypertrophic scarring after burn surgery, which she obviously focuses on, relative to patients with normal skin -- she felt that what we've done was reduce more than 50% of the excess collagen that forms, between those that -- a patient with a scar and a patients with normal skin, so in her mind, that -- she labeled it as unprecedented. She hasn't seen that with any other form of treatment. And that gives her confidence that, if we studied these patients with established cars for longer, then we would see a change in scar appearance. And she pointed just the fact that they currently use laser therapy a lot for changing scar appearance. And that change in the scar actually doesn't happen immediately after the laser either. It takes a while for the scar to remodel, so if we have reduced, which we've demonstrated, the collagen content in the scar by about 1/3, then that will lead to remodeling of the scar over a longer time. And we also pointed here towards the fact that the patients in the study had an average age of scar of about 12 or 13 years, so that is really a very old scar. And we may have more luck in looking at appearance over a short period of time, because these patients were only treated for 3 months, if we looked at different kinds of scars, so in the future -- we are in discussion with Professor Wood and her team looking to extend that collaboration that we've had with them that's already gone for a number of years. And the result we've got opens up a very wide and -- universe of different scars that we could now approach on the skin. And those include younger scars where the scar turnover by the body is a lot quicker. And therefore, we might see a faster response to that change in structure. We might look at scar prevention post surgery. And we are looking specifically here a patient group that's had burns and then gone in for surgery to correct that and then using a LOX inhibitor after their surgery in order to prevent these bad scars forming. There's nothing for these patients at the moment, so that's something that we're looking at specifically. We're also looking at different kinds of scars. So keloid is a scar that forms in Asian and African skin types populations. It's a disfiguring scar in some patients, and it leads to a lot of -- loss of function and obviously appearance problems. We're looking very close to see what the structure of those scars are and whether the kind of results we've seen in the established scar that we've had can be transferred into that area and whether we deal with keloids as a treatment of the keloid itself or we deal with perhaps preventing keloids in patients who are prone to them whenever they have surgery or injury. Dupuytren's is a disease where there's a fibrotic nodule on the tendon in the hand which causes the thing -- your fingers to flex upwards and you can't extend them. It's very, very common; almost no treatments at the moment other than surgery to try and release the tension in the tendon. And again we're talking to the world's leading experts in this area to see whether the change in fibrosis that we can form may give us an angle to go into that one as well and also surgical adhesions. Very often, in, say, abdominal surgery, the tissues bind together afterwards internally because of fibrosis. And that's something maybe we can also treat. So there's many different angles we can go forward in here. And as I said, we are in discussion with Professor Wood and other opinion leaders worldwide. And we will give an update on our plans for that skin scarring development line later in the year. So just to wrap up. We have ongoing studies. And obviously, in the myelofibrosis, there's a key one. Combination downstream will start soon, huge commercial opportunity. That market is worth $1 billion. The companies that have exited with Phase IIb data in this area in the last year, 2 years have gone for over USD 1 billion each, so there's a real prize to be had here to showing combination data with our drug in myelofibrosis. We're also obviously looking forward to recommencing further studies with Professor Wood and her team and other dermatologists and surgeons globally in the skin scarring area. And we have a drug in -- looking at Parkinson's disease which is about to recruit its first patient. So news flow later in the year that you can expect is that -- the announcement of starting the patients recruitment on that combination study with a JAK inhibitor in myelofibrosis, starting a study in scar treatment post surgery in burns and again for a pan-LOX inhibitor and then the study starting in Parkinson's disease as well, so some real things to look forward to. We'll be publishing more of this data that we've announced on myelofibrosis at ASH, the American Society of Hematology, later in the year, in December, which will be a high point for us in discussion with also potential partners at that point as well. So looking forward to the rest of the year now, on the basis of really strong first 6 months. And with that and -- just wrap up with a look at our register, which is still dominated by institutions which are our specialist health care investors, BVF, Karst Peak, Platinum, all specialist health care investors. All see the opportunity to -- with Pharmaxis now to really leap forward in valuation. And just to say that we finished the half with a pro forma cash of $14 million. So with that, [ Alfred ], I'll hand it back to you. And I'm happy to take any questions at this point.

Excellent. Thank you very much, Gary, for that informative presentation. Congratulations on the exciting FDA developments.

We've had a few questions come through which we are answering in a moment. [Operator Instructions] Gary, the first question comes from [ Allen ]. Has there been any new industry interest in 5505 since reporting the final interim data earlier in the month? Is the data enough to attract potential funding partners.

Yes and yes. So I was at BIO and which took place in Boston this year. It's the world's largest sort of pharma-biotech partnering thing. And I had a long list of companies that wanted to talk to us about our data. It's a little bit early that we couldn't really talk too much about the data that we've just released, but also we could talk freely about the data that we had at the end of last year that we published at ASH. And there's certainly strong interest in our data as it stands at the moment as a monotherapy, but as I mentioned on the -- earlier in my commentary, the data with combination with a JAK inhibitor releases a whole new level of commercial opportunities. So I think, whilst there is interest at this stage, the value of the asset in derisking it and showing the effect it has in combination with a JAK inhibitor is almost exponential, so there's certainly a strong drive for the company to explore those discussions with potential partners but then also to keep on sharing more data as it comes through. And an advantage of the study we're about to start is again it's open label. So even by the middle of next year, we will have some data that -- which starts to give us an indicator of what happens when you add 5505 to a JAK inhibitor in a myelofibrosis patient. And that's a really exciting time point to be around, I think, as we go. I mean it's the data from when we start that first patient to when we get through the first 3 and 6 months of that study will be fascinating to look at and really valuable for the company.

Questions from [ Dennis ]. Is the JAK combo study -- with the JAK combo study, will patients be dosed with 5505 for 12 months? Or 6 months.

They'll be dosed for 12 months. So we'll obviously get data at 6 months. We'll get data right the way through, but they -- the sort of defined time points when we will be taking, for example, looking at fibrosis scores will be after 3 months and 6 months and then 12 months. And we expect to see results which are indicative of what the drug does in combination at 6 months, but we feel the opportunity to see what happens if you leave them on longer and see the further effect of the improvement in the bone marrow fibrotic environment was something that we -- it would be very good to learn; and also -- and potentially valuable for both patients, regulators and potential partners.

A question from [ Kai ] in regards to 6302. What are the next steps? And are you in any near-term discussions with potential partners for it?

Yes. So that's an interesting point. So I think the data that we have, I think, as Fiona would -- said, is unprecedented, the level of change in structure of the scar. Nothing else has been able to demonstrate that, so that clearly attracts people who would like to talk to us and see what we're planning to do and whether there's an opportunity for them at this point. There's a lot of companies out there who specialize in dermatology. There are no drugs in the clinic in development for scarring. Scarring itself is a market which is worth $19 billion a year worldwide, and the -- even if you look at the subsegment of hypertrophic and keloid scarring. That's worth 3.5 billion. And current therapies are basically -- I guess, would fall into the category of devices and sort of laser or cryotherapy to try and improve the scarring. There is some pharmacology in terms of injections of steroids and things like that into the scarring, but they tend to have short-lived effects and have quite a lot of side effects as well and don't produce really much in the way of a change in the structure of the scar. Or you're looking at physical things like silicone sheeting and pressure bandages to try and improve. So I think we've got something which is absolutely unique. I think we've got something which is potentially extremely valuable. I think the study we've done gives us clinical proof of concepts and real confidence to go into the next stage. I think the value of the asset will be a lot higher if -- when we show also a change in the appearance of these cars going forward as well, on top of the change in structure. So we are certainly engaged in discussions with potential partners about this but at the same time very much planning to [ plow ] our own path to the next studies, which we aim to start some of them in the next 6 months. As I said, we're in discussion with Professor Wood and her team at the moment. We've got a study, which we're expecting to start recruiting, which will be in patients that have burns, who are post surgical. So to look at the effect of our drug in a scar prevention phase; as well as a scar in sort of improvement, "amelioration of an existing scar" phase; and a couple of other opportunities as well, so I think it's a really exciting time for us to be there. And we've got data which is attracting people. I'm not sure I'm ready to partner it just yet. I think there's a really valuable opportunity here for the company if we get the next study right.

[ Jowaha ], that answers your question also about the time line for the trials. Another question from [ Jowaha ] is can you talk to the more clearly defined batches of patients that you might be enrolling in the next set of extensive human trials.

Yes. The one which is absolutely clear now is the -- is to look at scar prevention post surgery. And in doing that, we've -- and because of our collaboration with Professor Wood, who obviously has a very large burns clinic. It -- in Perth in Western Australia. She has -- she looks at a very large number of patients from all over Western Australia every year. And so we're looking at that particular group and the burns, where they might have, say, more extensive burns, more than 5% of their body area; and to see whether we can -- by using LOX inhibition, we can prevent a scar, a burn scar, forming. Now all -- nearly all these patients end up with scarring after surgery, but in a lot of them, it's disfiguring and disabling as well and requires a lot of treatment afterwards with laser therapy, surgical correction very frequently. So there's nothing for these patients, and it's a real gold mine, so that's really high on our list of things to do, but I haven't also -- we certainly haven't given up on the other aspect which is the improvement of existing scars. I think keloids is something we see a really big commercial opportunity in and where there's a really unmet medical need. Really, again, nothing for these patients; and if we can find a way of studying that -- so we're looking at our data. And we're sharing that data with opinion leaders who focus on keloid scarring globally; and trying to understand which of the particular groups of keloid patients, we think, could be recruited into a study and which ones -- and what the design of that study has to be in order to really get us a result which not only satisfies the clinicians and the patients but one that would also stand up in front of a regulator like the FDA when they look at it. So that's I think one of the unknowns in the scarring and clinical development is there really aren't any defined end points which the regulators currently accept for scarring, so we need to work with them and with the clinicians and with the patients to understand getting the right design, which is why we're just taking a chance just to pause here and make sure we can go through those discussions before we kick off to the next study. Because the next study is potentially the one which is -- really unlocks the value in the drug and the company.

[indiscernible] tight on time, so I might just ask 2 more questions here. 1 more from [ Kai ]: Can you please talk to why the share price is where it's at and whether you think this fairly values Pharmaxis?

Yes. I mean our enterprise value, so -- or difference between cash and the value of the company, is only about 20 million. I think that's extremely low for a company with our stage of drug and with Phase II clinical trial data there. It may be [ an artifact of the ] history of the company. We've been listed for more than 20 years. And I think there's a -- maybe an element there of we need to demonstrate more. I think the reaction to the last data was positive, and we're looking forward now to demonstrating. I think we're showing what we can do. We're on time with what we're doing. The next myelofibrosis study or the combination arm is one which will -- we've talked about the -- it's starting quickly using, existing sites. We've got 20 sites up and we need to recruit 15 patients. And they now come from the broadly -- the broad group of myelofibrosis patients that are already treated on JAK inhibitors, so we expect fast recruitment and fast results from that with a study that's going to cost less than half of what the monotherapy study did, so I think -- I'm not happy with where the valuation sits at the moment. I accept [ that it's ] market. And I think the way we will correct that is with further data, and I think the data we've got coming is going to be -- you're not going to be able to ignore it.

Just one last question, another one from [ Allen ] -- where is it? There it is: the ASH conference coming up. Who is the target audience there? And what sort of data or information might you be able to present there that hasn't already been released via the ASX?

It will be probably a more detailed -- so the audience at ASH is hematologists primarily. Globally, I mean, it's the world's largest hematology conference. People come from all over the world. I think, last year, there were in the order of 20,000 people there. It's obviously taken advantage of by every pharmaceutical company as well that's interested in the field. They come to present their own data. They also come to look at other people's data. There are plenary sessions and discussions which go on, which really people are allowing to dig in and talk about the data that's there. The data that we will present will be a more detailed analysis of the data that we've already put up to the ASX. So the ASX has the headline data of the results of these trials and the patients. The ASH poster that goes up in December tends to give more information on the individual patients, the demographics so that the hematologists can understand the context of the results that they're seeing and draw more comparisons with the development of other things which they're seeing in the clinic. So we'll obviously wrap up with any further fresh data we have at that point from the monotherapy study, but it's unlikely that we'll be showing combination data at ASH in December.

Excellent, thank you very much, Gary. I will wrap up questions there, as we are out of time. If anyone does have any further questions, please feel free to e-mail them through. Gary and David's contact details are at the end of the slide presentations and the bottom of the ASX announcements. A recording of this webcast will also be made available for you on the Pharmaxis website. Gary, on behalf of the investors in attendance, thank you very much for your time today.

Thank you. It's a pleasure.