Chemomab Therapeutics Ltd. (CMMB) Q3 2022 Earnings Report, Transcript and Summary

Greetings, and welcome to Chemomab's Third Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only-mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Barbara Lindheim, Vice President of Strategic Communications. Thank you. You may begin.

Welcome to the Chemomab Therapeutics 2022 third quarter conference call. Thank you for attending. I am Barbara Lindheim, Consulting Vice President of Strategic Communications at Chemomab. With me today are Dale Pfost, our Chairman and CEO; Don Marvin, CFO, Chief Operating Officer and Executive Vice President; Dr. Adi Mor, our Co-Founder and Chief Scientific Officer; and Dr. David Weiner, Interim CMO. Before turning the call over to Dale, please take note of our forward-looking statement. Today's call may contain forward-looking statements, which may be identified by words such as may, could, will, expect, intend, plan and other similar words and expressions. All forward-looking statements made today are based on management's current expectations, assumptions and beliefs about our business and the environment in which we operate. These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on today's call. Listeners should not place undue reliance on forward-looking statements and are encouraged to review our earnings press release that we issued this morning, together with our SEC filings for a more complete discussion of factors that could cause our actual results to differ materially from those expressed or implied in forward-looking statements. You can read a comprehensive list of those factors under the heading Risk Factors contained in our annual report on Form 10-K, together with factors under similar headings and the other reports and materials we filed with the SEC. Except as required by federal securities laws, Chemomab does not undertake to publicly update or revise any forward-looking statements subsequent to the date made as a result of new information, future events, changing circumstances or for any other reason. Let me now turn the call over to Dale.

Welcome to the Chemomab conference call covering the third quarter of 2022. I am pleased to report that we have continued to make good progress on multiple fronts since our last call. Today, I will cover the following three advances we achieved during the third quarter. First, we advanced our clinical programs for CM-101, our first in class monoclonal antibody that neutralizes CCL-24, a novel disease targets at the confluence of fibrosis and inflammation. Second, we unveiled promising clinical data from an investigator-initiated lung injury study showing that CM-101 reduced biomarkers of lung inflammation and fibrogenesis in hospitalized COVID patients with severe pneumonia. Third, we presented new preclinical data at two major scientific meetings, one supporting the role of CCL-24 in the pathophysiology of primary sclerosing cholangitis, and second, showing how Chemomab has used biomarkers as a strategic tool to inform and derisk our drug development programs. We continue to make good progress in our CM-101 clinical programs, as Dr. David Weiner will discuss in greater detail. In summary, we have been working to ensure that our Phase II liver fibrosis biomarker data will be analyzed and reported in the coming weeks. We continue to open new clinical sites for our Phase II trial in primary sclerosing cholangitis, or PSC, while expanding our patient recruitment and outreach efforts and submitting the global regulatory filings required to support trial expansion. Lastly, we have designed our planned Phase II trial in systemic sclerosis, or SSC, and initiated study start-up activities. In support of our ongoing efforts to educate the scientific and medical communities about the critical role of CCL-24 in fibroinflammatory diseases, the company made a number of presentations at important scientific meetings. Most significantly was Dr. Adi Mor's presentation of data from an investigator-initiated clinical study of CM-101 in hospitalized COVID-19 patients with serious lung involvement. Adi will discuss these findings shortly. We were very pleased to see that CM-101 was well tolerated and demonstrated activity on key biomarkers of inflammation and fibrogenesis that are also relevant for systemic sclerosis. These CM-101 induced changes in biomarkers that have relevance across other fibrotic and inflammatory indications are a good example of the types of data we hope to see in the liver fibrosis biomarker study we will be reporting on later this year. At the important American Association for the Study of Liver Diseases, AASLD meeting, we presented a poster with data that reinforces the key role of CCL-24 in the pathophysiology of PSC. Chemomab researchers used two animal models, testing immune cell trafficking to show that CCL-24 plays a critical role in the recruitment and migration of monocytes and neutrophils major players in causing the biliary damage that characterizes PSC. We also show that CM-101 can interfere with CCL-24-stimulated migration of immune cells in an experiment animal model of PSC. This new study adds to the growing body of evidence, validating our CCL-24 target and confirming the therapeutic potential for our CCL-24 neutralizing antibody. And yesterday, Dr. Mor was a featured speaker at the Anti-fibrotic Drug Development Summit in Boston where she gave a presentation highlighting the growing use of inflammatory and fibrotic biomarkers to inform clinical trial design and derisk drug development. Adi showed how Chemomab has strategically used biomarkers throughout the drug discovery and development process as a key translational tool and how we are continuing to use them today. Let me now turn the call over to Adi Mor, our Co-Founder and CSO.

Thank you, Dale. Today, I want to share new positive clinical data from a clinical study assessing CM-101 activity and safety in hospitalized patients with severe lung injury derived from COVID-19. Earlier this week, I presented this study at the Union Conference and International Conference on Lung Health. We also issued a press release on the study, and the slides from the presentation will be available on the Chemomab website. Some of the mechanisms underlying lung inflammation resulting from COVID-19 infection are similar to those seen in chronic diseases involving lung inflammation and fibrosis. This study was initiated by Professor Yair Levy of Meir Medical Center in Israel, a rheumatologist, who treats patients with systemic sclerosis and other rheumatological diseases. The objective of the study was to evaluate the drug safety and activity in hospitalized COVID-19 patients with severe pneumonia, including its impact on biomarkers related to lung inflammation that are also relevant in systemic sclerosis. The open-label single-arm trial enrolled 16 COVID-19 patients with severe respiratory involvement. All patients were hospitalized and were receiving styles of care therapy, including antiviral agents, corticosteroids and supplemental oxygen. All were treated with a single 10-milligram per kilogram intravenous dose of CM-101 on the first day of the study and followed for 30 days. Clinical parameters were tested daily during hospitalization and serum biomarkers were tested at baseline and on days 1, 3, 7 and 30 following drug administration. Administration of CM-101 to this acutely ill patient population was found to be safe and well tolerated. CM-101 exposures and target engagement profiles were similar to what Chemomab researchers have seen in previous clinical studies of CM-101. Importantly, rapid reductions in serum biomarkers of lung inflammation, fibrogenesis and neutrophil activity were observed post-treatment with CM-101. Reductions in the serum levels of biomarkers included the cytokines CXCL9 and CXCL10, two biomarkers that are highly associated with lung inflammation and are known to be strongly correlated with respiratory severity. For example, CXCL10 was reduced by a median change of 65% from baseline as soon as 24-hours post treatment with CM-101 and further reduced by almost 80% at day 3. The effect was sustained through the end of the follow-up period. It was noteworthy too that patients receiving CM-101 demonstrated a rapid and robust median reduction of 50% in c-reactive protein, or CRP, a well-known general marker of inflammation, as soon as 48 hours post-administration. CRP levels were further decreased by more than 90% at day 6 after CM-101 administration and remained stable until the end of the follow-up period. CM-101 also demonstrated larger and more rapid CRP reductions compared to a retrospective Covid-19 control group who had similar clinical characteristics and also received standard of care therapy. Lastly, treatment with CM-101 impacted biomarkers that are associated with the formation and degradation of the extracellular matrix, such as Procollagen 4 and C3M, which were highly elevated in these patients at baseline and were significantly reduced by a median change of 25% as soon as 72 hours post-treatment, a reduction that remained stable until the end of the follow-up period. In conclusion, this study confirmed and extended the safety and tolerability profile of CM-101 and demonstrated clinically relevant changes in biomarker associated with lung inflammation and fibrogenesis further supporting CM-101's anti-inflammatory and antifibrotic effects. Moreover, we believe that these results add to the data suggesting the TM11 has the potential to attenuate lung inflammation and fibrosis, further strengthening the rationale for treating systemic sclerosis patients with this drug. These new clinical data also contribute to a growing body of evidence demonstrating CM-101's anti-fibrotic and anti-inflammatory effects in varied organs including the lung, liver and skin. We look forward to supplementing these encouraging data with the clinical and biomarker data we will be reporting in the coming weeks for our liver fibrosis study in NASH patients. Together, we expect them to increase our understanding of the potential therapeutic utility of CM-101 across a number of fiber inflammatory disorders. I will now turn the call over to Dr. Dave Weiner, our Interim Chief Medical Officer.

Good morning. Today, I will be providing brief updates on the status of our CM-101 liver fibrosis trial in NASH patients, and our Phase II trial in primary sclerosing cholangitis. I will focus my remarks on providing an overview of the design of our Phase II trial of CM-101 in patients with systemic sclerosis. We have been working closely with experts and look forward to sharing the planned study with you and the systemic sclerosis community. Let me begin with the liver fibrosis trial, a randomized, placebo-controlled trial evaluating CM-101 administered subcutaneously at a dose of 5 milligrams per kilogram in patients with nonalcoholic steatohepatitis, or NASH. We are on target for a final trial readout before year-end and look forward to sharing the clinical data at that time. We believe that the data from this trial will provide useful insights in support of the overall CM-101 development program. Although the sample size is small, the encouraging signs of activity we saw in the Phase Ib study of CM-101 in NAFLD patients and the biomarker activity reported this week in a lung injury study in hospitalized COVID-19 patients makes us optimistic that this study will produce informative results. Importantly, these data represent the first readout of CM-101's activity in patients with established liver disease. As I've noted previously, we believe the study results should also provide us the pharmacokinetic and tolerability data needed to inform the next steps in the development of our current subcutaneous formulation of CM-101. Turning to our Phase II primary sclerosing cholangitis trial. We continue to actively recruit patients across clinical trial sites in the U.S., Europe and Israel. We are adding additional trial sites and are advancing the regulatory submissions needed for implementation of a major protocol amendment supporting trial expansion and open label dosing. We are ramping up recruitment activities via personal outreach to clinical investigators and staff forming collaborations with patient advocacy groups, enhancing our patient and physician communications and increasing our use of social media and other proven methods of reaching patients and referring physicians. We believe these efforts will enable us to meet our recruitment goals, and we currently remain on track to report out top line data from the double-blind portion of the trial in the second half of 2024. Lastly, we will be performing an interim safety analysis of the currently enrolling dose cohort and expect the analysis to be completed before the end of this year. The primary purpose of this safety analysis is to enable review by the CM-101 data monitoring committee to support the evaluation of the higher 20 milligram per kilogram dose in the CM-101 clinical development program. Turning to systemic sclerosis. Today, we are providing an overview of our planned clinical trial in systemic sclerosis or SSC. SSC is a complex rheumatologic disorder characterized by inflammatory and fibrotic pathophysiology in multiple tissues. Despite recent approvals of therapies that can slow the progression of interstitial lung disease in SSC patients, there remains a clear unmet medical need in this disorder, a novel therapeutic that could address various manifestations of the disease, particularly the dermatologic aspects would represent a major advance in the treatment of SSC. We are initiating our clinical evaluations based on a strong therapeutic rationale for the neutralization of CCL-24 in this rare disease. This rationale includes multiple convergent lines of evidence, including demonstration of CCL-24 expression and relevant physiology in the skin, vasculature and lung, demonstration that genetic deletion of CCL-24 in rodents attenuates manifestations of skin and lung disease in a bleomycin challenge model of SSC and translational data suggesting that patients with SSC have high serum levels of CCL-24 and that higher levels of CCL-24 in these patients are correlated with a greater likelihood of developing pulmonary disease. In this trial in SSC patients, we seek to confirm the critical role of CCL-24 in this disease and to generate data that can establish biological and clinical proof-of-concept for CM-101. This study is designed to enable us to identify the optimal patient population within SSC to target with CM-101, as well as inform the selection of appropriate endpoints for subsequent trials. To that end, we will enrich the study with SSC patients who have higher levels of CCL-24 and may, therefore, be more likely to respond to neutralization of this critical chemokine. We will also study patients with limited and those with diffuse cutaneous manifestations of the disease. The trial will be a randomized, double-blinded, placebo-controlled study that will enroll 60 patients with SSC. To be eligible for the study, patients must manifest 2 key characteristics, the presence of clinically active disease, either dermatologic or pulmonary and high serum levels of circulating CCL-24. 40 patients will be randomized to treatment with CM-101 and 20 patients will be randomized to placebo. Of the 40 patients on active treatment, approximately half will have limited SSC and half will have diffuse cutaneous disease. The study includes a 24-week double-blind period during which patients assigned to active treatment will receive CM-101 at a dose of 10 milligrams per kilogram via intravenous infusion every 3 weeks. Following the double-blind period, patients will enter a 24-week open-label treatment period, where all patients will receive CM-101 at a dose of 20 milligrams per kilogram via intravenous infusion every 3 weeks. All patients enrolled will undergo a skin biopsy at baseline and again after the double-blind treatment period, along with multiple clinical assessments of skin, vascular and pulmonary function. The primary outcome measure for the trial will be demonstration of the safety and tolerability of treatment with CM-101. All other outcome measures will be principally assessed as changes from baseline to the end of the double-blind treatment period. The secondary outcome measures of the trial are focused on highly relevant and informative biological readouts. These secondary outcomes include evaluation of multiple serum-based biological markers that are known to be associated with different manifestations of SSC, including inflammatory cytokines, such as CCL2, IL-6 and CXCL10. Vascular and growth factor-related biomarkers, such as VEGF and PDGF, pulmonary-related biomarkers, such as KL-6, KL6SPD and CCL18, and lastly, fibrogenesis and extracellular matrix biomarkers, such as collagens, MMPs and ELF scores. Inflammatory, fibrotic and target expression markers in skin biopsies, including but not limited to CCL-24 and CCR3 expression levels. Pharmacokinetics and target engagement of CM-101, and we will monitor for the presence of any potential antidrug antibodies during the study. Exploratory biological outcome assessments will include immune cell phenotyping, assessments of neutrophil function and ex vivo biological assay. Exploratory clinical outcomes will include evaluation of vascular involvement, using nailfold capillaroscopy, vascular imaging and digital ultra-burden in involvement using the modified Rodnan scoring, pulmonary disease involvement using pulmonary function tests and multiple patient reporting outcome measures. The data collected should also enable us to evaluate global effects on intervention with CM-101 using the revised CRIP scale. We intend to conduct this study at multiple sites in the United States, the European Union and Israel. We are currently finalizing the required regulatory documents, and we intend to file an investigational new drug application with the U.S. Food and Drug Administration in the coming weeks. We anticipate that the trial will be open for enrollment by the end of this year or early in Q1 of 2023, and we anticipate that the top line data readouts for the trial will be available in the second half of 2024. With that, I will turn the call over to Don Marvin, our Chief Financial Officer, Chief Operating Officer and Executive Vice President. Don?

Good day. As CFO of Chemomab, I am pleased to have this opportunity to communicate directly with our shareholders and other stakeholders. Today, I will review highlights of our third quarter 2022 financial performance. Please see the press release we issued this morning for more detail. As you know, the market for biotech stocks remains very challenging. I want to note again that while we cannot change the markets, we can ensure that we are not distracted from focusing on what we need to do to build a successful company. And for Chemomab, that is to ensure we are pursuing the optimal development path for CM-101, prudently managing our finances, conserving capital to the extent feasible, while advancing our clinical programs and as rigorous fashion as possible and monitoring our ecosystem for potential opportunities to bring additional attractive assets in-house as resources permit and for tracking competitive challenges. We believe we are doing a good job delivering on these goals, and we will strive to do so going forward. Let me now share a summary of our financial performance for the third quarter of 2022. Cash, cash equivalents and bank deposits were $46.5 million as of September 30, 2022 compared to $51.8 million at June 30, 2022. R&D expenses were $5.4 million for the quarter ended September 30, 2022 compared to $1.5 million for the same quarter in 2021. The increase in R&D expense year-over-year primarily reflects the increase in activities in support of our preclinical and clinical programs. G&A expenses were $2.9 million for the quarter ended September 30, 2022 compared to $1.4 million for the same quarter in 2021. The increase was primarily due to increases in salaries and related benefits expenses mainly related to key additions to the senior management team, as well as increases in noncash share-based expenses. Net loss was $8.1 million or a net loss of approximately $0.035 per basic and diluted ordinary share for the third quarter of 2022 compared to $3 million or a net loss of approximately $0.013 per basic and diluted ordinary share for the quarter ended September 30, 2021. The weighted average number of ordinary shares outstanding, basic and diluted were 228,773,418 equal to approximately 11.4 million ADSs for the quarter ended September 30, 2022. We continue to prudently manage our cash and currently expect our runway to last through the end of 2023, as we indicated in our last call. We appreciate your continuing support and invite you to reach out if you would like to communicate with us directly. I will now turn the call back to Dale. Dale?

Hope we have conveyed some of our excitement about the momentum we are building at Chemomab. We look forward to sharing the results of our liver fibrosis biomarker trial in the coming weeks to continuing to expand and accelerate our PSC trial and to launching our innovative systemic sclerosis trial. These debilitating diseases are currently so poorly treated. We are optimistic that the unique dual mechanism of CM-101 has the potential to modify the progression of these disorders at the confluence of inflammation and fibrosis and to make a real difference for patients. We do appreciate your continued support. Stay tuned. Operator, we are ready to open the floor to questions.

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question is from Kristen Kluska with Cantor Fitzgerald. Please proceed with your question.

Hi, good morning. And good afternoon, everybody. Thanks for taking my question. First on SSC, could you talk about the percent of the overall patient population that has these higher levels of CCL-24 that you're hoping to enroll? And then I know that preclinically, you've shown a correlation to CCL-24 levels and disease severity. So should we be expecting these patients to be more on the moderate to severe disease spectrum?

Dave, do you want to start with that and then maybe I'll pass it to Adi.

Yeah, happy to do that. Good morning, Kristen. Yes, we are actually mapping out currently what CCL-24 levels look like across the systemic sclerosis population. The intent in the trial is to not impair enrollment. So we'll enroll those probably with roughly about 70%, 75% tile or greater levels within systemic sclerosis as we screen. And so without a deep knowledge and deep understanding of what exact cut-offs are for this particular experimental cytokine in that population, we're approaching it from a very practical perspective where we intend to - essentially exclude those with very low levels. Adi?

Yes. Thank you. So I just can add to your second question, Kristen, and thank you for that, is that indeed, we have said in the past that CCL-24 correlate with several measurements and manifestations of systemic sclerosis, pulmonary, digital or vascular-related one as well as some fibrotic-related biomarkers like ELF. So we do see that - or believe that this population with the cut-off – it will be determined will provide a better chance for success in terms of enrolling the more relevant patients with CCL-24 and the ones that are more active overall in the different spaces.

Thank you for that. And are you aware of any obvious items that might correlate with higher levels of CCL-24 without necessarily conducting some of these extensive tests. So I know it has a role in both the fibrotic and inflammatory markers of these conditions. But for example, like are there certain symptomology that are more reflective of having CCL-24 levels? Or perhaps, have you noted any differences related to different patients from coming from different geographies?

Adi, do you want to take that one?

Yeah, sure. So a lot about the geographies, but we did see definitely correlations between CCL-24 and ELF. We have seen that patients with higher CCL 24 had baseline across more predictive for the deterioration of their lung function, and we're also seeing data on correlations with a more vascular digital alter related their manifestation of the disease. But this is overall what we've seen so far and part of why we have decided to include this parameter as an inclusion criteria.

Okay. Thanks. And maybe last question for me. You've had a number of scientific presentations over the last couple of days here. Would love to hear some of the feedback you've heard from the scientific community?

Adi?

Yeah, sure. So actually, it's a great opportunity to share that just yesterday I presented in Boston and the FDD with a great audience of physicians and researchers specifically in the field of inflammation and fibrosis. And I also presented the study that was presented at the Union conference a day earlier, where we have seen clearly that an administration of CM-101 single dose of CM-101 into patients with lung injury derived due to COVID-19. And obviously, we all know the similarities in the lung injury between COVID-19 and some other chronic diseases like systemic sclerosis.

Okay. Our next question comes from Jeff Jones with Oppenheimer. Please proceed with your question.

Good morning or good afternoon, guys, depending on where you're sitting. And thanks for taking the question. I guess two questions. One, I guess, just following on the biomarker discussion. Is there a way that you've looked at to evaluate if the CCL-24 elevation is a result of the inflammatory state or if it's a driver saying using related biomarkers, though as to differentiate those patient populations more discriminately as to who are likely to be responders to therapy? And then on the PSC side, I believe you indicated top line data from the blind port population or the blinded portion of the study in 2H 24. Have you given any thought to reporting our interim data perhaps on the original 10 mg per kg cohort? Thanks.

Dave, do you want to pick up the second one first?

Sure. Happy to do that. Good morning, Jeff. Yes, that is certainly a consideration we make – we have. That is an option that we can include, particularly since that cohort is likely as you surmise to enroll in the nearer term than the full - than all the additional cohorts that we added through the recent amendment and trial expansion. As we position the study and think about the study, it is our hope in the longer run that this could be a regulatorily supportive study. And as such, we would like to protect it in that sense. And so that decision, although it's an option to us is, those are the two things that we're weighing, an earlier look at data versus the [indiscernible] when you do an interim analysis on study power for any particular outcome. So I think more to hear there as our trial unfolds.

I also have a --

Yes. I'm happy to start on the second question then if I do return --

I am here, if you can hear me.

Okay. Great, wonderful. On the CCL-24 here, the strategy here is to try to enrich biologically in this early trial for patients that have high levels of our target, right? And this is a mechanism to do that quite straightforwardly. The questions that you've asked the very - are exactly the ones we're exploring, right? So Adi and her colleagues and many people have been exploring and looking at either through retrospectively or looking at different patient populations and trying to ask the question of what is the relevance of those elevated levels with respect to, how do they correlate either to biomarkers or to clinical outcomes? And clearly, we see very encouraging data there. This is the motivation for us to study exactly that population with our antibody that neutralizes CCL-24. So I think the actual trial itself is going to ask the question you're asking, which is in that group of patients, does - what is the relationship between those higher levels and biomarkers or clinical outcomes. We'll get insight in that from the trial, and we'll also understand whether neutralizing that would have a greater effect size given the higher levels to begin with. So that's part of the strategy there. Adi?

Yeah, I think you covered that very well. You were asking, Jeff, if it's kind of the cause or part of the cycle. And for systemic sclerosis and PC we're obviously not familiar with what is the cause of disease, but we have seen preclinically, the CCL-24 is involved in kind of perpetuating this vicious cycle of inflammation and fibrosis. So even if the injury is some kind of an environmental or genetic kind of reason, CCL-24 was found by our models to kind of further progress the disease in this vicious cycle by its expression alone/

Great. I appreciate that insight. Thanks, guys.

Thank you.

[Operator Instructions] Okay. It appears that there are no further questions at this time. So I would now like to turn the floor back over to management for closing comments.

Well, thank you for your questions and interest in Chemomab today. I believe our team and programs are making great progress, and we look forward to further updates in the months ahead. Thank you very much.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.