Entera Bio Ltd. (ENTX) Q2 2020 Earnings Report, Transcript and Summary

Good morning and welcome to Entera Bio's Conference Call to discuss the Interim Six Month Results from the EB613 Phase 2 Clinical Trial and the Financial and Operating Results from the Second Quarter of 2020. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to your speaker today Jon Lieber, the U.S. based CFO of Entera. Please go ahead.

Thank you and welcome to the call. Joining me on today's call are Roger Garceau, Interim CEO, Philip Schwartz, our President of R&D; and Arthur Santora, our Chief Medical Officer. A press release announcing the interim six months Bone Mineral Density data from the first 50% of the projected enrollment in the Phase 2 clinical trial, the EB613, are all of human parathyroid hormone 1 to 34 in development for the treatment of osteoporosis and Entera's financial and operating results for the quarter ended June 30, 2020 was issued earlier today. For those of you who have not yet seen it, it is available on the Investor section of our website at www.enterabio.com. On our call this morning, we will share with you a business update and review of our financial results, which will be followed by a question-and-answer session. Before we begin our prepared remarks, I would like to remind you that various statements we make during this call about the Company's future results of operations and financial position, business strategy, and plans and objectives for our future operations are considered forward-looking statements within the meeting of the Federal Securities Laws. Our forward-looking statements are based upon current expectations that involve risks, changes in circumstances, assumptions and uncertainties. In particular, the Phase 2 clinical trial of EB613 is ongoing and our conclusions from the interim data analysis may not be indicative of the final results from the trial. Furthermore, developments related to the COVID-19 pandemic continue to evolve, and the extent to which the pandemic will impact us in the future, will depend upon the duration and magnitude of such impact, and the numerous factors that the Company may not be able to accurately predict. These risks are described more fully in our SEC filings and are available on the SEC's EDGAR system and our website. We encourage all investors to read our SEC filings. All the information we provide on this conference call is provided only as of today, and we undertake no obligation to update any forward-looking statements we make on this call on account of new information, future events, or otherwise. Finally, please be advised that today's call is being recorded and webcast. I will now turn the call over to Roger Garceau.

Thank you, Jon. Thanks everyone for joining the call this morning. I look forward to this and future calls, when I lead in for a while. Earlier today, we announced that we believe our exciting six months data from the Phase 2 clinical trial of EB613 in postmenopausal women with osteoporosis or low BMD. Along with our financial and operating results for the second quarter of 2020, the data we announced today represents an update to the three month biomarker data, which we reported from the Phase 2 trial back in May of 2020. This now includes six months bone mineral density data or BMD data for the first half of the subjects from the original full arms in the trial. To remind everyone, the trial was originally designed with the placebo group and EB613 treatment groups of 0.5 milligrams, 1 milligram and 1.5 milligrams. Based on the interim biometric data, we announced in May of 2020, we added a higher 2.5 milligram dose group in July of 2020. And the six months interim data reported today, EB613 appears to have a positive impact on lumbar spine BMD in a dose dependent manner. Well, Art will provide additional color later in the call. I wanted to quickly summarize the data for you now. Based on the six month data, EB613 generated a main placebo adjusted increase in lumbar spine BMD of 2.15%, for the 14 subjects in 1.5 milligrams treatment arm, as compared to 16 subjects in the placebo arm. An additional analysis of BMD changes in all 613 treatment groups showed a significant dose-dependent trend in the percentage change in lumbar spine BMD. This further supports the decision we made in July to amend the protocol and add higher 2.5 milligram dose group. The totality of the data generated to-date for this Phase 2 trial supports the pharmacologic activity of six months treatment analysts process and we're very pleased with the interim results of Entera for study evaluating EB613 impact on bone density. As a reminder, increases in lumbar spine BMD have been associated with facture reduction in patients treated with subcutaneous PTH and a change in lumbar spine BMD now is generally the step to endpoint for regulatory approvals of novel PTH formulations. In July, we amended the protocol for Phase 2 clinical trial, discontinued the 0.5 milligram and 1 milligram dose group and add the 2.5 milligram dose group. This decision was based on the interim three months biomarker data as indicated we had not yet reached the maximum effective dose. While the data presented today supports that decision, these results do not include any study for the recently added 2.5 milligrams treatment arm. We believe the data from this dose range in clinical trial will be important to the future development EB613 including the selection of the final dose to move into a potential Phase 3 pivotal study, which we are now targeting to begin late 2021 or 2022. Furthermore, the data we reported today including the change in lumbar spine in the 1.5 milligrams treatment arm and the trend analysis finally greater BMD increases in greater doses are highly supportive of the potential of 2.5 milligram dose, we recently added to the Phase 2 study protocol. If the final six data from this trial demonstrate that daily dose of EB613 of 2.5 milligrams is associated with the increases in lumbar spine BMD, similar to that recorded and published data studies are apparently marketed subcutaneous PTH, we believe that there may be a substantial market opportunity to EB613 obviously subject to the successful outcome of any potential future clinical trials and the required regulatory approvals. The data we announced today was a plan an interim step in advance that we expected completion of enrollment of the Phase 2 study in the third quarter of 2020 and the final BMD and full market data for this study. Our assessment the data today we share with you include feedback from leading outstanding outside clinicians that have designed and conducted many, many osteoporosis clinical trials. We currently have 131 subjects enrolled in our Phase 2 trial, up from 106 subjects as we reported back in July. Our enrollment is back on track, following a partial lifting of the COVID-19 restrictions. We believe the value proposition of EB613 is very strong, due to the fact that only a small percentage of patients with osteoporosis were actually treated due to cost, convenience and compliance challenges. In market research, we recently reported points to a significant unmet medical need for an oral therapy that builds bone in this multibillion osteoporosis market. Operationally, we have continued to carefully monitor expenses. Our current cash on hand is sufficient to support our planned operations into the second quarter of 2021. We also continue to entertain interest in our underlying technology platform from a number of potential collaborators and partners. Develop to continue to make good progress on EB612 for hypoparathyroidism. In our previously published data, we confirm that oral PTH is effectively delivered into the bloodstream and activates the PTH dependent biological pathways in patients with hypoparathyroidism. Phillip will talk a bit more about this later in the call. In addition to advancing your internal PTH programs, we also continue to support preclinical work in our collaborations with Amgen. We are pleased with the progress we have made there. We continue to work with Amgen to move the research and development program forward in accordance with Amgen's project plans and objectives. I'd like to now turn the call over to Dr. Art Santora, our Chief Medical Officer to discuss the Phase 2 trial of EB613. Art?

Thanks Roger. As a reminder, the Phase 2 clinical trial is a dose ranging placebo controlled trial in female subjects with osteoporosis or low BMD and is being conducted at four leading medical centers in Israel. Subjects were initially randomized to receive either a placebo or one of three doses of EB613, 0.5 milligrams, 1.0 milligrams and 1.5 milligrams. As Roger mentioned earlier, in conjunction with the evaluation of the interim three months data that indicated the maximum efficacious dose had not yet been achieved, we amended the protocol to discontinue additional enrollment in the 0.5 and 1.0 milligram dose groups and added a 2.5 milligram dose group. We're able to do this based on the safety profile of EB613 in both the interim analysis of the ongoing Phase 2 trial and other previously conducted clinical trials of EB613. Based on our amended study protocols, we anticipate in rolling a total of 36 subjects in the 2.5 milligram group, 31 in the 1.5 milligram group, and 43 in the placebo group. When combined with the subjects previously enrolled in the 0.5 and 1.0 milligram doses, we expect the total enrollment in the Phase 2 trials would be approximately 160 subjects. Subject follow-up in the Phase 2 trial remain strong, with 68 of the first 80 subjects randomized, completing their six months visit, even with COVID-19 restrictions that began earlier this year. In addition, there have been no serious drug related adverse events in the trial. Finally, demographics of the subjects in this trial are consistent with other previously reported osteoporosis trials. As a reminder, this trial was designed to evaluate the effects of EB613 on multiple biochemical markers, including P1NP and Osteocalcin, those bone formation markers in CTX, a bone resorption marker at both three and six months and BMD at six months. Subject safety is monitored throughout the study through a standard set of safety assessments. The six months biomarker data are consistent with the three months biomarker data that recorded in May, with no significant changes in any of these interim biomarkers after treatment with EB613 for six months versus placebo. Based on these data, treatment with EB613 are orally delivered human PTH 1 to 34 as a biomarker profile it differs from injectable PTH 1 to 34. However, critical clinical importance, EB613 appears to have a positive impact on lumbar spine bone mineral density that is those dependent. While the increase in lumbar spine BMD and the EB613, 1.5 milligram group did not quite reach statistical significance versus placebo, P value was 0.08. It is a reasonable estimation of the potential treatment effect. In addition, a significant dose related increase in lumbar spine BMD was found on EB -- and when BMD changes to all three EB613 groups and the placebo group were analyzed together. Taken together these are very encouraging results. As expected and consistent with the published data from studies or subcutaneous teriparatide, an analysis of BMD of the total femur and femoral neck BMD site did not show a significant effect from treatment with EB613. Increases in and maintenance of BMD are widely accepted by clinicians throughout the world as indicators for an overall improvement of osteoporosis during PTH treatment. The change in lumbar spine BMD is the recommended Phase 3 study efficacy endpoint for a novel PTH 1 to 34 formulation intended to treat osteoporosis and develop using the FDA 505(b)(2) regulatory pathway. A fracture end point trial is not required because subcutaneous PTH 1 to 34 generically, named teriparatide for injection, has been shown to reduce the risk of fracture. Thus, we believe that the Phase 2 study is now well designed to determine the effects of EB613 daily for six months on lumbar spine bone mineral density over a 0.5 milligram to 2.5 milligram dose range. I will now turn over the call to Dr. Phillip Schwartz, our President of R&D to share some updates with you on EB612 and our Amgen program.

Thanks very much, Art. Good morning everyone. I would like to provide you with a brief update on EB612, our orally-delivered products candidates for the treatment of the orphan disease hypoparathyroidism. As a reminder, our goal is to treat patients' acute symptoms while normalizing serum and urine calcium levels to minimize the adverse effects of long-term calcium supplements and active vitamin Ds. We are developing EB612 to be used as a first line therapy that would be applicable to patients with different levels of disease severity. We've continued to conduct additional formulation work on EB612 including the identification of enhancements that we intend to evaluate in preclinical models, which if successful may provide the support to advance this program into a potential Phase 2b or Phase 3 clinical trial in 2021. As part of this work, we are evaluating the possibility that twice or three times daily dosing may mimic normal endogenous pulsatile PTH secretory activity and therefore results in a better PK/PD profile. If we are able to extend the overall exposure and AUC area under the curve for each dose and reduce the impact of food and the bioavailability, you may be able to increase the calcemic effect while also limiting the risk of elevated urinary calcium. To remind, you elevated urinary calcium is strongly associated with many morbidities of hypoparathyroidism. Our collaboration with Amgen for the development of an oral anti-inflammatory agent has continued and we are pleased with the progress we have made to-date. We are continuing to support the collaboration and Amgen has completed several studies that have included evaluation of different formulations of their drug. We also continue to focus on the development of our platform as it relates to the evaluation of new APIs and believes that these efforts have the potential to generate value through either additional validation of our technology platform and/or through potential business development activities. In the process of developing the technology for other molecules that are proprietary to potential partners, we continue to identify new technologies as well as enhancements to our existing platform. We look forward to this work potentially leading to additional patents and expansion of our capabilities. I'll now turn over the call to Jon Lieber, our U.S. CFO to cover the financial results.

Thank you, Phillip. Revenue for the six months ended June 30, 2020, was $94,000, compared to $74,000 in the first half of 2019 with revenue in both years attributable to the R&D services provided to Amgen. Cost of revenues for the six months ended June 30, 2020 and 2019 was 73,000 and 62,000, respectively, and were comprised with salaries and related expenses in connection with the R&D services provided to Amgen. Total operating expenses for the six months ended June 30, 2020 was 6.4 million and included 3.6 million in research and development expense, and 2.8 million in general and administrative expenses. Research and development expense for the six months ended June 30, 2020, consisted primarily of headcount related costs, external costs related to the conduct of EB613 Phase 2 clinical trial, and consulting expenses and fees related to the preparation of a potential IND application for EB613. General and administrative expense for the six months ended June 30, 2020 was primarily made up of salary and related expenses, including stock-based compensation, professional fees, D&O insurance expense and legal fees. Net comprehensive loss was 6.1 million or $0.34 per ordinary share basic and diluted for the six months ended June 30, 2020. As a reference point, we currently have approximately 18 million primary shares outstanding and 26 million fully diluted shares outstanding. At June 30, 2020 Entera had cash and cash equivalents of $9.8 million and in our 6-K that we filed today, we will report approximately $8.9 million in cash and cash equivalent as of August 12, 2020, which includes approximately $200,000 in proceeds raised through our ATM agreement with Canaccord. Based on current operating plans, we expect our 2020 operating loss to be approximately $11 million. This is subject to the expected timing of product development programs including EB613 and subject to any continuing impact of COVID-19 on our operations. As a result, we continue to believe that our current cash position will fund our operations into the second quarter of 2021. I will now turn the call back to Roger for concluding remarks before we go to Q&A.

Thank you, Jon. We are very encouraged by the BMD data we provided to you today, especially in the 1.5 milligram treatment arm and are eager to see the data from the recently added 2.5 milligram treatment group which was not part of the data we released today. The improvement in lumbar spine BMD represents an important trend, given our plan to use the 505(b)(2) regulatory pathway for EB613. As we believe that improvement in lumbar spine BMD will be required endpoint for any potential approval of EB613 to treat osteoporosis. We continue to believe in the market opportunity and the need for better therapies for a convenient oral format is substantial. This has been supported by recent market research and clinician feedback, but such all forms could be their product of choice for patients with moderate to severe osteoporosis. We also believe our technology platform offer several benefits to potential collaborators, who have expressed their interest in our patent protected platform which both delivers and protects macro molecules. We remain committed to opportunistically advancing these programs, while protecting our financial resources with the goal or to advance EB613 into a Phase 3 program. This ends our formal presentation for today. Operator, you can now open the floor for questions.

Thank you. [Operator Instructions] Our first question comes from Brett Hoffman with Maxim Group. You may proceed with your question.

Hi, Jon and Roger. Thanks for taking my question. I had some questions on the BD front. First of all congratulations on recognizing some revenue from Amgen in conjunction with the research work you're doing in collaboration with them. I'm wondering if there's any more color that you might be able to offer regarding the Amgen partnership and of course, sensitive to the fact that to the extent they must limit what you're able to disclose? And then also if you could provide a little bit more qualitative color around some of your other BD initiatives, I think it's clear to everybody who follows this exciting story that the underlying drug delivery technology for large molecules has a wide array of applications. Thanks again and congrats to Roger on the new seat. Appreciate you taking my question.

Thanks, Brett', I appreciate it as well. Thanks for your support. As far as both Amgen and other BD at this point, I'm going to ask maybe Jon, can you give a little bit more color on Amgen and then Phillip maybe you want to chime in for the BD and other efforts.

Sure. So thanks for the question, Brett. Good to hear from you as always. So with Amgen, we've done as Phillip mentioned in his remarks -- in his prepared remarks, we've done a whole bunch of work supporting the advancement of the program that they are moving forward and we've been pleased with the results so far. Obviously, they are in control of the project plan, but we've continued to support them, I think effectively in that effort. As a reminder, there are potentials for them to opt in for a couple of more molecules if they were to do that, kind of this, of course, come with some potential milestones that certainly would help us from a capital raising perspective and to offset a significant amount of cash flow and we, of course, don't have specific timing on that, but suffice to say that hopefully, if we can demonstrate some success there they will find that of interest and opt-in on those additional potential molecules. Maybe I'll pause there and turn it over to Phillip now.

Yes, hi, Brett. Pleasure. Yes, so in terms of Amgen, I'll just add that in terms of other molecules that we're looking at obviously, in general we look at both things that are in development and both products that exist in the market in terms of creating opportunities that people may not perceive otherwise. In terms of other BD activities that we're going on, I would bucket them into two or three different areas. We have numerous ongoing conversations with a number of different entities. Some of them has to do with brand new APIs, technologies that people are utilizing to create APIs and thinking about it not just from a convenience perspective, but also in the fact that sometimes many of the drugs that these people are developing are not amenable to being injected or to being infused for a variety of different biological reasons. So that's sort of one bucket and we have a number of conversations going on with companies who are in that space, who are trying to develop therapies for various areas, but cannot deliver them in the current state or the current matter that they are. And the second bucket is for people who have existing products, who are also interested in either doing life extension to those existing products or also just creating a larger market by creating greater convenience and that's a second bucket of conversations that we have. And finally, the third bucket is when people have drugs that are relatively late stage development and for whatever reason they found that it's no longer possible for a variety of different reasons, whether it be competitive or scientific to go ahead and proceed with those drugs as an injection, there will be the third bucket of opportunities. In general, what we've done is we've gone ahead and we have -- we'll material transfer agreements where people will send us material and then we can evaluate it and then from there hopefully, if we're successful and they are successful, we can move on to an agreement.

Thanks, Phillip. Great to hear from you as well.

Yes. Thanks, hopefully that answer your question a little bit Brett. Obviously, it's a big effort from -- especially from Phillip and the team, in terms of trying to like, how do we leverage our technology platform, because, which I believe is really solid and a good opportunity for folks to use.

Absolutely, and certainly not lots on the community that each molecule you develop the oral delivery for, you're generating new IP. Maybe one follow-up question, if there are no others in the queue. On the data readouts for PTH 1 to 34 and osteo, intellectually theoretically, is there an explanation for why you saw BMD improvement in vertebrae, but not in the femurs -- in the larger femur bones? How do you think about that? And I maybe -- if you don't mind, obviously you're evaluating higher doses, safety seems to be very clean. We agree it's a reasonable path forward, do you expect better results in the larger bones from higher doses?

If you look at what we see with injectable PTH, okay. You see virtually no change in hip or femur and that's exactly what we saw. So I'm not surprised at all and [indiscernible], the primary change in injectable 1 to 34 is really the spine BMD, which is what we saw. So the BMD pattern we see is similar to what we would have expected for that. So and -- so I'm very hopeful that the larger dose will produce the results we want, but obviously, time will tell, the data will show. Art, do you have any additional comments?

Yes. Just I agree with those -- that response. I just wanted to add that the spine is made up of bone that's almost exclusively what's called trabecular or cancellous bone. It looks spongy, very -- it's a network of bone with marrow in the middle of it and there is no dense cortical shell around. The femur however, the top of the femur has some intra-vector bone, but it is predominantly cortical bone, it's a dense bone that's found around the outside of long bones just because of the different biomechanical loads. So trabecular bone is spongy bone response quite well in a favorable way to parathyroid hormone. There is relatively neutral effect on the cortical bone -- the dense cortical bone that's found in long bones.

Thanks, guys, very, very helpful there. That's all from me.

Thanks, Brett. Other questions?

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Roger Garceau for any further remarks.

Well, I want to thank everybody for taking time this morning and joining the call. We're very excited about these results and look forward to providing you with an update, once we have any additional information or report. We all wish you have a very good day. Take care.

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.