iBio, Inc. (IBIO) Q4 2021 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by and welcome to the iBio fiscal 2021, Fourth Quarter and Full Year financial results conference call. 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 will now turn the call over to your host, Stephen Kilmer, Investor Relations. You may begin.

Thank you. Good morning, everyone. Before we begin, I would like to remind you that during this call, the Company will be making forward-looking statements regarding our current expectations and projections about future events that are subject to risks and uncertainties. Reference to these risks and uncertainties are made in today's press release and disclosed in detail in the Company's periodic and current event filings with the Electric Securities and Exchange Commission. No forward-looking statements can be guaranteed and the actual results may differ from the results discussed in the forward-looking statements. The information on this call is provided only as of the date of this call, and we undertake no obligation to update any forward-looking statements contained on this conference call on account of new information, future events or otherwise, except as required by law. On the call today representing the Company are Thomas Isett, iBio 's Chairman & Chief Executive Officer, Randy Maddux, iBio 's Chief Operating Officer, Martin Brenner, iBio 's Chief Scientific Officer, and Rob Lutz, the Company's Chief Financial and Business Officer. With that said, I'll now turn the call over to Tom.

Great. Thanks, Steve. And good morning all. I'm pleased to report another productive period for iBio, highlighted by a major expansion of our oncology portfolio. Specifically, in August, we announced the acquisition of the rights to RTX-003, a novel antibody developed by RubrYc Therapeutics for the treatment of solid tumors. We also entered a strategic collaboration with RubrYc, that provide us access to their proprietary antibody discovery platform. We think this will fit nicely with our own recently established drug discovery capabilities. And another recent highlight relates to our infectious disease area. In September, we took another step forward with our COVID vaccine candidate development by submitting a pre -IND package filed by 0202 to the FDA. But before going into more details on these advancements, I'd first like to take a step back and describe our structure and business model, and explain why we believe iBio represents such a unique and compelling investment opportunity. Our Company now operates across two distinct but highly complementary segments. First, biopharmaceuticals, which includes our therapeutics and vaccine businesses. Our areas of focus include oncology, fibrosis, and infectious diseases, as well as areas of unmet medical need, wherein, those specialties overlap. Our second segment is bioprocess, which houses our products and services business units. The latter operates as iBio CDMO LLC and offers contract development in manufacturing services to third parties, as well as to our bio-pharmaceutical segment where applicable. The areas of focus for the bio-process segment include the provision of recombinant proteins to biologics developers using our proprietary plant-based FastPharming manufacturing system. And that's not to mention development services for improved product quality with our Glycaneering technologies. Randy will be describing the FastPharming system in more detail shortly. But at the moment, it's worth noting that we intend to use the speed and quality of the platform to create strategic advantage for our proprietary drug development initiatives. Beyond that, however, we envision FastPharming has the potential to become the industry's preferred alternative to Traditional Mammalian Cell Culture bio-production. Its speed, scalability, quality, and sustainability, can fundamentally change the paradigm of recombinant protein drug development by taking manufacturing off the critical path while making it greener, at the same. Thus, we've created the bio-pharmaceutical and bio-process segments, in order to help fully capture the value of the platform. To that end, we see significant synergy between the two, specifically, the advances we're making with developing our own molecules, using FastPharming helps validate the platform for perspective customers of our bio-process business. Meanwhile, our work in bioprocess helps create visibility opportunities for in-licensing therapeutics and vaccines to enhance the value of our own bio-pharmaceutical pipeline. So thus far, I've described the tremendous opportunities that we're beginning to unlock [Indiscernible] bio, but maybe more importantly, we're starting to see our Business model work in practice. RubrYc is a great representative example. As with many companies trying to advance monoclonal antibody therapeutic, but simply to do so using traditional mammalian cell culture methods, [Indiscernible] thing in terms of the time and cost required. That's true whether building one's own production capability or having to wait in line for the services of an established CDMO. And if the antibody has special glycosylation needs, then development costs and timelines only tends to increase further. In the case of RTX-003 from RubrYc will not only be able to give those very promising therapeutic candidate a new life on the FastPharming platform, where it will be known as iBio-101. But we have the potential to enhance its potency also, with our Glycaneering Technologies. Let me now turn to summarizing the significant progress we've made over the last 12 months. Around this time, last year, we laid out an ambitious plan to expand our biopharmaceutical pipeline, targeting 3 main areas, oncology, fibrosis, and infectious diseases. Today, we have successfully executed on that strategy with programs in all 3 areas. With respect to oncology, we announced in fiscal Q4, the establishment of our San Diego -based drug discovery team. We followed that up with the addition of three [Indiscernible] disclosed, and any cancer targets, and our partnership with FairJourney Biologics. Thereafter, we reached agreement with RubrYc for RTX-003. We're truly excited about the prospects with second-generation any CD25 monoclonal antibody, and Martin will be explaining why a little bit more detail later. But this isn't even the half of it. As part of our relationship, we also gave access to the RubrYc discovery engine, which uses artificial intelligence to aid in the development of new antibodies against epitopes that have proven difficult to target using standard approaches. Putting it all together, we believe we now have access to key drug discovery and development platforms, that will enable us to sustainably move multiple cancer immunotherapy candidates into our pipeline over the coming years. Then, regarding fibrosis, we continue to advance our work on iBio-100 molecules and endostatin E4 peptide that has demonstrated strong endofibrotic activity in preclinical models of disease, for systemic scleroderma and idiopathic pulmonary fibrosis. As a quick reminder, the FDA has granted iBio orphan drug designation for. iBio-100 for systemic scleroderma. And we remain on track to initiate IND enabling studies by mid-2022. With regards to infectious diseases and COVID-19 specifically, we continue to believe that a nucleic acid sub-unit vaccine may have the potential to address the growing mutational threat of the SARS COVID 2 virus, while addressing other unmet needs associated with current vaccines displaying spike [Indiscernible]. We announced in July the successful results of our preclinical immunization studies on iBio-202, wherein we observed robust memory T-cell responses. We've continued to advance our development efforts with a submission of a pre-IDE package to the FDA earlier this month. And once again, Martin will allow a little bit more color on that program as well. Finally, we also have an initiative in animal health with iBio-400, our classical swine fever vaccine candidate. We believe 400 addresses the current unmet need, as most swine flu vaccines cannot differentiate infected from vaccinated animals, and those that can, are relatively expensive. Classical swine fever has been designated a priority U.S. agricultural bio-threat to the $7 billion use pork export market, so we believe there is a significant commercial opportunity to develop an improved, less expensive vaccine for this underserved market in animal health. I'd now like to turn the call over to our COO, Randy Maddux, who will explain in greater detail how our FastPharming platform helps us expedite discovery through the R&D process, and ultimately accelerating the concept to [Indiscernible] timeline. Randy.

Thanks, Tom. I'm happy to be here on the call with you all today. On past calls, while we have focused on the many benefits of our FastPharming system, we haven't laid out exactly how they are derived. I'd like to take a few moments to do that now. As some of you may know, our FastPharming system allows us to produce bio-pharmaceuticals using plants. What you may not know is that greener options for the pharmaceutical industry are sorely needed. In fact, one surprising study showed that the pharmaceutical sector is 55% more emissions-intensive than the automotive industry. There are other benefits to our platform too, such as reduced time and cost to move from concept to clinic, easier scalability, and lower contamination risk from a mammalian viruses and prions. This ESD-based platform is at the heart of what we do. The process itself is straightforward. First, we start by growing our plants indoors using vertical farming techniques, which include advanced hydroponics and controlled LED lighting systems. The plants we use have a weak immune system and they are particularly susceptible to infection by certain types of bacteria. More on that in a minute. Next, we synthesize the gene, encoding the protein we want to make and clone it into one of our FastPharming vectors. The vectors are then loaded into a species of agrobacterium so that the microbes are armed to deliver the genome entrance to its ultimate destination. We then create a solution of the agrobacteria, dipped our iBio plant into the bath, apply vaccine, and infiltrate the bacteria into the leaf tissue. With the bacteria infecting the plants, they deliver the gene factors into the plant cells, essentially turning each plant into a little bioreactor. The target protein continues to be expressed in the leaves as the plants grow. iBio then harvest the leaves, and isolate and purifies the protein. It can then be formulated into the desired final product. Plant-based production saves months in initial setup time, compared with traditional methods. In large part because there's no need for expensive, labor-intensive cell line engineering. The risks and delays associated with scale-up are also reduced. Since we are transiently transpecting the plants at scale. If we want more product, we simply grow more plants. Thus, the material produced in small quantities during development is highly comparable to the material produced at commercial scale. And there are notable differences between protein expression in plants versus traditional mammalian cell culture systems when it comes to sustainability. At scale, traditional methods commonly utilize thousands of liters of specialized water for injection in a large energy-intensive bioreactor operation, that often deploys the use of large quantities of single-use plastic disposables. In contrast, the main consumables in the FastPharming operations, are seeds, bacteria, and purified water. As Tom mentioned earlier, the iBio business model is built on delivering speed, scalability, and sustainability, to change the paradigm of drug development and manufacture, and FastPharming allows us to execute on this strategy, both for our proprietary biopharmaceutical development programs, and for our bio-process customers. We have intellectual property and deep industry know-how to use plans to produce biological medicines. FastPharming allows us to more quickly deliver our growth portfolio from concept to clinic, which saves time and allows for faster cycles when testing innovative medicines. In addition, FastPharming also provides the opportunity for iBio to capture significant value through out-licensing of select pipeline assets. In exchange for development and commercial rights, iBio can sign attractive supply agreements for clinical-stage materials with partners. The economic surrounding such agreements are significant, with later-stage clinical trial supplies likely to capture multi-million-dollar opportunities. And with that, I will turn it back over to Tom.

Great. Thanks, Randy. So having provided a review of our business segments, I think it's appropriate to give a little bit of perspective on how we plan to build value for our shareholders with our business model. For instance, the deal struck which were a break to secure rights to an [Indiscernible] antibody was based upon a multitude of factors. Not the least of which was recognizing the external value placed on next-generation immunotherapies. To that end, we think it's important to remind investors that there has already been significant external validation for a molecule with the mechanism of action like iBio-101. Specifically, there was a recent M&A transactions centered around on anti-CD25 monoclonal antibody that, with attainment of various milestones, could reach a value of over $750 million. So as we evaluate future opportunities, we want our investors to know that we're not only looking for first-in-class or best-in-class therapeutic potential, but also, external third-party validation by highly reputable organizations. Of note, by taking this fast forward approach, we also have the added benefit of learning from a competitor who may be slightly ahead in clinical development. We intend to use their learnings in the clinic to our advantage as we think about how to formulate our [Indiscernible] plants. Now let me turn the call over to Martin Brenner, our CSO, for the more detailed review of our pipeline. Martin?

Thanks, Tom. I'm excited to share some updates on iBio's bio-pharmaceutical pipeline and drug discovery activities, particularly in the area of oncology. In August, iBio significantly expanded its immuno -oncology pipeline and R&D capabilities in a partnership with RubrYc Therapeutics. As Tom mentioned earlier, through this strategic collaboration with RubrYc, iBio expanded its pipeline by licensing the next-generation anti - CD25 antibody immuno -oncology asset, RTX-003, which we will refer to as iBio-101 as we bring it on to the FastPharming platform. CD-25 has emerged as a promising target for cancer therapeutics. It is expressed by immune-suppressive regulatory T-cells or T - regs, which allow cancer cells to evade the immune response, but also by tumor attacking T - effector cells, or TFs. First-generation anti - CD25 antibodies potently blocked CD25, but unintentionally also suppressed the IL-2 signaling pathway, which resulted in the depletion of both the immune-suppressing T - regs, as well as the cancer-killing TFs. Depleting both types of T-cells therefore had no impact on the tumor micro-environment. While blocking IL-2 signaling, also led to unwanted toxicities. However, second-generation anti-CD-25 antibodies, like iBio-101, have more refined epitope binding, which enables them to block CD-25 while preserving IL-2 signaling, which leads to preferential depletion of immune-suppressing T-Rex while allowing the TS to attack tumor cells, thereby creating a tumor microenvironment highly inhospitable to cancer cells. Pre-clinical data showed that this molecule generates a strong anti-tumor response when administered as a monotherapy or in combination with checkpoint inhibitors. IND -enabling studies for iBio-101 are expected to begin by mid-2022. Beyond iBio-101, we aim to bring additional new immuno -oncology candidates to clinic faster and more cost-effectively, through our discovery collaboration with RubrYc. RubrYc's robust discovery engine uses propriotary predictive algorithms to generate Mesa scale engineered molecules, MEMS, which are antigens that steer antibody discovery towards very specific epitopes that have proven difficult to target using standard immunization and screening strategies. As Tom noted earlier in the call, we also anticipate pairing RubrYc's platform with iBio's Glycaneering technology, which employs transgenic plants to optimize protein glycosylation patterns to increase cancer cell killing potential. In a major step towards establishing our own in-house struck discovery capabilities, we have signed a lease for our new drug discovery site in San Diego, California, which is expected to become fully operational in the first quarter of calendar 2022. And added 3 oncology targets to all pipeline of therapeutic candidates in July. In addition, as part of our plan to collaborate with best-in-class technology partners, we entered into a research services agreement with FairJourney Biologics, leader in antibody discovery and optimization. Under the accord, iBio gained access to novel display technologies, and proprietary antibody libraries. Finally, turning to all work on COVID-19, I would like to elaborate on our DAVI strategy. The acronym stands for our approach that focuses upon designing a next-generation vaccine that addresses D for durability, A for access, and VI for variant inclusion. While the current vaccines that use the spike protein are effective, recent data suggests that their ability of the immunity conveyed appears to be waning over time. Also, access to these vaccines continues to be problematic in several regions of the world, because of the expense and cold chain requirements associated with some products or due to challenges with intramuscular injection, or simply continued demand. Additionally, the emergence of the Delta variant and others of concern, suggest that there may be value in designing a vaccine that can provide better assurance of immunity against future variants and be less susceptible to the risks of the spike protein escape mutant. It is with this strategic approach in mind, that we've designed iBio-202. It deploys the use of sub-unit, the nuclei capsid, or N-Protein of Sars -COVID 2, rather than the spike protein. Because the N-protein is more highly conserved and the spike, we believe it may have advantages as a vaccine antigen towards providing immunity from perspective future variants. With respect to durability, the preclinical data we observed suggest that iBio-202 has the potential to drive long-lasting memory T-cell responses. And lastly, with regards to access of Protein sub-unit vaccine, like our candidate, would be unlikely to have special cold chain requirements and we could scale up manufacturing in our FastPharming facility. While there's still much work to be done to continue to advance 202, it is worth noting that an N-protein vaccine has the potential to be complementary to existing S-targeting vaccines. We look forward to providing more updates on this program as developments occur. With that, I'll hand it over to Rob, who will cover our most recent financial performance. Rob.

Thanks, Martin. Rather than reiterate the details of the Company's financial results, which are available in the press release and the 10-K, I will simply speak to a few financial highlights. Revenues for the fiscal year-end of June 30, 2021, were $2.4 million, an increase of 50% over fiscal 2020. We expect further growth in revenue in fiscal 2022 as our bioprocessing business continues to attract interests from companies who wish to sustainably and quickly develop biologics implants. However, significant quarter-to-quarter revenue variability is commonplace for early-stage pharma service Company like ours, given the relatively small number of contracts and the timing of revenue recognition. Based upon the current outlook, we expect a sequential decline in revenue during the first half of fiscal 2022 compared to the second half of fiscal 2021, followed by higher growth in the second half of fiscal 2022. Both our R&D and G&A expenses for the fourth quarter and full-year of fiscal 2021, were up significantly over the comparable period in fiscal 2020. This reflects our strategy to invest in our proprietary bio-pharmaceutical pipeline and our platform technology. Across R&D and G&A, we invested in staff, an external spend. to implement our strategy. We expect R&D and G&A will continue to grow in fiscal 2022, but at a lower growth rate than we saw in fiscal 2021. You will also note in fiscal 2021 that iBio recorded $10.2 million in settlement income. This reflects the value of our settlement of litigation with Fraunhofer. While we recognize the income in fiscal 2021, Fraunhofer owes us two cash payments of $5.1 million each, one in March of 2022 and one in March 2023. Fraunhofer also agreed to pay iBio $1.8 million for a licensed iBio intellectual property. Revenue for that license will be recognized when Fraunhofer pays for the license in two installments of $900,000 each in March 2022 and March 2023. In terms of liquidity, iBio had $97 million in cash, marketable securities, and investments in debt securities, as of June 30th, 2021. Based on current plans, we believe our cash position is sufficient to fund operations through the first calendar quarter of 2023. However, if we find more opportunities to in-license assets like RTX-003, our cash needs could change. With that, I will now turn the call back over to Tom. Tom.

Thank you, Rob. To summarize, we are proud of all that the iBio Team was able to accomplish in fiscal 2021. As much as we are pleased with the pipeline growth and development of our bio-pharmaceutical candidates, to date, we remain committed to scaling this growth with additional new candidates and partnership opportunities going forward. We're confident in our strategy, and our in-house talent and capabilities are better than ever, along with -- further demonstrating, improving out the platform, comparability to Traditional Mammalian Cell Culture Platforms that are out there, only with many additional advantages. We're also optimistic about the continued growth of our bio-process business for that reason. And it remains a core segment of iBio. These aspects combined with our strong leadership team and board should ensure our continued growth as a developer of next-generation biopharmaceuticals and a pioneer in sustainable plant-based biologics manufacturing. Thank you all. And with that concluding our highlights, we are happy to take any questions you might have. Operator?

[Operator Instructions]. Our first question comes from Kristen Kluska with Cantor Fitzgerald.

Hi everyone, this is Rick on for Kristen this morning. I have 2 questions for you. Now that you have access to the RubrYc computational platform, do you believe that this technology will be most useful for development in the new oncology pipeline, or do you envision this being broadly applicable throughout iBio's pipeline?

Rick, great question. The initial focus really will be on oncology. That's where we see a lot of opportunities. The whole category of Immuno -oncology. because you know it's a really attractive space. And when we pair up this capability, the targeting capability that the RubrYc discovery engine brings, along with the antibody libraries that we have access to, and then our Glycaneering technology where we can control the glycosylation patterns well, our monoclonal antibodies, there's a tremendous amount of value there. I'll ask Martin to comment on this a little bit further here in a minute, but also, two in the field of Immuno -oncology, there are a lot of combination therapies wherein you got a monoclonal antibody that can be paired with a checkpoint inhibitor to really drive some favorable any tumor responses. And so for those reasons, we see the most value coming from the oncology side of the portfolio. That said, there are other epitopes targeting benefits in other areas of the portfolio that we won't turn a blind eye to. But, Martin, would you like to comment a little further?

Absolutely. So as Tom mentioned already, it is absolutely our priority to drive the RubrYc discovery platform and collaborate with RubrYc on immuno-oncology targets. As you know, there are several epitopes -- several targets that have hard-to-target epitopes. And those would be initial high-priorities for us. And as Tom also mentioned, this is applicable to other target classes, not just your traditional Immuno -oncology targets, which we will definitely explore going down the road.

Understood. Thank you. And one more question. Could you please discuss a little bit about the discontinued ACE to EPCI project and whether there were any significant learnings to come out of the program despite the discontinuation? Thank you.

Sure. The molecule we were able to bring that into our portfolio at an interesting time. And this is a little bit similar to what we're doing, but in a very different way with anti-CD-25, where you get another player in the space and a pre-look at how their clinical trials were going. When we brought that molecule in, there was the opportunity to pursue a certain pathway with it and we work closely watching appear on biologics who also had an ACE-2, FC in the clinic. And following their Phase 2 readout and our review of the regulatory landscape, as well as the clinical trial pathway that FDA had commented on, we simply felt that the opportunity for that particular strategy as a treatment for COVID-19 disease was risky at best. And the two companies in addition to [Indiscernible], I believe also Sorento and others had Ace-2FC molecules that were in their portfolios. and similarly discontinued those offerings and ultimately the cost-benefit of continuing with the molecule we deemed to not be worth it. That said, others may still continue to go forward. We returned the asset back to its originator and it's quite possible that someone else may choose to move forward with it. If that were to be the case, we still have the manufacturing capability. We've been able to produce the molecule on our platform. So we'd be available as a contract manufacturer if somebody else was to pick up the asset. But Martin did I miss anything there?

No, Tom, I think you've covered everything, specifically the APR on data, that did not meet every -- all of the primary endpoints was disappointing to see.

All right. Thank you all.

I guess in the end --

Okay.

Yeah, you bet. And just in terms of learning, I think it was one of those where you know was the good news was it was a low-cost asset to bring in. I think in hindsight, it was worth doing. At the moment had things gone different -- turned out a different way, and has some of the regulatory agencies got a different route, we would've been very well-positioned to take it forward. So I think if anything, it goes to our modeling strategy, it's biologics, drug development, not everything works out. But that was a low-cost, low-risk way to be poised to move forward and prospectively create a high-value asset, but it's just not, as it turns out. Thanks for the question.

[Operator Instructions] Our next question comes from Matthew Herm with Matthew Herm, LLC.

Good morning, everyone. Tom, I appreciate you sharing the information with us this morning. My question has to do with the San Diego facility, specifically wondering if you could authorize any detail with regard to the budget for that facility, and kind of most importantly, is the expense factored into your declared cash burn?

Yes, it is, Matthew, and in terms of the spending that we're associating with it, it's not only going to be the lease for the facility, of course but then also, the staff that we're hiring in that location. In terms of the capability that we're getting, we get -- we get a nice bang for the buck, especially with the synergy associated with what we have in for RubrYc. In fact, in our cash burn estimates, we had previously also factored in the potential for the collaboration with RubrYc and the in-license of the molecule. So that's all fairly well-baked in. Rob, anything I missed?

No, that's correct, Tom.

And I'm not showing any further questions at this time. I'd like to turn the call back over to Tom for any closing remarks.

Great. Just want to thank everybody for your time and attention. We're continuing to be bullish on the platforms as we have them. And as well as the growth of our biopharmaceutical pipeline. So just wishing everyone a great rest of Monday and the week.

Ladies and gentlemen, this concludes today's presentation. You may now disconnect and have a wonderful day.