Nanobiotix S.A. (NBTX) Q4 2022 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Nanobiotix business update and full-year 2022 financial results conference call. A slide presentation accompanying this call can be found at the Investors section of the company's website at www.nanobiotix.com. [Operator Instructions] Please be advised that today's conference is being recorded. At this point, I will turn the call over to Craig West, Senior Vice President of Investor Relations of Nanobiotix.

Thank you, operator. Good afternoon, and good morning. And welcome to the Nanobiotix conference call to discuss our full-year 2022 financial and operating results. Joining me on the call today are Laurent Levy, Co-Founder and Chief Executive Officer; and Bart Van Rhijn, Chief Financial Officer. As a reminder, today's call is being webcast and will be available on our website for replay. I would like to remind you that this call will include forward-looking statements, which may include statements regarding the progress, success, and timing of our ongoing and planned clinical trials, collaborations, regulatory filings, dates of presentation, and future research and development efforts among other things. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change. They are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from our current expectations. Accordingly, you are cautioned not to place undue reliance on forward-looking statements. Please review the full description of risk factors that can be found in the documents we filed with the AMF in France and the SEC in the United States, including the URD and 20-F filed yesterday, both of which are available in the Investor Relations section of our website, along with the press release issued yesterday, highlighting our corporate and financial results for the period. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, Nanobiotix undertakes no obligation to update them to reflect subsequent events or future circumstances. With that said, I'd like to turn the call over to Laurent. Please go ahead.

Thank you, Craig. I would like to welcome everyone participating via conference call and webcast today. I would also like to welcome Craig to his first Nanobiotix conference call as he recently joined us as our new Head of IR. If you haven't already met him, I'm sure there will be opportunity to do so soon. As Craig mentioned, we issued a press release yesterday highlighting the company's full year's operating activity and financial results for 2022. For today's call, I would like to begin by providing an overview of our accomplishments and review upcoming milestones for each of our program before turning the call over to Bart to address financials results, after, we will open the call for your questions. Each year, since initiating development of our lead candidate NBTXR3, we have seen evidence continue to mount suggesting NBTXR3 has the potential to change the way solid tumors are treated and improve outcomes for patients. This past year, not only we saw this trend continue but also provided an opportunity to showcase the strength and agility of Nanobiotix's team and its partner, along with the commitment and support of our investigator, researcher, and most importantly, patient, who have continued to support our efforts. Against the backdrop of geopolitical unrest, the ongoing pandemic, and continued volatility in the capital market, the team remained focused on our mission and adapted to circumstances to successfully first initiate NANORAY-312, our global Phase 3 trial in head and neck cancer in the US, Asia, and Europe, complete enrollment in Study 102, also in head and neck, generate new compelling data from our IO combination program, and early, but very encouraging data on pancreatic cancer, and significantly reduce our operating expenses, secure future access to capital through an equity line, and restructure of debt obligations. As these achievements suggest the capability and commitment of our team, as critical to our success has is the promise of NBTXR3. It is further testament to both that during the challenges of 2022, we continued to attract new talent to join our mission to improve the lives of cancer patients through the development of NBTXR3. This started early in the year when we strengthened our executive leadership team with the appointment of Dr. Leonard Farber as Chief Clinical and Medical Affairs Officer, who brings significant clinical experience and strong networks of peers committed to improve outcome for patients battling cancer. His insights and expertise are supported by our scientific advisory board, comprised of leading global radiation, medical, and surgical oncologists involved in oncology treatment decision making, clinical trial investigation, and patient recruitment. Looking ahead, we are excited to share that we are expecting a new Chief Medical Officer with extensive development expertise in oncology and immunotherapy to join the Nano team in the third quarter of 2023. This anticipated addition is coupled with the expected arrival of a new head of regulatory scheduled to join the team later in Q2. We believe this addition will strengthen our clinical development program, better position us for registration, and help optimize our pipeline development. We look forward to working with this industry expert to help guide late-stage development of our product NBTXR3. As you know, we started 2022 with the randomization of our first patient in NANORAY-312, our global Phase 3 registrational study for patients with locally advanced head and neck cancer that are ineligible for platinum-based chemotherapy. This milestone set the tone for the year, and the team focused on driving the rollout of this study and initiation of sites across the globe. The diligence and execution supported by our partner, LianBio, have resulted in the activation of over 104 sites in 25 countries across core geographical sites in Europe, Asia, and United States as of year-end. I'm particularly pleased to be able to tell you that the team managed to accomplish this in just over a year in a challenging environment due to several factors, such as competitive clinical trial and difficulties of a post-COVID world. Despite these achievements and continued progress, I will note that enrollment across country generally has been slower than initially anticipated, and we primarily attribute this to the complex and changing regulatory framework across EU, the continued impact of the COVID-19 pandemic, particularly in the US, which has led to longer than anticipated contract approval and site initiation due to limited site staffing. And similarly, in Asia, COVID protection measure and, originally, lockdowns that persisted intermittently through 2022. And finally, we had to replace the Ukrainian and Russian sites that were originally selected. Since the initiation of NANORAY-312, we've been monitoring progress closely and have implemented several measures to increase the efficiency and speed of the trial rollout. The primary focus in 2022 was to increase sites and countries and to decrease the time between regional regulatory approval, contracting, and site activation. This has included increasing both virtual and in-person support for the clinical operation and medical affairs team, both before and after site initiation, to improve site engagement and increase support for key members of the site study team. While the longer than anticipated regulatory and site activation process has resulted in a shift in the early enrollment, we are confident that with most regional regulatory approval complete or in the final stage, we can move quickly to onboard the remaining target site plan for NANORAY-312. And reassured by the uptick in the enrollment, we are seeing following the addition of new site and the implementation of our [high-touch] clinical operation engagement strategy. We expect continued progress in adding sites and seeing the recently added site initiate enrollments. Further, through the increasingly close partnership with investigator fostered by this effort, we identified a new factor that could facilitate patient enrollment and, as a result, are close to the finalization of the minor protocol amendment to clarify and ease the inclusion criteria and simplify patient identification, screening, and enrollment without changing the overall target patient population. As we are ramping up our global registration study in 2022, we are also nearing completion of the Study 102. As a reminder, Study 102 is a dose escalation and expansion study in a similar head and neck cancer population that continues to demonstrate promising activity and was a driver in our decision to pursue registration in head and neck cancer has a first global registration pathway for NBTXR3. Early in the year '23, we completed enrollment in Study 102 expansion phase. And you will recall, in February 2022, we reported an interim update with an ongoing median overall survival of 17.9 months in all treated population and 23 months in the evaluable patient population. We are planning to present top-line safety and efficacy data from the full study population in the second half of 2023 and plan to submit this data for presentation at a medical meeting. We're also planning additional post-hoc analyses in 2023 that we believe will add to our understanding of the activity of NBTXR3 in head and neck cancer and further inform our assumption in the NANORAY-312. We believe the continued improvement in survival benefit already demonstrated in Study 102 reinforces the probability of success for Study 312 and suggests the anticipated delta between treatment and control arm may be larger than initially anticipated. If the final analysis remain in line with previously reported outcome, we believe this could potentially shorten the predicted overall time to expect data in the NANORAY-312. With this potential robustness in data, coupled with our operational efficiency, we expect, as planned, the interim efficacy and safety analysis for our pivotal NANORAY-312 trial after 67% of planned event in the second half of 2024. The futility analysis more heavily impacted by the first few months in study launch will be conducted following 25% of planned event, which is anticipated now to be in the first half of 2024. Another treatment approach we are actively pursuing is using radiotherapy-activated NBTXR3 to initially prime the immune system followed by anti-PD-1 therapy. This combination has potential to be a game changer for cancer immunotherapy and is supported by encouraging data from Study 1100 or Phase 1 dose escalation and expansion trial in patients with advanced cancer. In 2022, we completed a dose escalation phase of this study, establishing a recommended Phase 2 dose and open enrollment in the expansion phase. As a result of progressing this program, we had the opportunity to present an update at the SITC Conference in 2022, demonstrating durable response, including eight patients with over six months of disease control and five patients assailing disease control over than 12 months. These results continue to demonstrate not only improved therapeutic response among PD-1 treatment naive patients, but showed meaningful response among patients we had previously seen their cancer progress despite PD-1 therapy. We look forward to providing future update from Study 1100 as we continue the expansion phase of the study in the coming year. The positive activities seen in Study 1100 has supported our plan for Phase 3 registrational program for patients with locally recurrent or recurrent or metastatic head and neck cancer that are resistant to PD-1 therapy. In the first half of 2022, we received preliminary feedback from the FDA, suggesting a single randomized controlled trial that include a pre-specified comparative analysis of the overall response rate may support accelerated approval, pending confirmation of clinical benefit based on overall survival results of the same trial. Initially, we planned to submit a protocol to the FDA on a potential registrational pathway for NBTXR3 immunotherapy approach in the first quarter of 2023. However, given we have a new CMO joining in the third quarter, we plan to consult with the incoming CMO prior to continue discussion with FDA. This individual has extensive experience in immunotherapy drug development. And given the significance of the program, interest in optimizing enrollment efficiency, and ensuring we are building a fundamental protocol supportive of regulatory reporting requirements and commercialization in a competitive landscape, we have decided for first review the current data and future program with our new CMO. Based on this, we expect to provide an update for our NBTXR3 immunotherapy approach in the third quarter of 2023. Further, expansion opportunities for NBTXR3 are actively being explored as part of the ongoing collaboration with the University of Texas MD Anderson Cancer Center. Of note, we have determined the recommended Phase 2 dose for NBTXR3 in pancreatic ductal adenocarcinoma, and the principal investigator shared positive preliminary qualitative efficacy data in the fourth quarter of 2022. MD Anderson expects to present preliminary Phase 1b dose escalation safety in pancreatic cancer in the second half of 2023. We look forward to the continued progress in this study, and as a dose expansion phase gets underway, a borderline respectable patient become eligible for enrollment alongside locally advanced patient evaluated in the dose escalation phase. In addition to the upcoming data expected from pancreatic trial, MD Anderson has made significant progress in its Phase 1 trial of NBTXR3 in non-small cell lung cancer and expect to determine a recommended Phase 2 dose in this study in the second half of this year. As you recall, they are also leading a Phase 1 trial of NBTXR3, in combination with chemotherapy, for patients with esophageal cancer and are progressing toward an anticipated recommended Phase 2 dose in 2024. Given the shift to our proton therapy in treating these patients, the study presents an interesting opportunity to validate prior preclinical data, suggesting the safety and potential benefit of combining NBTXR3 with proton therapy, which theoretically offers a reduction in the radiation exposure to LC-neighboring tissue whilst improvement of the therapeutic ratio. MD Anderson is in the process to modify the existing protocol to allow for introduction of proton therapy for court of patients in this study. At this juncture, we anticipate the study team reaching a recommended Phase 2 dose under the existing intensity-modulated radiation therapy protocol before introducing a second radiation therapy treatment modality sometime in 2024. And finally, I would like to note that MDA is working on additional clinical study in different patient population that we have not disclosed before, and we'll have more to say about this development in the future. Finally, I would like to highlight that we have many value inflection points, see here in the coming 12, 24 months across all of our programs. We believe that NBTXR3 has the potential to enhance the utility of radiation therapy in many tumors, and we are moving on many fronts to make this vision a reality. I would like now to turn the call to Bart to briefly discuss our financial results for the period. Bart?

Thank you, Laurent. As Laurent mentioned, the enrollment of our first patient in in NANORAY-312 provides an exciting start to 2022, and our commitment to advancing this study remains our priority, defining how we navigated the remainder of the year. As the broader economic pressure and market volatility persisted, we took quick action early in the second quarter to significantly expand our cost control efforts initiated in 2021 by prioritizing investments in NANORAY-312 and Study 1100, scaling back preclinical programs and optimizing manufacturing and infrastructure expense to ensure we are well positioned to execute our core programs. The results of these efforts to enhance operational efficiencies and improve our cost bases across all our programs are evident in the financial results we reported yesterday, where we see only the most increase in R&D expense of approximately EUR2 million compared to 2021, despite the initiation of our pivotal Phase 3 registration study, the continuation of Study 102, and our ongoing immunotherapy in combination Study 1100. Likewise, you will note SG&A expenses decreased by EUR1.6 million, or 8.1%, from EUR19.4 million for the year ended December 31, 2021 to EUR17.9 million for the year ended December 31, 2022, reflecting our efforts to rationalize SG&A expenses and internalize key functions. While the company did not generate revenue in 2022, we successfully expanded eligible expenses and increased our overall research tax credits, as a result, by more than 60% year over year, and a portion of this gain represents a recurring increase to this credit. As a result, our total income increased significantly to EUR4.8 million for the year ended December 31, 2022, compared to EUR2.6 million for the year ended December 31, 2021. To further improve our financial flexibility and extend our operating runway, we've successfully restructured EUR30.7 million in outstanding debt with the European Investment Bank to significantly reduce near-term expense and better align our debt obligations with our anticipated development timelines. While the impact on our cash runway is clearly favorable, the restructuring resulted in a negative one-off valuation impact of EUR6.9 million. Combined with higher interest costs on the loan and lower foreign exchange gains, our net loss for 2022 was EUR57 million or EUR1.64 per share for the 12-month period ended December 31, 2022. This compares to a net loss of EUR47 million or EUR1.35 per share for the year ended December 31, 2021. You will also recall that we took steps to ensure future access to capital, unsecured and equity financing loan, through Kepler Cheuvreux in the second quarter of 2022. While we have not yet tapped this equity line, we have the full authority to exercise or suspend access to capital through this facility at any time at our sole discretion. As of December 31, 2022, Nanobiotix had EUR41.4 million in cash and cash equivalents, compared to EUR83.9 million as of December 31, 2021. Our press release that we released last night noted our cash, combined with our equity line financing, will fund operations into the third quarter of this year, which is a shorter runway than our previous guidance into first quarter of 2024. Our loan with the EIB carries a covenant requirement cash balance of EUR25.3 million, which is equivalent to the outstanding principal we are now getting [currently]. The EIB has granted a temporary waiver of this requirement of EUR15 million until December 31. The temporary waiver will be automatically extended until January 31, 2024 before signing of a business development partnership, collaborative or strategic alliance. Because the company is not reporting such an event at this time, the waiver is assumed by us and our auditors to be expiring on July 31. And because our projected cash and cash equivalents balances are expected to decline below the EUR25.3 million level in Q3, we are reporting a cash runway that extends only to the time based on the conservative series of assumptions that include no business development deals, no new financing, and the assumption the EIB will exercise the covenants and seek repayment of the loan in full. And now, I will turn the call back to Laurent. Laurent?

Thank you, Bart. In 2022, we continued our prioritized focus on further advancing NBTXR3 treatment of head and neck cancer. To date, the totality of clinical data continues to support the potential of our product to offer a meaningful therapeutic benefit to a large number of patients in oncology. Our initial focus in head and neck cancer is establishing a framework that can be expanded and replicated across other solid tumors and, as a reminder, we know that around 60% of all cancer patients who receive radiation therapy. With the recent strengthening of operation and executive leadership, we believe we are well positioned to execute across our near-term catalysts through the year. Looking ahead, '23 will be a foundational year for several reasons, and including different milestones and clinical data that we should expect. On our primary focus, head and neck cancer, we will have the final data coming from the Phase 1/2 Study 102, also an update on the 1100, and we continue and we will continue to progress in the pivotal trial NANORAY-312 to prepare, as planned, the interim readout for H2 '24. In addition to our priority focus, head and neck, we will get the first data coming from our last collaboration with MD Anderson, including pancreatic cancer and lung cancer trial results. With that, I will now have the operator to begin our Q&A session. Operator?

[Operator Instructions] Jonathan Miller, Evercore ISI.

Hey, guys. Thanks for taking my question. Let's start with the head and neck studies. I'd love if you could give us some more color on the protocol amendment you're talking about for 312 that might increase enrollment rates. And relatedly, I noticed you're sticking to guidance for data in the second half of '24. You also alluded to the possibility that there's an acceleration possible there based on Study 102 readout. Can you talk about the pushes and pulls there, and how much this could impact timeline to the 312 readout?

Thank you, Jonathan, for the question. So head and neck study pivotal trial, as you know, is a randomized Phase 3 study that is run globally, US, Asia, and Europe. And here, that's a 500-patient trial, randomized one to one, where early on, via our partner, will treat 100 patients out of the 500 total. So to date, what we've been seeing is after a slow start of this trial, as expected in such a complex time with the war in Ukraine and the end of the COVID period, we're seeing a good ramping up of the patient recruitment right now and have been able, across the year, to get much more sites activated and also open new countries that were not initially planned in order to compensate the loss of Ukraine and Russia and also the slow start of the trial. In addition to that, we looked at real world and discuss with our investigator in this trial to look at how can we ease the patient recruitment in this trial. So we've been doing some minor amendments in order to facilitate the number of patients that could have access to this trial. And that includes, but not limited to, some better or easier definition of what will be the eligibility to cisplatin in order to include more patients. We also have included a bit more patients in term of T&M definition and had been the previous background and record data from the patient entering the trial. So all this, we think, will help to accelerate the recruitment rate. And just of note, to date, we have only a part of the final number of sites that we expect that are currently recruiting. There's two sites happening. So we expect two things that make us think that we'll have another inflection point in the recruitment rate is the increasing number of site recruiting, and this amendment of the protocol that will start being actually in site within the next two months. So that's for 312 itself. I think, looking now at the 102 trial, which was the first part of the development in head and neck cancer, so that's a Phase 1/2 that includes an escalation part and an expansion part, where we've been treating total of 72 patients in a similar population. We've seen already in the past that the overall survival of the evaluated population in this trial was around 23 months, and we expect to be able to report final data later this year that include all the patients with at least 12 months follow up that we expect to be quite similar to what we have seen so far. Now, what is interesting is that we continue to dig in the data we have generated in this trial, and we expect to report, on the top of what was planned as per protocol, some additional data that could help us to understand how this should play out in the 312 trial. In all regards, we think we are confident, given what we have seen so far, and increase our internal probability of success of the 312 based on what we have seen so far.

Okay. Makes sense. One more for me. I would love to hear more about your runway assumptions. I understand the updated runway doesn't include the equity line or other sources of capital and is making conservative assumptions about these debt covenants. What would the runway be if you did include all of your anticipated, not additional BD, but already negotiated equity lines, full access to the debt, and no covenants? What would the less conservative runway look like?

Thank you, Jon, for the question. This is Bart on the line. That would not have changed in what we have guided to previously, which would be Q1 of '24.

Okay. Thank you very much.

Elliott Bosco, UBS.

Hi, everyone. Elliott Bosco on for Colin Bristow from UBS. Another one on NANORAY-312 recruitment, could you elaborate a little bit more on some of the regulatory challenges you're facing? And additionally, could you speak to the amount of sites that needed to be replaced or incrementally added through some of the challenges. And then last question, could you provide additional commentary on your strategy for potential collaborations or partnerships? Thank you.

Thank you. So in terms of the regulatory challenge, I think, in Europe, as we know, our product has a medical device status. And for most of the rest of the world, it is a drug. And as there is a fundamental reshaping in the medical device status in Europe and regulation around that, we went through some hurdle in order to connect our old regulatory system versus new regulatory system in Europe. So we went through a number of interaction with agencies in order to connect the dots and to be able to start the trial. So this has been causing some delays, which did not happen in other countries. In Asia, we've seen some lockdowns due to the COVID no later than end of last year, and beginning of this year was still the case that now it's real. And for US, that meant other was about the COVID tail, where it has slowed down most of the activities in hospitals. We think, now, everything is back to normal, and we're progressing well on every front. Now, in terms of replacing the sites that have been closed in Ukraine and Russia beginning of last year, we've been opening more sites in other countries that were already opened, like France and Spain and others, but also have added two or three other countries in order to compensate that. So the idea here was to make sure that by adding those sites in existing or new countries will recompensate the exclusion of Russia and Ukraine at the beginning and the little start that's a little slow versus what's expected. But the good thing is now, we see a very good ramp up in terms of recruitment and all base statistician. With the real-word life recruitment rate that we see today and the ramp up we see inside exploration, we maintain our guidance to get the interim readout second half of '24. And sorry, what was the last part of the question? Yes, partnership, right?

Yes. Your strategy to partnerships, collaborations. Thank you.

Okay. So just maybe a piece of context. I think we all see how the market is for the past 18 months, two years, and even a bit more. So in an efficient market, it will make sense and would that make sense to raise more money in order to pass the interim readout in order to create more value. And after that step, maybe establishing some partnership and collaboration with industry. Now, as we all see the market is not what we would hold high as expected to be, so we changed our strategy in the recent past. And we see like collaboration or industrial partnership as a key option for Nano in order to move forward and guarantee that we can reach a lot of patients and also guaranteeing the value for shareholders.

Thank you. That's all for me.

RK, H.C. Wainwright.

Thank you. Good morning, Laurent and Bart. Just a couple of quick questions. Just trying to find out if there's going to be any clinical data presentations at ASCO coming up. And also, when MD Anderson releases data on pancreatic cancer later this year, how are you thinking about taking this indication forward, expecting this data to be positive from here?

Thank you for the question. So yes, we expect at ASCO and other conferences for the second part of the year to present new data with our program. We will disclose in due time at which conference obviously we will present different data we have. But as you mentioned briefly, we expect to present the final data of the 102 study and also some other data coming from this study and update on the 1100 and the trial coming from MD Anderson. And as far as MD Anderson is concerned, we wait to get the lung cancer trial first results, but also pancreatic cancer trial data. I think that, as we mentioned, a very interesting trial because we think here, we could have a big impact for the patient. And what we should look at when the data coming out is the population we are treating here. We're talking about locally advanced pancreatic cancer patients that are fully [inoperable]. And for those patients, usually there is not much of a therapeutic option. What we have been doing after this patient getting a round of chemo as the standard of care is what is proposed. We have been injecting NANORAY and then activate it by radiation and look at the outcome for the patient. So what will be important here is to see how much of this patient we can stabilize, how much potentially we could have response, which is rare in this population, even more rare is how many of these patients could get surgery coming from inoperable to operable. And so all those data will be presented. And then, for you to know, we also have started the expansion part of this trial that we expect to conclude before the end of the year. And based on all these data, we think we should be able to propose a next step for pancreatic cancer patients. Now, what's not yet decided is the format of this next step for the pivotal trial. Will it be something else? So that will be discussed a bit further, and I think we'll give an update on that when we present the data of this trial.

Thank you, Laurent. Thanks for taking my question.

Thank you, RK.

Clément Bassat, BNP Paribas. Clément Bassat: Hello. Thank you for taking my question. Just one about your relationship with the EIB. You advised that the EIB is willing to extend for six months their requirement of EUR15 million in a grant instead of EUR25 million, but the condition is to find a partner. And I have in mind your CE mark in the STS program, and did they request or strongly suggest you to start the commercial phase on this program in Europe? And finally, are you in touch with the potential partners to do that? Thank you.

Thanks for the question. I think the STS is an interesting and important question. As you know, we've been successful in running a Phase 3 randomized trial, proving the superiority of NBTXR3 over the standard of care in a very hard to treat patient population, which is locally advanced soft-tissue sarcoma patients. Now, we also obtained the CE mark for that a few or two years ago. And the idea here is to capitalize on the existing CE mark, so when we get the head and neck data and hopefully positive interim readout that we could submit an extension use of the NBTXR3 to go from STS to head and neck cancer patients. We will not start commercializing with soft-tissue sarcoma because that will be globally detrimental to the whole franchise of NBTXR3. And also, the effort we have to deploy to make this product commercially available across Europe will not be interesting versus starting first with head and neck and obtaining a potential good price, a fair price, for the product and then extend it to the soft-tissue sarcoma and then start selling both in head and neck and STS. Now, as far as EIB's concerned on this topic, their fully backed strategy on this has potential ongoing discussion we have, talking about STS and the strategy to start with head and neck. It's seen by all our potential and existing collaborators as the right time to move forward. Clément Bassat: All right. Thank you.

Thank you.

Thank you. There are no further questions at this time. I would now like to hand the call back over to management for any closing comments.

Thank you. So I will just would like to thank you all for participating to this call, and we look forward to further executing across our upcoming milestones. And we'll continue, of course, to keep you updated on our progress and our fully and obviously much more clinical data that will come this year. Thank you very much, and I wish you all a very good day.

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.