BiomX Inc. (PHGE) Q2 2021 Earnings Report, Transcript and Summary

Greetings, and welcome to the BiomX Second Quarter 2021 Financial Results Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce Marina Wolfson, Senior Vice President of Finance and Operations. Thank you. You may begin.

Thank you, and welcome to the BiomX Second Quarter 2021 Financial Results and Corporate Update Conference Call. The news release became available just after 6:30 a.m. Eastern Time today and can be found on our website at biomx.com. A replay of this call will be available on the Investors section of our website. Before we begin, I would like to review the safe harbor provision. All statements on this call that are not factual historic statements may be deemed forward-looking statements. For instance, we're using forward-looking statements when we discuss potential market opportunities; the capabilities of the BOLT platform; the design, aim, expected timing and interim and final results of our preclinical studies and clinical trials; the sufficiency of our existing cash, cash equivalents and short-term deposits to fund the company's current operating plan until at least mid-2023 or with a full debt amount until the beginning of 2024; our cash runway; the potential for up to $15 million in additional loan tranches if certain milestones are met; and the potential of our product candidates. Except as required by law, we do not undertake to update forward-looking statements. The full safe harbor provision, including risks that could cause actual results to differ from these forward-looking statements are outlined in today's press release, which as noted earlier, is on our website. Joining me on the call this morning are Jonathan Solomon, our Chief Executive Officer; Dr. Sailaja Puttagunta, our Chief Medical Officer; and Assaf Oron, our Chief Business Officer. With that, I will turn the call over to Jonathan.

Thank you, Marina, and good morning, everyone. Let me start by saying how excited we are about the multiple catalysts the company will have in the next year. We are entering the most data-rich period in the company's history with expected readouts across all 4 of our clinical-stage programs. In our view, any one of these readouts, if successful, could represent a transformative event for our company. This is all thanks to the hard work and dedication of our team. We also entered the second half of 2021 with more than sufficient capital to reach these important milestones. As previously announced, last month, BiomX completed a registered direct offering of $15 million. Participation in this offering includes both existing and new investors, and I was also gratified by the show of confidence from our Board of Directors, each of whom also participated in this offering. We further strengthened our balance sheet with access of up to $30 million of debt financing from Hercules Capital, a leader in customized debt financing for companies in the life science and technology-related markets. The first $15 million tranche is available upon closing. Two subsequent tranches of $10 million and $5 million will become available upon the achievement of certain milestones. These 2 financings provide us with cash runway up to at least the middle of 2023, with the full debt supporting us until the beginning of 2024. Now let me briefly summarize the progress we made to date in our 4 clinical programs that enable us to have potentially meaningful clinical readouts in up to 4 different indications through mid-2022. Starting with our acne program. Top line results are on track to be reported for the 8- and 12-week treatment periods in the third and fourth quarters of 2021, respectively. We are pleased to previously report that enrollment in the study was completed on May 13, 2021, 2 weeks ahead of time. Given good progress, we can now confirm that the 12-week microbiologic assay analysis can be completed even earlier if bundled together with the 8-week samples. Therefore, we have made the decision to forgo the interim 8-week analysis, continue the blinded status of the study until completion and conduct and report all analysis, 8-week and 12-week, together. Hence, the full study readout will be available end of October, only weeks after previously communicated time line for the planned 8-week interim analysis and then the earlier end of our prior guidance to the 12-week data. As a reminder, BX001 is a topical gel comprised of a cocktail of natural occurring phage that targets the bacteria, Cutibacterium acne, or C. acne, which is implicated in the pathophysiology of acne vulgaris. The Phase II cosmetic clinical study is evaluating 140 subjects with mild to moderate acne vulgaris. Key endpoints of the study include safety, tolerability of BX001 in addition to its impact on the appearance of an acne brown skin. We will evaluate BX001 for cosmetically meaningful improvement of acne-prone skin as well as a reduction in C. acne burden. We look forward to reporting on these results in the upcoming months. With respect to our cystic fibrosis program, BX004 is our phage cocktail candidate designed to target Pseudomonas aeruginosa or P. aeruginosa, a bacteria that causes chronic respiratory infection and is a main contributor to morbidity and mortality in patients with cystic fibrosis, CF. By way of background, CF patients suffer from chronic lung infections and typically require prolonged and repeated courses of various antibiotics, whose effectiveness diminishes over time as multidrug-resistant strains appear. BX004 has the potential to be both active against antibiotic resistant strain of Pseudomonas aeruginosa and to penetrate biofilm, an assemblage of surface-associated microbial cells in closing extracellular polymeric substance and one of the leading drivers of antibiotic resistance. In consultation with the Cystic Fibrosis Therapeutic Development Network, BiomX will be conducting a Phase Ib/IIa trial compromised of 2 parts. Part 1 will evaluate the safety, pharmacokinetic, microbiologic and clinical activity of BX004 in a single-ascending dose fashion, followed by multiple doses in 8 CF patients that are confirmed to have chronic Pseudomonas aeruginosa respiratory infections. Results in Part 1 of this trial are expected to be in the first quarter of 2022. Part 2 of this trial will evaluate the safety and efficacy of BX004 treatment over 10 days in different cohort of 24 CF subjects, with chronic Pseudomonas aeruginosa respiratory infection. As in Part 1, results in part 2 of this trial are expected by the second quarter of 2022. Turning to our atopic dermatitis program. Our phage cocktail, BX005 is designed to target Staphylococcus aureus or S. aureus, a bacterium associated with the development and exacerbation of inflammation in atopic dermatitis. S. aureus is known to be more abundant in the lesional skin of atopic dermatitis patients compared to the skin of healthy individuals or non-lesional skin of atopic dermatitis patients. The target bacteria also increases in abundance and becomes dominant when patients experience flares. We expect results from the Phase Ib/IIa proof-of-clinical study evaluating the safety and efficacy of BX005 in the first half of 2022. During the second half of 2021, we plan to advance our clinical program in inflammatory bowel disease and primary sclerosing cholangitis into a Phase Ib/IIa trial of BX003. Study arms will include either healthy subjects or IBD or PUC subjects or confirmed carriers of the target bacteria, Klebsiella pneumoniae in their gut. The Phase Ib/IIa is a 4-week placebo-controlled dosing study designed to evaluate the safety, tolerability and efficacy of BX003 as measured by the reduction of the amount of targeted bacteria in stool. Results are expected in the second quarter of 2022. Finally, let me briefly touch on our preclinical immuno-oncology program focused on colorectal cancer or CRC. Despite the success of immunotherapy in cancer, only a small percentage of new cases of CRC respond to immunotherapy. This limited response is believed to be due to the lack of novel tumor antigens and scarcity of immune cells in colorectal tumors. We have observed in vitro and in vivo that phage can be used to target strain of Fusobacterium nucleatum, FN, a bacterial species that is highly enriched in colorectal tumors and is believed to contribute to the pathogenesis. We plan to administer phage with target F. nucleatum intravenously to deliver payload genes, such as those encoding immuno-simulator proteins to tumors while also reducing bacterial load of these bacteria. We have successfully engineered an IL-15 gene payload into F. nucleatum phage, and we plan to announce our preclinical results in this program in the fourth quarter of 2021. We look forward to keeping you informed on our progress. I'd like now to turn the call over to Marina Wolfson, our Senior Vice President, Finance and Operations, to review our financial results for the second quarter of 2021.

Thank you, Jonathan. As a reminder, the financial information is available in the press release we issued earlier today and also in more detail in our Form 10-Q, which will be filed later today. I will walk you through some of our brief highlights. The cash balance, including short-term deposits as of June 30, 2021, was $47.3 million compared to $57.1 million as of December 31, 2020. This figure does not include capital that we obtained with our recent equity and debt financings. Importantly, during July and August, we have strengthened our balance sheet and extended our cash runway with a $15 million equity financing and secured up to $30 million in debt funding from Hercules Capital to support our clinical trials, R&D efforts and for general corporate purposes. The first $15 million tranche of the venture debt is available upon the closing of the agreement, and we would also have access to up to an additional amount of $15 million with the achievement of certain milestones. We estimate that existing cash, cash equivalents and short-term deposits with the equity financing that we completed and the first tranche of the venture debt facility will be sufficient to fund the company's current operating plan until at least mid of 2023, with a full debt supporting us until the beginning of 2024, assuming achievement of milestones. Net research and development expenses were $3.8 million in the second quarter of 2021 compared to $3.7 million for the same period of 2020. The increase was primarily due to conducting preclinical and clinical activities of our product candidates, increased headcount in our research and development and clinical personnel, increased stock-based compensation salaries and related, partially offset by an increased Israel Innovation Authority grant that we recorded during the period. General and administrative expenses were $3.1 million in the second quarter of 2021 compared to $2.3 million for the same period in 2020. The increase is primarily due to increased stock-based compensation and salaries and related expenses, mainly due to the growth in the number of employees; increased expenses associated with operating as a public company, such as directors and officers insurance, and expenses of moving into new premises. Net loss was $7.3 million in the second quarter of 2021 compared to $6.2 million for the same period of 2020. Net cash used in operating activities was $12.8 million for the 6 months ended June 30, 2021, compared to $11.4 million for the same period of 2020. And now I'll turn the call back over to Jonathan for his closing remarks. Jonathan?

Thank you, Marina. Let me conclude by saying that we are entering a truly an exciting period for BiomX. Ahead of our clinical data readouts, I think it's important to remind investors what makes BiomX such a unique and compelling opportunity within the microbiome field. BiomX' BacteriOphage Lead to Treatment platform, or BOLT, is capable of generating clinical proof-of-concept data in patients within 12 to 18 months from project initiation. The BOLT phage discovery and optimization platform is capable of efficiently screening large libraries of phage, prioritizing potential candidates based on selectivity and potency as well as a number of other parameters that are important for drug development, such as safety, stability and ease of manufacturing. This approach, together with our in-house GMP manufacturing facility enables a rapid path from discovery to the clinic, and the upcoming data readouts of all 4 of our clinical programs clinically reflect the efficiency of our development platform. The combination of our BOLT platform, along with the broad acceptance of phage's inherent safety, enables us to develop, manufacture, formulate novel phage therapy candidates that target specific pathogenic bacteria at an unprecedented speed. Having all these capabilities in-house has helped us build a diverse portfolio spanning various indications. As a pioneer in this field, we believe that our approach of developing precision-based medicine that aim to restore the natural balance of healthy bacteria represents the safest and most effective means of treating microbiome-related disease. And we look forward to updating investors on our lead clinical programs over the next 6 to 12 months. We'd now like to open the call for questions. Operator?

[Operator Instructions] Our first question comes from the line of Michael Higgins with Ladenburg Thalmann.

Congrats on the continued progress. First one, specifically on the acne data and the timing for such coming up in late October, it looks like now. Can you give us a little more insight as to your decision-making going into releasing just the 8- and 12- together and the 8- and 12- separate?

Sure, Michael. Great to have you. Definitely excited about the progress in that program. And I can let Sailaja kind of give you into more details on the decision process.

Great. Thank you so much, Jonathan, and good morning, Michael. So as we reported earlier, we were very pleased with the enrollment in the study for 140 patients with acne. Completed enrollment about 2 weeks ahead of schedule as we reported earlier, and we continue to make good progress with the conduct of the study. And it turns out that if we bundle the microbiologic analyses, the 12- and 8-week time points together, that we may be able to report on the entire data set sooner than we thought. And so the difference between reporting the interim analysis just using the 8-week time point versus the complete data set after completion of the 12-week treatment period was only a few weeks. And so it didn't make sense for us to do the interim analysis separately. And therefore, we decided to combine -- continue the blinded status, do all of the 8- and 12-week analyses at the end of the study and report them just a few weeks later than the interim analysis would have been done.

Just a follow-up for that. I think investors would be curious. Are you able to see any of this data? This is not heading towards an NDA filing. So just curious if you guys are able to see the data as it's building.

No, we remain blinded and we do not see the data by treatment group at all. We can monitor the data, obviously, in a blinded status as we would with any study.

Okay, appreciate that. And then 1 follow-up and this is kind of the big one so I'll stop here with this one. Given the series you described for -- sorry, given the series news, can you describe for us the environments which your phages are being applied, specifically other active treatments if they're allowed or not? That obviously can have an impact on the microbiome environment. I'll start it off with in acne, if benzoyl peroxide is allowed.

Sailaja, do you want to address?

I'm sorry. Can you please repeat the question? I'm so sorry.

Sure. Yes, no problem. I was just, in brief, following the series news. So I thought it'd be interesting to hear from you guys about what the exact environments are in which your phages are being applied, for example, in acne, is benzoyl peroxide allowed? But just curious to hear your comments about how that may be different here.

Okay, sure. So for the acne study, no, benzoyl peroxide is not allowed and no other over-the-counter or other topical treatments are allowed. It's just either the phage gel or the placebo that are allowed in the study. And so this is exactly the same way that we did the first study that we reported out earlier this year. The -- as for the series data, Jonathan, you should take that back.

Yes. I can jump in because I think you bring up an important point, right? I think we are all very disappointed to see the CERIS data in IBD. And it's a blow to the field. I think in general, the phage approach is very differentiated, right? First, we use the phage, we're not adding a bacteria. Second, I think an important aspect is because with the phage, you have a specific target. Our approach, if you look at -- in the case of IBD, right, is only relevant to 30% of the patients that actually have high levels of Klebsiella. So we don't think IBD is a single disease, right? And you can't use a broad approach. You need something which is specific to the patients that have this manifestation of high level of the bacteria. So that's a key difference, right? Secondly, and I think another important aspect is in the CERIS approach, right, we used fecal material source in healthy volunteers. So it's not necessarily a consistent or a robust product, and I think these are issues that they've had in the past. In our approach, we used phage banks, host banks. We produce a same well-defined phage so it's a very consistent product, and that's the way we're looking at it.

Just a follow-up to that in CF and atopic dermatitis. What other meds are allowed in the treatment for the patients?

Sure. Sailaja, please go ahead.

Yes. Thank you. So I'll start with the CF program. In that study, we are enrolling patients with cystic fibrosis who have chronic Pseudomonas aeruginosa pulmonary infection. These patients generally stand, part of their standard of care are taking inhaled antibiotics either on a continuous basis or on an on-off 28-day cycle basis. And so those treatments, we will allow and allow the patients to remain on whichever standard-of-care antibiotic, either tobramycin or aztreonam inhaled medication on their cyclical basis as they're used to doing. And those that are randomized to phage will receive a nebulized phage on top of those antibiotics, and the others will receive placebo nebulized on top of those antibiotics. CFTR modulators are the other group of medications that CF patients are on, especially in the U.S., and we will continue -- allow continuation of the use of CFTR modulators as well. So that's CF. For atopic dermatitis, these patients -- in this study, we plan to enroll patients with moderate to severe atopic dermatitis who are colonized with staph. And this will be a topical gel formulation. So for that study, patients who are requiring systemic biologics will not be allowed into that study. And those that are receiving other topical treatments for the atopic dermatitis, we will wash them off, allow a washout period to come off of their other topical medications and only be allowed to use study products during the course of the study.

I appreciate the long question, long answers. I'll jump back in the queue.

Our next questions come from the line of Kristen Kluska with Cantor Fitzgerald.

The first 1 I have is just continuing from your earlier comments about the personalized and targeted approach of phage. Could you remind us, for your lead indications, what works specifically went into validating the role that these harmful bacteria play across these conditions? And then to what extent do antibiotics and/or other therapies help validate these targets while recognizing that they come with the limitations?

Sure. So I'll jump in. So I think if you look into the different programs, right, I think it's different in terms of validation for every program, right? In acne, we know topical antibiotics are used. We know C. acne is kind of the major component, that's what most therapies are going after. But there's now more and more issues basically with topical antibiotics. And here, we're building a basic -- a better mousetrap, right? We're trying to overcome resistance. We're trying to overcome biofilms and provide a safe and effective treatment. If you look -- if I look at time lines, right, CF, we know these patients take antibiotics. We know that when the bacteria is sensitive, they do better briefing parameters or work, improve in CF patients. But just due to the prolonged usage of antibiotics, right, they become more and more antibiotic-resistant, biofilm is formed and you stopped responding to therapy. So here again, phage can overcome antibiotic resistance, can have anti-biofilm capability. And moreover, I think in CF, there's even evidence of compassionate use, cases of patients that we treat with phage successfully, not only reducing the target bacteria as well as improving lung capacity. And in atopic derm, there has been historical evidence that antibodies did have effect in reducing Staph aureus and improving parameters. There's now even new studies, right, the likes of [ 4k ] and we're coming out of UCSD that shows that reducing this bacteria is having an effect. And again, in atopic derm, you just cannot use antibiotic chronically, right? This bacteria is so antibiotic-resistant, that's just not an option. Same thing in IBD, right? These patients cannot be chronically treated with antibiotic. It messes up the whole microbiome, messes up with their immune system. So there's a clear need for a very precise approach. And in IBD, I think it's all based on the excellent work that was published by Professor .

Great. Appreciate that. And then moving on for the IBD study. Wondering whether you have an internal goal on the percent or the amount of reduction for K. pneumoniae that you hope to see with 4-week dosing. And then as you look across the 30% or so of these IBD patients and PSC as well that have elevated levels of this bacteria, and then from looking at the microbiome composition of healthy patients, do you know what reduction would be considered clinically meaningful here, where you might start to see some correlation with some of the other measures in longer studies as it relates to the effects of the disease?

I think it's -- again, I think it's still difficult at this point. I mean, there are historical studies that have reduced it by half a log to a log. So we've seen some numbers like that. The question is what happens to the other population of the bacteria. But I think if we see a signal, which is significant in the 4 weeks, since the IBD study itself is planned when we go to patients can be longer, probably even get a greater reduction. So I think in this study, we want to see a reduction around that range and then longer we want to see kind of greater reduction. Hopefully, the rest of the microbiome is also going to be in competition, so might, over time, get even a greater effect.

Okay, great. Looking forward to the acne data in October.

Likewise.

[Operator Instructions] Our next questions come from the line of Keay Nakae with Chardan Capital Markets.

This is Keay from Chardan. Jonathan, as we anticipate the acne data, give us a sense of what a good efficacy result would be.

Sure. I'll let actually Sailaja comment on that. So go ahead, Sailaja.

Thank you, Jonathan, and good morning, Keay. So in terms of what would be a good outcome for the acne study, just to remind you what we saw in the first study was that the phage was able to reduce the bacterial burden of C. acne. And here in this study with the longer duration of treatment, we expect to see that reduction but also see a clinical correlation of that reduction, meaning some change in the appearance of the acne-prone skin.

And in saying that, is there a specific threshold of improvement your potential collaboration partner needs to see before they'll pull the trigger?

So I can jump in. I think we've -- this is obviously pursuing cosmetic path and a relatively small study. So people are looking for a signal, right, not necessarily a need for statistical significance since it's not a very large study. But we do want to see a signal indicating that there's a separation between treatment and placebo.

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

So I wanted to thank you all again for joining us this morning. I want to thank the team at BiomX, which has worked so diligently to bring our innovative phage therapies into clinical testing as well as our shareholders for their support and patients participating in our clinical trial. Have a wonderful day, and please reach out to us if you have any questions. Thank you.

Thank you. This does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time. Have a great day.