Celyad Oncology SA

Q4 2022 Earnings Conference Call

3/24/2023

spk03: Greetings. Welcome to the Cellulite Oncology Full Year 2022 Earnings Conference Call. At this time, all participants are in the cellulite mode. A brief question and answer session will follow the formal presentation. If anyone today should require operator assistance during the conference, please press star zero from your telephone keypad. Please note that this conference is being recorded. At this time, I'll now turn the conference over to David Shores, Vice President, Finance Administration.
spk04: David, you may now begin.
spk05: Thank you, operator. Thank you all for joining us today.
spk06: Before we begin, I would like to remind everyone that today's event may contain forward-looking statements within the meaning of applicable securities laws, including the Private Securities Liquidation Reform Act of 1995. Forward-looking statements may involve known and unknown risks and uncertainties which might cause actual results, financial conditions, performance, or achievements of the company to defer materially from those expressed or implied by such forward-looking statements. A list and description of these risks, uncertainties, and other risks can be found in the company's U.S. Securities and Exchange Commission filings and reports, including in its annual report on Form 20S filed with the SEC on March 23, 2023, and subsequent filings and reports by the company. These forward-looking statements speak only as of the date of this call, and the company's actual results may differ materially from those expressed or implied by these forward-looking statements. The company expressly disclaims any obligation to update any such forward-looking statements made on this call to reflect any change in its expectations with regard thereto or any change in events conditions, or circumstances on which any such statement is based, unless required by law or regulation. Let me now turn the call over to Michel Dessier, Interim Chief Executive Officer of Cellular Oncology. Michel, the floor is yours.
spk07: Thank you, David, and thank you, everyone, for joining us today as we report the financial results for 2022 and provide an operational update. Joining me from the management team is our VP Finance and Admin, David George, and our head of R&D, Etan Breyman. We will start today's call with an operational update, an overview of the financials, and then discuss the key milestones we expect to achieve over the next several months. After our prepared remarks, we will ask the operator to open the line for your questions. So through the past year, Stereo-oncology has faced important changes and turning points. Early 2022, we continued to deliver a steady stream of data across multiple programs that advanced our position in the field of allogenic CAR T-cell therapies. Among others, the validation of our proprietary SHRNA platform with the data from Immunity One, study evaluating CIAD-211 represented a major achievement for the company by demonstrating the safety of SHRNA, which was the primary goal. However, we faced challenges stemming from insufficient clinical efficacy in our CIAD-211 program and delays and additional costs resulting from the clinical hold in our CIAD-101 program. This stream of events led to the decision of the Board of Directors to reshape the strategy of the company to focus on its core assets, its world-class research unit, and intellectual property. So throughout the year, but more specifically since October 2022, we have implemented a staged strategic shift from an organization focused on clinical development to one prioritizing R&D discovery and demonetization of its intellectual property estate through partnerships, collaborations, and license agreements. We stretched our cash runway by divesting our manufacturing business units and discontinued our clinical programs to focus on selected, critical R&D efforts to mitigate the current limitations of CAR T-cell therapies. The company also compiled a foundational and broad SIP estate that controls key aspects of developing therapy in the allogenic cell therapy space. With our attractive portfolio, we are able to strategically develop both novel cell therapy candidates and potential partnerships within the allogenic landscape and beyond. In summary, While our clinical results have not lived up to expectations, we are hopeful for the many patients who have been successfully treated in these programs and the solid foundation it has created to move these therapies further. We believe that our clinical accomplishments, strengthened with the current and future research efforts, can lead to commercially successful products. With that, I'll turn over the call to Etan Bremen. to provide more details on our research activities. Etan?
spk02: Yes, thank you, Michel. And thank you, everyone, again, for joining us today. As Michel just discussed, our clinical programs had clear potential. And even if they did not deliver sufficient clinical efficacy to initiate a registration trial, they provided us proof of concept of our technologies. We have demonstrated that non-gene editing technologies can be used to engineer an allogeneic corticotherapy with a reduced risk of graft-versus-host disease, or GVHD. No GVHD was reported among the 19 patients treated with SEAD-211 in the Immunity-1 study, nor the 25 patients treated with SEAD-101 in the AlloShrink study. We validated our proprietary SHRNA platform, not only with the data from the Immunity-1 study with SEAD-211, where TISA receptor was downregulated to prevent the risk of graft-versus-host disease, but also with the data from the Cycle 1 study with SEADO2, where the expression of NKG2D ligands were downregulated to increase the CAR T cell persistence. All this provided us a solid proof of concept of the versatility and safety of our SAGE RNA technology. With the new strategy prioritizing R&D discovery and the monetization of our intellectual property, we are pursuing our efforts on the SAGE RNA platform. We have successfully multiplied the SAGE RNA technology, to enable the targeting of multiple targets simultaneously, using our all-in-one vector system. This is of great importance, as in most cases, a single target will offer only limited uses. For example, in the case of allogeneic candidates, one target is needed to combat graft-like host disease, and additional targets are needed to combat recognition by the host immune system, in order to improve cell persistence. Similarly, immune checkpoint inhibitors are important targets for drug regulation. since multiple tumors have been shown to express the ligands to these receptors, which can be involved in the inhibition of CAR T cell responses or other T cell-mediated responses. The large number of candidates for donor regulation at once makes these perfect candidates for our SHRNA technology. In short, this multiplexing platform potentially allows us to generate CAR T cell candidates with optimized features, like increased persistence, efficacy, or the ability to evade complex or immune-suppressive tumor-marked environments. This clearly allows for a very broad therapeutic functionality, which is especially important in the context of solid tumors. Currently, the SA-JRNA multiplex platform has been validated in which it includes up to four different targets in a plug-and-play manner. Next to the ability to down-regulate the target or targets of interest, the dynamic range that can be achieved using the SA-RNA multiplexed platform means that the expression of each candidate protein can be modulated. This is of importance in instances when a reduction of protein expression is of benefit rather than complete removal of the protein expression. For example, removal of the HLA class 1 leads to recognition of the cell by host and K-cell, which in turn will lead to low cell persistence. Modulating the protein expression to such an extent that is not targeted by NK cells can help engineered cells evade the host immune system. In addition to our multiplexing platform, we're also working on CAR T cells with dual or multi-targeting capabilities. The reasons behind the possible failure of a single-targeting CAR T cell are multifactorial and include the tumor-marked environment, antigen escape or loss, among others. With a multi- or dual-targeting CAR, Several antigens can be targeted together by the same CAR product. We therefore developed a dual-CAR platform focusing on the NKG2D receptor. The NKG2D receptor specifically targets NKG2D ligands that are induced by different stress responses. This offers a very different strategy from dual-CAR T-cells that target similar antigens, such as lineage antigens like CD19 and CD20. By targeting NKG2D ligands, a broader range of antigen can be targeted simultaneously that are not limited to only one specific tumor indication. Thus, the implication and applicability of the NKG2D-based dual CAR T cells is suitable not only in situations where the antigen can escape or loss may occur, but in situations where multiple organs are impacted, such as the case of metastatic and trans-solid tumors. These malignancies are very difficult to target with conventional means. and use of an NKGTD-based dual-cost system may offer much-needed alternatives. In parallel, we are also making efforts into identifying new targets expressed by a broad range of indications. For this, we are currently developing immunotherapies targeting B786, which is a ligand expressed in a broad range of cancers, and was shown to be associated with tumor progression, pool prognosis, and lived-on metastasis. With these platforms, we aim to provide solutions to some of the main limitations of current CAR TESOL therapies, including the lack of validated targets beyond BESOL malignancies and the issues concerning TESOL persistence, efficacy, and fitness. We are very excited about our latest advancements in the work and look forward to providing more details on our assay journey, multiplexing capabilities, and new candidates in the near future. With that, I will now turn the call over to David for an update on our financial statements of 2022.
spk05: Thank you, Ocon.
spk06: Turning to our financials, I'd just like to remind you all that our full financial details are available on the Cellular Oncology website in both French and English languages. Research and development expenses were 18.9 million euros in 2022 as compared to 20.8 million euros in 2021, a year-over-year decrease of 1.8 million euros. The decrease in the company's R&D expenses is primarily driven by the company's decision to discontinue some of the preclinical and in-process development costs after the company's decision to adopt and implement a new business strategy over the last few months of 2022. General and administration expenses were €10.5 million in 2022 as compared to €9.9 million in 2021. an increase of 600,000 euros. This increase is primarily related to higher insurance costs and consulting fees partially compensated by the decrease of the expenses associated with the share-based payment, non-cash expenses, related to the raw employment offers for employees and directors. The fair value adjustment of 14.7 million euros relating to the contingent considerations and other financial liabilities as of December 31st of 2022, is mainly driven by the full reversal of the liability. This liability is a result of business combination accounting, IFIS III, which requires the liability to be recorded unless the possibility of any outflow is removed. This impairment comes as a result of the company's strategic shift in focus away from clinical development and the early stage nature of the implementation of the CELIAT 2.0 strategy, which involves shifting from an organization focused on clinical development to one prioritizing R&D discovery and the monetization of its intellectual property portfolios through partnerships, collaboration, and license agreements. To date, no effective sublicense contract nor collaboration contract has been entered into. And as a result, there is an uncertainty as to the timing and amount of associated short, medium, and long-term revenues. Given this uncertainty, and as per accounting standards, the company recognizes a full impairment loss on the remaining value of Goodwill in process research and development and Horizon Discovery's SHRNA platform. resulting in a non-cash impairment of €35.1 million on a consolidated basis for the financial year ended December 31, 2022. This accounting conclusion does not affect management's commitment to continue in its effort to pursue the potential monetization of the company's IP. If and when such a firm's sublicense or collaboration contract occurs and hence increases the probability of revenue, The management will estimate the reversal of the impairment, which will be limited so that the carrying amount of the asset does not exceed its recoverable amount, along with the remeasurement of the relative contingent liability. We posted net order income of €9 million for 2022 compared to a net order income of €3.4 million for 2021. The company's order income is principally coming from The gain on sales of the CTMU activities for 5.2 million euros, which is resulting from the terms of the asset purchase agreement between Cellian Oncology and Cellistic, under which Cellistic agreed to acquire Cellian Oncology Manufacturing Business Unit. The remaining number of income is mainly associated with grants received from the Walloon region for a total amount of 1.6 million euros, mainly in the form of recoverable cash advances. Net loss for the year ended December 31, 2022, was 40.9 million euros, or 1.81 euros per share, compared to a net loss of 26.5 million euros, or 1.70 euros per share, for the same period in 2021. As noted above, the increase in net loss between periods was primarily due to the non-cash impairment adjustment on the oncology intangible assets. Net cash use in operations for the year ended December 31st, 2022, which excludes non-cash effects, amounted to 28 million euros, which is in line with the net cash use in operations of 26.6 million euros for the year ended December 31st, 2021. As of December 31, 2022, our treasury position was €12.4 million, or $13.3 million. Based on our current scope of activities, we estimate that our cash and cash equivalents should be sufficient to fund operating expenses and capital expenditures requirements into the fourth quarter of 2023. The net assets of the company as of December 31, 2022, on a Belgian GAAP non-consolidated basis, have fallen below half of the company's capital. As a result, in accordance with the Article 7228 of the Belgian Code for Companies and Associations, the Board of Directors plans to submit for a vote at its May 5, 2023, shareholders' meeting its business plan, including a proposal to continue the company's activities. The Board of Directors will publish a detailed report regarding this proposal on or around April the 3rd, 2023, together with a convocation with proposed resolution for the shareholders' meeting.
spk05: With that, I will now turn over the call to Michel for closing statements. Thank you, David.
spk07: So in closing, Celiac Oncology is more focused than ever on our mission, and although we faced several challenges during the last year, we believe that we are now very well positioned to unleash the power of our IPSA and to help making the cell therapy approach a success. As such, we look forward to announcing exciting upcoming milestones in the remainder of 2023, including updates from our SHRNA multiplexing platform and our dual CAR platform and business development in the second quarter of the year. And... Appointment of our new chief executive officer following an extensive and very fruitful search process in the coming weeks. So in that regard, we are very pleased to announce that George Rawadi has been appointed as our new chief executive officer and succeeding to me. George is not only a seasoned executive with over 20 years of experience in pharma biotech, But he also spent four years at Celiac Oncology from 2014 to 2018 as Vice President Business Development and Intellectual Property. So we are convinced that George's solid business development track record and immuno-oncology in-depth knowledge will make George a great leader for Celiac Oncology. Finally, I wanted to mention that all the work done up to now has created new foundations building on our current research platform, helping to generate next-generation candidates in the future. So I'm deeply grateful to all our team members who tirelessly deliver each and every day with dedication in pursuit of our mission to develop innovative cell therapies against cancer. With that, I'll turn over the call to the operator in order to take your questions. Operator? Thank you.
spk03: We'll now be conducting a question and answer session. If you'd like to ask a question today, please press star 1 from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions.
spk01: Once again, that's star 1. Thank you. Once again, if you have a question, you may press star 1 at this time. Thank you. I'm showing no questions at this time.
spk03: I'll hand the floor back to Michel Lussier for any further comments.
spk07: Thank you, Operator. So I'd like to thank everyone for joining us today. and your interest in celiac oncology. We remain steadfast in our mission to bring novel and innovative cardiac cell therapy to cancer patients with unmet medical needs. We look forward to speaking to you again soon.
spk04: Thank you. Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.
Disclaimer

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