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spk06: Good day, and thank you for standing by. Welcome to the EQRX Q2 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during that session, you will need to press star 1 1 on your phone. Please be advised that today's conference is being recorded, and I would now like to hand the conference over to your speaker today, Mr. Neil Swamy, Head of Investor Relations. Mr. Swami, please go ahead.
spk05: Thank you, Operator, and good morning, everyone. Earlier today, we issued a press release providing an overview of our second quarter 2022 financial results and our recent corporate progress. A copy of this release and presentation to accompany this call are available on the investor relations section of our website at investors.eqrx.com. Joining me on the call this morning are Melanie Nalasheri, President and Chief Executive Officer, Jamie Rubin, Chief Financial Officer, and Dr. Eric Hedrick, Chief Physician Executives. Before we get started, I would like to remind everyone that some of the statements we make on this call and information presented in the slide deck include forward-looking statements as outlined on slide two. Events and results could differ materially from those expressed or implied by any forward-looking statements as a result of various risks, uncertainties, and other factors, including those set forth in our most recent filings with the SEC and other future filings that we may make with the SEC. You are cautioned not to place any undue reliance on these forward-looking statements, and EQRX disclaims any obligation to update such statements. I will now turn the call over to Melanie.
spk02: Thank you, Neil. Good morning, everyone, and thank you for joining us for our quarterly investor conference call. Slide three is a reminder of our mission to improve health for all with great, innovative, affordable medicines. This is increasingly relevant as we've seen the U.S. Senate debate and advance prescription drug pricing reform legislation this week. EQRx is creating a market-based approach to bring down prices and address inequitable access for patients. We believe our approach will increase competition, foster biomedical innovation, create savings for healthcare systems, and most importantly, provide population-level access to innovative therapies in the U.S. and around the world. Our progress in the second quarter reflects the urgency we all feel at EQRx to advance our mission. Our team remains hyper-focused on execution. And as you'll see from today's updates, we're making progress toward our 2022 goals. We would like you to come away from our call today with three key takeaways as outlined on slide four. First, We continue to advance our lead oncology programs, Omolertinib and Sugamaramab, towards regulatory approvals and commercialization. We are delivering data to support the applicability of these programs to the US population while constructive conversations with the FDA continue. In fact, we just initiated our US-led comparative three-arm phase 3B clinical trial of Omolertinib for the first-line treatment of EGFR-mutated non-small cell lung cancer. We are continuing to execute on our regulatory plans outside the U.S. Recently, EQRx's first marketing authorization application was accepted for review by a major global regulatory agency. This is an important milestone for any company, and I'm incredibly proud that we have accomplished this in such a short period of time since our founding. For sugarmalumab, our anti-PD-L1 antibody, we are anticipating our first global regulatory submission for stage four non-small cell lung cancer outside of the U.S. during the second half of 2022. We are generating and presenting clinical data for our lead programs alongside our partners that underscore the important role of omalertinib and sugarmalumab could play in the treatment of lung cancer and beyond. Presentations in this quarter included ASCO and this week's late-breaking oral presentation at the World Conference on Lung Cancer. Second, turning to our Global Buyers Club, we now have Memoranda of Understanding, or MOUs, in place with payers and health systems that cover more than 210 million lives within their networks. We continue to engage with payers and health systems in their interest in our business model and the quality of our pipeline remains strong. Third, we ended the second quarter with just under $1.6 billion in cash and cash equivalents. You will hear more about this from Jamie, who will tell you more about our disciplined use of capital and control of spend. We expect to end the year with a strong cash position and have cash runway at least into 2025. Let me now turn the call over to Eric, who will discuss almalertinib and sugar malumab in greater detail. Eric?
spk04: Thank you, Melanie. On slide five, I will begin with almalertinib, intended for the treatment of patients with advanced EGFR-mutated non-small cell lung cancer. As a reminder, almalertinib is a third-generation or mutant-selective EGFR inhibitor, which we then licensed from Hanso Pharmaceuticals in 2020. In the Phase III Aeneas trial, Amalertinib was shown to significantly improve progression-free survival, which is the endpoint of clinical and regulatory interest in this setting, with a safety profile characterized by lower rates of rash and diarrhea than Gafitinib, a finding which is consistent with the mutant selectivity of Amalertinib and its metabolites. This risk-benefit profile is potentially unique among CGFR inhibitors, and we will be evaluating this profile in the newly-initiated Phase III-B trial that Melanie mentioned in the opening. We continue to learn of specific aspects of the benefit afforded by Amalertinib from ongoing analysis of the Phase III Aeneas trial. At the ASCO annual meeting in June, our partner HANSO presented an analysis of the effect of almalertinib in patients with CNS metastasis, showing a highly significant 68% reduction in the risk of central nervous system progression compared to gefitinib, a median prolongation of freedom of CNS progression from approximately eight months with gefitinib to approximately 29 months with almalertinib. Given the frequency of brain metastasis, and the significant morbidity and profound quality of life impact associated with brain metastasis in this type of lung cancer. Robust CNS activity is paramount, and we believe that these data further differentiate amalertinib from other EGFR inhibitors. The Phase III INEOS trial has also served as the basis of our first regulatory submission in the UK. This application is currently under review by the Medicines and Healthcare Products Regulatory Agency, or MHRA. We look forward to working with the MHRA as they complete their review. As a reminder, we have received Innovation Passport designation for amlertnib, which provides an opportunity for a coordinated review amongst agencies in the UK and an expedited review process. We are continuing to pursue what we believe to be constructive conversations with the FDA regarding conditions under which almalertinib may be filed for approval in the U.S. As Melanie mentioned, we've initiated a randomized U.S.-led clinical trial evaluating the clinical comparability between almalertinib and osimertinib with a third study arm assessing the potential clinical benefit of the addition of chemotherapy to almalertinib in the first-line metastatic treatment setting. As outlined on slide 6, This study is designed to enroll a patient population representative of EGFR-mutated lung cancer in the U.S. We believe this will address the applicability of the results of the Phase III ANEAS trial to current U.S. medical practice in the patient population. As I previously noted, it will also assess the potential differences in the risk-benefit profile between these two third-generation EGFR inhibitors particularly in regard to tolerability differences related to different metabolic profiles of amalertinib and osomertinib. The primary endpoint of the study will be progression-free survival, with secondary endpoints including overall survival, surrogate survival measures such as tumor response, circulating tumor DNA clearance, objective response rate, duration of response, and others. Each arm will enroll approximately 140 patients for an anticipated total of 420 patients. Details of this study are posted on clinicaltrials.gov. Other studies of almalertinib also continue. Our partner, Turning Point Therapeutics, recently initiated a Phase 1b2 clinical trial evaluating almalertinib in combination with elzavatinib in patients with EGFR mutant metamplified advanced non-small cell lung cancer. In addition, our partner, Hamso, is conducting a clinical trial in the adjuvant treatment setting of EGFR mutated lung cancer ongoing in China, and we are in discussions to expand the study to include multi-regional enrollment. I will now turn to slide 7 to discuss Sugamalamab, our anti-PD-L1 monoclonal antibody, which we in-licensed from Seastone Pharmaceuticals in 2020. As a reminder, Sugamalumab has met the primary endpoints of two large Phase III studies conducted by our partner, Seastone, one in Stage IV disease and the other in Stage III disease. Note that Sugamalumab has also been evaluated in a now-completed pivotal study in relapsed or refractory extranodal NKT cell lymphoma, or ENKTL, a rare and aggressive type of non-Hodgkin's lymphoma. At ASCO, our partner Seastone presented interim overall survival data from the pivotal Phase III Gemstone 302 study, which assessed the addition of sugar malumab to chemotherapy in patients with stage IV non-small cell lung cancer, demonstrating that the addition of sugar malumab to chemotherapy led to an improvement of median overall survival by 8.5 months, with the median overall survival exceeding 25 months in the sugar malumab arm. The survival benefit was observed across tumor histologies and was independent of PD-L1 expression status. Of note, these overall survival findings were based on a pre-specified alpha-controlled analysis, which is an important regulatory consideration. Also at ASCO, there was an oral presentation featuring the primary analysis of the Phase II Gemstone 201 study of Sibumelamab in relapsed or refractory ENKTL. This trial met its primary endpoints of objective response and response duration with responses in approximately half of patients, complete responses in a third of patients, and a one-year duration of response rate of 86%. This is particularly compelling as the prognosis of relapsed or refractory ENKTL is historically poor, and there are currently no approved treatments for this disease. This week at the World Conference on Lung Cancer, there was a late-breaking oral presentation of updated data from the Phase III GemStone 301 trial in which sugar malumab was evaluated as a consolidation agent after chemoradiotherapy for patients with Stage III non-small cell lung cancer. As we have noted, this is the only Phase III trial that has evaluated PD-L1 inhibitor following chemoradiotherapy given in either a concurrent or a sequential manner. The sequential method is a particular note as it represents the treatment given to approximately 25% of stage 3 patients in the US, yet no checkpoint inhibitors have been approved for use in this setting. The results of the final analysis of PFS demonstrated a significant improvement for sugar malumab with the median PFS of 10.5 months for sugar malumab versus 6.2 months for placebo, a hazard ratio of 0.65. The PFS benefit was observed for shikomalumab regardless of whether patients received prior concurrent or sequential chemoradiotherapy. We expect an interim analysis of overall survival from this study in 2023. In total, these presentations add to the growing body of clinical evidence for shikomalumab in a number of different cancer treatment settings. We are also supporting an expanded access program in relapsed or refractory ENKTL that is open to patients in the U.S., reinforcing our commitment to addressing unmet need. We expect to submit for regulatory approval in the U.S. in 2023 for relapsed or refractory ENKTL. And as a reminder, Sugamalumab was granted breakthrough therapy designation by the FDA for ENKTL in 2020. To further build Sugar Malumab's value of evidence, we are planning to initiate a U.S.-led randomized clinical trial, which will compare Sugar Malumab with other approved immune checkpoint inhibitors in a population of non-small cell lung cancer patients, reflecting the U.S. demographic. This study is being designed to address the applicability of the results of GENSTONE 302 to the current U.S. medical practice and patient population. Regarding regulatory processes for sugar malumab, we're continuing to pursue what we believe to be constructive conversations with the FDA regarding conditions under which sugar malumab may be filed for approval in the U.S. We're also continuing to engage with various regulatory authorities around the globe regarding potential filings for approval in non-small cell lung cancer, and we remain on track for filing our first submissions for sugar malumab outside the U.S. in the second half of this year. With that, I will turn the call back to Melanie. Melanie?
spk02: Thanks, Eric. Moving to slide eight, as you can see, we are building a robust pipeline and generating data to support the applicability of our lead programs to the U.S. population while also advancing multiple clinical stage programs beyond omalertinib and sugar malumab. We currently have more than 10 ongoing programs five of which are in the clinic, that address some of the highest-cost areas in oncology and immune inflammatory diseases. For the remainder of our pipeline, the multiregional Phase III study for norepinephrine in liver cancer has completed enrollment. Our multiregional Phase II study for laryocyclic and metastatic breast cancer remains ongoing. And as we start building our immunology and inflammation franchise, We plan to investigate our JAK1 inhibitor in atopic dermatitis. Our approach enables us to work closely with our partners and get an early look at the clinical data they are generating. Our team then applies a rigorous and disciplined approach to determine if we should advance programs toward regulatory approvals in commercialization in our licensed territories. This optionality is a critical part of our business model, which provides cost-effective data generation and helps de-risk opportunities to advance our pipeline. In addition to in-licensing, we continue to enter into early stage R&D collaborations with leading drug engineering companies, which we believe are a capital-efficient way to build our pipeline and will provide sources of revenue in the future. We now have collaborations with seven of the leading drug engineering platform companies across the globe. Most recently, we have signed an agreement with Origen. Let me now turn to slide nine. We continue to make progress in growing our Global Buyers Club. We are working to enter into long-term trusted strategic partnerships with private and public payers and health systems so they and the patients they serve can gain access to our future medicines when approved. As I alluded to earlier, in Q2, we signed MOUs with payers and health systems that cover 30 million lives within their networks, growing our covered lives base to more than 210 million lives. We plan to sign additional MOUs, and our team is also working towards converting existing MOUs to pre-commercialization agreements. I will now turn the call over to Jamie to discuss our financial position.
spk03: Thanks, Melanie. I am now on slide 10. A summary of our second quarter 2022 financial results can be found in the press release that we issued this morning. More detail is included in our 10Q filing, which we will file later today. We ended the second quarter of 2022 with just under $1.6 billion in cash, cash equivalents, and short-term investments. Total operating expenses were $79 million versus $34 million for the same period a year ago. For the first six months of the year, our total operating expenses were $165 million, up from $62 million a year ago. R&D accounted for approximately 60% of our operating expenses this quarter as we continue to advance our portfolio, ramp up clinical trials across all stages of development, and build important infrastructure to support our operations. Of note, our cash burn was $119 million for the first six months of the year. While we continue to expect $400 million or less in operating expenses in 2022, which includes non-cash comp expenses, our cash burn is trending even lower than we had anticipated, as we continue to be highly disciplined in tightly managing our capital. With the initiation of our three-arm study for amalertinib, a major milestone for the company, and additional trials to start in the second half of the year, including a comparative study for sugar malumab, We do anticipate our operating expenses will be back and loaded in the second half of the year, but we still expect to end the year with cash between 1.3 and 1.4 billion. Given where we completed the first half of the year and our anticipated activities later in the year, we feel very good about ending the year with a very strong cash position and maintain cash runway at least into 2025. Against what has been a challenging capital markets backdrop, we are fortunate to be in a strong financial position, which will enable us to grow, thoughtfully shape our portfolio by selectively adding new programs and advancing our existing pipeline programs and complete significant development and commercial milestones. Now moving to slide 11, I would like to summarize the multiple milestones we are expecting for the remainder of the year. As you heard during the call, these include an additional regulatory submission outside the U.S. for sugar melamab, the planned initiation of our comparative study for sugar melamab, continuing to add members to our global buyers club, and managing our spend towards 400 million or less in operating expenses for 2022. Let me now turn the call back over to Melanie.
spk02: Thank you, Jamie. In closing, I would like to thank all of our employees, partners, and stockholders for your support. I would also like to acknowledge and thank the patients and healthcare providers around the world who are participating in our clinical trials. We can now go ahead and turn the call back over to the operator so we can take any questions. Operator?
spk06: Thank you. As a reminder, to ask a question, you'll need to press star 11 on your phone. Please stand by as we compile the Q&A roster.
spk01: One moment.
spk06: Our first question will come from Eric Percher of Nefron Research. Your line is open.
spk08: Thank you. I'd like to start on the commercial side of the equation. I appreciate the commentary on expanding to 210 million as part of the Buyer's Club. Could you speak to, as you are doing both MOUs and movement to pre-commercial at the same time, Does that movement to pre-commercial take away at all from the MOU goal? I think it was $350 million by the end of the year. That's still quite a jump. And how that process is running in tandem, both MOU and pre-commercial?
spk02: Erica, thank you for the question. This is Melanie. Those two are indeed running in parallel, but they're really not taking away. If you think about it, these partnerships are like Really, you know relationships where we're working with our partners day in day out, you know The teams are meeting all the time And so it's actually not that you know one needs to give way to the other they can work very well in parallel in terms of the 350 million lives goal for the end of the year. I would agree with you. It's an ambitious target and But as you can see, we are making really great progress. And, you know, with being ahead of the 200 million line, I would say we continue to work really diligent towards this very ambitious goal.
spk08: Thank you. And maybe one more on this topic, which is as we focus on UK medicines and that innovation and access passport, have you been able to gauge the pace of market authorization and the benefit risk assessment under that program? And the real question being, once you're approved, how quickly can you be on market?
spk02: Well, first of all, Eric, let me just clarify the innovative licensing and access pathway, the ILAB pathway. really has a benefit for the regulatory approval timeline, and it has a number of different options, including an accelerated approval that including clock stops could be much faster. So that's one benefit. The other benefit is that the ILAP partner organizations include both the regulator, MHRA, as well as the health technology assessment organization, NICE. And the goal is that there is a much more coordinated, is perhaps the best word, approach here so that timelines are more coordinated and that the two processes work in parallel so that access to patients can be enabled as soon as possible.
spk08: So there's really no benchmark as of today, but it's a promise that they are actually interworking and get you to market sooner.
spk02: Well, we are amongst the first companies that have been granted the Innovation Passport designation, so there isn't actually a lot of data around in terms of how it plays out. I will just simply say that so far it has been a real pleasure to be working with both of the partner organizations to advance our medicines through these processes. Both Omalertinib and Sugarmalamab have the innovation passport designation. And as we just mentioned, Omalertinib has been accepted by the MHRA for review and we're planning to submit sugar malumab for review later this year.
spk01: Thank you for the detail. Thank you. One moment please for our next question. Our next question will come from Akash Tewari of Jefferies. Your line is open.
spk07: good morning this is clark on for akash thanks for taking our questions first what are your thoughts on hutchman withdrawing surfat nibs maa due to general generalizability concern and is there a read across your eu filings have you noticed any tone shifts with your discussions with ex-us regulators and secondly when can we expect top line data from all alert nibs phase 3b head test study we noticed that the primary completion date on clinicaltrials.gov, noted May 2027. Is there any flexibility around statistics and the potential for earlier interim readout and filing? Thank you.
spk04: Yeah, thanks for the questions, Clark. This is Eric Hedrick. A couple of things. You know, regarding the decision on the HutchMed application, It's a little bit difficult to, well, impossible to comment on other companies' filings, so I can't comment in specific. I will say that, particularly if you're talking about generalizability, each potential medication, an indication is unique in terms of its generalizability concerns, and so it is difficult to know for us whether, you know, Concerns that were specific to the drug and disease that. You know, brought about some concerns about generalizability for will be applicable in our situation. You know, we, we think we understand. lung cancer and its generalizability concerns or lack thereof pretty well. And so we can really only go off the direct discussions that we're having with regulators. And right now, those discussions outside the U.S. have led us to our belief that we'll be filing submissions in the second part of this year. It's hard to comment in specific, but I think that we feel comfortable in the discussions we're having that we're on track. I think the other question was around our Phase 3B study. Yeah, you know, the details there, endpoints are listed on clinicaltrials.gov. Like we said, we're in the process of a discussion with the U.S. FDA regarding the nature and timing of data that would be available from that study that would be supportive of filing in the U.S., and those discussions are ongoing.
spk07: Understood. Thank you so much.
spk06: Okay. Thanks. Thank you. One moment please for our next question.
spk01: Our next question will come from Chris Shiwatani of Goldman Sachs.
spk06: Your line is open.
spk09: Thank you and good morning. Two questions, one somewhat more broadly strategic and then a second follow up relating to some of the financials. On the broader question, we're very much involved with thinking about implications of drug pricing reform and legislation. Plenty of uncertainties and yet perhaps could you talk to where you think potential changes could be bullish for EQRX? areas that you think could present challenges, and then perhaps how uncertainty is something that you may be able to capitalize on. And I'm thinking about both your current assets as well as how you're looking at potential capital allocation and further build out of the portfolio. There's a lot of talk about small molecules versus biologics, therapeutic categories, et cetera, if you could frame kind of bullish challenges and uncertainty. Thank you.
spk02: Thank you, Chris. This is Melanie. I'll take your question or start with your questions and others may add. So, first of all, I would say that I think we all recognize, and certainly at EQRx we recognize, along with everybody in Washington, that drug prices are too high. And we, of course, welcome the debate and any ideas about different ways to bring costs down both for patients, for payers, for healthcare systems, to reduce patient out-of-pocket costs, and to improve access. Now, as you know, that's core to our mission, and there are lots of statistics that support that, including data that has shown that for seniors in particular, there's a large number of seniors that are not filling their prescriptions because of the significant out-of-pocket burden. So I would say we, of course, welcome all approaches. We believe that a market-based solution like the one that we are putting forward is the most finely tuned instrument, if you will, with the least undesired consequences. Having said that, I would say that There are certainly provisions, and as you know, Chris, you never know what exactly ends up really being law until it's all done. And there always remains still a lot of negotiations happen. But anything that shifts more costs to payers, so for instance, when you look at the increasing participation of Medicare Advantage plans in the catastrophic coverage phase, that certainly will put a lot more burden on the same companies or organizations that we're partnered with. And so I would imagine that that is an opportunity for EQRx to continue to relieve that additional burden. With regards to the challenges, I would say the challenges lie probably in your number three in some of the uncertainties, right, around what ultimately will be the drugs that will be negotiated. We know that there are a number of carve-outs, such as orphan drug status, which we have, for instance, for a couple of our drugs. And so the devil will be in the details, I would say. But I would say regardless, or perhaps just because of that, there will be, I believe there will be a lot of opportunity for EQRx. And then the last thing I would say, while the negotiations, at least in the current draft, are expected to start in 24, they're not starting to have impact, really, until 26. I mean, that's still a long time from where we are, and we're hoping that we're going to bring a lot of benefit both to our partners and to patients around the world long before that. With regards to your question on capital allocation and portfolio decisions, I mean, absolutely, you know, I would say any company in our industry is looking at this very closely and is asking questions, you know, does the potentially different treatment of small molecule drugs versus biologics, you know, what are the implications? We will certainly also ask ourselves those same questions. And in some ways, you know, greater clarity around what might end up being negotiated in the future will certainly also lead to us to make decisions on where those benefits will not come through and where we could make investments and bring benefits that the government regulation doesn't.
spk09: That's helpful. And then if I could follow up with just a clarifying question about financials and modeling, perhaps for Jamie, You were quite specific in talking about the shape of the spending to the balance of this year and the trend relative to your prior comments and guidance. And there was vocabulary now at least until 2025. Help us a little bit. I think we're all quarterizing 23. We're thinking about a couple years ahead. Any further reaffirming details would be great.
spk03: Yeah, sure. Thank you, Chris. And thank you for your perception in terms of what we're saying. So as I said, for the first six months of this year, we are trending lower than we had anticipated with respect to our cash burn, and we expect to end the year between $1.3 to $1.4 billion. So, again, overall, we are continuing to managing our capital spend very, very tightly, and we expect to continue to do so over the next several years. So the point of our comment and our language is just to reiterate our confidence that we see multi-years of strong cash, and we are going to continue to commit to managing our capital with a lot of discipline, and therefore we feel confident in our very long cash runway.
spk09: That's helpful. Thank you.
spk06: Thank you. And that ends the Q&A portion of this conference. I would now like to conclude today's conference call. Thank you all for participating. You may now disconnect and have a pleasant day.
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