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spk05: Good afternoon, and welcome to the EQRX First Quarter 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. Later, we'll conduct a question-and-answer session. In order to ask a question, please press star 1-1. Please be advised that this conference call is being recorded. I would now like to turn the call over to Michelle Greenblatt, Head of Investor Relations.
spk01: Thank you, Operator, and good afternoon, everyone. Earlier this afternoon, we issued a press release providing an overview of our first quarter 2023 financial results and our recent corporate progress. A copy of this release and the presentation to accompany this call are available on the Investor Relations section of our website at investors.eqrx.com. Joining me on the call today are Melanie Nalicherry, President, Chief Executive Officer and Principal Financial Officer, and Dr. Eric Hedrick, Chief Physician Executive. Before we get started, I would like to remind everyone that some of the statements that we make on this call and information presented in the slide deck include forward-looking statements as outlined on slide two. Actual 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 any 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'll now turn the call over to Melanie.
spk04: Thank you, Michelle. Good afternoon, everyone, and thank you for joining us for our first quarter conference call. For those of you following along on the slides, I will begin on slide three. Today, we announced a reset for EQRX. Going forward, we will focus on developing clinically differentiated high-value medicines. To do this, we will leverage our team of experienced drug hunters, strong execution skills, and significant capital position of $1.3 billion. Our goal is to make a meaningful impact to patients and build long-term value for shareholders. Our CDK4-6 inhibitor, Leurocyclib, with its compelling early clinical data and potential for strong financial return, is an exciting starting point from which to build our pipeline, along with some of our early stage oncology programs. Lior Zyklip has an opportunity to expand CDK4-6 inhibition into new indications and additional combinations that could be firsts for this class of medicine. As you'll hear from Eric shortly, we continue to make excellent progress on the development of leurocyclib, including initiating our Phase III trial in first-line advanced metastatic or recurrent low-grade endometrial cancer, which we believe is the first Phase III study with a CDK4-6 inhibitor in this indication. Additionally, we are nearing the completion of patient enrollment in our Phase II open-label trial in first and second line hormone receptor positive, HER2 negative, advanced breast cancer. With this reset, we plan to remove any programs from our existing portfolio that are inconsistent with our new strategy. Specifically, we are taking the following actions as outlined on slide four. First, we are seeking commercialization partnerships for OmalertNet our third-generation EGFR inhibitor. We believe a company with an existing commercial infrastructure is better positioned to effectively deliver Omalertinib to patients around the world. Marketing authorization applications for Omalertinib for use in the treatment of EGFR-mutated non-small cell lung cancer remain under review by both the United Kingdom's MHRA for a Great Britain license and the EMA for a European Union-wide license. Second, we are terminating our existing license agreements for our two checkpoint inhibitors, Sugamalamab and Nofazinlamab, as well as for our JAK1 inhibitor, EQ121. Seastone Pharmaceuticals will regain rights for the research, development, and commercialization of Sugamalamab and Nofazinlamab, and Link Pharmaceuticals will regain rights for the research, development, and commercialization of EQ121. We'd like to thank Seastone and Link for their partnership and support around our original mission and believe that these assets are well placed back in their capable hands. Third, in light of our new focus, we plan to full wall our potentially differentiated immune inflammatory programs which we are excited about, into a separate entity under EQRx. We intend to explore its path as an independent company and pursue additional funding options. Accordingly, we are aligning our organization to our new strategy and will be reducing our workforce by approximately 170 positions. I would like to thank all of our team members for their commitment, passion, and contributions since our founding. It has been a true privilege to work with all of you. Difficult but necessary, these changes are setting the stage for our go-forward build of the company, providing clarity and focus. We expect that collectively, the actions I have outlined will generate annualized cash savings of at least $125 million. enabling us to significantly lower our go-forward spend. This allows us to amplify the capital we have and puts us in the best position to move forward. Before we move on, I'd like to take a moment to reflect on what our team has accomplished over the last three years. We built a global bias club and aligned stakeholders from across the healthcare ecosystem around a shared goal of improving patient access. Showing that the system can change is something we are proud of. Importantly, and critical for our go-forward strategy, we have demonstrated that we can pick targets and assets and advance them, which along with our $1.3 billion in cash puts us in a strong position for the future. I will now turn the call over to Eric. who will talk about the current status of our development of liracycline.
spk06: Thanks, Melanie. Please turn to slide five. I would like to begin with a reminder of the clinical profile of liracycline, which has been defined in more than 400 patients treated in clinical trials. The data generated from these studies, detailed on slide six, clearly demonstrate that liracycline can be dosed continuously without scheduled interruption in contrast to palbocyclid and ribocyclid with comparatively low rates of neutropenia. In contrast to abemocyclid, lirocyclid, when administered without scheduled interruption, is associated with acceptably low rates of GI toxicities such as diarrhea. Thus, lirocyclid appears to have possible ease of administration advantages within the CDK4-6 inhibitor class potential tolerability advantages for patients, and an adverse event profile that may afford best-in-class combinability potential with a variety of agents in hormone receptor-expressing breast cancer and other CDK4-6 inhibition-sensitive tumors. Turning to slide seven, we plan to continue further the development of liracycline in a variety of ways. We plan to pursue late-stage studies in novel indications for CDK4-6 inhibitors while pursuing earlier combinations with novel agents in hormone-sensitive cancers. One example of an indication which has been established to be responsive to CDK4-6 inhibition but remains an area of unmet need is metastatic or advanced endometrial cancers. We have initiated a multi-regional Phase III clinical trial to evaluate liracyclib in combination with letrozole compared to letrozole with placebo for the first-line treatment of patients with advanced or metastatic low-grade endometrial cancer. In addition, we are nearing the completion of enrollment in our multi-regional Phase II open-label trial with liracyclib in combination with standard endocrine therapy in first and second line hormone receptor-positive advanced breast cancer. This trial provides the foundation for future development of lirocyclobin-malval combinations enabled by its potentially differentiated safety profile. With that, I will turn the call back to Melanie for a financial update and closing remarks. Melanie?
spk04: Thank you, Eric. Please turn to slide eight. A summary of our first quarter 2023 financial results can be found in the press release that we issued this afternoon. More details will be included in our 10Q, which we will file later today. As I highlighted earlier, we ended the first quarter of 2023 with $1.3 billion in cash, cash equivalents, and short-term investments. Total operating expenses were $102 million, versus 86 million for the same period a year ago. R&D expenses accounted for approximately 70% of our spend this quarter as we continue to advance our portfolio. Our cash firm was 86 million for the first three months of this year. We expect cash used in operations to be 275 million or less for 2023. including non-recurring costs of approximately 45 to 55 million for wind down, termination, and exit costs related to the announced portfolio decisions and reduction in workforce. We estimate our 2023 year-end cash, cash equivalents, and short-term investment position to be approximately 1.1 billion. As I stated earlier, we expect to significantly lower our spend and generate annualized cash savings of at least $125 million derived on a 2023 four-year basis. Key savings will be driven by the collective actions we outlined today, including the removal of several programs from our pipeline. This provides capital and financial flexibility to support additional product acquisition costs and the pursuit of additional indications. Now, before we open the call for your questions, I would like to conclude with the following on slide nine. We are resetting EQRx. Our new focus is on developing clinically differentiated high-value medicines to make an impact for patients and build shareholder value. We believe we have the drug hunting expertise, drug development and execution capabilities, and scale of capital necessary to deliver on this strategy. Our go-forward organization will have a significantly lower expected cash burn, which when combined with our current cash position of $1.3 billion opens up degrees of freedom as we plan to grow our portfolio. We look forward to sharing more about our plans and progress in the future. Thank you all for listening. I would now like to turn the call back to the operator to start the Q&A.
spk05: Thank you. As a reminder, to ask a question, you will need to press star 11 on your telephone. Once again, to ask a question, please press star 11. And our first question comes from the line of Chris Shibutani with Goldman Sachs.
spk03: Thank you very much for taking the question. obviously as you framed, very difficult but necessary decisions. Three things, if I could ask, can you give us a sense for timelines for regulatory possible kind of decisiveness for ALMO over in the UK and Europe? Just frame some of the timelines there. Number two, as you contemplate thinking about a home for the immune assets there, is there anything that you can tell us about a process that may be ongoing? And number three, in particular, you mentioned in your prepared remarks about additional potential product acquisitions. Can you characterize what that might be when you're thinking about your capital allocation timelines and strategies there? Thank you.
spk06: Hi Chris, this is Eric Hedrick. Thanks for the question. I'm going to tackle the first part of this and maybe hand off to Melanie for the second two parts. In terms of regulatory timelines for amlortinib in the UK and the European Union, we're anticipating decisions on those applications this year, this calendar year. And then let me hand off to Melanie for the rest of it.
spk04: Yeah, so on the INI assets, I just want to re-emphasize what I said a few minutes ago. These are very exciting opportunities they are nearing the clinic and we believe that to maximize the potential of these assets it really requires focus and hence we're putting it into an entity which originally or initially we are going to wholly own and then over time we are going to identify capital for that entity and so it's it's yes if you want to call it a process what we're trying to do is we want to make sure that it's best served by dedication to this field and then on your third question so on the product acquisition side I just want to highlight that with the scale of capital that we have with the 1.3 billion that we have as of the end of this quarter and with bringing our cash burn way down, this is a time when this scale of capital is extremely valuable. Capital has become expensive and there are a lot of people out there that are trimming their portfolios. There are a lot of companies that are trading below cash And so we believe that that just puts us in an interesting position to put something together that is going to be an interesting portfolio. So that's how we're thinking about it. I would say more to come, Chris, on this in the future.
spk03: Great. Thank you very much.
spk05: Thank you. One moment for our next question, please. And our next question comes from the line of Chris Schott with J.P. Morgan.
spk07: Hi, this is Ekaterina on for Chris. Thank you so much for taking our questions. So first question, so on the timelines for Laracyclib, can you just remind us your latest thoughts on potential timelines and how quickly you can bring the asset to market? And a second question is kind of on the adjuvant opportunity. So given some of the additional financial flexibility you'll have you know, doing some of this that you've announced today. Does that change your thinking about the adjuvant opportunity and potentially running a study in that setting? And then maybe tied to that, does Novartis' Natalie study that recently read out change how you're thinking about the development path more broadly for that asset? Thank you so much. Yeah.
spk06: Hi, Catherine. This is Eric. Thanks for the question. In terms of lirocyclic timelines for approval, again, with our program focused on endometrial cancer, that's a Phase III study that is just initiated, and it is possible with a positive result that we'd be looking at and seeking approval sometime in the 2026 timeframe. Your question about the adjuvant opportunity, You know, I think we're taking a realistic approach to evaluating additional indications for Laracyclib. I don't believe that the conventionally defined adjuvant setting is one where it would make sense for us to pursue that. But we do believe that there are some other opportunities in the breast cancer setting, the hormone receptor positive breast cancer setting, that we may be able to pursue in lieu of adjuvant. And we're planning on sort of having a bigger discussion of those opportunities, I think sometime in the near future.
spk04: Yeah, Katerina, I want to emphasize what Eric just said. The core for today, because we've shared so much information, is to keep in mind how we're thinking about lirocyclib, which is it has a profile that allows us to take it in first-in-indication opportunities, like the one that we just talked about, metastatic endometrial cancer, with its tolerability profile, the ability to continuously dose. It doesn't have the liabilities that we have in that class generally, neither the neutropenia liabilities nor the GI toxicities. And so it is a very good backbone for combinations, whether those are doublets or triplets in the future, and that's where we believe the future is really going to go. But I would just simply say, given the amount of information that we put out here today, we'll come back to that and we'll make sure that we have a more in-depth conversation at Katerina.
spk08: Thank you.
spk05: Thank you. We're going to leave for our next question. And our next question comes from the line of Steven Scala with TD Cowen.
spk02: Thank you. Apologies, but I am not clear on the new strategy since it sounds similar to the strategy the company had been following since its most recent pivot. that is to develop differentiated drugs. EQRx previously pivoted away from the Buyers Club in the U.S., so that's not news today. The news today is that liraciclib has made some progress and you are no longer developing some other drugs which you previously had said were differentiated. And I guess you're abandoning the Buyers Club OUS, which appeared to be making some progress. So can you clarify for me what I'm missing in this new strategy versus the old one? And with all due respect, it's hard to have high confidence given the path that the company's been on for the last year or so. Thank you.
spk04: So Steve, thank you very much for the question. Let me first just reiterate that we know that today is a really important moment for the company. And you're right, after the feedback that we received from the FDA in November, we talked about our path forward or the lack thereof, especially for sugar malamab in the United States. I want to remind everybody that as a company, we have a lot going on. We just talked about multiple filings that we have under review, a number of late stage trials. We have just under 10 different partnerships. And so, Steve, we wanted to be thoughtful and execute such a reset as the one that we're describing today well. And that has brought us to today. With regards to the question around the focus going forward, I just want to reiterate that what we are doing here today. We're essentially saying we're trimming everything from our portfolio that does not fit the go forward strategy. I think in the past there's been some confusion around still retaining some of the assets and starting to pivot to differentiated medicines. And today we're creating that clarity and the focus where we're saying we are only going to focus on differentiated high value medicines going forward. And perhaps last to your point around the original mission, I want to say the following. We tried something groundbreaking, something that we all knew was going to be hard. We're actually proud of the fact that the part that everybody thought was going to be the hardest, the ability to assemble a global bias club, that we've actually done that. But ultimately, you need to have approved drugs for the buyer's club to pull them through. And we just need to realize that the world around us has changed, and two long-tail risks that we thought perhaps one of them might happen, but not both. They both happened. It's very sad. But I think... We just need to realize where we are today and hence the clarity around what the focus is going forward.
spk00: Thank you.
spk05: One moment, please. Our next question comes from the line of Akash Tiwari with Jefferies.
spk08: Hi, this is for Kosh. Thanks so much for taking our questions. We have two, actually. The first is, given that you have $1.3 billion in cash, can you just give us a refreshed view on your BD strategy? The second is pretty related, but it's essentially, would you consider looking at rare disease assets which are less likely to be negotiated by the IRA and where FDA might be more lenient and you can leverage for partnership? Thank you.
spk04: Let me start and then I'll see if Eric wants to add to my comments. So today is a lot of information that we put out there. So we are looking forward to providing more updates and more detail in the future and really talk in detail what we're adding. But I just want to reiterate that with the cash that we have and with having brought our spend way down, we have the ability to assemble something really interesting. We believe that Miro is an exciting starting point. And so with that firepower, we're going to come back and we're going to talk about how we're going to develop Miro in more detail. We'll also come back and talk about how we're seeing the evolution of the portfolio.
spk06: Yeah, and this is Eric. I would just add, you know, as Melanie stated, we see liracyclib as really a starting point. We're interested in its profile and as, you know, the field evolves towards novel combinations, having a sort of cornerstone drug with that profile for combinations we think is important. But we didn't intend to say that We're going to be a company exclusively centered around lay recycling. And we are in a fortunate cash position that Melanie stated before. And I think in terms of what opportunities we might be afforded with that cash position, we're not going to be exclusive, I believe, to certain companies. you know, indications or fields. And if there are rare disease assets that we believe are good assets worthy of development and we have the expertise to drive those forward, you know, we would consider those opportunities.
spk04: In short, more to come later on this.
spk08: Next question. Thank you.
spk05: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.
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