Neoleukin Therapeutics, Inc.

Good afternoon, and thank you for joining us today for the Neoleukin Therapeutics conference call. At this time, all participants are in a listen-only mode. Following the conclusion of the prepared remarks, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, today's conference is being recorded. I would now like to turn the call over to Julie Rathbun, Communications for Neoleukin Therapeutics. Julie, please go ahead.

Thank you. Good afternoon and welcome to Neoleucin Therapeutics' second quarter 2020-20 conference call. Joining me on the call today from Neoleucin are Jonathan Drachman, CEO, Priti Patel, Chief Medical Officer, and Sean Smith, Vice President, Finance. Today's call is being recorded. It will be available for replay on the investor relations section of the Neoleucin website approximately two hours after the call for at least 30 days. Before we start, I'd like to remind you that today's call will include forward-looking statements based on current expectations. Such statements represent management's judgments, intentions, beliefs, and expectations about future events, strategies, product candidates, and operating plans. All forward-looking statements included in this presentation are made as of today and involve assumptions, risks, and uncertainties. And actual results could differ materially from those anticipated in the forward-looking statements. Neolucan undertakes no obligation to update or revise any forward-looking statements. Please refer to the company's filings with the SEC, which are available from the SEC, or on the Neolucan website for information concerning the risk factors that could affect the company. I'll now like to turn the call over to Jonathan Drachman.

Thank you, Julie, and good afternoon. Neolucan was founded in 2018 based on the vision that de novo protein design will become an important way to design new biologic therapies with customized properties, making them more suited to be therapeutics than native proteins. In the past three and a half years, we have continued to push the boundaries of de novo protein design, learning how to extend pharmacodynamic half-life, fine-tune the affinity of the ligand for its cognate receptor, target the cytokine memetic to specific cells, and how to design increasingly complex molecules. NL201 is the first molecule in this new class of potential therapeutics, and we believe it is the first fully de novo protein to enter clinical testing. Through the ongoing phase one clinical trial, we expect to learn a tremendous amount about the biological effects of de novo proteins in patients and how to continue expanding the capabilities of our technology. In addition to NL201, we have other examples of our de novo protein design capabilities. In 2020, we announced a de novo protein that could prevent SARS-CoV-2 from entering human cells. In 2021, we presented data on an IL-2, IL-15 antagonist that could inhibit IL-2-induced proliferation and protect mice from graft-versus-host disease. And we have more recently announced that we are working on a T regulatory cell agonist with the goal of treating patients with autoimmune or inflammatory diseases. Now we're entering the next phase of de novo protein design technology, which involves adding machine learning and neural networks to computational methods in order to develop new molecules. We have a team of scientists who have been working on this, and we believe it offers advantages for the development of de novo protein therapeutics. Design methods leveraging machine learning can go faster, require less computational power, create designs for more complex proteins, and don't require high resolution crystal structures as a starting point. Over the last six months, we have used this technology to develop prototypes for two additional de novo cytokine memetics. These proteins have established mechanisms of action that we believe could make them promising anti-tumor candidates, and the native proteins have more complex structures than those we have previously designed memetics for. We believe this is the future of de novo protein design, and we're very excited about entering into this next phase with our growing research pipeline. I'd now like to turn the call over to Preeti Patel, our chief medical officer, for an update on ML201. Preeti?

Thank you, Jonathan. I'm pleased to share an update on our clinical development program. As a reminder, NL201 is a de novo protein that stimulates both the IL-2 and IL-15 receptors. It is more potent than native IL-2 and preferentially stimulates naive CD8 T cells and NK cells versus immunosuppressive T regulatory cells at low concentration. The first in human clinical trial of NL201 is being conducted in patients with relapsed or refractory solid tumors. The open label phase one trial of NL201 is currently active at 12 sites in the United States, Australia, and Canada. Our NL201 clinical trial is progressing well with strong investigator engagement across our clinical sites and active enrollment. We're currently in the dose escalation phase and are exploring two dose schedules in order to assess safety, pharmacokinetics, pharmacodynamics in anti-tumor activity. The trial is evaluating two different schedules and multiple dose levels in order to determine a recommended Phase II dose and schedule. We have added intermediate dose levels to the clinical plan as we have progressed through dose escalation, which has extended the timeline to reach a recommended Phase II dose and schedule. Due to the addition of these intermediate doses, we now expect to release our interim data on this clinical trial in 2023. After our recommended Phase II dose and schedule is identified through our dose escalation study, we plan to initiate enrollment of indication-specific expansion cohorts, including patients with renal cell carcinoma and melanoma. Earlier this year, we started the combination portion of our Phase I clinical trial with the addition of pembrolizumab to NL201 in specific cohorts. Patients with relapsed or refractory solid tumors in these combination cohorts receive a standard dose of pembrolizumab combined with ascending doses of NL201 in order to define a recommended dose and schedule for the combination regimen. The NL201 Pembrolizumab combination will be tested as a separate arm of the ongoing phase one trial. With that, I'd now like to turn the call over to Sean Smith, VP of Finance, to discuss our second quarter 2022 financials. Sean?

Thanks, Preeti, and good afternoon, everyone. I'm pleased to present you with our second quarter financial results. Cash, cash equivalents, and short-term investments totaled $116.5 million as of June 30, 2022, compared to $142.5 million as of December 31, 2021. Research and development expenses for the second quarter of 2022 increased to $11 million from $9.8 million for the second quarter of 2021. The increase was primarily due to increased clinical trial expense related to NL201. General and administrative expenses for the second quarter of 2022 decreased to $4.9 million from $5.3 million for the second quarter of 2021. The decrease was primarily attributable to decreases in personnel related and facility related costs. Net loss for the second quarter of 2022 was $15.7 million compared to a net loss of $15.1 million in the second quarter of 2021. Based upon current internal infrastructure and pipeline initiatives, we believe our cash and short-term investments will be sufficient to fund operations through 2023. Importantly, we are also evaluating opportunities to extend our runway by gating certain activities and have slowed down growth due to the challenging capital markets. We remain focused on our core value-driving activities and feel confident that the amount of cash we have will enable important milestones over the next year and a half. And with that, I'll turn the call back over to Jonathan for some concluding comments.

Thanks, Sean. We are looking forward to the coming months as we progress NL201 through dose escalation and gather information to help guide optimal dosing and schedule based on tolerability, pharmacokinetics, and pharmacodynamics. We look forward to learning more about our lead molecule while also continuing our efforts to expand the potential offered by de novo protein design. We're thankful for our dedicated team at Neolucan that remains diligently focused on our goal to advance new therapeutics to improve outcomes for patients with serious diseases. Operator, we can now open the call up for questions.

Thank you. And everyone, to ask a question, that is star 1 on your telephone keypad. Again, that is star 1 to ask a question. And we'll pause for just a moment to assemble the roster. And we'll first go to Greg Harrison of Bank of America.

Hi there. Good afternoon. This is Mary Kate Onford. Greg, thanks for taking our question. Maybe could you add some additional color to your expectations for the NL201 update? Maybe what should we expect to see in the initial data update, and how has this changed at all with the addition of the intermediate doses? Thank you.

Sure. I'll start, and then I'll ask Preeti to elaborate. I don't believe that the addition of intermediate doses will change anything in terms of what we'll be presenting next year, and you should expect to see a data set that will include safety, tolerability, biomarker data, pharmacokinetics, and any anecdotal anti-tumor activity that comes from the clinical trial. Preeti, anything you'd like to add to that?

No, I think that covers it. Great, thank you.

Our next question will come from Charles Zhu of Guggenheim Securities.

Hey guys, thanks for taking our questions. I had another question on the intermediate dose cohort that you've announced. I'm kind of wondering if you could provide some additional color as to what exactly that means. For example, have you dose escalated up to a certain level and then now you're coming back down? Or are these additional intermediate doses kind of like further steps up as you continue to go upwards in escalation, and how should we think about the additional number of doses that you may evaluate? Thanks.

Thanks for the question, Charles. So, with any clinical trial, there are adjustments that are made during the course of it, and During the trial, we felt that in order to best and fully evaluate both safety and activity, it was best to add intermediate dose levels to our planned dose levels. And we continue dose escalation, so there's no de-escalation going on.

Got it. Okay, already. And then how are you thinking about, are you able to, for example, refine, you know, timing within 2023, or we should still think about some time within that full year of 2023 for the initial data?

At this time, we're going to leave it at 2023, and we'll definitely update you as time goes on.

All right. Fully understand. Thanks for taking the questions.

We will now move to a question from Ben Burnett of CFAW.

Hey, thank you very much. I wanted to also ask a question around just the dose scheduling and the new cohorts. But I guess first, regarding the two schedules, schedules A and B, I guess, do you feel confident at this point that these are the right schedules? Or is there an appetite to maybe look at further additional schedules beyond that?

Well, whenever you're working with an agonist, I think that getting the interval right is a very important part of how you develop a drug because the pharmacodynamic activity can often be much longer than the pharmacokinetic half-life. Based on extensive preclinical work that we did, we feel like these are the right schedules. And at this point, we continue with the original plans to look at the day one and eight schedule as well as the day one schedule for three-week intervals.

Okay, excellent. And is there anything you can comment on regarding safety in it, and have you seen any DLTs at this point?

You know, we really can't comment on that at this point, but we look forward to providing a full update next year.

Okay, understood. And maybe if I could just ask one more just regarding your comments around some of the Treg pursuits. I know it's early, but do you have a sense for which autoimmune disorders would maybe suffer from poor functioning Tregs and might represent low-hanging fruit in this setting?

We do have some ideas about areas that are interesting to pursue, but, again, we're not prepared to discuss that at this time. I think there's a lot of opportunities, though, for expanded T regulatory cells to have an impact in both inflammatory and autoimmune conditions.

Interesting. Got it. Okay. All right. Thank you very much.

And again, as a reminder, that is star one if you'd like to ask a question. We will now go to Mara Goldstein of Mizuho Securities.

Great, thanks. I just wanted to ask also about the intermediate dose. If A, that is being incorporated into the combination arm and as well as just trying to understand There's no discussion of hematology study and whether or not that is still in the works also at this dosing schedule.

Yeah. Thanks for the question, Mara. What we learn from the solid tumor monotherapy dosing will be used to guide the dosing for other studies in the future, as well as for the combination with pembrolizumab since that was started later and is earlier in dose escalation. As far as the hematology study goes, as we announced last quarter, we have decided to wait on initiating that trial until we learned more about the dose and schedule from the ongoing solid tumor trial. It's still something that we are interested in and have seen good activity preclinically. across lymphoma and multiple myeloma, and we've presented those data previously. So that remains an interest, but rather than doing the same thing in terms of dose escalation and dose finding across a second phase one study, decided to wait until we learn more from this ongoing study.

Okay, thank you.

And as there are no further questions, I'd like to turn the call back to Jonathan Druckmann for closing remarks.

All right. Thanks, everyone, for joining our call today. We look forward to sharing our progress with you in the months ahead. Thank you.

And with that, everyone, that does conclude today's conference call. We'd like to thank you again for your participation, and you may now disconnect. you Thank you. you Thank you. Good afternoon, and thank you for joining us today for the Neolucan Therapeutics Conference Call. At this time, all participants are in a listen-only mode. Following the conclusion of the prepared remarks, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, today's conference is being recorded. I would now like to turn the call over to Julie Rathbun, Communications for Neoleucin Therapeutics. Julie, please go ahead.

Thank you. Good afternoon and welcome to Neoleucin Therapeutics' second quarter 2020-20 conference call. Joining me on the call today from Neoleucin are Jonathan Drachman, CEO, Priti Patel, Chief Medical Officer, and Sean Smith, Vice President, Finance. Today's call is being recorded. It will be available for replay on the investor relations section of the Neoleucan website approximately two hours after the call for at least 30 days. Before we start, I'd like to remind you that today's call will include forward-looking statements based on current expectations. Such statements represent management's judgments, intentions, beliefs, and expectations about future events, strategies, product candidates, and operating plans. All forward-looking statements included in this presentation are made as of today and involve assumptions, risks, and uncertainties, and actual results could differ materially from those anticipated in the forward-looking statements. Neolucan undertakes no obligation to update or revise any forward-looking statements. Please refer to the company's filings with the SEC, which are available from the SEC or on the Neolucan website for information concerning the risk factors that could affect the company. I'll now like to turn the call over to Jonathan Drachman.

Thank you, Julie, and good afternoon. Neoleukin was founded in 2018 based on the vision that de novo protein design will become an important way to design new biologic therapies with customized properties, making them more suited to be therapeutics than native proteins. In the past three and a half years, we have continued to push the boundaries of de novo protein design, learning how to extend pharmacodynamic half-life, fine-tune the affinity of the ligand for its cognate receptor, target the cytokine memetic to specific cells, and how to design increasingly complex molecules. NL201 is the first molecule in this new class of potential therapeutics, and we believe it is the first fully de novo protein to enter clinical testing. Through the ongoing phase one clinical trial, we expect to learn a tremendous amount about the biological effects of de novo proteins in patients and how to continue expanding the capabilities of our technology. In addition to NL201, we have other examples of our de novo protein design capabilities. In 2020, we announced a de novo protein that could prevent SARS-CoV-2 from entering human cells. In 2021, we presented data on an IL-2, IL-15 antagonist that could inhibit IL-2-induced proliferation and protect mice from graft-versus-host disease. And we have more recently announced that we are working on a T regulatory cell agonist with the goal of treating patients with autoimmune or inflammatory diseases. Now we're entering the next phase of de novo protein design technology, which involves adding machine learning and neural networks to computational methods in order to develop new molecules. We have a team of scientists who have been working on this, and we believe it offers advantages for the development of de novo protein therapeutics. Design methods leveraging machine learning can go faster, require less computational power, create designs for more complex proteins, and don't require high resolution crystal structures as a starting point. Over the last six months, we have used this technology to develop prototypes for two additional de novo cytokine memetics. These proteins have established mechanisms of action that we believe could make them promising anti-tumor candidates, and the native proteins have more complex structures than those we have previously designed memetics for. We believe this is the future of de novo protein design, and we're very excited about entering into this next phase with our growing research pipeline. I'd now like to turn the call over to Preeti Patel, our chief medical officer, for an update on ML201. Preeti?

Thank you, Jonathan. I'm pleased to share an update on our clinical development program. As a reminder, NL201 is a de novo protein that stimulates both the IL-2 and IL-15 receptors. It is more potent than native IL-2 and preferentially stimulates naive CD8 T cells and NK cells versus immunosuppressive T regulatory cells at low concentration. The first in human clinical trial of NL201 is being conducted in patients with relapsed or refractory solid tumors. The open-label phase one trial of NL201 is currently active at 12 sites in the United States, Australia, and Canada. Our NL201 clinical trial is progressing well with strong investigator engagement across our clinical sites and active enrollment. We're currently in the dose escalation phase and are exploring two dose schedules in order to assess safety, pharmacokinetics, pharmacodynamics in anti-tumor activity. The trial is evaluating two different schedules and multiple dose levels in order to determine a recommended Phase II dose and schedule. We have added intermediate dose levels to the clinical plan as we have progressed through dose escalation, which has extended the timeline to reach a recommended Phase II dose and schedule. Due to the addition of these intermediate doses, we now expect to release our interim data on this clinical trial in 2023. After our recommended Phase II dose and schedule is identified through our dose escalation study, we plan to initiate enrollment of indication-specific expansion cohorts, including patients with renal cell carcinoma and melanoma. Earlier this year, we started the combination portion of our Phase I clinical trial with the addition of pembrolizumab to NL201 in specific cohorts. Patients with relapsed or refractory solid tumors in these combination cohorts receive a standard dose of pembrolizumab combined with ascending doses of NL201 in order to define a recommended dose and schedule for the combination regimen. The NL201-pembrolizumab combination will be tested as a separate arm of the ongoing phase one trial. With that, I'd now like to turn the call over to Sean Smith, VP of Finance, to discuss our second quarter 2022 financials. Sean?

Thanks, Preeti, and good afternoon, everyone. I'm pleased to present you with our second quarter financial results. Cash, cash equivalents, and short-term investments totaled $116.5 million as of June 30, 2022, compared to $142.5 million as of December 31, 2021. Research and development expenses for the second quarter of 2022 increased to $11 million from $9.8 million for the second quarter of 2021. The increase was primarily due to increased clinical trial expense related to NL201. General and administrative expenses for the second quarter of 2022 decreased to $4.9 million from $5.3 million for the second quarter of 2021. The decrease was primarily attributable to decreases in personnel related and facility related costs. Net loss for the second quarter of 2022 was $15.7 million compared to a net loss of $15.1 million in the second quarter of 2021. Based upon current internal infrastructure and pipeline initiatives, we believe our cash and short-term investments will be sufficient to fund operations through 2023. Importantly, we are also evaluating opportunities to extend our runway by gaining certain activities and have slowed down growth due to the challenging capital markets. We remain focused on our core value-driving activities and feel confident that the amount of cash we have will enable important milestones over the next year and a half. And with that, I'll turn the call back over to Jonathan for some concluding comments.

Thanks, Sean. We are looking forward to the coming months as we progress NL201 through dose escalation and gather information to help guide optimal dosing and schedule based on tolerability, pharmacokinetics, and pharmacodynamics. We look forward to learning more about our lead molecule while also continuing our efforts to expand the potential offered by de novo protein design. We're thankful for our dedicated team at Neolucan that remains diligently focused on our goal to advance new therapeutics to improve outcomes for patients with serious diseases. Operator, we can now open the call up for questions.

Thank you. And everyone, to ask a question, that is star 1 on your telephone keypad. Again, that is star 1 to ask a question. And we'll pause for just a moment to assemble the roster. And we'll first go to Greg Harrison of Bank of America.

Hi, there. Good afternoon. This is Mary Kate Onford. Greg, thanks for taking our question. Maybe could you add some additional color to your expectations for the NL201 update? Maybe what should we expect to see in the initial data update, and how has this changed at all with the addition of the intermediate doses? Thank you.

Sure. I'll start, and then I'll ask Preeti to elaborate. I don't believe that the addition of intermediate doses will change anything in terms of what we'll be presenting next year, and you should expect to see a data set that will include safety, tolerability, biomarker data, pharmacokinetics, and any anecdotal anti-tumor activity that comes from the clinical trial. Preeti, anything you'd like to add to that?

No, I think that covers it. Great, thank you.

Our next question will come from Charles Zhu of Guggenheim Securities.

Hey, guys. Thanks for taking our questions. I had another question on the intermediate dose cohort that you've announced. I'm kind of wondering if you could provide some additional color as to what exactly that means. For example, have you dose escalated up to a certain level and then now you're coming back down? Or are these, you know, additional intermediate doses kind of like further steps up as you continue to go upwards in escalation, and how should we think about the additional number of doses that you may evaluate? Thanks.

Thanks for the question, Charles. So, with any clinical trial, there are adjustments that are made during the course of it, and During the trial, we felt that in order to best and fully evaluate both safety and activity, it was best to add intermediate dose levels to our planned dose levels. And we continue dose escalation, so there's no de-escalation going on.

Got it. Okay, already. And then how are you thinking about, are you able to, for example, refine, you know, timing within 2023, or we should still think about some time within that full year of 2023 for the initial data?

At this time, we're going to leave it at 2023, and we'll definitely update you as time goes on.

All right. Fully understand. Thanks for taking the questions.

We will now move to a question from Ben Burnett of CFAW.

Hey, thank you very much. I wanted to also ask a question around just the dose scheduling and the new cohorts. But I guess first, regarding the two schedules, schedules A and B, I guess do you feel confident at this point that these are the right schedules? Or is there an appetite to maybe look at further additional schedules beyond that?

Well, whenever you're working with an agonist, I think that getting the interval right is a very important part of how you develop a drug because the pharmacodynamic activity can often be much longer than the pharmacokinetic half-life. Based on extensive preclinical work that we did, we feel like these are the right schedules. And at this point, we continue with the original plans to look at the day one and eight schedule, as well as the day one schedule for three-week intervals.

Okay, excellent. And is there anything you can comment on regarding safety in it, and have you seen any DLTs at this point?

You know, we really can't comment on that at this point, but we look forward to providing a full update next year.

Okay, understood. And maybe if I could just ask one more just regarding your comments around some of the Treg pursuits. I know it's early, but do you have a sense for which autoimmune disorders would maybe suffer from poor functioning Tregs and might represent low-hanging fruit in this setting?

We do have some ideas about areas that are interesting to pursue, but, again, we're not prepared to discuss that at this time. I think there's a lot of opportunities, though, for expanded T regulatory cells to have an impact in both inflammatory and autoimmune conditions.

Interesting. Got it. Okay. All right. Thank you very much.

And again, as a reminder, that is star one if you'd like to ask a question. We will now go to Mara Goldstein of Mizuho Securities.

Great, thanks. I just wanted to ask also about the intermediate dose. If A, that is being incorporated into the combination arm and as well as just trying to understand There's no discussion of hematology study and whether or not that is still in the works also at this dosing schedule.

Yeah. Thanks for the question, Mara. The, what we learn from the solid tumor monotherapy dosing will be used to guide the dosing for other studies in the future as well as for the combination with pembrolizumab since that was started later and is earlier in dose escalation. As far as the hematology study goes, as we announced last quarter, we have decided to wait on initiating that trial until we learned more about the dose and schedule from the ongoing solid tumor trial. It's still something that we are interested in and have seen good activity preclinically. across lymphoma and multiple myeloma, and we've presented those data previously. So that remains an interest, but rather than doing the same thing in terms of dose escalation and dose finding across a second phase one study, decided to wait until we learn more from this ongoing study.

Okay, thank you.

And as there are no further questions, I'd like to turn the call back to Jonathan Druckmann for closing remarks.

All right. Thanks, everyone, for joining our call today. We look forward to sharing our progress with you in the months ahead. Thank you.

And with that, everyone, that does conclude today's conference call. We'd like to thank you again for your participation, and you may now disconnect.