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spk05: Pseudocles continues to advance PRS-342 or BOS-342, which is a 4,1-BB-GPC3 bispecific MAP-Kalin compound towards the clinic, with Phase I expected to begin in the coming months. We are eligible to receive a more nominal milestone payment upon the first in-human dosing on this program, and we believe that clinical entry of this program, which would be the fourth clinical stage 401 by specific from our IO franchise offers additional long-term upside. This concludes my prepared remarks, and I will now hand the call back to Tom.
spk03: Thank you, Steve. Cash and cash equivalents and investments total $59.2 million for the quarter ended December 31, 2022, and this does not include the $5 million CGN milestone payment, which was received in February of 2023. The year-end cash balance is compared to a cash and cash equivalence balance of $117.8 million for the year ended December 31, 2021, with the overall decrease during the course of 2022 being a result of the need to fund operations. The company believes operations are sufficiently funded for more than the next 12 months. Research and development expenses were $53 million for the year ended December 31, 2022, compared to $66.7 million for the year ended December 31, 2021. This decrease is due to the lower overall program costs for both L-aricopep and cinrobifus-alpha, as well as due to lower manufacturing costs across other late-stage respiratory and immuno-oncology programs, lower license fees, and lower consulting costs. These lower costs were partially offset by higher clinical costs for PRS-220, and PRS-344 or S095012. Higher preclinical spending was also incurred on PRS-400, and there's an increase in personnel and travel costs. Next, general and administrative costs were $16.4 million for the year ended December 31, 2022, compared to $16.6 million for the year ended December 31, 2021. The period-over-period decrease was driven primarily by lower personnel, facilities, and audit and tax costs, partially offset by higher business development, travel, and amortization of deferred costs related to revenue recognition. Moving on to other income, for the year ended December 31, 2022, $8.2 million of grant income was recorded with respect to PRS 220, compared to $3.7 million for the year ended December 31, 2021. The increase is due to high overall costs incurred on PRS-220 as the program progressed into Phase I clinical studies, along with a full year of grant funding eligibility in 2022 compared to 2021, the year in which the grant was awarded. The company's net loss was $33.7 million, or a $45 loss per share for the year ended December 31, 2022, compared to a net loss of 45.7 million, or a 71 cent loss per share for the year ended December 31, 2021. With respect to my remarks that we believe operations are sufficiently funded for more than the next 12 months, I wanted to make a few additional comments. First, we believe in the immense commercial potential of our respiratory programs, and that inhaled biologics can yield transformative therapies not possible by other modalities. We remain committed to our mission and are evaluating opportunities to support the long-term development of therapeutic candidates such as PRS-220 and PRS-400. However, we cannot ignore the more constrained environment in which we are operating, and we continue to reduce our cost profile as evidenced by the significantly reduced cash burns approximately $22 million in the second half of 2022, compared to more than $40 million in the first half, while having meaningfully advanced our two proprietary respiratory programs, PRS-220 and PRS-400. Although our operating plans for the current year include the benefit of cost-saving actions we have already taken, we are prepared to gate future investments on PRS-220 and PRS-400, including certain Phase II readiness activities for PRS-220 and IMD-enabling activities for PRS-400 in the interest of achieving our top priority, namely, obtaining data from the ELERECABEP Phase IIa study in asthma. Based on the current timelines for AZ to deliver this study, we are confident we will be able to achieve our cash reach objective on the basis of our current balance sheet, making cost-saving decisions as needed, and being supported by anticipated modest milestones from existing collaborations. For that, I'll now hand the call back over to Steve.
spk05: Thank you, Tom, and thank you all for joining us on the call today. We would now like to open the call for any questions.
spk01: Thank you. When I'll be conducting your question and answer session, if you'd like to be placed into question queue, please press star 1 on your telephone keypad. 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 star 1. One moment, please, while we poll for questions. Our first question today is coming from Roger Song from Jefferies. Your line is now live.
spk06: Great. Thanks for the update and taking our questions. Just a couple from the first one for 060, knowing the timeline projection is mostly driven by AstraZeneca, But just so you know, any kind of, I think Steve, you mentioned on the call, some leading indicator, the enrollment is accelerating after the protocol amendment and opening new sites. Can you just give us a little bit more color around this acceleration of the enrollment and how confident maybe you and AstraZeneca about the new timeline for the top line data in 2024? Thank you.
spk05: Sure, Roger. Thanks for the question. Understood. Look, PRS 060 has been challenging to enroll, as we mentioned. However, we're very encouraged by the composite of efforts that AZ has been doing and has, you know, now really, you know, increased resource commitments as we've communicated hopefully clearly today. There has been a composite of meaningful protocol amendments that squarely address a significant portion of previously observed screen failures, and those have been fully approved in all the jurisdictions we mentioned. There has been meaningful additional site engagement, which has translated into some of the increase in, for example, screening, which we can come back to. And very importantly, there has been this clear increase in operational commitments to increase both geographies by more than 50 percent of the current the current number of geographies that are listed on ct.gov and a significant increase of sites to over more than 100. So when we combine the more ease in enrollment, the increased site engagement, and the significant volume of increased sites, we believe that that is all trending in the direction that we need it to go. And I think there's, without question, there is no question that AZ doesn't believe this is a very high priority and they are treating it as a very high priority. I think what is also very helpful is as we've been working through COVID and we're working through post-COVID, we are operating under a new normal for enrolling asthma studies. And we, with every passing month, every passing quarter, are getting more real-time visibility on the throughput of patients through sites on studies such as PRS 060. And so we will continue to rely on real-time intelligence from the global CRO that's administering the study for AZ to be as accurately informed as possible on those recruitment rates. And that is something that we have factored into our go-forward projections for delivering the study by the middle of 2024. There is, I think, some important nuances or aspects of the study we can remind on in terms of the path to getting patients ultimately randomized. And I'll maybe hand it over to Mary Fitzgerald, who can go through the actual sequence of events and why the screenings, we believe, are a reliable leading indicator to ultimately increasing the enrollment and delivering the study on plan. So, Mary, do you want to take that one?
spk00: OK, thank you, Steve. Yes, Roger, one of the things that happens is that screening takes some time to translate into actual randomization. So we have a two-week screening period followed by a four-week run-in period. So there is six weeks then between the initial screening and when patients can be randomized. So there is always a lag behind an increase in screening. and the randomization. So we expect, based on the approval of the new protocol with these amendments that will enhance screening, will take a little bit of time to come into place, but based on this six-week period before patients are randomized.
spk06: That's great. Yeah, thanks for all the comments. I think we have better understanding of the the improvement here. Okay, so maybe just another question related to O60. Also, the cash runway, you know, given the timeline, it's kind of a working towards your cash for the top line, understanding you're gating your other earlier pipeline to prioritize the O60. But just to remind us, what will be the next step for O60 after top line? you know, what will happen there and how does that build into your operational plan? Thanks.
spk05: So, Roger, I'll just say at a high level a couple of remarks and turn it over to Tom. So, we are considering that the current cash reach will allow us to get through the data, the 060 or LARICA top-line data, and that is absolutely a priority. It's prior one, and it's something we are extremely committed to getting through on the basis of our balance sheet and, as we mentioned, modest anticipated milestones from our existing collaborations. Mechanics of co-development are pretty clear, and we also believe it's going to be a watershed moment for that program leading to clinical validation, and we would be prepared to manage financing a co-development opt-in at that time. Tom can talk again about the specific mechanics of what triggers our co-development opt-in and what we will have at the time, both internally and externally, to communicate publicly at the time we would communicate our opt-in decision.
spk03: Yeah, thanks. Right, so we have, at the time of the top-line data readout, right, AstraZeneca would also need to give us a development plan, a going-forward development plan, that they would prepare asthma, the indication of asthma, for this program to get to BLA filing. With those two pieces of information, we have to make our co-development opt-in decision. The opt-in, we can, at two levels, one at 25% of a cost share with a cost cap, and the other is a 50% without a cost cap. In either one of those scenarios, the benefit compared to not opting in, for example, is that we get an increased share of economics for the lifetime of the program as opposed to a defined term or period if we don't opt in. So enhanced economics on the back end. And when we think about the opt-in overall, again, I think one of the pieces that we think is very manageable for us, again, regardless of our profile, is at the time of the readout, assuming the data is good, The opt-in at 25% at a minimum is something that we will achieve or have an offset of future development milestones on this program that cover about 50% of the overall opt-in cost that we would have with AstraZeneca. So that becomes a very attractive option for us on this program. And if, again, we think about the, again, like the multi-billion dollar opportunity in asthma and the market it brings, not even to mention the you know, the potential for COPD or other respiratory indications, right? Again, we see, you know, the pathway that dupilumab has forged, and this, again, creates a great opportunity for us. And so, you know, we very much, you know, value the co-development opt-in decisions that we have.
spk06: Excellent. Thanks for the team. For those comments, I really appreciate it.
spk01: All right.
spk06: Thanks, Roger.
spk01: Thank you. Next question is coming from Jonathan Miller from Evercore ISI. Your line is now live.
spk02: Hi, guys. Thanks for taking the question. Just to follow on Roger's question there, am I understanding right that the current cash milestone you no longer anticipate to be sufficient to fund that 25% opt-in on its own, and you would have to finance that when the time comes? And then just related to that, When you say you're prepared to gate for the development for 220 and 400 in the interest of O6O advancement, can you give us some color on the timelines, how those timelines might change as we wait and when you would know whether or not you can move forward with those development programs in advance of the O6O readout?
spk05: Sure. Thanks, John. On the first question, Just to be clear that, yes, we are not factoring in our runway the ability to opt in on the back of positive clinical efficacy data for PRS 060 or Alaricabep, but we've never factored that in. So, again, we believe that that data set will be a watershed moment for the program, and given the timeline for that data set to be delivered and all of the other optionality within our pipeline, and our history of transacting with third parties to create significant shareholder value, we remain very optimistic and confident that we will be able to manage through that at the appropriate time. The second question was around gating expenses. Well, I would say at a high level, and I'll turn it over to Tom, that we believe we still have time to manage those critical path activities. to look at multiple options that we're working on across our pipeline. And as you could imagine, PRS-400, more early stage, is a lower cost investment relative to PRS-220. However, PRS-220 is going to continue to benefit heavily from the Bavarian grant through the Phase I study, and we are absolutely committed to completing the Phase I study, which is on plan. There will be some Phase II readiness activities that we will need to consider later in the year, second half of the year. And that's probably all we can say about that. But again, we have time to work through a lot of different options, including what we think could be a very informative readout from FibroGEN's Pemrevlimab, which has been communicated by FibroGEN as something that would be disclosed by middle of this year. So I think that's another important piece Nonetheless, we do believe PRS-220 has already demonstrated best-in-class potential based on the preclinical data we've seen and also based on the fundamental biology where we believe you absolutely should interrogate this locally to have a meaningful clinical benefit.
spk03: Yeah, and maybe I'll just add one thing in terms of the overall spending. I'd say this doesn't change for those two programs, the path that we're on today. It just is going to impact the going forward later this year, as Steve mentioned, right, and how quickly we're able to continue to move those programs along. For example, we know a Phase II study for PRS-220 is something we would have to independently work to fund. So certainly some Phase II readiness-type activities and starting that would make sense, again, in terms of gating that type of spending in order to make sure that we have sufficient runway to achieve the readout for LREC about And it's the same thing with PRS 400. There's a lot of costs that come into play once you get to a development candidate nomination that you're going to have to incur for CMC and TOCS work to bring that to an IMD state. So those are the type of costs that those programs continue. It's just those larger expenditures, some of those cannot be incurred or committed to in the near term.
spk02: make sense make sense uh uh thanks so much for the color on that and then on the on the oncology side of the business uh obviously most of this is is off your balance sheet and is being done through existing collaboration agreements uh which is which is great i guess i'd love to get a sense for your expectation on uh milestone potential funding potential there you know is your cash crunch in any way going to impact the potential for those programs to develop with the collaborators?
spk05: So, John, Steve here. I would answer that by saying, you know, we continue to increase the ratio of investments on respiratory to IO, as you probably imagine. And our current IO investments are very measured. Going forward, we're predicting that that's probably going to be about 10% of, for example, cash on hand. So that's something that's very manageable given, as you said, we have most of this development expenditure for IO off of our balance sheet. For 344, escalation is ongoing, and we would expect to disclose those data publicly before changing the spend ratio that I mentioned, and we believe that given all of the the data we've generated and the commitment of the several partners that have now sued for bispecifics in the clinic based on the same format in 401B biology, that there will be opportunities to get a net positive outcome for purists. We believe that, and we're going to just have to let some of those things play out.
spk02: Makes sense. Thanks so much, guys.
spk01: Thank you. Next question is coming from Matt Phipps from William Blair. Your line is now live.
spk04: Good morning, everyone. This is Rob Andrew. I'm from AppFibs here. Thanks for taking the questions. You know, one of the issues that was raised last year was screen failures, and it's kind of been touched on a little bit here, but you've made efforts to kind of widen the funnel, avoid some of those failures. So I guess, can you just confirm that you are now seeing less screening failures following the implementation of those protocol changes? And then, Steve, I think you mentioned 100 sites now looks from clinicaltrials.gov like there's about 60 up and running with about 40 listed as active. Could you just give us a sense of how up-to-date that is and what the timelines are for getting to that 100 site number?
spk05: Sure, Rob. Happy to talk about that. Your first question was on the screen failures and how much the amendments have impacted that. And then the second question was on the how current is the list on CT.gov. I think Mary closely working with AZ can talk specifically about those. We've already mentioned the impact of the amendments were meant to address about 50% of the screen failures and that the T2 endotype will also continue to be a basis or has been a basis for screen failures, but we do not want to compromise on that point. Again, remember the composite of eosinophil and phenol cutoffs, I think, really put us in the bull's eye of the right patient population. So that's something we really want to try to maintain, and we are. And we do believe with the significant increase in volume of additional sites and geographies that we're able to address that and manage that going forward. But Mary, please feel free to talk a bit about the nature of those amendments and how it's addressed a critical amount of the screen failures, and then also the trajectory at a high level of the onboarding of the additional sites to get over 100 sites, as we mentioned.
spk00: Yes, of course, yeah. Okay, Matt, in terms of the screen failures, some of the things that have been implemented, I mean, I think you're aware of them, the widening of the FEV1, for example, the allowing high-dose inhaled corticosteroids allowing separate devices to be used for the ICS and LABA combinations. All of these significantly contribute to improving the screen failure rate, so that goes down. But as Steve says, we can't reduce screen failure rate to zero, and everyone would anticipate that you will still see screen failures due to ensuring we have a T2 enter type in the study. And of course, that's the appropriate endotype for the FEV1 improvement that we're looking for. So I think we've done what we can here. And obviously, we're in constant dialogue with the sites to try and make sure that we accommodate things that are difficult to the sites. So we have simplified, if you like, the assessments being done at each visit. So all of these contribute to making the study easier for patients and for sites. So all of these things we think will contribute to more patients coming into the study. And you alluded to the 60 sites being currently listed on clinicaltrials.gov, which is accurate. AZ has a transparency policy whereby they put meaningful changes on clinicaltrials.gov on a regular basis. So I wouldn't expect the numbers there to be out of kilter with what's actually happening. But when you make the decision to include new countries and new sites, of course, there's a lag between the time it takes between agreeing that you're going to do that, submitting the protocol, the new protocol, to those countries to be approved, and those countries being approved, and then the sites being activated and screened starting. So we wouldn't expect to see a significant increase there until later in the year when the countries approve the protocol and the sites that are involved in the study. So we would expect to see that happening towards the mid, you know, half of the year. So Q2, Q3. So that's just unfortunately how long it takes to get countries involved and then sites active. I hope that answers your question.
spk04: Yeah, that's helpful. Thank you. Just one other question, you know, the success in CLPD was mentioned in the call. Could you just kind of remind us of the mechanics of what a decision to pursue an additional indication would be kind of as it relates to the original deal and opt-ins or additional indications treated separately when it comes to those kind of decisions, if there were a decision to pursue any additional indications such as COPD. Thank you.
spk05: Thanks, Rob. And yes, so we are, as I mentioned, we are enthusiastic about the dupilumab data, as in past other so-called T2 interventions, say on IL-5, 5-receptor, have not produced you know, such robust results. So we do believe that this continues to validate IL-4RA as the quintessential intervention point for T2 asthma, in particular stratifying as we continue to stratify patients. And as it relates to the co-development opt-ins, We do believe there are multiple features of the co-development option that actually facilitate peers being unable to participate in significant upside on additional indications that make sense for oral inhaled administration, including COPD. Tom can talk about some of those, not the mechanics, but some of the components that would allow us to participate should we choose to opt-in, even if at the time of the opt-in it's not clear exactly when additional indications may be pursued. So with that, I'll turn it over to Tom for some more of those details.
spk03: Sure. Yeah, as it relates to an indication like COPD, for example, the development plan that AstraZeneca could give us, I think that is something we'll have to talk with them about whether they would go right after COPD right now. So lots of discussions to still yet happen. But it would be clear that or it is very clear that the development opt-in decision is for the indication of asthma. So that's the primary indication. However, any opt-in decision that we take, whether it be, again, say do nothing, the 25% or the 50%, the resulting economics apply for all future indications. So if we're opting in, for example, at a 50% level and we're going to get a gross margin share, that will apply to all indications because there's no way to split whether it's going to be asthma or COPD or other indications in the future. So the economic upside for AD's decision to expand to other indications is going to be very clear in terms of what the economic benefit would be. From a cost perspective, overall, the development plans in terms of what they give us initially, that sort of comprises the biggest piece of our you know, sort of known commitment. There are mechanisms in the contract by which these additional costs or obligations to us for that development pattern would come into play, and we know we're going to have those obligations, but some of it could be part of, again, like an ongoing budget, or some of it could be deferred until later in terms of the overall contract timeline. So it's a little bit more nuanced in terms of how the cost obligation comes in, but I guess I would say That's helpful in terms of we know we get the economics, and then it's just a little bit more how we pay for that.
spk05: Thanks, Tom. And I would just sum up to say we would welcome additional investment and other indications as a co-development partner alongside AstraZeneca. We would not meet any such ambitions with fear or trepidation. It would be manageable investments based on the mechanics of the contract in our view. which would allow significant growth for the program, which allows significant economic upside for purists.
spk04: Great. Thanks very much.
spk01: Thank you. We've reached the end of our question and answer session. I'll turn the floor back over to Steve for any further closing comments.
spk05: Okay. Well, thank you, Kevin. And I want to thank everyone again today for your attention and for your continued support of the company. We are truly excited by the promise in particular of our inhaled biologics pipeline and the opportunity to improve outcomes for patients with respiratory disease. We look forward to updating you on our progress. Have a great day.
spk01: Thank you. That does conclude today's teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.
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