Selecta Biosciences, Inc.

Good morning, everyone, and welcome to the Selecta Biosciences second quarter 2021 financial results and corporate update conference call. Currently, all participants are in a listen-only mode. This call is being webcast live on the investors and media section of Selecta's website at www.selectabio.com and is being recorded. For opening remarks, I would like to introduce Kristen Baldwin, Chief People Officer of Selecta. Please go ahead.

Thank you and good morning. Welcome to our second quarter 2021 financial results and corporate update conference call. The press release reporting our financial results is available in the investor and media section of Selecta's website, www.selectabio.com. And the quarterly report on Form 10-Q ended June 30th, 2021, which was filed today with the SEC. Joining me today are Karsten Bruhn, President and Chief Executive Officer, Peter Traber, Chief Medical Officer, and Kate, excuse me, Kai Kishimoto, Chief Scientific Officer. During today's call, we will be making certain forward-looking statements, including, without limitation, statements about the potential, safety, efficacy, and regulatory and clinical progress of our product candidates, financial projections, and our future expectations, plans, partnerships, and prospects. These statements are subject to various risks that are described in the filings made with the Securities and Exchange Commission, including the most recent quarterly report on Form 10-Q. You are cautioned not to take place under reliance on these forward-looking statements, which speak only as of today, August 12th, 2021, and selected as claims any obligation to update such statements, even if management views change. I would now like to turn the call over to Carsten Bruhn.

Thank you, Kristen. Good morning. I appreciate you joining us today. To start, it's worth emphasizing our steadfast commitment to selectively mitigating unwanted immune responses through the development of next-generation antigen-specific tolerogenic therapies. Selecta continues to take a leading position in the immune tolerance field, and in the last quarter, we achieved several milestones that advanced our clinically validated intro platform across enzyme therapies, gene therapies, and autoimmune diseases. With that, I'll walk us through some of our key pipeline updates and upcoming milestones. First, a few key points on our enzyme therapy programs. SAL212, which was licensed to SOBE, is comprised of mTOR co-administered with our proprietary urocase, Fagatricase, for the treatment of chronic refractory gout. As a reminder, our phase three dissolved clinical program kicked off in the third quarter of 2020 and consists of two double-blind placebo-controlled trials of SAL212. In both trials, SAL212 will be evaluated at two doses of mTOR 0.1 milligrams per kilogram and 0.15 milligrams per kilogram. And one dose of begatricase, 0.2 milligrams per kilogram. Each trial aims to enroll 105 patients with 35 at each dose and 35 on placebo. Enrollment is progressing on schedule and top line data from DISSOLVE is expected in the second half of 2022. We intend to leverage the success of SEL212 for a second enzyme program indication in IgA nephropathy, which is a kidney disease that occurs when immune complexes of an antibody called immunoglobulin A1, or IgA1, accumulates in the kidneys. Genetic or environmental factors that cause abnormal IgA1 and its accumulation in the kidneys can result in the development of IgA nephropathy and lead to kidney disease. Although there are no approved therapies We believe our novel approach, which combines mTOR with IgA1 protease, has the potential to treat the root cause of the disease and overcome previous limitations associated with IgA protease development. Due to delay in securing a qualified CDMO to productive process development and manufacturing work, we expect to push our anticipated IND filing into 2022. Although COVID-19 and the recent surge has impacted supply chains and resulted in challenges, we've successfully secured a CDMO and ID enabling studies are currently underway. We'll provide updates on our progress later in the year. Now turning to our gene therapy programs. In the first quarter of 2021, in collaboration with Aspio, we initiated the first in-human phase one dose escalation trial of SAL399, an AV8 anti-capsid vector capsid or EMC101 containing no DNA combined with mTOR. The trial is being conducted in healthy volunteers and aims to determine the dose regimen of mTOR to mitigate the formation of antibodies to ABA capsid used in gene therapies. We're pleased with the progress made to date and remain on track. We expect to report top line data in the fourth quarter of 2021. Building on our ongoing anti-AV8 capsid study in the first quarter of 2021, we also strengthened our wholly-owned gene therapy portfolio by regaining exclusive rights to MMA-101, an AV gene therapy vector for the treatment of metabolic acidemia, or MMA, a rare metabolic disease in which the body cannot break down certain proteins and fats. The previously disclosed MMA-101 third-party manufacturing issue was resolved and we are pleased the manufacturing of a new lot has been completed and is currently undergoing final release testing. We expect to file an IND for our lead gene therapy candidate, SCL302, which is a combination of NMA101 plus mTOR in MMA during the third quarter of 2021. Further, our recent publication in the Journal of Molecular Therapy Methods and Clinical Development demonstrated our observation that mTOR enhances transgene expression after both initial and repeat dosing of an AV vector in a mouse model of MMA. The publication further validates the use of mTOR in our gene therapy pipeline and is especially relevant for the clinical development of SAL302. The Phase I-II SAL302 program, which is expected to commence in 2022, will evaluate biomarkers of the disease utilizing antibodies, safety, and tolerability. Our second wholly-owned proprietary gene therapy product candidate, SAL313, is being developed to treat ornithine transcarbamylase, or OTC deficiency. OTC deficiency is an X-linked genetic disorder caused by genetic mutations in the OTC gene, which is critical for proper function of the uracycle. Looking ahead, We expect to file a clinical trial application, or CTA, and or an IND in 2022. We submitted the Pediatric Investigation Plan, or PIP, for SEL313 to the European Medicines Agency Pediatric Committee in February 2021. Before we wrap up on gene therapy, Sarepta Therapeutics continues to conduct preclinical work looking at the combination of INTOR in certain neuromuscular disorders, including Dijon muscular dystrophy, or DMD, and limb-girdle muscular dystrophies, or LGMD, subtypes. We recently achieved a 3 million milestone payment for successfully meeting the criteria in a preclinical study under a research license and option agreement with Sarepta. This further validates the potential of INTOR's platform. Overall, we're seeing excellent progress and we look forward to building on this momentum as we move one step closer to addressing immunogenicity constraints in AV-driven gene therapy, as we strive to overcome repeat dosing limitations by preventing the formation of reducing antibodies, and as we enable more durable and robust expression of the transgene after the first dose. Now, moving on to our autoimmune program. Our recently published data in Frontiers in Immunology demonstrated that mTOR enhanced the tolerogenic environment in the liver, showed induction of a tolerogenic phenotype in all major hepatic antigen-presenting cell populations, and was protective in an acute model of autoimmune hepatitis. The publication further supports development of Selecta's mTOR platform for the treatment of liver-specific autoimmune diseases, including primary bilirucal angitis, or PBC, a chronic progressive autoimmune liver disorder that leads to inflammation damage, and scarring of the small bile ducts. PBC has a well-defined target antigen, significant unmet medical need, and is well-suited to the application of our mTOR immune tolerance platform. Our autoimmune program is advancing through IND enabling studies, and we expect to file an IND in PBC in the second half of 2022. Now I'll run through our financial results for the second quarter ended June 30th, 2021. We remain well capitalized. We had 151.5 million liquidity as of June 30th, 2021, which compares to 149.2 million liquidity as of March 31st, 2021. We believe our liquidity will be sufficient to meet our operating requirements into the third quarter of 2023. Net cash used in operating activities was 18.2 million for the six months ended June 30th, 2021, as compared to 23.5 million for the same period in 2020. Revenue recognized for the second quarter of 2021 was 19.6 million compared to no revenue recognition for the same period in 2020. Revenue was recognized under license agreement with SoBe, which began in July 2020, resulting from the shipment of clinical supply and the reimbursement of costs incurred for the Phase III dissolved clinical program. Additionally, during the second quarter, we recognized less than 0.1 million for shipments under the license agreement of Sarepta and 0.1 million resulting from the expiration of the contractual audit term under the Skolkovo Foundation grant. Research and development expenses for the second quarter of 2021 were 14.5 million, which compares with 10.7 million for the same period in 2020. During the quarter ended June 30th, 2021, there was an increase in expenses incurred for consulting, salaries, and the discovery of programs offset by a decrease of ASPbio collaboration costs. General administrative expenses for the second quarter of 2021 were 4.7 million, which compares with 5.6 million for the same period in 2020. The decrease in costs was primarily the result of reduced expenses for salaries, professional fees, and patent expenses offset by increased consulting and stock compensation expenses. For the second quarter 2021, we report net income of 4.6 million or basic net income per share of 4 cents compared to a net loss of 24.1 million or basic net loss per share of 25 cents for the same period in 2020. Before concluding today's call, we have a few corporate updates to share. As we enter a critical inflection point in development, we're excited to welcome gene therapy pioneer Dr. Jude Samulski as special advisor. He's a professor of pharmacology and has been director of the University of North Carolina Gene Therapy Center for over two decades. He was awarded the first patent for AV as a viral vector and was the first recipient of the American Society of Gene and Cell Therapy Outstanding Achievement Award for Lifetime Achievements in Gene Therapy. Dr. Samolsky has advanced gene therapies in the tumor trials for hemophilia, eugenic mastoid dystrophy, giant axonal neuropathy, Pompe disease, and heart failure. He's currently the president, chief scientific officer, and co-founder of ASPIO. We're also pleased by the addition of industry leader, Nishan De Silva, to select us board of directors. Dr. De Silva has extensive leadership experience, most relevant in gene therapy development manufacturing and regulatory activities. Dr. De Silva brings over 20 years of experience in biotechnology operations, biopharmaceutical venture capital, and healthcare management consulting. He's currently Chief Executive Officer and Director of Ethics Therapeutics, a private venture-backed biotechnology company focused on addressing unmet needs in mucosal diseases. Previously, Dr. De Silva served as President Chief Operating Officer and Director of Poseida Therapeutics, a cell and gene therapy-focused biopharmaceutical company where he oversaw clinical development, regulatory, manufacturing, finance, and business development activities. Together, Dr. Samulski and Dr. De Silva's contributions will be invaluable as we continue to advance into the clinic. As mentioned earlier, we're extremely excited about the continued growth of our company and remain confident in our platform. I'd like to conclude by reiterating our gratitude to the many people who have been supportive along the way, including our patients and their families, our investigators, and our great team at Selecta. With that, we're happy to take questions. Operator?