Earnings Call Transcript - ABVX Q4 2023

Operator, Operator

Ladies and gentlemen, thank you for standing by. Welcome to ABIVAX Conference Call to discuss 2023 Financial Results and Business Update. My name is Sandra, and I'll be your operator for today's call. As a reminder, this call is being recorded at ABIVAX's request. Now I would like to introduce your host for today's call, Patrick Malloy, Senior Vice President, Investor Relations. Pat, please go ahead.

Patrick Malloy, Senior Vice President, Investor Relations

Thank you, operator. And good morning and good afternoon to everyone. Welcome to today's call, during which we'll provide an update on our financial results for the full year ended December 31, 2023, as well as key program updates across the business. On April 2nd, we issued a press release summarizing our financial results. And on April 5th, we filed our 20-F and Universal Registration Document, all of which can be found on ABIVAX's website. Before we get started, I'd like to remind everyone that during today's discussion, we will make statements about our future expectations, plans, and prospects that constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Security and Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these forward-looking statements as a result of important factors, including those risk factors discussed in our SEC filings, and we are not under any obligation to update these forward-looking statements. In just a few moments, I'll be handing the call over to our CEO, Marc de Garidel, who will provide the financial results and business update. Following the prepared remarks, we will move to a question-and-answer session, where we'll be joined by members of the management team, including our CFO, Didier Blondel; our Chief Medical Officer, Sheldon Sloan; Chief Scientific Officer, Didier Scherrer; and Chief Commercial Officer, Michael Ferguson. Now I'd like to hand the call over to Marc de Garidel. Marc, please go ahead.

Marc de Garidel, CEO

Thanks, Pat. Good morning and good afternoon, ladies and gentlemen, and thank you for joining the first ABIVAX earnings webcast that we are holding as a dual-listed company on NASDAQ and Euronext. Last year was very exciting for ABIVAX, one that has set us up to accomplish important milestones that are crucial for the future as we continue to develop Obefazimod to a potential preferred oral option for inflammatory bowel disease patients. First of all, let's focus on the financial aspects. In 2023, ABIVAX raised over €500 million. This consisted of first, €130 million crossover financing in February, followed in August by two structured debt financing transactions, allowing ABIVAX to draw up to €150 million. And finally, our initial public offering on the NASDAQ global market in October of last year, which raised €223.3 million. ABIVAX's NASDAQ IPO was the largest ever completed by a French-listed biotech company. This record capital raise will support our overall financial and development strategy for our lead drug candidate, Obefazimod, for the treatment of inflammatory bowel disease. With a cash position of €251 million as of December '23, we have sufficient funds to finance our operations into Q4 of '25 based on the current business plan. This means that we have financed beyond the announcement of our major milestones for next year, the top-line data from the Phase 3 ABTECT induction trial of Obefazimod in ulcerative colitis expected in Q1 2025. Let's move now to our clinical and preclinical development progress. Over the course of last year, we implemented a strategy that would allow us to seize the potential of Obefazimod's unique and differentiated profile for the treatment of IBD. The execution of this approach is underway and well advanced. The Phase 3 ABTECT program investigating the efficacy and safety of Obefazimod in adults with moderately to severely active ulcerative colitis is progressing according to plan. The recruitment into both induction trials is currently ongoing in all designated areas around the world, unlike the Phase 2b, which was only conducted in Europe. Further, we plan to initiate patient recruitment in our Phase 2b trials for the treatment of Crohn's disease in Q3 of this year, with top-line data expected during the second half of 2026. As already announced in September of '23, the preclinical efforts intended to identify different options to strengthen our pipeline are also progressing, along with the option being evaluated as a potential combination therapy of oral and injectable candidates with Obefazimod in ulcerative colitis. Experiments in preclinical models are ongoing, and the data to support our decision are expected in the second half of this year. Research and development work to identify potential follow-on drug candidates from ABIVAX's compound library is also advancing. We expect the selection of the first follow-on drug candidate later this year in Q3 to evaluate its usefulness for IBD or potential other inflammatory conditions. To enable us to successfully execute on all R&D and clinical development programs and plans, ABIVAX made significant efforts in the past months to build the necessary operational infrastructure in the U.S. as well as in Europe. We now have a very seasoned global team in place that we believe has the required market-specific competencies and expertise to conduct the ongoing programs and prepare for the respective market authorization applications, starting with Obefazimod for the treatment of ulcerative colitis. In addition, not only did we reinforce the operational team, but we also made notable changes within our Board of Directors in the past year. June Lee and Troy Ignelzi joined in July of '23. I'm glad that we can also now welcome Camilla Soenderby as a new member of the Board. We believe Camilla's expertise in driving portfolio strategy and commercialization will be very valuable for us. We will continue to bring the best expertise on the Board to strengthen our path forward with a focus on the U.S. market, representing a significant opportunity in inflammatory bowel disease. In the past year, in addition to attracting new renowned colleagues and Board members, we also experienced increasing interest among the scientific community and the industry. ABIVAX's scientific excellence has been highlighted by several abstracts presented by leading U.S. and European KOLs at the major scientific IBD congresses in 2023 and the first quarter of 2024. We'll continue to scientifically underpin Obefazimod's potential as a safe and effective long-term treatment option in IBD and its mode of action at upcoming conferences and through publication in relevant scientific journals. ABIVAX can look back at a very successful 2023 while also looking forward to achieving implementation of our financial, clinical, scientific, and operational strategy in the course of this year. We believe 2024 will lead us to major milestones, with the data readouts of our UC program in early '25, initiation of the 2b in Q3 '24, and the decisions on how to strengthen our pipeline in the future with new preclinical results. That concludes our prepared remarks. Now we will move to the Q&A session. Operator, please.

Operator, Operator

We will now take the first question from Thomas Smith at Leerink Partners. Please go ahead.

Thomas Smith, Analyst

Hey, guys. Good morning. Thanks for taking the questions and congrats on the progress. Just on the ongoing Phase 3 ABTECT program, I was wondering if you could elaborate a little bit on how enrollment is progressing there? Are you seeing any region-specific enrollment trends that are worth calling out? And can you comment at all on how patient retention has been in the study so far?

Patrick Malloy, Senior Vice President, Investor Relations

Sheldon, do you want to take that one?

Sheldon Sloan, Chief Medical Officer

Yes, I will. Okay. Tom, thank you for your question. I think Marc laid it out where we are with the study. Let me just give you a little bit of a highlight regarding our regional expectations. I think we already talked about no more than 25% of the subjects enrolled in the study will be from any specific region, which Marc already pointed out, in contrast to Phase 2b, where two-thirds were from Eastern Europe. The good news is we are now actually deployed in all our targeted geographic regions. We're already enrolling in China and Brazil. And obviously, we've been in Japan for a while. North America has been up and running the longest, and even though we had, what I would say, at the beginning, a little bit of a delay with C-DIS, primarily in European countries, we're all fully engaged in those countries now. I think the second thing, which you were talking about retention, I believe you're referring to the dropout rate. Although that's currently blinded, so we really don't know, but that's something we're actively looking at regarding discontinuation. As you know, we had a little over 12%, I believe, in the Phase 2b study, and we're really tracking that carefully. One of the things that drove discontinuations was headaches in the Phase 2b study. We know that headaches are more about managing expectations at this point, making sure that the investigators and patients know that it's something that occurs early in the start of therapy, generally almost always treated with over-the-counter either acetaminophen or non-steroidals, and does not last for more than a few days to a week. The bottom line is once the patients are on the medication, the headaches actually do not return. That was apparent in our second year of our open-label extension where headaches were not an adverse event. To wrap that up, we're managing that by actually instructing the sites on how to handle headaches. Again, there are reasons why patients need to discontinue, but that generally should not be a reason to exit the study. So we're actually aggressively and proactively managing that discontinuation.

Thomas Smith, Analyst

Thank you. Got it. That's helpful. And then with respect to the long-term extension trial readout for Obefazimod in UC that you're expecting in Q3, can you just talk about your expectations? And what are you hoping to learn from the data set?

Sheldon Sloan, Chief Medical Officer

We announced the first data presentation at ECCO and are planning a similar data cut. Patients from the 2a study will have around six years of exposure, while those from the 2b study will have up to four years. In the first year, patients who were well controlled, defined as having an endoscopic subscore of zero or one, showed impressive improvement from an initial score of three. After one year in the 25-milligram open-label extension, 100% had endoscopic improvement, with very few patients dropping below improvement; 95% maintained endoscopic improvement. We hope to demonstrate continued durability with the 25 milligrams in a well-controlled population. This will be our first assessment of one-year durability in the Phase 3 program, providing long-term data on durability for well-controlled patients.

Thomas Smith, Analyst

That's super helpful. Thanks for taking the questions, guys.

Sheldon Sloan, Chief Medical Officer

You bet. Thanks, Tom.

Operator, Operator

We will now take the next question from the line of Vikram Purohit from Morgan Stanley. Please go ahead.

Vikram Purohit, Analyst

Hi, everyone. Good morning. Thanks for taking our questions. So we had two. First, on the ABTECT readout that you're guiding to for Q1 '25. I know it's a little early, but would you have any initial sense of which parameters of data and how extensive of a readout you might expect the induction readout in Q1 to be? And as you progress through the study and presumably get feedback from your KOLs on the program over time, how are you seeing the hurdle for a win on efficacy evolve there? And then secondly, on follow-on compounds, I would just love to get a bit of color on how you're prioritizing, as I am thinking about choosing the best follow-on compounds to add to the pipeline. Thank you.

Patrick Malloy, Senior Vice President, Investor Relations

Alright. Great. Thanks, Vikram. Sheldon, do you want to take the first part, and then maybe Didier Scherrer and Marc can weigh in on the approach to combination?

Sheldon Sloan, Chief Medical Officer

Yes. So Vikram, regarding what data we're going to present for the first quarter of 2025, we're still in discussion internally about how extensive because we have to manage a maintenance study that's concurrently running. So we'll gain some clarity on that as we go a little further down. And to address your second question about the KOLs, I wasn't clear on winning on efficacy. Can you clarify that question? I apologize. I didn't quite catch it.

Vikram Purohit, Analyst

Yes. I was just wondering, as you speak with more KOLs in the space and as the Phase 3 program progresses, how is your view on what a win on efficacy from the induction readout? What that could look like in Q1?

Sheldon Sloan, Chief Medical Officer

Yes. I'd tell you I wish I had the crystal ball for that one. We're blinded to the data currently. The only thing I could tell you that is really more anecdotal is when we meet with key opinion leaders or investigators who participated in our 2b program, who continue to have patients enrolled, they tend to be very enthusiastic about the opportunity for Obefazimod because many of these patients were at the point of going to surgery. We hear these stories now, but I don't want to give any kind of over-promise and under-deliver expectations. This feedback is coming from investigators who have had patients who've gone through practically every other therapy. Our expectations are modeled for the Phase 3b study to be very competitive induction results with the current offerings on the market, and that's as best as I can tell you right now. I'll hand it over to Didier Scherrer.

Didier Scherrer, Chief Scientific Officer

Sure. I can tackle the follow-on compound question. We're working on a follow-on compound. Unfortunately, I cannot disclose the exact criteria we're trying to optimize. But in general, we're looking at two sides of the cradle. We're looking at those compounds based on the same mechanism of action. We're trying to play around critical chemical properties of the compound, but also in terms of induction and efficacy. Sorry I cannot go into too much detail, obviously, for competitive reasons, but that's what we're working on right now.

Vikram Purohit, Analyst

Fair enough. Thank you. Very helpful. Thank you.

Operator, Operator

We will now take the next question. It comes from the line of Julian Harrison from BTIG. Please go ahead.

Julian Harrison, Analyst

Congrats on all the recent progress. And thank you for taking my questions. Regarding your follow-on program to Obefazimod, I know it's early, but I'm curious if you have a good sense now of how you plan to prioritize IBD versus other inflammatory indications, given how broadly relevant the mechanism likely is. Regarding combination regimens down the road, I'm curious if there are any external data events that could inform your future decisions there? Or will that be based mainly on internally generated data?

Patrick Malloy, Senior Vice President, Investor Relations

Julian, thanks for your question. Maybe turn it to Didier Scherrer with regards to the combination. And then if Sheldon and Marc can weigh in on our strategy related to competitive events that might inform our decisions.

Didier Scherrer, Chief Scientific Officer

Yes. So the way we're looking at combinations is different. Obviously, we can look at combinations based on complementary mechanisms of action that could make sense. We can also consider how we can improve with the combination based on the profile of the two compounds we want to combine, but we can also look at it from a payer perspective, assessing compounds that, for example, can go generic, and see how the combination approach is structured with those types of compounds. Currently, we're running preclinical experiments. I don't know if our decisions will be fully based on preclinical data. But right now, we're waiting to see what we will garner from those experiments.

Patrick Malloy, Senior Vice President, Investor Relations

Maybe I can jump in just on further consideration. Obviously, beyond the preclinical experiments, we are attentive to numerous factors. As you know, many of the large companies are developing their own combination programs, which is obviously something we have to think about. We took advantage of our presence at ECCO, where we met about 30 investigators from different nationalities to ask them their views on where combination therapy is heading. They expressed various thoughts. The first being that it would be highly beneficial to hit hard with a strong combination regarding efficacy for induction, thus reducing inflammation to the maximum extent and ideally enhancing the response. The second thought was to reserve combination therapy for cases where there are fewer options available, primarily for safety considerations. Lastly, it should involve safety as a critical criterion when combining with obefazimod since we do not want to cause harm while controlling disease. That's why in our current preclinical program, we will conduct a vast array of experiments to comprehend the dynamics of different drug combinations. Eventually, we'll likely have to choose one combination development, as financing multiple trials can prove difficult. We expect to reflect on these parameters by year-end or early next year and determine where we advance combination therapy with obefazimod.

Julian Harrison, Analyst

Very helpful. Thank you.

Patrick Malloy, Senior Vice President, Investor Relations

Thank you.

Operator, Operator

There are no further questions at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.