Earnings Call Transcript - BLTE Q1 2023

Operator, Operator

Good morning, and welcome to the Belite Bio Quarter One 2023 Financial Results Conference Call. At this time, all attendees are in a listen-only mode. A question-and-answer session will follow the formal presentations. As a reminder, this call is being recorded and a replay will be made available on the Belite Bio website following the conclusion of the event. Before we begin, I'd like to reference you to the forward-looking statements and legal disclaimer slide on the screen. Joining us on today's call is Belite Bio’s Chairman and Chief Executive Officer, Dr. Tom Lin; Chief Scientific Officer, Dr. Nathan Mata; and Chief Financial Officer, Hao-Yuan Chuang. With that, I will now turn the call over to Tom.

Tom Lin, CEO

Thank you, Tara. Thank you, everyone, for joining our financial results for the first quarter of 2023. Joining me today is our CSO, Nathan Mata, who will be updating our recent clinical trial progress, and our CFO, Hao-Yuan, who will be updating our Q1 financial results. For those who are new to the Belite story, the company is developing a novel oral once-a-day treatment that potentially slows disease progression in Stargardt disease and Geographic Atrophy in dry AMD. There is still a significant unmet need for both indications, as currently there is no approved treatment for Stargardt disease. And there are currently no approved oral treatments or non-invasive treatments for Geographic Atrophy, which predominantly affects an elderly patient population. We are currently in global Phase III for both indications. So far, we have been granted fast track designation, rare pediatric disease designation, and orphan drug designations. We currently hold composition of matter patents until at least 2035. With patent term extensions and new patents to be filed, we will extend this well into the 2040s. Therefore, we still have a very long patent life on this drug. For the Stargardt indication, the Phase III is already two-thirds enrolled, with estimated interim readouts by May 2024. We recently presented very promising 18-month treatment results from our Phase II, which our CSO will be presenting later on. We also expect to have the 24-month final data readouts for the Phase II study in Q4 this year. For the Geographic Atrophy in dry AMD indication, the Phase III is expected to start enrolling subjects in mid-2023. And now I would like to pass it on to our CSO to give an update on our clinical trials. Nathan?

Nathan Mata, CSO

Yes. Thanks, Tom. Hello, everyone. I'm Nathan Mata. As Tom mentioned, we are exploring an oral once-a-day treatment. The drug is called Tinlarebant. This drug is a retinol binding protein 4 antagonist. Our approach is to use this drug to limit the delivery of retinol to the eye as a means of reducing the toxins, bisretinoid byproducts that have been implicated in the disease progression of both Stargardt disease and advanced dry AMD. In both of these studies, we aim to slow the growth rate of retinal lesions, which is the FDA's primary accepted endpoint for both Stargardt disease and Geographic Atrophy. What you see in front of you are the trial design overviews for our ongoing open-label Phase II, where I'll share some 18-month data with you. We've conducted interim analyses periodically every six months throughout the study and presented that data at international ophthalmology conferences, including AAO and ARVO. We recently presented the 18-month data at ARVO. You can see here the overview of the study in the Phase II outline 13 subjects. These subjects entered the study with no atrophic retinal lesions but had very prominent autofluorescent lesions, which are precursors to atrophic lesion growth in Stargardt disease. These subjects came predominantly from Australia and Taiwan. It is an open-label study, lasting two years, and we are primarily looking at safety and tolerability. We've already established the optimal dose at 5 milligrams daily, which has shown to achieve the same pharmacodynamic response in both adolescent Stargardt patients and elderly healthy patients. As we move forward, we are examining the growth rate using an instrumentation called fundus autofluorescence photography to visualize both the atrophic lesion and the precursors of atrophic lesions. The Phase III study, which we call DRAGON, is currently enrolling. We are up to about, I believe, 58 patients out of the 90 we are targeting. All subjects will have DDAF at baseline as this is a pivotal study. This is a global study. Stargardt is an orphan disease, therefore hard to find subjects, especially since we are focused on adolescent subjects rather than adults. Thankfully, enrollment is going quite well at this point. You can see the randomization here, two to one favoring Tinlarebant, two-year treatment duration with a one-year interim analysis. We are looking at the same efficacy and safety measures that we assessed in Phase II. As I mentioned before, this drug targets retinol binding protein 4, which is the sole carrier responsible for delivering retinol from the liver to the eye. It's important to note that this protein is not required for retinol delivery to other tissues of the body, as they lack a sufficient receptor quantity that the eye possesses. The eye depends on the delivery of retinol bound to RBP4. Over the dosing period in our ongoing Phase II up to 18 months, we have recorded a sustained reduction of retinol binding protein 4 of at least 70% or more. This dosage has shown to achieve the same pharmacodynamic response across both adolescent subjects and elderly healthy adults. This daily dose of 5 milligrams has also resulted in approximately an 80% mean reduction of RBP4 throughout the treatment trial, with no tachyphylaxis — meaning no rebound pharmacodynamic effect. Now, I want to share some of the lesion data from our 18-month open-label Phase II study. We're looking at two lesion types. The first is the questionably decreased autofluorescence lesion, which is outlined in blue. Ophthalmologists refer to this as a QDAF lesion. The importance of these lesions is that they may be amenable to treatment because the tissue is not yet atrophic. It is merely filled with autofluorescent bis-retinoids, which can be targeted to prevent conversion. Transitioning to the right side, you can see how the autofluorescence lesion converts into an atrophic retinal lesion, which I refer to as dead retina, indicating irreversible loss of photoreceptor cells. When investigators look at growth rates, they analyze it in a couple of ways: aggregate growth of both the autofluorescence and atrophic retinal lesions, known as decreased autofluorescence (DAF). Alternatively, we can independently evaluate growth in both autofluorescence and atrophic lesions. The dead retina growth is what the FDA is primarily interested in as a primary endpoint for efficacy. We referenced a recent study published by Georgia in 2020, where they quantified the growth rate of aggregate lesions in 53 adolescent subjects, showing a growth rate of about 0.7 millimeters square per year. In our cohort at 18 months, when we perform the same analysis and annualize the data, we see a growth rate of about 0.28 millimeters square per year. This represents approximately a 60% reduction in the growth rate of aggregate retinal lesions compared to natural history. We now turn our attention to comparisons with ProgStar. ProgStar was an international effort led by global retinal specialists and ophthalmologists to better characterize the natural history of disease progression in patients with Stargardt disease. They looked at both adolescent and adult patients, but the study was skewed more toward adults. Our Phase II cohort mostly focuses on subjects 18 years or younger without DDAF at baseline. Interestingly, patients with that specific baseline characteristic were also present in the ProgStar cohort. When we examine the growth rate of lesions, both the aggregate lesion (DAF) and atrophic retinal lesions, we observe a fairly linear growth trend. The gray or blue line presents the ProgStar data, where we see a growth rate ranging from about 0.8 to 1 millimeter square change in those retinal lesions per year. Then comparing this to our data, represented by the red line, we observe roughly a 50% reduction in the growth rate of both combined and separately assessed atrophic retinal lesions compared to ProgStar. An important point of analysis is that not all subjects in our cohort converted to atrophic retinal lesions; in fact, most did not. Seven out of twelve subjects did not develop any atrophic retinal lesions at the 18-month time point, which is approximately 60% of the cohort. Next, we discuss the Visual Acuity Data, which is promising. It demonstrates vision stabilization. Most ophthalmologists observing adolescent Stargardt patients expect to see significant vision loss due to the natural progression of the disease. However, we are noting stabilization, showing that the loss is no more than three letters over 18 months, which falls well within the test-retest variability of BCVA. This result is indicative of a favorable treatment trend. Moving on to the safety data, we analyze 18-month safety results, surveying subjects for any adverse events. Given that this is an oral medication, one would typically expect systemic side effects. However, we see no systemic side effects whatsoever; no severe or moderate drug-related AEs reported, nor any AEs requiring discontinuation from treatment. There are also no clinically significant findings in vital signs or physical exams relating to cardiac health, which is a crucial point. We are primarily observing two ocular drug-related adverse events, which we anticipated. The first is chromatopsia, an aberration of color vision that occurs when transitioning from a dark environment to a bright one, causing a delay in the perception of bright light and color. Most subjects report this as mild and transient. The second occurrence is delayed dark adaptation, where patients face a delay in adjusting from bright light to dim light. This is a known effect of treatment and can be mitigated by advising patients to transition slowly between light extremes. Most patients find these adverse events manageable, with the delay being an intrinsic part of their underlying disease. We previously reported clinical proof-of-concept from a different retinol binding protein 4 antagonist, known as a surrogate molecule. This study was conducted when I was with another company about twelve years ago to determine if reducing retinal delivery would slow lesion growth in patients with Stargardt disease or Geographic Atrophy. This study specifically focused on Geographic Atrophy, where patients were more prevalent. Fenretinide was the chosen drug; although it was developed as an anti-cancer drug, it also reduced retinol binding protein 4 in circulation. In this Phase II proof-of-concept study, we involving 246 patients and included a placebo control. I would now like to share the lesion growth data. Over the study span, we found that the placebo group experienced a 50% increase in lesion size, whereas subjects receiving the 300-milligram treatment had significant positive outcomes. Those subjects who achieved a reduction of retinol binding protein 4 of 70% or more had a profound reduction in lesion growth, around a 25% decrease over the study duration. It is unfortunate that only one in three subjects met the requirement for retinol binding protein 4 reduction. This happened largely due to bioavailability issues, as fenretinide needed to be taken with high-fat meals. Many elderly patients did not comply with this directive, leading to poor effectiveness. In comparison, Tinlarebant addresses these concerns: it has a 100-fold greater potency than fenretinide, enhanced bioavailability, and does not require a high-fat meal for effectiveness. It also boasts a cleaner safety profile, making it a more manageable long-term treatment for Stargardt disease and Geographic Atrophy. Now, let's talk about the Phase III study design for Geographic Atrophy, known as the PHOENIX trial. We plan precisely the same endpoints and design structure as we have in the Stargardt disease study.

Hao-Yuan Chuang, CFO

Thank you, Nathan, and thank you everyone for joining this earnings call. For Q1, on the income statement, our R&D expenses were $5.7 million, compared to $0.9 million for the same period in 2022. The increase is primarily due to an increase in expenses related to the DRAGON and PHOENIX trials, and a rise in wages due to our R&D team expansion. Our G&A expenses were $1.2 million, compared to $0.2 million for the same period in 2022. The increase is primarily due to higher professional service fees, insurance premiums for D&O liability, and wages. Overall, our net loss was $6.9 million compared to a net loss of $1.1 million for the same period in 2022. As of the end of March, we had $37.8 million in cash and expect this to last until the end of 2024. To recap our key milestones, we initiated the PHOENIX study in Q1 and announced the 18-month data from the Stargardt disease Phase II study on April 25 at ARVO. Currently, we have enrolled 58 subjects for the DRAGON study and expect to enroll the first patient for the PHOENIX study around mid-year. In the second half of 2023, we anticipate completing the Phase II Stargardt disease study with the 24-month data and expect to finish enrollment for the drug studies as well. In the first half of 2024, we expect to have interim results for the DRAGON study. This concludes our earnings call presentation. I would like to turn it over to Tara for Q&A. Thank you.

Operator, Operator

Great. Thanks, Hao-Yuan. So our first question comes from Jennifer Kim from Cantor Fitzgerald. Please go ahead, Jennifer.

Jennifer Kim, Analyst

Hey, good morning. Congrats on another quarter and thanks for taking my questions. Maybe to start off with the DRAGON trial. The additional enrollment in these patients, I'm wondering so far, can you break down where those patients are coming from in terms of the clinical trial sites, especially those 16 more patients this quarter. Where are they coming from? And then my second question, more general. For BCVA loss over 18 months, what kind of loss would one expect in patients with DDAF at baseline? Thanks.

Tom Lin, CEO

Sure. I'll take the first question. I'll let Nathan answer the second question. The majority of patients are coming from Europe. We recently opened sites in China, and given the large population there, recruitment has caught up pretty fast with Asian patients, especially from China. So most of the enrollment so far has come from Europe, particularly from the UK, Moorfields, and from various parts of Europe, along with Asia and Australia. Nathan, the visual acuity?

Nathan Mata, CSO

Sure. In terms of loss of visual acuity in Stargardt subjects who have atrophic retinal lesions at baseline, it depends on the lesion location. Ophthalmologists generally agree that if it is a foveal-involved lesion, one can expect about a line of loss, which equates to five letters per year. Our subjects entered with foveal-involved autofluorescence, which converted to atrophic lesions, yet we are observing fairly stable vision. By analyzing the quantitative autofluorescence data, we believe we are effectively clearing some autofluorescence away from the fovea, contributing to this stabilization. Generally, we would expect somewhere between five to six letters per year, about a line in these patients with foveal involvement.

Operator, Operator

Thanks for the questions, Jennifer. Our next question comes from Tim Lugo from William Blair. Please go ahead, Tim.

Timothy Lugo, Analyst

Thanks for taking the question. Is the 24-month data expected to be presented at AAO? Is that the likely venue for the update?

Tom Lin, CEO

Yes.

Timothy Lugo, Analyst

What are your expectations for the 24-month data given the 18-month data? Are you just looking for stability? Improvements?

Nathan Mata, CSO

If you look at the trajectory, it's a fairly linear growth rate; thus, I don’t expect significant changes. However, we expect continued trends with a roughly 50% difference in growth rate at 24 months when compared to ProgStar data. We have that data, so we're aware of what that projection will look like.

Timothy Lugo, Analyst

Understood. And how long do you expect enrollment for PHOENIX to last?

Nathan Mata, CSO

We expect it could take at least a year to enroll up to the 430 subjects but potentially up to a year and a half without unforeseen issues.

Operator, Operator

Thanks, Tim. Our next question comes from Yi Chen from H.C. Wainwright. Please go ahead, Yi.

Yi Chen, Analyst

Thank you for taking my questions. Does the FDA require a certain percentage of patients in the DRAGON trial to be recruited from the U.S.?

Nathan Mata, CSO

The FDA does not specify a required percentage for U.S. patients in an international Phase III study. They look for some representation, but there's no strict guidance. After enrollment, we will communicate our demographics with the FDA to ensure alignment with their expectations.

Hao-Yuan Chuang, CFO

If I may add, we are not overly concerned about this, as the majority of our patients come from Europe, unlike other international studies that have a large percentage, sometimes upwards of 80-90%, from one Asian country. Our study has a balanced enrollment across regions.

Nathan Mata, CSO

It's important to note that the FDA will assess demographic representation and not just a sheer number of patients. We'll have leniency considering the rarity of Stargardt disease, particularly in adolescents.

Yi Chen, Analyst

At this point, is it safe to assume that the DRAGON trial could complete enrollment around mid-2023?

Nathan Mata, CSO

That sounds reasonable, more likely by July.

Yi Chen, Analyst

I appreciate the insight. On the cost projection going forward, considering you have the PHOENIX trial starting alongside DRAGON, what should we estimate for operating expenses?

Hao-Yuan Chuang, CFO

For the DRAGON study, we anticipate costs of around $15 million to $20 million total. For the PHOENIX study, the total expected cost is about $40 million to $45 million. However, bear in mind we won't need all this funding immediately. It will be spread out over three to four years, so cash pressure won't be severe in the initial year.

Operator, Operator

Thanks, Yi. Our next question comes from Bruce Jackson from Benchmark. Please go ahead, Bruce.

Bruce Jackson, Analyst

Hi. Thank you for taking my questions. I wanted to ask a few follow-up questions about Page 9, which we have up here on the screen right now. Can you tell us about the error bars on those lines? What do they represent and how are they calculated?

Nathan Mata, CSO

The error bars represent the standard error of the mean, indicating variability around the average.

Bruce Jackson, Analyst

If we extend those error bars to the 24-month period, what would we see on the ProgStar line?

Nathan Mata, CSO

The standard errors will remain similar at 24 months and not expand significantly. If a treatment trend is seen, we will still observe statistical significance between LBS-CTO2 patients and ProgStar as the deviations will not increase.

Bruce Jackson, Analyst

Can we use the operating profile from the current quarter and project that out for the next few quarters? Will the start of the PHOENIX trial affect the second half of the year?

Hao-Yuan Chuang, CFO

Expenses may be higher this quarter due to startup costs for the new trial, including milestone payments. It is unlikely you can simply extrapolate this quarter's costs over the year. The next three quarters should generally reflect lower expenses.

Operator, Operator

Thanks for the questions, Bruce. Our next question comes from Yuan Zhi from B. Riley. Please go ahead, Yuan.

Yuan Zhi, Analyst

Good morning. Thank you for taking my questions and thank you for the recent KOL seminars. I have a layered question regarding your assumptions for the Phase III Stargardt DRAGON trial. It would be helpful if you could summarize them for us. Learning from ProgStar and your current Phase II program, do you expect lesion growth or DDAF in the Phase III placebo arm to be slower or faster than in the DRAGON trial?

Nathan Mata, CSO

We're hopeful that the placebo in the DRAGON study mirrors the results we've seen in natural history studies. Specifically, we are anticipating what the studies suggest for placebo growth, showing an at least 40-50% improvement in our treatment effects.

Yuan Zhi, Analyst

Thanks for the clarification.

Tom Lin, CEO

I want to highlight the projected growth rates. If we are looking at a placebo growth of approximately 20% from the research, our expectations for this treatment are promising.

Nathan Mata, CSO

There is minimal risk for CNV conversion thanks to the focused nature of our oral treatment. Unlike Astellas drugs targeting inflammation, our approach is solely aimed at retinal delivery.

Yuan Zhi, Analyst

Thank you for the valuable insight.

Tom Lin, CEO

Thank you, everyone, and we look forward to updating everyone on our next call. As Hao-Yuan mentioned, in Q4, we should have the completion of the Phase II final analysis data, along with the completion of enrollment for our Phase III. Looking forward to it. Thank you again, and goodbye.