Earnings Call Transcript - BLTE Q4 2023

Operator, Operator

Hello, and thank you for joining us to discuss Belite Bio’s Fourth Quarter and Full-Year 2023 Financial Results. Joining the call are Dr. Tom Lin, Chairman and CEO of Belite Bio; Dr. Nathan Mata, Chief Scientific Officer; and Hao-Yuan Chuang, Chief Financial Officer. Before we begin, let me point out that we will be making forward-looking statements that are based on current expectations and beliefs. These statements are subject to certain risks and uncertainties, and actual results may differ materially. We encourage you to consult the risk factors discussed in our SEC filings for additional detail. Now I'll turn the call over to Dr. Lin.

Tom Lin, CEO

Thank you. Thank you, everyone, for joining our reporting for 2023 and for this quarter. I'm Tom Lin, CEO of Belite Bio. Joining me are our CFO, Dr. Nathan Mata and CFO, Hao-Yuan. I'd like to start off by giving an overview. Tinlarebant is a novel once-a-day oral tablet designed to bind to serum retinal binding protein or RBP4 as a means to specifically reduce retinol delivery to the eye. This approach is intended to slow or stop the formation of the toxic retinol derived by-products, which are generated in the visual cycle and are implicated in the progression of Stargardt disease and Geographic Atrophy. Belite Bio believes that early intervention directed at emerging retinol pathology, which is not mediated by inflammation, will be the best approach to potentially slow disease progression in Stargardt disease and in GA. There's 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 for GA, and we're already in global Phase 3 trials for both indications. So far, we have been granted fast track designation, rare pediatric disease designation, and open drug designation in U.S., EU, and now Japan. We have several patent families, with composition of matter patents lasting until 2040, and with patent term extensions and new patents to be filed, which will have patent protection way past the 2040s. For the Stargardt indication, the Phase 3 is fully enrolled with estimated interim results by the end of 2024 or early 2025. We will also be presenting further positive findings and treatment results from our annual Phase 2 results, which we'll present at ARVO in May this year. For GA in Dry ND indication, we currently have more than 50 subjects enrolled in our global Phase 3 trial. With this, I would like to pass this on to our CSO to give an update on the clinical trials.

Nathan Mata, Chief Scientific Officer

Thank you, Tom. So I'll go right into the clinical trial designs. In previous financial updates, we've shown you the overview of our open-label Phase 2 as well as the well-controlled Phase 3 study design, which is our pivotal Phase 3 study. We emphasized the big differences between these two studies, with patients in the open-label Phase 2 coming in with a very early stage of disease, characterized by the presence of autofluorescence, but not atrophy of retinol lesions, whereas in the Phase 3, all the subjects have retinal atrophy. In our Phase 2 study, when we look retrospectively at those baseline images, we find that a number of these subjects actually do have atrophic lesions. They were just not measurable by the routine imaging algorithm that most clinical researchers use. Our imaging center has developed a new algorithm, much more sensitive in identifying atrophic retinal lesions. So we do know that in the Phase 2 open-label study, many of these subjects did start with very, very small atrophic lesions that grew over time. We aim to compare to natural history growth to determine whether or not we're seeing any real treatment effect. We showed this data previously in a comparison to ProgStar, a cohort of subjects that have similar baseline characteristics as our Phase 2 subjects. We see a dramatic slowing of lesion growth in the treatment group versus the natural history group. We've also performed a genetic analysis regarding lesion growth, noting that five of 12 subjects never converted to atrophy over the two-year study. We now know that those five subjects have severe mutations, predicting retinal pathology. The absence of transition from early lesion type to atrophic lesion type in these subjects could not be attributed to benign or mild mutations. All this data points to a profound treatment effect of our drug.

Hao-Yuan Chuang, Chief Financial Officer

Thank you, Nathan. In 2023, we had R&D expenses of $24.8 million compared to $8.9 million in 2022. The increase was primarily due to an increase in expenses related to conducting the DRAGON and the PHOENIX trials. On G&A expenses, in 2023, we had G&A expenses of $6.8 million compared to $4 million in 2022. The increase was primarily due to an increase in share-based compensation granting in 2023 and an increase in professional service fees. We had lower professional service fees in 2022 as we completed the IPO by the end of April 2022. Thus, we only had eight months of professional service fees related to being a public company in 2022. For the year 2023, we had 12 months of professional service fees. On net loss, we incurred a net loss of $31.6 million in 2023 compared to $12.8 million in 2022. In terms of cash, we had $88.2 million in cash by the end of 2023 compared to $42.1 million by the end of 2022. The increase was primarily due to a total of $52 million raised from the follow-on offering and exercise of the warrants issued in that offering, along with an additional $29 million from the ATM offering. We expect our cash runway to extend through the end of 2026. Thank you. Back to you, Tom.

Tom Lin, CEO

Thank you, Hao-Yuan. I would like to conclude with the key milestones to expect for this year. We are making good progress in the Phase 3 study in PA as there are many sites activated and enrolling subjects. We'll be presenting further findings and more positive data from our Phase 2 in Stargardt disease at major conferences this year. We're also expecting interim data for Phase 3 in Stargardt disease later this year or early next year. We have a short presentation today, as most of you would be familiar with the MOA right now. We are focusing this presentation on the key updates and hopefully have more time for Q&A. We are pleased with the progress we've made in 2023, and we ended 2024 energized and optimistic as we look forward to our progress for the year. I would now like to turn this back to the operator to start the Q&A. Thank you.

Unidentified Analyst, Analyst

First, I have a question about the timeline of the Stargardt disease trial. You mentioned we expect the trial to yield results either towards the end of the year or early 2025. If the trial was already fully enrolled on time, why is the trial delayed by this little delay to early 2025? Also, what should we be expecting at this interim readout in terms of efficacy and safety, and what are the scenarios if the data looks good? Are you going to keep this study ongoing or what are the different scenarios for this interim readout? Thank you.

Tom Lin, CEO

Sure. Thank you. So, first, to clarify, there’s no delay. The trial is fully enrolled already. The timing for the interim data readout falls within the second half of this year, to be more exact, Q4. This depends on the DSMB; they will be reviewing the data. The timing depends on how fast the CRO is able to clean and organize all the data, as well as coordinating with the DSMB. That's all in their hands. Regarding the second question about safety and what actions would be taken based on the data, the DSMB will observe if the study will proceed as is, or if they recommend increasing the sample size. There are multiple possible scenarios based on the interim analysis results.

Unidentified Analyst, Analyst

It's really what we should be expecting. And also, what are the different scenarios for this particular readout? Like, if the data is good, what are you going to do?

Tom Lin, CEO

The DSMB will review whether the study should continue as it is based on the data available, or they may recommend an increase in the sample size. A positive trend could lead to adding another 30 subjects to increase statistical power. If they notice no significant difference at this interim readout, they could still recommend proceeding to the completion of the study.

Hao-Yuan Chuang, Chief Financial Officer

If I may explain further, the timing was adjusted because we initially planned to enroll 90 subjects. However, we over-enrolled due to high patient demand. We had to wait for the last patient to begin treatment, which resulted in a slight adjustment of the interim timeline.

Tom Lin, CEO

Right. Thus, we need to get the data from the last few patients cleaned up per the CRO's timeline for the DSMB meeting.

Nathan Mata, Chief Scientific Officer

That's great. And we have a question from Jennifer Kim with Cantor.

Jennifer Kim, Analyst

I have a couple here. To start off, regarding the potential outcomes in the interim analysis later this year, you listed the three scenarios. I want to confirm that in the scenario where the treatment effect falls below the expected range, and you stated they would recommend expanding the patient count—what conclusions should investors draw from that?

Nathan Mata, Chief Scientific Officer

Thanks, Tom. When we talked about the effect size range, it was designed to anticipate or hypothesize a treatment effect to properly power the study. The DSMB is actually looking for a statistically significant difference, regardless of the effect size, between the growth trajectories of the lesions in the treatment and placebo arms. So if that difference is statistically significant, we will have to make a decision whether to add more patients, based on that interim analysis.

Jennifer Kim, Analyst

Yes, that's very helpful. On a second question, could you share your latest thoughts on your cash runway? Are there strategies expected to drive enrollment in PHOENIX?

Hao-Yuan Chuang, Chief Financial Officer

We have enrolled 56 subjects so far, and with the new cash from the warrants and ATM offerings, we now expect our cash runway to extend through 2026. This will enable us to complete both the DRAGON study and the interim analysis and pay for necessary milestones.

Yi Chen, Analyst

My first question is for Dr. Mata. You mentioned that this new method to discover patients with initial lesion development. Is that method currently widespread in terms of usage? If not, how easily could this method be adopted?

Nathan Mata, Chief Scientific Officer

You're referring to the new imaging algorithm developed by our reading center, right? This algorithm needs to go through a validation clinical trial. We've just developed this and used Phase 2 data to confirm its accuracy. It isn’t widespread yet; it's relatively novel.

Yi Chen, Analyst

Do you think that when the drug reaches the market, patients need to have some preliminary atrophic lesion development to be eligible for treatment? If so, then this new imaging algorithm could be critical for market acceptance, correct?

Nathan Mata, Chief Scientific Officer

Yes, this is very important. For regulatory approvals, the endpoint is slowing the growth of atrophic lesions, so patients will need to have atrophic lesions at baseline. In terms of market adoption, this algorithm could indeed play a crucial role to determine eligibility and gauge lesion development more accurately.

Tom Lin, CEO

It is well known that the pathogenesis of Stargardt disease involves mutations leading to toxic byproduct deposits, causing retinal cells to die. This mechanism is exactly what Tinlarebant is targeting. Thus, whether patients have lesions or not should not hinder treatment, as the aim is to prevent or slow the pathology of the disease. The drug will likely cater to all Stargardt patients.

Nathan Mata, Chief Scientific Officer

Regarding the PHOENIX trial enrollment, our goal remains to complete it by the end of the year. However, due to competing studies and resource limits at certain sites, we may need to extend the timeline into Q1 of 2025.

Hao-Yuan Chuang, Chief Financial Officer

We anticipate that our cash runway supports operations throughout 2026.

Bruce Jackson, Analyst

There's been a fair amount of buzz around complement therapies, specifically C3 and C5 therapies. Could you compare and contrast the mechanism of action between Tinlarebant and these complement therapies? Also, could you address the inflammation and retinal vasculitis issues seen with some complement drugs?

Tom Lin, CEO

Nathan, I guess this is a perfect question for you.

Nathan Mata, Chief Scientific Officer

The fact is that we're looking at two different spectrums of the same disease. Complement inhibitors treat late-stage inflammatory responses, while we are focusing on early-stage pharmacotherapy prior to inflammation. By addressing the disease earlier on, we have a chance of preventing vision loss rather than simply trying to control late-stage complications.

Tom Lin, CEO

It’s well known that after the initial year of treatment with complement therapies, the treatment effect tends to plateau, similar to the placebo group which means that the underlying pathology is still causing lesion growth. We believe addressing this pathology early may yield better outcomes.

Nathan Mata, Chief Scientific Officer

Indeed, it’s critical; these therapies may not be competitive but could be synergistic. Early intervention with our oral therapy could serve as maintenance treatment while complement inhibitors address acute inflammation.

Tom Lin, CEO

Currently, we may present genotype-phenotype relationships at the upcoming AAO, which should provide new insights that are crucial to this discussion.

Hao-Yuan Chuang, Chief Financial Officer

In summary, we want to maintain confidentiality regarding interim data to prevent a bias among investigators, as advised by the FDA.

Tom Lin, CEO

I would like to thank everyone for participating in the Q&A and for your interesting questions. We look forward to sharing data in Q4, and will keep you updated on the progress of the Phoenix studies.