Inventiva S.A. Q2 FY2021 Earnings Call

Good day and thank you for standing by. Welcome to Inventiva’s First Half Financial Results Presentation. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. Please be advised today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Frédéric Cren, Chairman, CEO, and Co-Founder. Please go ahead.

Thank you, and welcome. Good morning, everybody. Good afternoon. And welcome to the first half 2021 financial results. So, as usual, I will be making forward-looking statements. So, please refer to the regulatory filings that are available on our site or at the SEC or at Euronext. Today, I’ll be, of course, sharing the presentation with Pierre, Pierre Broqua, our CSO and Co-Founder; and Michael Cooreman, our CMO will be presenting the latest on lanifibranor. I will be speaking and introducing some very exciting news concerning our partnership with AbbVie and the recent progress of cedirogant, and Jean will be presenting, of course, the financials and our financial situation for the first half of this year. So, without losing too much time, let’s look at what are the highlights of the very busy first half. So, if we turn to what was our ambition at the beginning of the year, we wanted and our goal was to add a pipeline by the end of the year with compound lanifibranor in Phase 3 and cedirogant in Phase 2b. And I think we are in a very well-positioned to achieve both goals. So, on lanifibranor, you’ve seen that recently we have announced that we have started screening in the U.S. with our global partner and that we have qualified more than 330 sites in 25 countries. So, we’re really pleased by the launch of this exciting Phase 3, and Michael will provide more background on the design and how the study is rolling out. The good news also comes from cedirogant, ABBV 157. So, you followed during the AbbVie Q1 results that they communicated to have achieved clinical proof-of-concept during the Phase 1b in patients with psoriasis. And we were extremely pleased and happy to see that on September 14th, on ClinicalTrials.gov, AbbVie posted the design of the upcoming Phase 2b with cedirogant in patients with psoriasis, a very important study involving 2000 patients, 45 sites, and especially they have confirmed that the study will be up and running in November, which should trigger a milestone payment for us. And, of course, we are already looking forward to the results of this important study which are scheduled for March ‘23. Concerning odiparcil, we’re continuing actively on the evaluation of the best way to move this program forward. We will not be able to update the market in 2021, as we plan to do that in 2022. Concerning the other important event, of course, we have been able to launch Phase 3 also because we’ve been able to reinforce our team on both sides of the Atlantic. Michael is now leading the team in the U.S., devoted to the Phase 3, and also in France, we have strengthened our position, both in terms of support function and medical oversight, and we’re really geared and prepared for this Phase 3. Over the summer, we’ve put in place an ATM, as expected as many biotechs listed on NASDAQ do, and this gives us additional flexibility in order to reinforce our cash position with the possibility to exercise ATMs up to $100 million. Lastly, we have reinforced our Board with the arrival of Martine Zimmerman, who is providing valuable regulatory expertise, given her position currently at Alexion. So, that was a short intro, and now, I’ll give the floor to Pierre who will give a brief update on lanifibranor.

Thank you, Frédéric. So, hello, everyone. As you know, lanifibranor is a pan-PPAR agonist, currently in clinical development Phase 3, for the indication treatment of NASH and improvement in liver fibrosis. It has an unprecedented structure and pharmacological profile. It’s a pan-PPAR agonist with moderate and well-balanced activity across the 3 isoforms. It’s not a thiazolidinedione, it’s not a fibrate. This program has recently obtained Breakthrough Therapy designation as well as Fast Track designation from the FDA, and the FDA has confirmed that the nonclinical toxicology package is complete and acceptable for an NDA filing. We have started our Phase 3 in patients with NASH and fibrosis scores of F2 or F3, and Michael will present the details and the key milestones of the study. We are also preparing additional clinical studies, evaluating the potential of lanifibranor in NASH compensated cirrhosis based on positive preclinical findings we have recently published. For example, the latest trials indicated that after 24 weeks of treatment, the 1,200 milligram dose had a significant effect on improvement of fibrosis by at least one stage and no worsening of NASH. Both doses, 1,200 and 800 milligrams, showed a significant effect on the resolution of NASH and no worsening of fibrosis, as well as on the composite endpoint of resolution of NASH and improvement in fibrosis. Additional analyses were performed and communicated earlier this year at EASL, indicating that lanifibranor also showed significant efficacy on the composite endpoint in patients with NASH and F2/F3 fibrosis. We observed in this subgroup of patients that markers of lipid metabolism, insulin resistance, liver injury, inflammation, and fibrosis also improved compared to placebo. Based on the NATIVE 2 data, lanifibranor showed key differentiating benefits compared to the current competition, particularly on insulin resistance and on fibrosis. As I mentioned, lanifibranor is the only drug that has achieved statistical significance on the key regulatory histological endpoints of NASH resolution without worsening of fibrosis and fibrosis improvement without worsening of NASH, with more than 30% responders for both regulatory endpoints.

Thank you, Pierre. We have started the pivotal Phase 3 study conducted in patients who have NASH, stage of fibrosis F2/F3. The study consists of two parts, and the inclusion and exclusion criteria are quite similar to the ones in the NATIVE Phase 2b trial to ensure consistency. The two parts define the objective to obtain accelerated approval after a year and a half, with 72 weeks of treatment based on surrogate endpoints, which is histology. The second part is a much longer study, up to seven years, that will look at outcomes, which are the foundation for full approval following accelerated approval. The trial evaluates the long-term efficacy and safety of lanifibranor in adult patients with NASH and liver fibrosis. In part one, the primary efficacy endpoint is histology, with approximately 900 patients expected to be enrolled in that study. Key secondary endpoints include NASH resolution and no worsening of fibrosis, and fibrosis improvement without worsening of NASH among other endpoints.

Thank you, Michael. I’ll present a brief overview of AbbVie and try to convey the excitement we have in this program. First of all, scientifically, ROR-gamma is a fantastic target, targeting IL-17 expression, modulating Th17 differentiation. The development of cedirogant in moderate to severe psoriasis has substantial potential. AbbVie confirmed achieving clinical proof-of-concept with cedirogant in patients based on the PASI score, and they believe that the efficacy of cedirogant could be like or greater than Humira, with a good safety profile. The excitement continues with the recent news published by AbbVie on ClinicalTrials.gov, indicating an important trial starting very soon in November where Inventiva is entitled to a milestone when the first patient is included in the study, which aims to recruit 200 patients over a 16-week treatment period across 45 sites in the U.S.

Thank you, Frédéric. Good morning, good afternoon, everyone. We are still relying on our solid shareholder base, which has remained largely unchanged since the NASDAQ IPO in July. There has been no financing activity for this semester. In terms of market value, we are back in the grind after the little shift during the summer when we announced the ATM, but it’s all back to the value before the ATM, and we are in quite good shape. However, we believe that considering the potential of our programs, we may be slightly undervalued relative to our peers. We can now review the key financials. No revenues were recorded during the semester but we hope that this line will change by the end of this year with the enrollment of the first patient planned for November ‘21. The key information is a significant increase in R&D expenses, reflecting the acceleration in development, mainly for lanifibranor, and the preparation for the launch of the NATiV3 phase, including the establishment of our U.S. operations where 100% of our staff is dedicated to the study. G&A expenses increased as expected due to NASDAQ listing compliance and implementation of U.S. regulations, including Sarbanes-Oxley. The current cash position is reasonable at €93.6 million compared to €105.7 million last year, driven by cash flow consumption relating to the increased expenses. The dynamic burn rate has risen to €4.6 million per month and we anticipate reaching an average of €6 million by year-end, aligning with our strategic developments.

If we look at the near-term catalysts, we will keep you busy with updates concerning the pivotal Phase 3 development and also we’re looking forward to results from the study ongoing at the University of Florida. On odiparcil, I mentioned we’ll provide an update in 2022, and on cedirogant, you should expect to hear from us upon the launch of the trial and when we receive the milestone for the initiation of Phase 2b. So those are the news and updates we wanted to share. I suggest we move to the Q&A session.

Thank you. The first question is from the line of Lucy Codrington from Jefferies. Please go ahead.

Just firstly, on the anticipated AbbVie milestone, should we think about that as being in a similar ballpark to the milestone you received on the Phase 1 and psoriasis patient dosing, or given that this is a Phase 2b, is that likely to be a bit more? And secondly, do you have any insights into the recruitment status of Prof. Cusi study? And do you see any risk to the April 2022 timeline from patients suggested on their clinical trials entry at the moment? Then with safety or oral treatments for psoriasis, what are the key safety concerns regarding ROR-gamma? Is safety the key risk to the Phase 2b over any concerns regarding efficacy?

Thank you, Lucy. The milestone and the situation of the Cusi study will be addressed. Pierre, can you comment on the safety regarding the JAK class and any potential concerns about ROR-gamma?

As we mentioned, we see the JAK class has faced issues regarding serious health-related events. ROR-gamma has different specificity and distribution. From our preclinical models, we haven’t seen severe side effects. I think, ROR-gamma will demonstrate a safety profile distinct from what we have observed for the JAK class.

Three questions from my side. Could you remind us how many patients need to be screened for inclusion of the total first 900 patients in part 1? On the broader clinical development of lanifibranor, is there visibility on when trials could be initiated for F4 and combination settings? Also, what are the drivers behind the delay of odiparcil's strategic review?

Yes. NASH trials have high screening failure rates, often around 70%. We are implementing imaging studies like Fibroscan before biopsy to reduce those rates. Regarding cirrhosis, the FDA requires outcome improvement rather than histological endpoints, as these patients have an immediate medical need. Our strategy focuses on gradual approaches for populations facing cirrhosis.

The review for odiparcil has taken longer because we seek a solution that continues development while ensuring good returns for Inventiva. If we cannot meet our two objectives, we are better off continuing to develop odiparcil internally when time and resources allow.

You mentioned ongoing programs. Can you explain how you see the ongoing Phase 2 that’s expected to read out early next year in Type 2 diabetes? How do you see that program evolving? Also, particularly for lanifibranor, what mechanisms do you believe make the most sense for combination studies?

The Phase 2 study is exploratory, focusing on mechanistic data regarding insulin sensitivity improvement. For combination therapy, lanifibranor and SGLT2 inhibitors aim to improve efficacy and offset weight gain, given the latter's potential adverse effects.

The main differences between NATiV3 and the Phase 2b study involve the duration and patient population. The longer treatment in the Phase 3 allows a more robust assessment of efficacy, helping inform potential outcomes for patients in need.

I just want to clarify if the plan is to use the same doses currently used for both the combo studies and for F4 patients? How do you plan to differentiate lanifibranor in the competitive NASH landscape, given that many sites have ongoing studies?

Concerning doses, it’s premature to project what doses are suited for F4 trials and combos. We will focus on the current Phase 3 and clarify those after the trial. Regarding differentiation, lanifibranor's strong efficacy and its pan-PPAR mechanism demonstrate its potential impact on the metabolic syndrome associated with NASH, giving us a competitive advantage.

How close are you with AbbVie regarding development, and do you have views on dosage selection? Regarding the ramp-up in terms of royalties, can we secure facts around the scale-up to double-digit royalties? Lastly, can you provide an update on the oncology pipeline in the YAP-TEAD program?

With AbbVie, they fully control development. I suspect specific studies will be required for pediatric patients, but that is speculation. We aim to provide updates on recruitment timelines as efficiently as possible, aligned with exchange requirements. On odiparcil, competition can evolve. We will consult with the FDA about the best path forward for marketing approval and development.

Regarding YAP-TEAD, we are evaluating compounds that can inhibit both YAP and its family member, TAZ. We aim to improve our compounds' profiles to enhance their potential against cancer.

Thank you for your support and for following us over the past year. We look forward to providing additional exciting news regarding our pipeline, lanifibranor, cedirogant, odiparcil, and YAP-TEAD. Thank you very much and have a great day.

Thank you. That does conclude the conference for today. Thank you for participating and you may now disconnect.