Inventiva S.A. Q4 FY2022 Earnings Call

Good day and thank you for standing by. Welcome to the Inventiva 2022 Full Year Results Call and Webcast. At this time, all participants are in listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please note that today's conference is being recorded. I would now like to hand over to your speaker, Mr. Frédéric Cren. Please go ahead, sir.

Thank you, operator, and welcome to everybody to this full year 2022 financial results. As usual, I will be making forward-looking statements with my colleagues. So please have a look at the regulatory documentation that is available on our website. In terms of speakers today, I'm very happy as usual to have Pierre with us our CSO and Co-Founder; Michael, our CMO, will go through an update of our three important clinical trials with lanifibranor, of course, the Phase III, but also two Phase II that are ongoing. And then Jean will conclude the presentation with an update on the financials. Of course, at the end of the session, we will have a Q&A session. So let me give you, first of all, some highlights for the full year. So let's start with our lead program, lanifibranor in NASH, and start with NATiV3, where we've been, I would say, very happy to work and extend, develop the Phase III in 23 countries. And now we have more than 350 clinical sites that are active and more than 300 that have screened at least one patient. Throughout the year, and we continue to do so, we have implemented a series of measures to boost enrollment, and I would say that this continues throughout 2023. We have done many things, and we're very proud of those and grateful to our team. We have reviewed and implemented a new process to speed up our biopsy analysis. We have trained sites, put in place incentives, included specialized site networks, and closed sites that were not performing to our expectations. We developed patient material including opening recently the patient website and provided support to pre-screening activities to sites, including a screening algorithm to better identify patients. We have organized and we're currently organizing investigator meetings and also made several protocol improvements. All of that, I would say, makes us confident that we will achieve our target to have the last patient first visit as targeted for the second half of 2023. We have also developed a new design for NATiV3, which is much more patient-centric. We have started to implement this new protocol. It has been submitted, and we're very pleased to see that it has been approved in key countries, including the U.S. This morning, Akero announced their design for the Phase III and we're very pleased to see that Akero is working in our footsteps with a design that is very close to ours, and especially they have selected the same primary endpoint as our primary endpoint in NATiV3. On the other trial, I think it's important to point out that LEGEND. We have activated the first clinical site in the U.S. and in Europe, and, of course, we're randomizing in all of the countries where LEGEND is open. And finally, we're looking forward to the results of the investigation study conducted by Professor Cusi from the University of Florida. The last patient was enrolled in September 2022. We recently exchanged with Professor Cusi, who is going through the database analyzing the last cleanups and getting ready for the database log. So we're looking to be able to publish those results by the middle of Q2 2023. The year 2022 has also been very active in terms of partnerships, and we are very proud to have secured a strong partner with Sino Biopharm after extensive due diligence on their part, which proved that our drug is well-positioned in China, which, as you know, is a very promising market for NASH given the prevalence of the disease in China. It has allowed us to secure close to €13 million of upfront payment, and we're eligible for additional milestones that can reach €290 million on top of royalties. Depending on various discussions and interactions, Sino Biopharm may join the NATiV3 trial. Finally, I would point out that we're very pleased with the strategy of finding partners in Asia. This allows us to speed up the development and the entry to market, and we continue exploring other potential commercialization of lanifibranor in NASH. In terms of IP, we have secured a patent in the U.S. that strengthens our IP estate, especially in patients with cirrhotic cases. Regarding the older program ABBV-157, unfortunately, we were notified by AbbVie that following the expected toxic result in a long-term toxicity study, they have decided to halt this program. We have had a very constructive discussion with the FDA over the summer regarding odiparcil. They confirmed that we can proceed with this drug in children, given the safety profile, and they validated that a single Phase II/III trial in children would be sufficient to secure accelerated market approval if the results are positive. Financially, we've been very active as well. We've secured €50 million loan from EIB, one of the largest for biotech in Europe. Out of those €50 million, still €25 million are to be used and are not included in our cash runway. On top of the approximately €13 million we received from Sino, we also raised close to €10 million from our ATM program and secured additional facilities backed by the French government of close to a bit more than €5 million. Finally, we were selected as part of a very limited number of players to be part of the Euronext Tech Leaders segment, and we're pleased to welcome Dr. Lucy Lu as a new board member. Now let me talk a little bit about lanifibranor. Before I give the floor to Michael, let me remind you of some key features of lanifibranor. Very importantly, the profile of the drug is really unique. We are, to our knowledge, the only pan-PPAR currently in development for NASH. This profile is very important due to the strong results we are able to show during the Phase IIb that granted breakthrough therapy designation according to AbbVie, which is really the ability to activate the three isoforms. We also remind you that we're not a TZD; we have not seen any of the typical liabilities that characterize TZD especially during the preclinical program. The safety continues to be, in our mind, very favorable. Recently, we had a DSMB in our NATiV3, and the conclusion from the previous DSMB rules throughout the course of lanifibranor's history is that we can continue the trial with no changes. I mentioned the very strong result of the Phase IIb I think is important to try to position lanifibranor compared to potential competitors. This is, of course, very difficult because trials are different. We have reported our data giving the ITT population because this seems relevant, being the one considered by regulatory authorities while most of our competitors only report data for protocol-defined populations. But I think it gives an idea that lanifibranor shows very compelling data in NASH resolution and no worsening of fibrosis, certainly with a profile that is very competitive and probably superior to the other oral drugs in development and also a competitive profile versus injectables. This is even more true when we look at fibrosis improvement, which for us remains important given the disease and what we want to achieve, which is that patients with NAFLD do not become cirrhotic. On the primary endpoint, both our low dose and high dose at 800 milligrams and 1,200 milligrams, all demonstrated three to four times more responders. This is a compelling endpoint because it enables us to reduce the placebo effect. We have 7%, while Akero was at 5%. Finally, let's discuss the interaction we have had with the FDA, a positive interaction that has led to the new design Michael will present. I think this is a very good step for the field to have a trial based on surrogate histological endpoints in patients with non-cirrhotic NASH, and it enables the possibility of securing full approval with an outcome trial in patients with compensated cirrhotic NASH. This makes development more feasible from a timing point of view, shortening development to secure full approval. Also, it would expand the patient population we could address to include patients with compensated cirrhosis. So that's my briefing introduction. I will now turn to Michael, who will give you an update on NATiV3 and also the other two Phase II that are ongoing.

Thank you, Frédéric, and good morning. Good afternoon to everybody. I'm on Slide 15 now, which summarizes the development program for lanifibranor. On the left in green, you have the completed study that was summarized by Frédéric just a minute ago, the Phase II study. I would just highlight that this was a six-month treatment with a very robust efficacy on histology both for NASH activity and fibrosis, which testifies to the compound's efficacy to have that degree of effect on fibrosis after a short treatment period for a fibrosis evaluation. Based on these data, the efficacy and the safety of the compound, the FDA has granted breakthrough therapy designation for lanifibranor in NASH. On the right in orange, the Phase III study, which is currently ongoing. We are in the midst of the Phase III study as you know, and I will also speak about two earlier Phase II studies mentioned by Frédéric on Slide 16. As you heard, we have updated the design of the study to make it more attractive to patients and investigators by removing the seven-year placebo-controlled treatment period, and we have had very good interactions with the FDA on this change. So what are the main changes in NATiV3? The readout for the surrogate efficacy endpoint, which is histology after 72 weeks of treatment, has remained unchanged. We have two active arms and a placebo arm, and there will be two biopsies: one at baseline and one at the end of treatment for a total of about 950 patients. After that, patients will remain in the study, but they will be re-randomized to an active treatment arm, ensuring they will not receive placebo beyond that time, which is seen by everybody as a very positive approach. The active treatment extension will be at least 48 weeks after the readout for the secondary biopsy. In addition, this is also a new aspect: we will enable patients who screen fail due to histology, but who have NASH and fulfill all the other inclusion criteria to enroll in an exploratory cohort of about 200 patients, again using two doses in a placebo-controlled design. This exploratory cohort will enroll patients staged for fibrosis in a manner defined by our expert pathologists. The main changes are really the shorter duration of exposure to placebo and two biopsies instead of three. The exploratory cohort also will not require a second biopsy. So we move on to the next slide, Number 17. The readout of the histology at 72 weeks is the basis for submission for accelerated approval in the United States with the FDA and the corresponding conditional approval by the European Medicines Agency, the EMA. This is in agreement with several communications that the FDA has made on their proposed development approach that we have currently in place. The principal investigators are Dr. Francque from Antwerp and Dr. Sanyal from Richmond, Virginia, two very well-known leading experts in the field of NASH. The main inclusion criteria have remained the same, so result patients within a degree of activity based on the SAF scoring system for the degree of tissue injury, ballooning, inflammation, and fibrosis stages F2-F3. Patients with advanced fibrosis, but not progressed to the degree of cirrhosis will be included. We allow patients who have a stable dose of GLP1 receptor agonist, which they must have been on for at least three months. This will also be very important for enrollment and to get data on the treatments of those two compounds. We have randomization according to type 2 diabetes and fibrosis stage. The study is powered based on the very positive Phase II data. We have 90% power for the primary efficacy endpoint. The biopsy reading is robust; we employ three expert pathologists, and it's based on the fact that every biopsy is read by two of them. In case of non-agreement on certain aspects affecting eligibility, the third pathologist serves as a tiebreaker. The primary efficacy endpoint is again, based on the Phase II data: both NASH resolution and fibrosis improvement, which relay significant clinical benefits in comparison to having only one endpoint. This corresponds to the mechanism of action of the compound, lanifibranor. We do have an effect on all aspects of the disease biology associated with NASH. Key secondary endpoints include NASH resolution with no worsening of fibrosis, and similarly with fibrosis improvement and no worsening of NASH, alongside a series of other secondary endpoints that relate to beneficial effects on metabolic immune markers of NASH. Additionally, safety and tolerability will also be assessed to ensure a good benefit-risk ratio, the basis for approval. Moving to Slide 18, the current NATiV3 update will provide the data necessary for accelerated approval. To obtain full approval thereafter, we need data on outcome benefits, which we plan to derive from a study on patients with NASH who have compensated cirrhosis. Based on data regarding the natural course of patients with early cirrhosis, we anticipate addressing a sample size for this study effectively. We plan to involve about 900 patients, selecting one dose of lanifibranor, of course, using a placebo control. The outcome will be event-driven. The study is expected to last up to three years. Our approach to study design expands the number of patients we can potentially treat and will certainly provide a wealth of information about additional metabolic benefits that could be observed in combination treatments. So we are excited about the updates in NATiV3, and I think it’s safe to say that we’re optimistic about these developments.

Good morning, good afternoon, everyone. We will now get to the key information on our financial landscape. I'm happy to answer, of course, your questions later on if you have further inquiries. First of all, in terms of shareholder base, there’s no significant change; it’s stable. We have extended our coverage with analysts, including Stifel; I wouldn't like to elaborate too much about our market cap, which appears disconnected from the potential of the lanifibranor assets, but at least the consensus remains positive in spite of the significant spread process related to the current market cap. In terms of financial statements, there are three takeaways to highlight. First, in terms of revenues, I guess it's the first time we have reached this level of €12.2 million in sales, and importantly, we record this amount with the upfront from the Sino Biopharm partnership in China that we spoke about. The second key point is the continuous effort that we have seen some actions to boost enrollment, which has resulted in a significant increase in R&D expenses, expected to continue this trend into 2023. The third point relates to the financial market conditions; this year has been difficult, yet we have secured a short-term close to €80 million principally with the European Investment Bank deal of €25 million. One tranche was raised in the first quarter, and we’ve also utilized our at-the-market program with $9 million, plus approximately $58 million remaining on the shelf. We've also optimized a state-backed loan, securing around €5 million. Thus, we concluded the year with close to €8 million, not considering the cash cartridge of the €25 million second tranche from the EIB, allowing us to operate until the end of 2023.

Great. Thank you, Jean. Regarding the catalysts, we are looking closely at obtaining the data from Professor Cusi on the Phase 2, and we feel relatively confident regarding this trial. This data will be important for positioning lanifibranor with patients who have type 2 diabetes. Of course, I mentioned all the efforts underway, with the aim of completing enrollment for NATiV3 in the second half of this year, which will be a significant achievement and positive news. Finally, we are also focused on the work we are doing on LEGEND with data expected in the second half. This is a quick update on our 2022 financials and achievements. I will now hand over the call back to the operator, who will provide instructions for questions.

Thank you, sir. The questions come from the line of Seamus Fernandez from Guggenheim Securities. Please ask your question.

Great. Thanks so much for the question. I have a couple of quick inquiries. The first is regarding whether there will be disclosure of baseline characteristics of the patients for the Phase 3 trial, which is expected to read out in 2025. I think that’s an important dynamic as we consider the differentiation of this clinical trial versus some other competitor opportunities. The second question I have is about your opportunity to share results from the Phase 2 clinical studies—hoping to better understand how those results will be presented, whether it’s in a press release with a formal primary endpoint assessment or exploratory analysis to be presented at a medical meeting.

Thank you, Seamus. I will address the first question, and for the communication strategy of the Phase 2 with Professor Cusi, I’ll let Pierre or Michael summarize our discussions. Addressing your first query about disclosing baseline characteristics, it's a good suggestion. Honestly, we hadn't thought about that yet, but it’s feasible and could be interesting to do. We have looked at the patients that have been enrolled, and, Michael, please correct me, but as far as we have seen, we won't be changing the patient population from the previous Phase 2b. Essentially, we are still targeting patients with F2, F3, who exhibit moderate to severe inflammation and ballooning, consistently maintaining activity scores of at least two or three. We have observed possibly a higher percentage of patients with type 2 diabetes—about 60% now, as opposed to 40% previously in the Phase 2. However, we don’t think that indicates any significant change. The efficacy of the drug has remained consistent across both populations, meaning it works well for patients with NASH or those also dealing with NASH and type 2 diabetes. Michael or Pierre, would you like to discuss the communication strategy for the Phase 2?

Yes, sure. For the study sponsored by the University of Florida, once the data are available, we will issue a press release on the top line results. Subsequently, details including the primary efficacy endpoint and all secondary efficacy endpoints will be publicly presented at scientific conferences, with Dr. Cusi's team leading this effort.

Great. And as a follow-up, should we anticipate those results at particular medical meetings, such as the EASD conference, considering the diabetic population involved? Or more along the lines of AASLD focusing on liver specialists, as there seems to be a mix of marketing towards both endocrinologists and liver specialists?

Absolutely. We aim to target both actually. We have done significant analyses of metabolic immune markers in the NATIVE study and plan to present those at both liver-focused conferences such as AASLD and EASL, while also focusing on endocrinology conferences like ADA. We will ensure to widen our outreach in both areas.

Thanks so much.

We are now going to proceed with our next question. The questions come from the line of Annabel Samimy from Stifel. Please ask your question.

Hi, thanks for taking my question. Thank you for all the detailed information on the Phase 2. I want to look a bit bigger picture. Considering the Phase 2 trials you are conducting, will lanifibranor be available to all patients, or are you mainly targeting type 2 diabetic patients for specific benefits? Additionally, in the LEGEND trial, some physicians believe that patients may already be on existing treatments. Can you clarify the vision for these combinations in the real world? Will there be strategies to optimize lanifibranor through combination treatments? Or is the goal primarily to manage weight gain or optimize its overall profile?

I’ll address the current Phase 3 status. We have patients with F2 and F3 classifications, with a specific focus on patients dealing with NASH and type 2 diabetes. We firmly believe that lanifibranor caters to both populations; it has shown efficacy in both groups based on the previous Phase 2b results. We are highlighting the anti-diabetic properties of lanifibranor to understand competitive positioning. Our belief is that a patient with NASH and type 2 diabetes can not only benefit in improving NASH and reducing fibrosis with lanifibranor, but also receive assistance in HbA1c control. This makes lanifibranor a strong option for this demographic. We’ve seen that in the Phase 2b studies documenting diabetes halting progression in patients treated with lanifibranor. We see this as a significant patient population. Additionally, when discussing with endocrinologists, many have patients with NASH in their care. The data we’re generating with Professor Cusi will assist in positioning the drug within that context. For the GLP-1 aspect, I will turn this over to Michael or Pierre to elaborate further.

In the context of evolving treatments, we observe substantial shifts in diabetes treatment paradigms. The emergence of GLP-1 receptor agonists, specifically semaglutide, is altering established approaches, and many have now become the first line of treatment for type 2 diabetes. This shift is an opportunity for us. We allow patients on stable doses to participate in NATiV3. We might consider this opportunity to adjust LEGEND as well, which we are currently exploring. Importantly, lanifibranor remains distinct from other compounds as it functions as a pan-PPAR agonist with effects on metabolism, inflammation, and fibrosis. For diseases like NASH and type 2 diabetes, which are interconnected, while our approval will focus on NASH, many involved patients are likely to also have type 2 diabetes. Even those without diabetes, many are in a pre-diabetic stage, which the diabetes community is recommending treatment for. This positioning holds a significant advantage for us.

Okay. Great. Thank you.

We are now going to proceed with our next question. The questions come from the line of Ed Arce from H.C. Wainwright. Please ask your question.

Great. Thanks for taking my questions and congratulations on the continued progress. I have a few inquiries. Firstly, could you disclose how many patients are currently enrolled in NATiV3? Additionally, regarding the outcomes trial, I believe you mentioned a target of 900 patients. I noticed 800 referenced in a slide, and I want to confirm which is accurate. Lastly, could you clarify which dose of lanifibranor will be used in that trial?

On the current status of the outcome trial, we monitor the situation daily, and we're very pleased with enrollment; however, we do not disclose specific numbers. We are actively working to improve screen failures, which occurred earlier than anticipated. In light of recent efforts, we have seen these screen failure rates decline consistently over the past few months, which is encouraging. As for your third question regarding dosing, Michael, would you like to highlight our discussions with the FDA?

To clarify, regarding the total number of patients enrolled in the outcome study, we estimate around 800, using two arms: one for lanifibranor and another for placebo. As for the NATiV3 study presently running, this involves approximately 950 or 960 patients, as detailed earlier.

Thanks. The other part of the question was which dose of lanifibranor you plan to utilize for the outcomes study?

We have yet to decide, but we will choose one dose. We will finalize the design, considering all information, including clinical pharmacology data, and the results obtained from NATiV3.

Great. Thank you. I also wanted to inquire about the efforts regarding speeding up biopsies and their impact on outcomes. Additionally, could you confirm your cash runway touchpoints and provide the remaining amount available on the ATM?

Regarding the biopsy process, we have engaged in numerous activities to optimize this process, which has been beneficial for improving screening outcomes. What I mean by speeding up is the time from when a biopsy is taken at a site until the reviewer can provide their appraisal; this has historically been long. We have successfully expedited and optimized this process. Importantly, we began with two pathologists reviewing biopsies; we now have implemented three, adding a tiebreaker. Going forward, any disagreements between the two pathologists will be addressed by a third. This change will, of course, ensure greater stability in histological scoring. When it comes to assessing efficacy ultimately, both the histology at baseline and after treatment will be re-evaluated by three pathologists to maintain uniformity throughout evaluations. On the topic of cash, I’ll have Jean address inquiries concerning the ATM.

Absolutely. I can provide clarity regarding cash runways—currently aiming towards the end of 2023 as a crucial juncture. In this context, it is vital to note that we have not considered the second tranche of the EIB, which translates to the cash cartridge of €25 million. Concurrently, we still possess approximately $58 million available from our ATM program.

Thank you so much.

We are now going to proceed with our next question. The question comes from the line of Frédéric Gomez from Pharmium Securities. Please ask your question.

Thanks for taking my questions. On NATiV3, can you clarify the primary goal for the HbA1c measurement? Also, can you comment on the potential impact of having three pathologists review the biopsies instead of two? I'm curious regarding this alteration and its effects on trial results.

Sure, regarding LEGEND, we based the sample size analysis on the data provided by NATiV2 regarding the expected benefit on HbA1c, also considering the advantages anticipated when combining pioglitazone with an SGLT2 inhibitor. The consistency of these additional benefits is established in at least four significant randomized trials, concluding that the combination generally exhibits favorable outcomes. Importantly, this is a proof-of-concept study designed to showcase the added benefits deriving from the combination for specific patients. We acknowledge that while PPAR agonists induce some metabolic weight gain, it may not be a concern for every patient involved. As for the changes to our biopsy system, we have optimally planned for three-approach from the beginning. Introducing the tiebreaker allows for increased stability and consistency, which strengthens our histology scoring assessments. The inclusion of established methodology—requiring biopsies to be reviewed and re-analyzed—is designed to ensure uniformity across our assessments.

This method ensures consistency in evaluating both inclusion and efficacy after the 72-week treatment mark. So the reading remains robust with the reassessment for all evaluations.

We have no further questions at this time. I will hand the conference back to Mr. Cren for closing remarks. Thank you.

Thank you very much for attending. We see a very exciting 2023 ahead in the NASH space, which wasn't the case last year. We observe renewed interest and expect numerous events this year, particularly with the FDA, the Intercept, and the Madrigal submission. We remain confident regarding lanifibranor and have the drive to reach our goals. Operationally, we know we need to deliver on NATiV3, and we feel we are on the right track. We'll also look forward optimistically towards data generated by Professor Cusi in the type 2 diabetes study and, of course, the LEGEND study. Thank you once more for joining us today, and I look forward to connecting with you in future meetings.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect your lines.