Lyra Therapeutics, Inc. Q1 FY2021 Earnings Call

Welcome to the Lyra Therapeutics First Quarter 2021 Financial Results and Corporate Update Conference Call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will hold a Q&A session. As a reminder, this call is being recorded today, May 11, 2021. I would now like to turn the conference call over to Stephen Jasper from Gilmartin Group. Please go ahead.

Thank you, operator. Joining us on the call today from Lyra Therapeutics are President and Chief Executive Officer, Maria Palasis; Chief Financial Officer, Don Elsey; Chief Medical Officer, Rob Kern; and Senior Vice President of Commercial Strategy and Market Development, Corinne Noyes. Early today, Lyra released financial results for the first quarter ended March 31, 2021. If you have not received this news release, or would simply like to be added to the company's distribution list to receive future releases, please go to the Investor Relations section of Lyra's website, which can be found at www.lyratherapeutics.com. During the conference call, management will make forward-looking statements, including statements related to Lyra's 2021 financial results and guidance, and the clinical development of the company's product candidates, business strategy and planned operations. These forward-looking statements are based on the company's current expectations and inherently involve significant risks and uncertainties. Lyra's actual results and the timing of events could differ materially from those anticipated in such forward-looking statements, as a result of these risks and uncertainties. Factors that could cause results to be different from these statements include factors the company describes in the section titled risk factors and the company's current report on Form 10-Q filed on or about May 11, 2021. Lyra cautions you not to place undue reliance on forward-looking statements and undertakes no duty or obligation to update any forward-looking statements as a result of new information, future events or changes in its expectations. With that, I will now turn the call over to Maria Palasis, CEO of Lyra Therapeutics. Maria?

Thank you, Stephen. And welcome everyone to Lyra Therapeutics first quarter 2021 financial results conference call. As a reminder, Lyra Therapeutics' goal is to transform the ENT treatment paradigm by providing effective solutions for physicians and new treatment options for their patients. Lyra’s first area of focus is the treatment of chronic rhinosinusitis for which there are an estimated 8 million patients treated each year in the US with roughly half of them failing medical therapy. Lyra has designed LYR-210 and LYR-220 to be disease-modifying and best-in-class for CRS patients who are underserved by current medical management. Having now demonstrated effectiveness in our Phase 2 for underlying XTreo platforms, Lyra intends to use LYR-210 and 220 as the foundation on which we build a leading ear, nose and throat company. We made further progress towards this goal in the first quarter with the presentation of the full data from our LANTERN Phase 2 study of LYR-210 at the Combined Otolaryngology Spring Meetings in April. And with the appointment of Dr. Robert Kern as our Chief Medical Officer, you will remember that we introduced Rob on our fourth quarter call. Looking ahead to the remainder of the second quarter, we look forward to sharing with you the feedback from our end of Phase 2 meeting with the FDA for LYR-210, as well as sharing with you the top line results from our pharmacokinetic clinical study. Later in the year, we plan to initiate a Phase 2 clinical trial for our second development candidate, LYR-220, and then large matrix using the same 7,500 microgram doses as LYR-210 for patients who have previously undergone sinus surgery, followed by the initiation of a Phase 3 clinical trial for LYR-210 around year-end. Before I hand the call over to Rob to cover our clinical pipeline, let me remind you of the highlights from our COSM presentation. The new data we presented included 100% of both non-polyp and polyp patients in the study achieve the minimal clinically important difference of 8.9 points of symptom improvement in SNOT-22 score at week 24. This made LYR-210 the first intranasal implant that has been found to be effective in non-polyp CRS patients, which represent 90% of the pre-surgical CRS patient population. LYR-210 also achieved improvement in an objective imaging endpoint measuring sinus opacification at week 24 from baseline in a dose-dependent manner with a 7,500 microgram dose, achieving significant improvements compared to control between the two time points. Furthermore, LYR-210 at the 7,500 microgram dose reduced the need for rescue treatment. Only one patient in the 7,500 microgram group required a rescue medication, compared to seven patients in the control group over the 24 week treatment period. Now to give you further insight into our clinical development progress in LYR-210 and LYR-220, I will hand the call over to Rob Kern. Rob?

Thank you, Maria. First, let me take a moment to thank Maria and the entire Lyra Therapeutics team for welcoming me to the company. I look forward to leveraging my knowledge and experiences as we continue to progress LYR-210 and LYR-220 through the clinical pipeline and towards an NDA submission and potential approval. In addition to the data presented at COSM, Lyra separately shared an analysis of the LANTERN study that focused on a composite score of three of the cardinal symptoms of CRS. Lyra looked at the composite score that included nasal blockage, nasal discharge and facial pain, which are the most prevalent symptoms for surgical naive CRS patients without polyps. Looking at these three cardinal symptoms with a single administration, LYR-210 achieved statistically significant improvement in the composite score compared to control at week 24 with a p-value of 0.003 and at earlier time points as well. As a reminder, our goal was to come out of the study with insight into what might be the most relevant endpoint for a pivotal study. And we believe that the three cardinal symptoms could be the most appropriate. We will have more to say on this matter when we share the feedback from our end of Phase 2 meeting with the FDA. Leveraging the clinical success to date of LYR-210, we are also preparing to initiate a Phase 2 study for LYR-220 in previously operated patients. This will occur in the second half of the year, and we will use the 7,500 microgram dose that achieved positive results for our LYR-210 in the Phase 2 LANTERN study. Combined, we believe that LYR-210 and LYR-220 could offer ENT a complete suite of first-in-class products treating the majority of CRS patients that walk into their office. We believe that this will be a key commercial advantage versus current product offerings. With that, I will now hand the call over to Don to summarize Lyra's financial results for the first quarter. Don?

Thank you, Rob. Starting with our cash and cash equivalents balance, we ended the first quarter with $66.1 million, compared with $74.6 million as of December 31, 2020. Total operating expenses for the first quarter were $7.8 million compared to $4.2 million for the same period in 2020. Net loss for the first quarter was $7.8 million. The earnings release we issued earlier today outlines our financial results in full. So, I will not go through the full details on this call. In terms of financial guidance and as we previously stated, we believe that Lyra has sufficient cash to fund the company through planned operations into 2023. Finally, Lyra shares outstanding as of March 30, 2021 were approximately 13 million shares. With that, I will turn the call back to Maria.

Thank you, Don. In addition to our clinical progress, I am pleased to report that the tech transfer to our contract manufacturer is on track. The installation of manufacturing equipment and infrastructure at our CMO has been completed, which has resulted in the commencement of Lyra's first manufacturing lot to support the IND supplement and the commencement of our Phase 3 clinical trial for LYR-210 around year-end. Again in the remainder of the second quarter, we will share the highlights of the end of Phase 2 meeting with the FDA and the topline results from our pharmacokinetic clinical study of LYR-210. Before I open up the call for questions, let me talk a little bit about the PK study and its background. The PK study is our third clinical study for LYR-210 and enrolls a planned 24 US patients and will be a critical component of the company's strategy for obtaining regulatory approval through a 505(b)(2) new drug application. In terms of what you should expect us to announce, we anticipate sharing top line results at a high level as we plan to present the data at a medical meeting this fall. In terms of results, we are looking for firstly, Mometasone pharmacokinetic data that confirms LYR-210 is applicable for a 505(b)(2) pathway and safety and usability information for LYR-210 that confirm what we have seen so far in our Phase 1 and Phase 2 trials. The trial conducted in the United States has also given us our first in-depth US experience with US sites and the learnings will facilitate our Phase 3 trial for LYR-210. As you will recall from the comments of Dr. O, the leading enroller in the PK trial, the anecdotal evidence from the study is encouraging and we're excited to share it all with you soon. With that, I will now open up the call for questions. Operator?

First question comes from the line of Robert Hazlett from BTIG. Your line is now open.

Hi. This is Perry on the line for Bert. Thanks for taking the question and congratulations on the progress. I'm curious about the time point upcoming for the potential Phase 3 trial. You're seeing efficacy based on LANTERN, both in terms of the SNOT-22 score as well as a three CSS. Is there a time point that you're currently more interested in? Is it at the 24 week time points? Just any thoughts on how you're going about choosing a time point for Phase 3?

Thank you, Perry. Yes. So, when we look at our SNOT-22 results, and when we look at the three cardinal symptoms, we certainly see efficacy and statistically significant improvement over control at 16 weeks, 20 weeks, and 24 weeks. So certainly, what we would propose to use moving forward is a later time point, up to 24 weeks would make sense. If you look at the three cardinal symptoms that we shared, we see a p-value of 0.003 at 24 weeks. So certainly, that is going to make sense for us to use one of those later time points.

Okay. Thanks, Maria. That's very helpful. And then just one other question on, I guess, the status of manufacturing capabilities in terms of readiness for the Phase 3 trial, and then how that's progressing over the next few months. And then, I guess beyond that, and it's quite early, but what do you anticipate in terms of commercial readiness beyond the Phase 3 manufacturing build up?

Thanks, Perry. So we have begun the process of technology transfer. It's going very well. We're really excited about the partner that we've chosen to work with us. We are working with them to scale up the manufacturing. I think they’re aware that we manufactured the product in-house for Phase 1 and Phase 2. And so, our engineers and scientists are at the contract manufacturer every week. Another highlight of the manufacturer that we selected is they're very strong in automation. That is going to be key for us, especially as you mentioned commercial readiness. There's millions of patients out there with CRS. So it's going to be really important for us to be able to automate so we can make the products for the millions of patients that are out there. And certainly, as we think about commercialization, we fully anticipate being ready as we are conducting the Phase 3 trial that is going to give us the time to put the automation in place to be ready.

Great, thank you. And looking forward to continued progress. Thanks.

Thanks, Perry.

Your next question comes from the line of Jason Gerberry from Bank of America. Your line is open.

All right, good evening. Just heading into the FDA meeting, could you just remind us maybe some of the key agenda points, potential variables, and how you're thinking about perhaps, study size and inclusion criteria to ensure you get the broadest label for both polyp and non-polyp patients? Thanks.

Thanks, Jason. In terms of the agenda, first and foremost, it's the primary endpoint. And as we mentioned, we'll be looking at cardinal symptoms in the Phase II study. For cardinal symptoms, we've now also published and presented the individual symptoms, and when we look at it as a composite of the three, that gives us a high degree of significance. And so we certainly want to set up the program for success. We're going to be looking at the time point and the composite of cardinal symptoms, that is going to be the strongest and that our data support. So we certainly will be talking to the FDA about the composite that we would be proposing. And also, in terms of the time point, as I mentioned, a later time point up to 24 weeks, that will be key for us. We'll also be talking about some of the key secondary endpoints certainly, it's a symptomatic disease. So, the individual symptoms are going to be key. Also, other types of endpoints, like what we did in the Phase II rescue treatments and how those will fit in. In terms of the size, again, we have planned for approximately 350 patients, and that is very much driven by the number of exposures that we think we're going to need in terms of the statistics. The statistics are very strong. So, we're estimating about 350 patients, and we're going to be proposing the high dose of 7,500 micrograms. So those are some of the items that we'll be discussing and that we're going to be wanting to reach agreement on.

Got it. Great. Thanks so much.

Sure, thanks.

Your next question comes from Chris Howerton from Jefferies. Your line is open.

Thank you for taking my question, and congratulations on your progress. I would like to know what specific insights you gained from the US experience in the PK study and how those might inform the design and execution of the Phase III study. Additionally, has the final design and all features of product 220 been completed? Are there any further modifications planned for that product? Lastly, for Don, could you clarify what is included in the financial guidance regarding the planned operations, such as which clinical trials may or may not be part of that? Thank you.

Thank you, Chris. I'll begin with the final design question and then hand it over to Rob, who will discuss the insights from the US experience and the conduct of the Phase III study, followed by Don. Regarding the final design, yes, it is finalized. We have a 7,500 microgram dose. This dose, along with the data supporting its safety and efficacy, is the same dose that we will use for the LYR-220 product candidate. We do not anticipate any adjustments. The products we tested in Phase 2 will be the same ones we move forward with in Phase 3. Rob?

Yeah, I think that the key takeaways in the American experience are the readiness and relative ease of recruitment. We were able to attract US patients without a great deal of difficulty. And also the ease and acceptance of the whole idea in the US market, I think, speak very well towards the future and our ability to readily acquire a lot of patients for the Phase 3 trial.

Okay, great. Maria, I just wanted to clarify that I was asking about 220 in relation to the form factor for that product.

I'm sorry, I misunderstood that. So yeah, so in terms of 220, what we have said is we're taking two designs actually into the Phase 2 trial. Now, as you know, our technology is a platform. We can alter the cell size, which provides more surface area coverage or less surface area coverage. And so, we are planning on taking the two designs forward, that hasn't changed. And both of those designs will have the 7,500 microgram dose on them. Does that answer your question, Chris?

Yeah, yes, it does. Thank you.

All right. Sorry about that. Don, do you want to take the next one?

Hello?

Your next question comes from the line of Tim Lugo from William Blair. Your line is now open.

Hey, this is Lachlan standing in for Tim, thank you for the questions. I'll start by asking if, aside from the FDA meeting and aligning on the trial design, is the only other factor for starting Phase 3 the validation of the product from the CMO? What is the timeline for that? My second question is whether you plan to engage with regulators outside the US regarding the Phase 3 design, or will you be focusing solely on the US for now and then consider other markets once you have that established? Additionally, Don, I would appreciate your insights on the last question.

Hey, hi. Thanks for the question. And so your question, Lachlan, is starting the Phase 3 gating items. So the gating items certainly are the final protocol that'll get submitted to the FDA and then what we'll do with that protocol is, then use it to begin to get the study going in terms of IRB approval, et cetera, getting our sites up and running. And so we'll have to be doing that in parallel. And then, the next item that's going to be critical certainly is getting the product to the site. So all of those things, that are gating the start of the trial, and we feel very confident about how things are progressing on all fronts. Then, in terms of your question about regulators outside of the US, our focus is on the US for this study. And we may have sites outside the US. So right now, we are however, focused on the United States in terms of the trial. And then in terms of as your comment pertains to perhaps commercialization outside of the US, one other thing that we mentioned is that we will be seeking partnerships outside the US. So, that is certainly something that we are open to and are pursuing.

So Maria, this is Don, if I can jump in. Sorry about that, we had a little power surge here. So if I heard the question correctly before I got cut off it, what clinical trials were contained in the financial guidance? Is that correct?

I will assume.

Yeah. That was correct. So, what we've got in that guidance is the Phase 3 being undertaken four to ten. And the two for 220 at the approximate patient count that Maria was talking about.

Okay. Thank you.

There are no further questions at this time. I would now like to turn the conference back to Maria Palasis.

Thank you, Operator. Lyra has begun 2021 with strong momentum, which we plan to build upon as we further our clinical pipeline in the second half of the year. We are well positioned for an exciting future and remain very confident in the ability of LYR-210 and LYR-220 to provide a meaningful difference in the way CRS is treated here in the US and also elsewhere in the world. In the coming months, we plan to attend the Bank of America, Jefferies and William Blair Healthcare conferences, and welcome your requests for meetings during those events. With that, I would like to thank you all for participating in today's call.

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