Nanobiotix S.A. Q2 FY2023 Earnings Call

Good day, and thank you for standing by. Welcome to the Nanobiotix Business Update and First Half 2023 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a Q&A session. Please be advised that today's conference is being recorded. At this point, I’d like to turn the call over to Craig West, Senior Vice President of Investor Relations of Nanobiotix.

Thank you, operator. Good afternoon, and good morning, and welcome to the Nanobiotix conference call to discuss our first half 2023 financial and operating results. Joining me on the call today are Laurent Levy, Co-Founder and Chief Executive Officer; and Bart Van Rhijn, Chief Financial Officer. As a reminder, today's call is being webcast and will be available on our website for replay. I would like to remind you that this call will include forward-looking statements, which may include statements regarding the progress, success, and timing of our ongoing and planned clinical trials, collaborations, regulatory filings, dates of presentation, and future research and development efforts among other things. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change. They are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from our current expectations. Accordingly, you are cautioned not to place undue reliance on forward-looking statements. Please review the full description of risk factors that can be found in the documents we filed with the AMF in France, and SEC in the United States, including the RFS and 6-K filed yesterday, both of which are available in the Investor Relations section of our website, along with the press release issued yesterday, highlighting our corporate and financial results for the period. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, Nanobiotix undertakes no obligation to update them to reflect subsequent events or future circumstances. With that said, I'd like to turn the call over to Laurent. Please go ahead.

Thank you, Craig. I would like to welcome everyone participating via conference call and webcast today. As Craig mentioned, we issued a press release yesterday highlighting the company's first half 2023 operating activities and financial results. For today's call, I will begin with an overview of our accomplishments and review upcoming milestones for each of our programs. Bart, our Chief Financial Officer, will follow up with financial updates. I will then give closing remarks before opening the call for questions. The first half of this year has been truly transformative for Nanobiotix, following the successful completion of a global license agreement with Janssen, the appointment of Dr. Kayitalire, an industry veteran in oncology, as Chief Medical Officer, and the ongoing advancement of trials designed to establish the clinical foundation of NBTXR3 in multiple solid tumor indications. I'm very proud of what the company has accomplished in the past months. Collectively, this achievement continues to propel late-stage development of NBTXR3 forward, expand our patient reach, and ultimately position us to realize the paradigm-changing potential of NBTXR3 worldwide. We're very excited about the recent global licensing co-development and commercialization agreement with Janssen Pharmaceutica, one of the Janssen Pharmaceutical Companies of Johnson & Johnson, for NBTXR3, a potential first-in-class radioenhancer. This partnership is designed to leverage the strengths of both companies and accelerate and broaden the treatment potential of NBTXR3. As part of the agreement, the initial focus of clinical development will be on head and neck and lung cancers, with expansion potential in additional solid tumor indications. We believe this partnership underscores the therapeutic and market opportunities of NBTXR3 and importantly, further validates our platform and our scientific approach. What we find particularly attractive about this deal is that it offers both near-term and long-term value for shareholders, including access to up to $60 million in near-term support, up to $30 million in equity, subject to certain conditions and a success-based payment of over $1.8 billion in development, regulatory, and sales milestones. Additional success-based milestone payments of up to $650 million are available for indications that may be developed by Janssen at its sole discretion, and up to $220 million for indications that may be developed by Nanobiotix in alignment with Janssen. Beyond milestones, it also includes tiered double-digit sales royalties and product manufacturing and supplies. Recently, we received shareholder approval for Johnson & Johnson Innovation to become a strategic investor in Nanobiotix with an initial trench equal to $5 million. Bart will go through the details more in depth shortly. But we are pleased this deal has helped strengthen our balance sheet and extend our cash runway into the first quarter of 2024, including through some key clinical catalysts. We believe we selected the best possible strategic partner in Janssen, a premier oncology leader with a global reach and proven experience in pharmaceutical and medical technology. At Nanobiotix, we will continue to focus on the development of NBTXR3, continue our manufacturing expertise, and serve as the innovation engine. Janssen will contribute its substantial development support, regulatory, and commercial capabilities. We believe Janssen's regulatory and commercialization experience combined with Nanobiotix's capabilities and know-how in nanophysics will help us to achieve our shared objectives. We're well underway getting the collaboration started and we look forward to the potential to bring life-changing treatment for patients around the world. As we work to build the next chapter of Nanobiotix and advance clinical development and commercialization of NBTXR3, we're pleased to welcome industry veteran Dr. Louis Kayitalire to our executive leadership team at this pivotal time. Louis brings an exceptional biopharmaceutical industry track record with proven success in development, registration, and commercialization of oncology therapeutics. His innovative leadership will be invaluable as we focus on maximizing the disruptive potential of our radioenhancer for millions of cancer patients around the world. We look forward to working together as we prepare for registration and further optimization of our pipeline. Now let's turn to our clinical programs. As a reminder, more than 60% of all solid tumor cancer patients will receive radiation therapy during their treatment. This presents a large opportunity for NBTXR3, which is a single treatment designed to enhance outcomes alone or in combination with standard-of-care, and importantly, easily integrate into existing medical practice. The significant clinical evidence across multiple indications to date has shown NBTXR3 to be well tolerated with consistent and encouraging activity in the range of solid tumors. Our ongoing clinical program evaluating NBTXR3 for the treatment of solid tumors continues to progress well, including our Nanobiotix-sponsored programs in head and neck and our MD Anderson partner program exploring expansion opportunities in pancreatic cancer, esophageal cancer, non-small cell lung, and head and neck cancer. Importantly, we expect multiple potential value inflection points in the next 12 to 24 months. Our late-stage efforts for NBTXR3 are advancing with our ongoing pivotal NANORAY-312 global randomized Phase 3 trial. This trial evaluates radiotherapy activated NBTXR3 with and without cetuximab compared to radiotherapy alone, with and without cetuximab in patients with locally advanced head and neck cancer that are ineligible for cisplatin chemotherapy. We remain on track to report the interim efficacy for NANORAY-312 after 67% of planned events in the second half of 2024. The futility analysis conducted following 25% of planned events is expected in the first half of 2024. For Study 102, a Phase 1 dose escalation and expansion trial in patients ineligible for cisplatin chemotherapy or intolerant to cetuximab, we expect to present safety and efficacy data at a medical meeting in the coming weeks. This data from Study 102 in a similar indication as NANORAY-312 will help inform our Phase 3 ongoing trial. We are also pursuing a late-stage potential for a radiotherapy activated plus immunotherapy combination approach, which is designed to initially prime the immune system and improve the efficacy of checkpoint inhibitors. We anticipate providing a Phase 1 data update between now and the first half of 2024. For a potential Phase 3 registrational program in patients with recurrent or metastatic head and neck cancer that are resistant to previous anti-PD-1/PD-L1 therapy, we are in consultation with our newly appointed CMO and our partner on what next steps should be for this program. Ongoing exploration of expansion opportunities for NBTXR3 as part of our strategic collaboration with the University of Texas MD Anderson Cancer Center continues to be promising and includes five ongoing trials in advanced solid tumors. We believe this trial can help lay the clinical foundation and provide proof-of-concept support for additional indications that are de-risked with demonstrated clinical therapeutic potential for NBTXR3. In July, the first patient was injected in the newest MDLA study, a Phase 1/2 study evaluating radiotherapy activated in combination with an anti-PD-1/PD-L1 checkpoint inhibitor in patients with advanced solid tumors with lung or liver metastasis. We will present preliminary Phase 1 dose escalation safety data at a medical conference in the coming weeks in pancreatic cancer, in addition to the planned upcoming data for pancreatic trials. MD Anderson has made significant progress in its Phase 1 trial of NBTXR3 in operable non-small cell lung cancer and expects to determine a recommended Phase 2 dose for this product in the second half of this year. As you recall, MD Anderson is also leading a Phase 1 trial of NBTXR3 in combination with chemotherapy for patients with esophageal cancer, where initial data are expected in 2024. We believe these multiple value inflection points in the coming 12 to 24 months will further support the potential of NBTXR3 to deliver treatment benefits and enhance the utility of standard-of-care like radiation and immunotherapy in many solid tumors. With that, I would like now to turn the call over to Bart to briefly discuss our financial results for the period. Bart?

Thank you, Laurent. Good morning and good afternoon, everyone. As Laurent mentioned, we are pleased that our agreement with Janssen provides Nanobiotix with substantial near and long-term value. I will start with a brief overview of the key elements of the deal. The company already received the $30 million upfront cash licensing fee and is eligible to receive $30 million in-kind regulatory and development support for study NANORAY-312 provided at Janssen's sole discretion, and $30 million in equity in two tranches of $5 million and $25 million that are subject to certain conditions, and in the case of the $25 million, a future qualified financing of at least $50 million in the aggregate. We are pleased to have already received the first equity charge of $5 million following shareholder approval and issuance of approximately 960,000 shares for a subscription by Johnson & Johnson Innovation, representing a stake of 2.65% in the company. As part of the long-term value, the company is eligible for success-based payments of up to $1.8 billion and tiered double-digit royalties on net sales of NBTXR3. Additional success-based potential development and regulatory milestone payments of up to $650 million are also available in the aggregate for five new indications that may be developed by Janssen at its sole discretion. For indications developed by Nanobiotix in alignment with Janssen, the company has the potential to receive up to $220 million in aggregate for indications. Now we transition to the financials. Revenue and other income increased for the six months ended June 30, 2023, to EUR3.3 million compared to EUR1.3 million for the six months ended June 30, 2022. The company has mainly benefited from the research tax credit granted by the French government to encourage companies to conduct technical and scientific research, and from the supply and collaboration agreement signed with LianBio, generating an additional EUR1.3 million in revenue for the six months ended June 30, 2023. R&D expenses consist primarily of pre-clinical, clinical, and manufacturing expenses related to the development of NBTXR3. These expenses for the first six months in 2023 were EUR17.8 million compared to EUR16.6 million for the six months ended June 30, 2022. Purchases, subcontracting, and other expenses increased by EUR1.5 million for the six-month period ended June 30, 2023, as compared to the same period in 2022. This increase reflects the company's focus on advancing its clinical trial development priorities, specifically the global Phase 3 registrational trial, NANORAY-312. SG&A expenses consist primarily of administrative, legal, and professional fees, patent filing and maintenance fees, and insurance. The SG&A expenses for the six months ended June 30, 2023, were EUR10.9 million compared to EUR9.6 million for the prior six-month period. Purchases, fees, and other expenses increased by EUR1.1 million for the six-month period ended June 30, 2023, as compared to the same period in 2022, and mainly relates to EUR1.4 million paid to a financial advisor. Net loss attributable to common shareholders for the six months ended June 30, 2023, was EUR28.1 million or EUR0.80 per share. This compares to a net loss attributable to common shareholders of EUR26.4 million or EUR0.76 per share for the same period in 2022. As of June 30, 2023, Nanobiotix had EUR21.6 million in cash and cash equivalents, compared to EUR41.4 million as of December 31, 2022. For clarity, this cash balance does not take into account the $30 million upfront cash licensing fee nor the $5 million cash related to the first equity tranche that the company has since received. Based on the current operating plan and financial projections, we anticipate that the cash and cash equivalents of EUR21.6 million as of June 30, 2023, in conjunction with the EUR30 million upfront and EUR5 million initial equity tranche will result in a cash runway that extends into the first quarter of 2024 and does not take into account any potential future financing or cash inflow resulting from milestones or future collaborations. Additionally, as a result of the company's licensing agreement executed with Janssen, the company has entered into discussions with the European Investment Bank, or EIB, aiming to remove the cash covenants from the debt financing agreement between the company and EIB. We are pleased to inform you that these discussions have culminated in an agreement in principle on key terms that would result in the removal of the cash covenant in its entirety, in exchange for an acceleration of payment of a portion of the applicable milestone payment calculated using an escalating single-digit percentage applied to bracketed funding amounts in the event of an equity funding event and the payment of scheduled PIK interest. Execution of the definitive amendment to the agreements between Nanobiotix and EIB is subject to the finalization of necessary documentation and is expected at the beginning of the fourth quarter of 2023, which has the potential to positively influence our cash runway. And I'll turn the call back to Laurent.

Thank you, Bart. As you can see, we have an exciting 12 to 24 months ahead of us with multiple value-creating catalysts across indications. A new Chief Medical Officer to help execute across our clinical program and a new partnership with Janssen that provides both near-term and long-term value and robust developmental and commercial capabilities. Collectively, these achievements are all designed to help support the successful execution of our mission to bring NBTXR3 to as many patients as we can worldwide. In the coming weeks, we look forward to reporting final Phase 1 data in head and neck cancer and initial Phase 1 dose escalation data in pancreatic cancer for NBTXR3. During 2024, we also expect to report data from the NDA sponsor trial in esophageal cancer. Finally, in the second half of next year, we look forward to the interim results for our NANORAY-312 Phase 3 trial in head and neck cancer. With that, I will now have the operator begin our Q&A session.

Thank you. We will now begin the question-and-answer session. Our first question comes from Lucy Codrington with Jefferies. Please go ahead with your questions.

Hi, there. Thank you for taking my questions. Just ahead of the pancreatic cancer data in the coming weeks, just wondering if you could outline what we should be expecting from that? Is it just a safety update or will it also include initial efficacy measures? Then secondly, in terms of the payment in kind support for 312, when can we expect that to begin from J&J? I appreciate it. It is at their discretion, but any potential guidance on that? And then finally, in terms of the IO combination, Phase 3 and beyond, just whether you can give us any insights into J&J's commitment to that. I noticed that they have authority over all regulatory matters. Does that include the interactions regarding the Phase 3 and is this still something we can expect as a near-term catalyst? Thank you.

Thank you, Lucy. So let's tackle the first question about pancreatic cancer. One of these trials is a Phase 1 that includes an escalation and expansion part on pancreatic cancer patients. So what we should expect in the next few weeks is about the data coming from the escalation and the first patients coming from the expansion. This will be about safety and feasibility, but we will also start looking at the first signs of efficacy. Just as a reminder, in this first part of the clinical trial, we have been treating locally advanced pancreatic cancer patients. What will be very important to look at here is, in terms of disease control rate and survival. The second question, Lucy, was about the contribution in kind from J&J in the 312 trial. By contract, as you mentioned, there's a $30 million in kind for this specific program. We have been initiating this contract in July, became effective in August, and since then we've been working actively with the Johnson & Johnson team. We are finalizing the plan as we speak. The final question was about the IO Program. Our product could have a local effect in combination with radiation therapy and we've been showing that this product primes an immune response. The overall goal is to see if we can get more patients with metastatic stage disease to respond to checkpoint inhibitors. As far as this Phase 3 is concerned, we are reviewing what's best for the product to move forward and will come back to you as soon as possible.

Thank you.

Our next question comes from the line of Swayampakula Ramakanth with H.C. Wainwright. Please proceed with your questions.

Thank you. Good morning, Laurent. On the data, we are expecting some final data from Study 102 in the coming weeks, you said. Just trying to see what sort of a read-through we can get from that to the NANORAY-312.

Thanks, Ramakanth. As you mentioned, we have been talking about Study 102. I think this readout is very important, because it will include information on the potential success of NANORAY-312. In the Phase 1, we have a very frail population and we have injected the primary tumor and irradiated it. When I talk about the primary tumor, a good number of those patients have lymph invasion, and we just have given radiation to rapid dose, no NBTXR3. So that's a difference, which is fundamental. We may expect additional efficacy in the 312 also. But let's see when the data come in.

Thank you for that. One more question. On the non-small cell lung cancer data that MD Anderson is going to release, is your partner, Janssen, going to wait for that data before they decide on their study design?

Thanks for the question. These are two independent pathways. At MD Anderson, we are treating a specific population in non-small lung cancer. The good thing is that we did not hear about this trial in that term, so it means that so far the safety is good. As far as Janssen's program is concerned, we will talk more about naive patients. So we expect to conclude the RP2D very soon and to be able to communicate the first data after that.

Thank you. Thank you, Laurent, for taking all the questions.

You're welcome.

Thank you. Our next question is from an unidentified participant. Please proceed with your question.

Yes. Hi. I had a question regarding Hensify in soft tissue sarcoma. Was it discussed with J&J? Do they plan to launch it after the launch of the first product in head and neck? And the second question was regarding LianBio and their commitment to five registrational trials. Have they mentioned any interest beyond the head and neck program? Thank you.

Thanks. So let's start with soft tissue sarcoma. We already have had a positive Phase 3 randomized trial in soft tissue sarcoma patients that led us to get approval in the European market. There has been part of the extensive due diligence that J&J has been doing on the product. For now, we have no specific story to give on this aspect, but we will keep you posted on what's going to happen. For the second question about LianBio, you're right to mention that in the contract we signed with them, there is a commitment from them to be participating in at least five registrational trials. They do participate in the ongoing Phase 3 in head and neck cancer. Now we are currently discussing beyond what is on the table and see what could be the next steps.

All right, thank you very much.

You're welcome.

Thank you. There are no further questions. I'll now turn the call over to Dr. Levy for his closing remarks.

So Ron, thank you very much for participating in this call. I see there are more people than usual. We are happy about that. We'll be very happy to communicate very soon with you about the next set of data that are coming, so pancreatic cancer and head and neck Phase 1 final data. Again, happy to have you all on board. Thank you for your help, and let's talk soon.

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect.