Nanobiotix S.A. Q4 FY2023 Earnings Call

Good day and welcome to the Nanobiotix Business Update and Full-Year 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 question-and-answer session. Please be advised that today's conference is being recorded. At this point, I will now turn the call over to Craig West, Senior Vice President of Investor Relations of Nanobiotix. Please go ahead.

Thank you. Good afternoon, good morning, and welcome to the Nanobiotix conference call to discuss our full-year 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're 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 the SEC in the United States, 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, I'd like to turn the call over to Laurent. Please go ahead.

Thank you, Craig. And thank you everyone for joining us today. As Craig mentioned, we issued a press release yesterday highlighting the company's full-year operating activity and financial results for 2023. For today's call, I would like to begin with another view of our accomplishments and upcoming milestones before handing the call over to Bart to address the financial results. Then I will provide closing remarks before opening the call for questions. 2023 was an incredible year of progress for Nanobiotix and our program on MBTXR3. Last summer we entered into a $2.5 billion license agreement with Johnson Pharmaceutical, a Johnson & Johnson company to expand the worldwide potential of MBTXR3, a potential first-in-class radioenhancer with universal application across solid tumors. Late in 2023, our partner LianBio assigned its right to MBTXR3 in China and other Asian markets to Janssen, thus consolidating global development and commercialization rights with Janssen, which is now responsible for the $205 million in milestone potentially available to us with this partnership. We also reported positive data from two key programs, including final and exploratory data from Study 102. Our Phase 1 trial in head and neck cancer, as well as initial data from our Phase 1b study supporting expansion potential in pancreatic cancer as part of an ongoing collaboration with MD Anderson. We will discuss this encouraging finding in more depth shortly. First, let's start with our global licensing for development and commercialization agreement with Janssen for NBTXR3. This partnership is designed to leverage the complementary strength of both companies, accelerating and broadening the treatment potential of NBTXR3. As part of the agreement, the initial clinical development focus will be on head and neck and lung cancer, with expansion potential in additional solid tumor indications. We believe this agreement underscores the therapeutic and market opportunity of NBTXR3. And importantly, it further validates our platform and scientific approach. We believe that this collaboration with our partner at the Interventional Oncology Group at J&J has the potential to impact the lives of many patients. We believe this because NBTXR3 can treat patients at the stage of where their disease is local and do so with radiation therapy, which is a treatment utilized by millions of patients. Better local control of the disease at this stage, we believe, could have a fundamental impact on overall outcomes for patients. As a reminder, or for those new to the story NBTXR3 is a biologically inert electron-dense nanoparticle. It is a one-time treatment that is designed to be injected directly into solid tumors prior to a course of radiation to amplify the anti-tumor activity of radiotherapy. NBTXR3 is made up of hafnium oxide, a sterile inert material with high electron density that acts as a strong energy absorber and increases the amount of energy transferred to the tumor, which leads to cell damage and death. This universal model fraction of NBTXR3 as a radioenhancer offers broad application potential across 60% of patients with solid tumors that receive radiation during the course of their treatment. This broad potential of NBTXR3 is something that we have been actively evaluating in hundreds of patients across various tumor types treated to date. We continue to see strong proof-of-concept data that support a well-tolerated safety profile and robust anti-tumor activity with radiotherapy-activated NBTXR3 treatments. Our prioritized focus has been the late-stage development of NBTXR3 in head and neck cancer, which include an ongoing global registrational trial, the NANORAY-312 study, in elderly patients with locally-advanced head and neck cancer, as well as a treatment approach using radiotherapy-activated NBTXR3 to help with local control of the injected tumor, as well as initially prime the immune system, followed by anti-PD-1 therapies. We believe this combination has the potential to be a game changer for cancer immunotherapy, and it is supported by encouraging data from study 1100. Our Phase 1 trials in patients with advanced cancer, including those who are anti-PD-1 naïve, as well as those for whom anti-PD-1 therapy has failed. We also continue to generate additional early-stage data to support the clinical potential of NBTXR3 across different solid tumor indications as part of our collaboration with MD Anderson. This effort includes 500 clinical trials in advanced solid tumors with lung or liver metastases, recurrent or metastatic head and neck cancer, inoperable non-small cell lung cancer, esophageal cancer, and pancreatic cancer. As I mentioned earlier, the license agreement with Johnson & Johnson has a total potential value of $2.5 billion. And to this, we can now add $205 million related to the rights in Asia, that are found by LianBio to J&J. The deal values include upfront and intangible and a number of development and regulatory milestones for certain indications in head and neck cancer and lung cancer, along with milestone achievements that together potentially total up to $1.8 billion. There are additional regulatory and development milestones for new indications that Janssen may pursue over time of up to $650 million in aggregate. For any new indications that Nanobiotix will develop and bring to market, there will be an additional $220 million per annual indication. Of course, this deal also includes royalties that go from low-10s to low-20s. In June, we secured $140 million gross in funding, which includes several deal-related payments and equity raise. This equity deal was supported by a major shareholder and also provides J&J the opportunity to become a Nanobiotix shareholder. As part of the review in more depth shortly, we are pleased to have significantly strengthened our balance sheet, removing cash movement and expanding our cash runway into the third quarter of ‘25. Looking ahead, we're strongly positioned to further advance and maximize the rapid potential of NBTXR3 within the solid tumor treatment landscape. Turning to our clinical progress earlier this year, we reported positive final safety and efficacy data and the successful completion of Study 102, our Phase 1 dose escalation and expansion study in head and neck cancer at the annual ASTRO meeting. The robust antitumor efficacy and well-tolerated profile being a vulnerable elderly population with a high comorbidity burden was encouraging and today, we saw a 64% complete response rate and 82% overall response rate. We also saw a median progression-free survival of 16.9 months and a median overall survival of 23.1 months, which is nearly double the survival reported in historical data. This data informed our next steps and supports the positive underlying design of our registration NANORAY-312 Phase 3 study. Additional signs of efficacy in exploratory analysis presented at the 23 ESMO Congress provide further confidence in our ongoing Phase 3 study, including a 42.8-month median overall survival observed in the 82% evaluable population who had a response in the NBTXR3 injected lesion compared to 18.1 months in the all-treated population. Importantly, there's a positive correlation associated with objective response, PFS and OS extension, like observed in the regulatory activated NBTXR3 injected lesion. This highlights the response in over 80% of treated patients linked to the extended survival beyond 40 months, which is encouraging and supports the potential of NBTXR3 to change treatment paradigms in this patient population. Importantly, there are several key aspects of this Phase 1 data that give us confidence in the design and potential outcome of our registrational NANORAY-312 study. The first is the expanded survival observed in this elderly and highly comorbid population. We have also applied learnings from our Phase 1 study, which has the potential to optimize treatment outcomes in the Phase 3 trial. This includes the injection of both the primary lesion and the possibility to inject lymph nodes in the Phase 3 trial instead of just the primary lesion, as was done in the Phase 1 study. Additionally, NANORAY-312 will enroll a broader population and will be stratified based on comorbidities. Collectively, we believe these modifications have the potential to yield improved outcomes over our Phase 1 findings. But let's be clear, if we reach similar outcomes in our Phase 1 trial, then the NANORAY-312 trial should be able to be successful. We expect to report initial Phase 3 interim efficacy and safety data after 67% of planned PFS events in mid-‘25, which could enable eligibility for accelerated approval as has been discussed with the FDA. In pancreatic cancer, we were pleased to report initial data from our Phase 1b study led by our collaborator, MD Anderson, supporting the potential of radiotherapy-activated NBTXR3 after chemotherapy in patients with locally advanced pancreatic cancer at the AACR special conference on pancreatic cancer and ESMO. This trial focuses on patients with large tumors that are unable to undergo surgery and rely on radiation combined with chemotherapy as a key treatment option to help control the tumor. This initial Phase 1b dose escalation data support the feasibility and promising durable antitumor efficacy of radiotherapy-activated NBTXR3 in pancreatic cancer. The ESMO data could help inform clinical trial development by publishing a recommended Phase 2 dose and demonstrating a favorable safety profile and a preliminary median overall survival of 23 months, which is longer than the 19.2-month median survival achieved by patients who previously received chemotherapy induction followed by radiation plus a second course of chemotherapy. In other words, the same center-controlled patients received one additional course of chemotherapy versus NBTXR3 treated patients. To put this into perspective, when we look at the comparative data that have been previously published by MD Anderson, we are seeing promising therapeutic potential versus this historical control. We plan to discuss this data with our partner, MD Anderson and Johnson & Johnson to assess potential next steps for patients with pancreatic cancer. In our efforts to further advance clinical development and commercialization of NBTXR3, we are pleased to welcome industry veteran Dr. Louis Kayitalire to our executive leadership team as Chief Medical Officer. Dr. Kayitalire brings an exceptional biopharmaceutical industry track record with proven success in development, registration, and commercialization of oncology therapies. His seasoned innovative leadership will continue to be invaluable as we focus on maximizing the disruptive potential of our therapy for millions of patients with cancer around the world. In the year ahead, we expect immunotherapy combination data from our Study 1100 trials in head and neck cancer, where we have seen encouraging activity in both PD-1 treatment-naive and refractory patients. We also expect initial chemotherapy combination data in esophageal cancer from our collaboration with MD Anderson. With that, I would now like to turn the call over to Bart to briefly discuss the financial results for the period. Bart?

Thank you, Laurent. Good morning and good afternoon, everyone. As Laurent mentioned earlier, Nanobiotix has had an extremely productive year, and we believe that the company's position has been completely transformed into one where we have set the stage to allow us to deliver on the potential of NBTXR3 and the pipeline in the product. More specifically, we began our collaboration with Johnson & Johnson, through which we are working to bring NBTXR3 to the millions of patients that suffer from solid tumor malignancies that are limited to treatment with radiotherapy. The first two indications targeted for development are planned to be head and neck cancers and lung cancers. But this is far from the full potential we see possible with a therapy like NBTXR3. As you've just heard Laurent discuss, additional indications such as pancreatic cancer can, we believe, benefit from adding our potentially first-in-class radio enhancer to the treatment armamentarium. To date, the company has received $30 million as part of an upfront cash licensing fee, $5 million for the first equity tranche, which was received post signing, $25 million as part of the second equity tranche, and we are due to receive $20 million for the NANORAY-312 operational milestone. And as Laurent mentioned, the company completed an equity offering in which a total of $59 million was raised, which is inclusive of the aforementioned second equity fund of $25 million. With these events, we have also addressed a significant manner of the financial overhang that was an understandable concern for market participants. As of December 31, 2023, Nanobiotix had $75.3 million in cash and cash equivalents, compared to EUR 41.4 million as of December 31, 2022. We are grateful for the continued support we receive from existing shareholders and are pleased to welcome new shareholders to our list. As previously disclosed, the European Investment Bank has agreed to the removal of the minimum cash and cash equivalent covenants from the company's CIB loan effective October 13, 2023. As a result of the terms of this new agreement, the company has paid the EIB approximately EUR 0.5 million, which is 1% of the net equity proceeds further to the equity milestone acceleration mechanism the company agreed upon. To turn to the specifics of our revenues and expenses, our top line of EUR 36.2 million reflects an increase of EUR 31.4 million versus the EUR 4.8 million we recorded in 2022. This was primarily driven by the revenue recognized following the signing of the Janssen agreement. Our investment in NBTXR3 increased our R&D expenses to approximately EUR 5.8 million to a total of EUR 38.4 million, due to primarily the investments related to the pivotal Phase 3 registration study, the NANORAY-312, and our immunotherapy combination Study 1100. Our SG&A expenses increased by EUR 4.2 million to EUR 22 million for the year ended December 31, 2023. This year-over-year increase reflects growth in operating costs and one-time business activities, including equity issuance costs, license agreement execution, and the termination of the services agreement. Based on the current operating plan and financial projections, we anticipated that the cash equivalents of EUR 75.3 million as on December 31, 2023, and in combination with the $20 million milestone we are due to receive results in a cash runway that stands into the third quarter of 2025. And now I will turn the call back to Laurent. Laurent?

Thank you, Bart. As you have heard today, we made incredible progress this year, advancing clinical development of NBTXR3, fostering strong strategic partnerships to further maximize the potential of NBTXR3, and extending our renewal through key milestones. The society of clinical data continues to support the potential of NBTXR3 to offer a meaningful therapeutic benefit to potentially millions of patients in oncology. We are pleased with the progress we have made in our initial focus in head and neck cancer as well as the expansion potential across other indications like pancreatic cancer. Looking ahead, we expect multiple clinical readouts in ‘24, including immunotherapy combination data from Study 1100 and new data from the collaboration with MD Anderson. With the recent strengthening of our balance sheet, we believe we are strongly positioned to execute across our near-term milestones and advance our mission of bringing nanotechnology-derived products like NBTXR3 to more patients worldwide. With that, I now ask the operator to begin our Q&A session. Operator?

Thank you. We will now start the question-and-answer session. Your first question comes from Jonathan Chang from Leerink Partners. Your line is open.

This is Dylan Drakes on for Jonathan. Thanks for taking our question. First of all, could you provide any context for what we should be expecting to see regarding patient numbers, duration of follow-up, and potential readouts in the upcoming ASCO update for Study 1100?

Hi, this is Craig. I'm the Head of IR here at Nanobiotix. It's our understanding that some of our attendees have had trouble connecting to the webcast. I just want to make sure that people know that we are aware of the problem; we will post the slides and the replay as soon as possible. We're very sorry for the inconvenience. And I'm sorry, could you repeat your question?

Just wanted to ask if you could provide any context for what we should be expecting to see regarding patient numbers, duration of follow-up, or potential readouts in the upcoming ASCO update from Study 1100?

Hi, Dylan, thanks for the question. So maybe for the audience, let's recap what is the study and what is the intention here. Study 1100 is a study that is made to define and observe safety and efficacy in different populations treated with radiation therapy, NBTXR3, and a checkpoint inhibitor in head and neck cancer. So maybe before going into some of the details of what we should expect to see at ASCO, as the title abstracts have been released lately. Here, we're talking about patients that have received a certain number of lines of treatment previously, including radio, chemo, or chemo along with surgery, followed by radiotherapy. When experiencing a relapse have been eligible to go for PD-1 treatment. So if you want to look at the comparator of such a baseline population, you should look at trials like CheckMate 141 or KEYNOTE 040. In this ongoing extension phase, we have split it into two different cohorts for head and neck patients. The first cohort being patients that are naive to PD-1 and the second cohort being patients that are refractory to PD-1. The recruitment has been going very well. We expect to have a good number of patients to show data for both refractory and naive to PD-1 patients for ASCO. And what we would expect in terms of data is, of course, the safety. And importantly, the efficacy. In terms of efficacy, we should look at response rate after treatment, overall target lesion response, and overall survival and progression-free survival. We believe that achieving a good number of patient recruitment in this trial will start to really allow us to quantify the potential effect of NBTXR3, and it evolves to amplify the response for naive patients and potentially to reverse the resistance in refractory patients.

Great. Thank you so much.

I hope that answers your question.

Your next question comes from the line of Lucy Codrington from Jefferies. Your line is open.

Hi, thank you for taking my questions. I have a couple of inquiries. Regarding the lung cancer trial that Janssen plans to start, how often are you meeting with MD Anderson to discuss decisions about the lung cancer start and the registrational strategy for the IO combination in pancreatic cancer? When can we expect to receive more details on these upcoming indications beyond head and neck? Additionally, concerning the Janssen relationship, what is the visibility on the in-kind funding for NANORAY-312 and its timing? Why is that included in your cash runway, and if it isn't, why not? I believed it would provide near-term funding. Lastly, regarding the mid-2025 readout for NANORAY-312, how confident are you in that timeline? I understand it is event-driven, but what is your comfort level with your current cash runway? Will it take you to that data? Also, can you provide an update on the recruitment for NANORAY-312? Thank you.

Thank you, Lucy. That's a bunch of questions. Let's start with the relationship with J&J and the priorities we've been shaping in this collaboration since we signed last summer. Overall, we've been working a lot with J&J to shape this collaboration. First, establishing the right framework, then establishing joint teams and working teams, which I can tell you, we've been engaging with them almost on a daily basis. We also have a number of priorities that we are moving forward with for NANORAY-312 and the lung cancer program owned by J&J. Those are our two priorities for initial development in this program. Something you don't see, but we have been working hard also in manufacturing and exploring potential other indications with the medical team internally at Nanobiotix and the J&J team. There’s a lot of ongoing work to ensure the success of this collaboration, and we are actively discussing the pathway to market for NBTXR3. I assure you that in due time we will provide more information when things are being finalized and agreed with our partner. But right now, we can't disclose much more. Regarding the lung cancer program, I can't speak specifically for our partners; however, I can confirm that they have been working diligently on the initiation and that we are assisting from time to time. As soon as we can share information, we will inform you about this very important program. Now regarding the in-kind contributions, this is something that was outlined in the licensing agreement, and it refers to support that J&J will fund directly from their own P&L. Therefore, it does not flow through our P&L and doesn't impact our cash runway. However, it helps to accelerate the ongoing NANORAY-312 study. So within the current financial definition, the in-kind contributions are not included but are indeed a positive aspect to support the study moving forward. As for the interim analysis for NANORAY-312, we continue to expect to have the right number of events by ‘25 to enable this readout. Based on our financial statements, we have sufficient funds to sustain operations into Q3 2025. Perhaps I would ask Bart to provide further context around our financing moving forward.

Yes, happy to. Thank you for the question, Lucy. Regarding the cash runway into Q3 of ‘25, based on the guidance we've provided for the interim read out. That continues to be our expectation. In the licensing agreement with J&J, several significant milestones are included. Typically, milestones are payable at key inflection points, and significant moments in time can trigger payments that sustain and refinance the company moving forward. That's all I can share at this point, but I hope that provides some clarity.

Lucy, I hope this answers your questions. Would you like to ask more?

That was very helpful.

Your next question comes from the line of Swayampakula Ramakanth from H.C. Wainwright. Your line is open.

Thank you. This is RK from H.C. Wainwright. Good afternoon, Laurent and Bart, and I have a couple of questions related within the NANORAY-312 program. The first question is, since you will be taking a couple of looks into the data, one for futility analysis and another for the interim safety and efficacy look on the pre-planned 67% of PFS. Would this impact your offer in terms of statistical calculations when you're doing multiple looks before you see the interim data, especially for significance to file for an accelerated approval?

Thanks, RK. Yes, if we look at the design of this trial, there are multiple events for the futility analysis, interim readout, as well as the final readout. The primary endpoint is PFS, and the secondary is overall survival. As I've mentioned, multiple looks will influence the alpha. When designing this trial, we have powered it to be strong for overall survival and ensure robustness for PFS. However, we believe that we will achieve positive statistical benefits from this trial based on the number of patients we need to work with. If you would like to discuss more detailed aspects, we can arrange a conversation with our CMO about this.

Certainly, we can take that offline. I just wanted to check on that at a high level. The second question is regarding your ongoing studies with MD Anderson. What is the appetite for Janssen in terms of picking up these other indications and what do you think is their appetite going beyond what they're doing now?

Let’s remind ourselves of the context of our collaboration with Janssen. In the agreement, they have taken back the rights for worldwide development and commercialization of NBTXR3. In this situation, we maintain a collaboration with MD Anderson, which is compatible with our partnership with Janssen. It's two separate collaborations aimed at maximizing the impact for patients. If we look at large companies like J&J, their goal is to run pivotal and randomized trials to prepare for commercialization within standard-of-care or outside. Meanwhile, our collaboration with MD Anderson is more focused on how can we push the boundaries of medicine using NBTXR3, in addition to finding signals in terms of efficacy that could help guide future developments. While we cannot disclose third-party details in these collaborations, there is scientific exchange, and we ensure compatibility in our objectives. As I've mentioned, we're having discussions with the Interventional Oncology Group about how and what the next steps can be following the initial data from head and neck and lung cancer. We're currently unable to disclose anything more specific.

Thank you for taking my question, and I look forward to our upcoming conversation.

Thank you, RK.

Your next question comes from the line of Clemence Thiers from Stifel. Your line is open.

Hi, thanks for taking my question. I'm stepping a bit away from the presentation, but I had a couple of questions regarding your technology and equity platform, which you kind of unveiled this year. Can you give us more color on your activities there, maybe at what stage of development you are? Is there any chance to see a candidate in the clinic this year? And regarding your gene therapy collaboration with Sanofi from 2021, could you tell us if it's still ongoing and where you are now? Lastly, are there any discussions ongoing with J&J about this platform?

Thank you, Clemence. To clarify, we have two additional technology platforms at Nanobiotix. To summarize briefly, our philosophy has been focused on developing products or platforms that could help millions of patients, ideally ones that are novel and broadly protected by intellectual property. This has led us to successfully develop three different platforms, which have generated multiple first-in-class products. We are leveraging Nanophysics as a fundamental aspect as it reduces biological variability, allowing us to imagine impactful products. The first of these is the radioenhancer platform, followed by another focused on CNS disorders, where we are researching neuronal function by viewing it as an electric circuit. With this approach, we have been developing nanoparticles that can alter electrical conduction at the neuron level. We see potential for multiple products from this platform. Our less advanced platform is related to drug delivery systems, where we are creating what we call the Nanoprimer. This nanoparticle, when injected IV, can alter the liver’s handling of therapies, changing biodistribution of drugs effectively. We expect to provide an update on our progress with these platforms before the end of this year. As for the Sanofi collaboration related to gene therapy, it has progressed well and generated substantial data, with next steps still in discussion. However, we have not yet initiated discussions with J&J about these new platforms as our current focus remains on the development of NBTXR3.

Okay, thank you very much. And have you discussed it with J&J or are they focused solely on NBTXR3?

No, for now we haven't been discussing with J&J about other technology platforms. We're currently focused on the development of NBTXR3, which occupies the vast majority of our team's efforts.

Your next question comes from the line of Colin Bristow from UBS. Your line is open.

Hi, this is Elliott Bosco on for Colin Bristow. A few questions for me. You recently shared the recommended Phase 2 dose inoperable lung cancer. I know that study was led by MD Anderson, but is there anything you can say about our next steps? And then on the initial Phase 1b/2 esophageal cancer readout that you're expecting, are you able to share what might be expected in the readout and what you see as the threshold for success?

Thank you for the question. We have several ongoing clinical trials conducted by MD Anderson, and we have been delivering good news coming from these studies. Regarding the lung cancer trial, we have reached the RP2D, and we are now expanding into the next phase with the recruitment moving well. We hope to provide an update on this trial soon. For the esophageal cancer, we are examining patients with non-removable tumors, where local control is critical for potentially improving survival and quality of life. We do not have an exact timing yet for this readout, but we anticipate some updates in the coming quarters.

Thank you. And there are no further questions at this time. I would like to turn it back to Laurent Levy for closing remarks.

Thank you. I would like to thank everyone for participating in this call and assure you that we will keep you updated as we progress with the developments mentioned today. I would like to personally thank you for all the support you've given us over the past year and decade in helping us reach millions of patients with our technological platforms. I hope to talk to you soon, and I wish you a great day.

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