Earnings Call Transcript - NBTX Q3 2023

Operator, Operator

Good day, and thank you for standing by. Welcome to the Nanobiotix Business Update and Third Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. At this point, I will turn the call over to Craig West, Senior Vice President of Investor Relations of Nanobiotix.

Craig West, Senior Vice President of Investor Relations

Thank you, operator. Good afternoon and good morning, and welcome to the Nanobiotix conference call to discuss our third quarter 2023 financial and operating results and the clinical data presented at this year's ESMO conference. 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. Moving on to Slide number 2, 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 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 said, I'd like to turn the call over to Laurent. Please go ahead.

Laurent Levy, Co-Founder and Chief Executive Officer

Thank you, Craig. I'll propose to start with Slide number 3. As you may have seen in our press release, we have had a very productive and busy quarter that we think is going to drive Nanobiotix into a great future. We've started this quarter by signing a $2.5 billion collaboration with Johnson & Johnson and provided several updates, including the final data of our Head and Neck Phase 1 trial plus some exploratory data through ESMO and ASTRO that gave us some strength and confidence about the potential outcome of the ongoing global Phase 3. Additionally, our partner, MD Anderson has been publishing data on pancreatic cancer showing good feasibility and safety of this treatment for those specific patients, but we are also beginning to see some strong signals of efficacy. As you will see, through our recently completed financing round, we have significantly strengthened our financial position, and Bart will provide an update on that. We will finish this call with a Q&A session. Let's go now to Slide 4. To remind new shareholders and participants on this call, our first-in-class radioenhancer, NBTXR3, is designed to be combined with radiation therapy. As a reminder, 60% of all cancer patients will receive radiation therapy during the course of their treatment. This product works by being a one-time injection directly into the tumor to maximize effectiveness while minimizing systemic exposure for the patient. This product is made of crystalline inorganic particles of a very particular material, hafnium dioxide. HfO2 is a very stable and inert material, which is good for safety, and it also provides unique properties as a strong X-ray absorber, due to its high atomic number and density of electrons. This is not a new product, as we have demonstrated its safety in hundreds of patients with initial signs of efficacy, including a strong proof of concept in soft tissue sarcoma where we demonstrated the superiority of our treatment compared to the standard of care. Given that this product has a physical universal mode of action, we believe that it can be applicable across many oncology patients. Moving to Slide 5, you will see the breadth and size of our pipeline. As a company focused on head and neck cancer, we have also shown the potential and safety of this product across various clinical situations. To develop this broadly, we require strong development and commercial capabilities. The ongoing Phase 3 trial in head and neck cancer should have important readouts in mid-2025. This is why we have recently signed a partnership, as noted on Slide 6, with J&J, Janssen to ensure we have sufficient resources to develop this product in multiple indications and to prepare for global commercialization. The deal, valued at $2.5 billion, includes upfront and in-kind support as well as numerous development and regulatory milestones for ongoing programs, which includes sales milestones up to $1.8 billion, along with additional regulatory and development milestones for new indications that Janssen may pursue over time up to $650 million. Furthermore, for any new indication that Nanobiotix develops and brings to market, there will be an additional of $220 million per new indication, along with tiered royalties ranging from low-teens to low-20s. Today, we're here to provide an update on our recent quarterly activities, particularly the data published by our partner MD Anderson regarding the head and neck cancer trial. Moving to Slide 7 and Slide 8, we published the first data from the pancreatic cancer trial conducted by MD Anderson. If you go to Slide 9, we're looking at patients with locally advanced pancreatic cancer or borderline resectable pancreatic cancer. For those patients with large tumors who cannot undergo surgery, radiation therapy with chemotherapy is a critical treatment to either control the tumor or attempt surgery for borderline resectable pancreatic cancer. Historically, outcomes for these patients from radiation plus chemotherapy, or chemotherapy alone, have not been sufficient to achieve a cure. In our trial, the first part, which was only an escalation part, included locally advanced pancreatic cancer, excluding borderline resectable cases. Moving to Slide 10, you see a summary of the trial's design. So far, we have treated 17 patients who received induction chemotherapy, and if there was no systemic progression, they received our treatment, comprising radiation plus NBTXR3. An important point is that, at MD Anderson, they have previously treated many of these patients, allowing us to conduct an internal historical control with the same center on 243 patients who received subsequent treatments: chemotherapy alone or radiation plus chemotherapy. It is essential to note that the 144 patients in the previously treated cohort received one more chemotherapy than what we administered in our trial, where patients post-chemotherapy induction only received radiation plus NBTXR3. Moving to Slide 11, we have treated 17 locally advanced patients with our product, and the median age of the patients treated was 60 years old. The RP2D has been established with no dose-limiting toxicities (DLT) related to NBTXR3 observed, only one Level 2 DLT linked to radiation therapy has been noted. Moving to Slide 12, we've seen interesting findings related to the CA19-9 biomarker in pancreatic cancer. At baseline, a portion of previously treated patients at MD Anderson had elevated CA19-9 levels, and only 17% had normalized post-treatment. In contrast, our trial showed that 42% of patients had normalized CA19-9 following all treatment courses, more than double the historical data, despite our patients undergoing one fewer chemotherapy treatment than most previously treated individuals. For our first biomarker, this is significant, though it does not fully reflect the expected outcome for patients. Examining Slide 13, as of now, in the first 15 subjects evaluated, we have seen a median overall survival of 20 months post-diagnosis, which is slightly better than the historical MD Anderson data. Patients who previously received chemotherapy induction followed by radiation and chemotherapy had a median overall survival of 19.2 months, while our treatment, using NBTXR3 in combination with radiation, has led to a median overall survival of 23 months, demonstrating a potential improvement for these patients. Obviously, with one less chemotherapy in combination with radiation, one would expect or hope for reduced toxicity. Thus, moving to Slide 15, we've successfully administered the product to patients with a good safety profile, and we are beginning to see encouraging signals of efficacy, with a median overall survival of 23 months. Further, we observe a positive trend regarding comparative outcomes obtained previously by MD Anderson. Now transitioning to Slide 16, I'd like to remind you of the ongoing Phase 3 global trial in locally advanced head and neck cancer patients who are not eligible for cisplatin. The data we've presented at ASTRO and ESMO are significant and demonstrate the potential of our product. As designed, Study 102 has enrolled 75 patients, with part in the escalation phase and 56 in the expansion phase. The latest data showcased in ASTRO and ESMO were extracted from the final data of the expansion phase. In this trial, we have been targeting frail, elderly patients with locally advanced head and neck cancers who are not eligible for cisplatin, leaving radiation alone as their only therapeutic option, to which we added our product. While much of the focus of this trial has revolved around safety and feasibility, we have also begun assessing overall response rates, complete response rates, progression-free survival (PFS), and overall survival (OS). In concluding the ASTRO presentation, as shown on Slide 18, we highlighted that our product was administered safely in all patients, confirming our prior findings from the escalation phase. Importantly, safety aside, we've recorded a very high response rate of 79% and observed a median duration of response that is substantial, especially in the tumors treated with our product under irradiation. Significant endpoints to consider are the median PFS and median OS, which will serve as our primary endpoints for the Phase 3 trial. The median PFS in the evaluable population has been documented at 16.9 months, with a median OS of 23.1 months. As a reminder, this can be compared to historical data, where the median PFS in similar populations has been nine months, and the median OS has been 12 months. This data gives us confidence in the ongoing Phase 3 endeavor. Moving to Slide 19, the latest exploratory data shared at ESMO examined correlations, acknowledging that response quality enhances both PFS and OS. The notable observation is that patients in the trial exhibit elevated CA19-9 levels, with significant treatment corresponding to observed outcomes. Moving to Slide 20, it is fascinating to find a high correlation between PFS, duration of response, and overall survival. We identified a stronger correlation when looking at the local tumor that was injected and irradiated with our product. All of this reinforces that our product yields a significant response that contributes to improved PFS and potentially enhances overall survival as well. Moving to Slide 21, let's revisit one of the slides shared at ASTRO, showcasing treatment responses among patients. As highlighted, a significant number of complete responses were observed, contributing to an overall response rate of 79%. This is noteworthy when comparing literature regarding radiation plus chemotherapy in healthier populations and what kind of response rates and survival they achieve. Here, we have treated with just radiation and nanoparticles alone, achieving remarkable outcomes. As depicted on Slide 22, you can see the survival curves for the treated populations, indicating that those patients achieving either CR or PR saw an encouraging median overall survival of 42.8 months, underscoring an impressive achievement in a cohort known for poor prognosis. It suggests we're approaching a pivotal moment. Importantly, this gives us confidence regarding our upcoming Phase 3, as structured on Slide 23. While I won't go into detail, it's vital to remember that this trial is ongoing. Following our prior communications, we expect an interim analysis following 283 events on the primary endpoint, which should occur by mid-2025. This is a crucial endpoint for the company and this trial because, if results are positive, we could be eligible for accelerated approval, potentially marking the first commercialization efforts for our partner, LianBio, and Janssen globally. Moving to Slide 24, several factors heighten our confidence in the Phase 3 outcome. First, we have observed solid median PFS and OS characteristics based on our Phase 1 data in our target population. We are optimistic about extending our studies to a broader population with fewer comorbidities, which would allow more time for the treatment to provide benefits. Importantly, while injecting the primary lesion, we also plan to include lymph node injections in the Phase 3. If we achieve the results we secured in the Phase 1, we expect the trial to be positive. All these elements provide significant assurance to our team and investigators regarding the upcoming Phase 3 results. We appreciate your attention, and I now invite Bart to provide an update on our cash runway and financial highlights.

Bart Van Rhijn, Chief Financial Officer

Thank you, Laurent. Good morning and good afternoon, everyone. Nanobiotix has had an extremely productive quarter, and we believe that the company's position has been completely transformed into one where we have set the stage to deliver on the potential of NBTXR3, a pipeline-in-a-product. There's considerable work left to do, but the company is currently on significantly firmer ground than when we began this quarter. More specifically, we commenced the quarter on a high note as we commenced our collaboration with Johnson & Johnson, through which we aim to bring NBTXR3 to the millions of patients suffering from solid tumor malignancies treated with radiotherapy. The primary indications we plan to develop are head and neck cancers and lung cancers, but we perceive immense potential within solid tumors and the combination-agnostic product that NBTXR3 represents. As Laurent just mentioned, other indications such as pancreatic cancer are also perceived to benefit from adding our potentially first-in-class radioenhancer to the treatment regimen. Additionally, we believe that the quarter has also served to address, significantly, the financial concerns that have been evident in the capital market. As of September 30, 2023, Nanobiotix held €37.8 million in cash and cash equivalents compared to €41.4 million as of December 31, 2022. For clarity, this cash balance does not include the €50.9 million financing that the company has just completed. We are grateful for the ongoing support received from existing shareholders and are pleased to welcome new shareholders into this journey. As previously disclosed, the European Investment Bank, or EIB, has consented to the removal of the minimum cash and cash equivalent covenants from the company's EIB loan effective October 13, 2023. As a result of this new agreement, the company will pay EIB approximately €0.5 million, representing 1% of the gross proceeds of €50.9 million. Based on our current operational plans and financial projections, we expect the cash and cash equivalents of €37.8 million as of September 30, 2023, combined with the €50.9 million in financing and derisked milestones related to our collaboration with Johnson & Johnson, to ensure a cash runway extending into the second quarter of 2025. To note, regulatory requirements state that Johnson & Johnson's initial subscription to the second equity tranche was approximately €19.1 million. This amount is expected to increase to the total €23.7 million or $25 million upon approval from the French Ministry of Economy. Including this last amount in our cash and cash equivalents projections suggests our runway extends to the end of Q2 2025. This timeline aligns with when we anticipate potentially reporting the interim efficacy results of the NANORAY-312 study. I will now turn the call back to Laurent.

Laurent Levy, Co-Founder and Chief Executive Officer

Thank you, Bart. As you can see, we have had a very busy quarter that we think will help us pivot Nanobiotix into a great future. With that, I will now ask the operator to begin our Q&A session.

Operator, Operator

Thank you. Our first question comes from Swayampakula Ramakanth of H.C. Wainwright. Please go ahead. Your line is open.

Swayampakula Ramakanth, Analyst

Thank you. This is RK from H.C. Wainwright. Good morning, Laurent and Bart. How are you doing?

Laurent Levy, Co-Founder and Chief Executive Officer

Hi, RK.

Swayampakula Ramakanth, Analyst

So, my first question is on the pancreatic cancer indication. So, certainly, it's interesting data that MD Anderson put out at ESMO. What do you think is the appetite for J&J to take this forward? And if they decide to do this, how soon do you think those studies will commence?

Laurent Levy, Co-Founder and Chief Executive Officer

Thanks, RK, for the question. We concur that the data provided by MD Anderson regarding pancreatic cancer is very encouraging and interesting. It's a challenging indication to provide suitable options for patients. We believe we should complete this trial, and the expansion phase is recruiting really well. We anticipate being able to finish it soon to report the final data. Discussion will be needed with J&J, MD Anderson, and LianBio to determine next steps regarding not just pancreatic cancer but how to broaden the development of NBTXR3 more generally. For the time being, though, our focus is on advancing the head and neck program and starting the lung program that J&J wants to proceed with. As a follow-up, we will keep the market updated on a more comprehensive development plan for NBTXR3. For now, let's continue pursuing promising opportunities, and we'll provide updates on pancreatic cancer in due course.

Swayampakula Ramakanth, Analyst

Thanks for that, Laurent. MD Anderson is also evaluating a few additional indications. Do you have any indication of the cadence of data expected from them?

Laurent Levy, Co-Founder and Chief Executive Officer

Certainly. MD Anderson is conducting trials across various indications, including pancreatic, esophageal, and lung cancer. As we noted in a previous press release, they are preparing for another significant trial that we hope to commence soon; we'll inform you when it's actionable. Regarding upcoming data, we expect to reach the RP2D in lung cancer soon and anticipate additional data on pancreatic, esophageal, and lung cancers throughout 2024 and 2025. We will keep you informed about progress made with MD Anderson, as well as potential next steps for successful trials like pancreatic cancer.

Operator, Operator

Thank you. Our next question comes from the line of Colin Bristow at UBS. Please go ahead. Your line is open.

Yihan Li, Analyst

Hi. This is Yihan on behalf of Colin. Congrats on the quarter, and thanks for taking our questions. I have two questions. The first is about the statistical assumptions underlying NANORAY-312. You expected the median PFS in the control arm to be around six months and median OS to be around 12 months. We note that this seems reasonable, but the patients enrolled in NANORAY-312 seem to have a lower comorbidity burden compared to Study 102. Do you think the control arm may perform relatively better against historical data? And secondly, regarding the cash runway, you currently expect to extend into the second quarter of 2025 assuming a development milestone. You mentioned this milestone is de-risked, but does that imply that you foresee no risks associated with it? Will this runway suffice to support the NANORAY-312 interim analysis in mid-2025?

Laurent Levy, Co-Founder and Chief Executive Officer

Thanks for the question. The hypothesis for the NANORAY-312 trial is based on literature regarding outcomes in recent trials involving elderly patients receiving radiation alone. The assumptions you mentioned will be nine months for PFS and 12 months for the control arm. Our goal is to conduct a successful Phase 3 trial against a PFS of 13 months, leading to a lower burden of comorbidity compared to the Study 102 population, which had a higher percentage of patients with significant comorbidities. We are optimistic that more patients with lower comorbidities will yield better results. Regarding the second question about the 'secured milestone' or 'de-risk milestone', we're focused on progress in recruitment for the Phase 3 head and neck cancer trial. I'll let Bart elaborate on the details of the cash runway relative to the interim analysis for NANORAY-312.

Bart Van Rhijn, Chief Financial Officer

Thank you, Laurent, and for the question. We are pleased to indicate that we've removed the financing overhang previously associated with our EIB loan by lifting the cash covenants, extending our runway into mid-2025. This includes the milestone described as 'de-risked', which we anticipate announcing in the near future. It's primarily a function of timing right now, and we will be focusing on sharing updates and information with you regarding what's to come in the next 12 months. We are pleased to be in this position.

Yihan Li, Analyst

Thank you. That's very helpful.

Operator, Operator

Thank you. One more question has come through from Clemence Thiers at Stifel. Please go ahead. Your line is open.

Clemence Thiers, Analyst

Hi. Thank you for taking my question. I have a question regarding the pancreatic cancer study: how comparable are the baseline characteristics of the patients in prior MD studies to those in the ongoing Phase 1 trial, particularly in terms of the CA19-9 levels at diagnosis? Also, could you outline the extent of reductions in that biomarker observed in your study? My second question relates to the EIB. I’d like an update. You’ve made that payment in time and paid €0.5 million. Previously, there were terms for reimbursement either before June 2029 or in two equal installments following commercialization. Is this new method of royalties the only way you'll reimburse this amount?

Laurent Levy, Co-Founder and Chief Executive Officer

Thank you for the question. Regarding the MD Anderson pancreatic cancer trial, both baseline patient groups are locally advanced pancreatic cancer patients, which are non-operable. Therefore, it's not a true comparator as it's not a randomized trial. We compared our patients to a historical control group of locally advanced pancreatic cancer patients. Regarding CA19-9 comparisons, in general, patients with elevated CA19 levels pose a poor prognosis; most MD Anderson patients normalize CA19 only 17% of the time. In our trial, we've seen normalizations in 42% of our 17 treated patients, indicating our efficacy. We have fewer chemotherapy sessions than historical controls and while the CA19 reductions are a positive outcome, our historical comparison is encouraging for the next steps in pancreatic cancer, and we are currently formulating our next plans. I’d like to pass it onto Bart for comments on the EIB.

Bart Van Rhijn, Chief Financial Officer

Thank you, Laurent, for the question, Clemence. As you remember, we restructured the loan in 2022, making the milestone of €20 million payable at the beginning of commercialization with a long stop date in mid-2029. In light of the recent developments, we’ve introduced conditions under which the EIB can access that €20 million earlier, which aligns with recent fundraising amounts and is structured according to the tiered access to the funds. The payment represents 1% of the raised amount recently. The 2022 restructuring provided flexibility amid challenging market dynamics for biotech companies over the last three years. I hope that answers your question.

Clemence Thiers, Analyst

Thank you for clarifying that. I noticed that the RP2D regarding lung cancer of the MD study was initially scheduled for H2 2023 but has now moved to 2024. Can you explain the delay? Has enrollment slowed?

Laurent Levy, Co-Founder and Chief Executive Officer

No, the enrollment process remains robust for the trial. The timeline for declaring the RP2D involves a three to four-month period between patient injection and the safety study conclusion before asserting the RP2D. Every other trial remains on track and is accelerating, including pancreatic and esophageal. They are also preparing to rapidly advance a new trial that we will discuss soon.

Operator, Operator

Thank you. With no further questions in the queue at this time, I’ll hand the floor back to our speakers for closing comments.

Laurent Levy, Co-Founder and Chief Executive Officer

Thank you for your participation in our quarterly call; we appreciate your continued interest. We are excited to keep you updated on the company’s progress and various programs. I look forward to seeing you in person soon. Have a great day and a wonderful rest of the week.

Operator, Operator

Thank you. This concludes the conference. Thank you all very much for attending. You may now disconnect your lines.