Earnings Call Transcript - PHGE Q1 2021

Operator, Operator

Good morning and welcome to BiomX First Quarter 2021 Financial Results and Corporate Update Conference Call. Currently, all participants are in a listen-only mode. There will be a question-and-answer session at the end of this call. I'd now like to turn the call over to Marina Wolfson, Senior Vice President of Finance and Operations at BiomX. Please proceed.

Marina Wolfson, Senior Vice President of Finance and Operations

Thank you and welcome to the BiomX first quarter 2021 financial results and corporate update conference call. The news release became available just after 6:30 AM Eastern Time today and can be found on our website at biomx.com. A replay of this call will be available on the Investor Section of our website. Before we begin, I'd like to review the Safe Harbor provision. All statements on this call that are not factual or historic statements may be deemed forward-looking statements. For instance, we're using forward-looking statements when we discuss on the conference call potential markets opportunities, the capabilities of the BOLT platform, the design, aim, expected timing, and interim and final results of our preclinical, clinical trials and studies, the sufficiency of our existing cash, cash equivalents and short-term deposits, our pipeline and momentum and the potential of our product candidates. Except as required by law, we do not undertake to update forward-looking statements. The full Safe Harbor provisions, including risks that could cause actual results to differ from these forward-looking statements are outlined in today's press release, which as noted earlier is on our website. Joining me on the call this morning are Jonathan Solomon, our Chief Executive Officer; Dr. Sailaja Puttagunta, our Chief Medical Officer; and Assaf Oron, our Chief Business Officer. With that, I will turn the call over to Jonathan.

Jonathan Solomon, Chief Executive Officer

Thank you, Marina, and good morning to everyone. In the first quarter of 2021, we continue to make substantial progress across our pipeline and we remain committed to achieving our goal of delivering novel naturally occurring and synthetically engineered phage therapies that target pathogenic bacteria in the microbiome of patients with unmet medical needs. We are excited to be part of the leading efforts in the microbiome space as this is a field that holds a lot of promise. Our approach is focused on targeting specific strains of pathogenic bacteria in the microbiome that are strongly associated with the diseases and conditions we are investigating. Our rationally designed phage cocktails have the potential to restore the natural, healthy balance of the microbiome to provide patients with safe and effective treatment options. Using our proprietary BOLT platform, we can generate and screen large libraries of phage, prioritizing potential candidates based on cell activity and potency, as well as a number of other parameters that are important for drug development such as safety, stability, and ease of manufacturing. With a focus on executing our priorities, we have successfully and rapidly advanced our phage cocktail candidates in five indications and we expect clinically meaningful readouts in four different indications within the next 14 months. These important clinical milestones include a Phase 2 readout from our program of BX001 in acne-prone skin, with results from the 8-week treatment period expected in the third quarter, followed by results from the 12-week treatment period in the fourth quarter. Next, for our BX001 program in cystic fibrosis, we expect results from Part 1 of our Phase 1b/2a trial in the first quarter of 2022 and results from Part 2 of this trial in the second quarter of 2022. We are also planning a Phase 1b/2a readout for the BX003 program in Inflammatory Bowel Disease and Primary Sclerosing Cholangitis expected in the second quarter of 2022. Finally, by the first half of 2022, we expect Phase 2 proof-of-concept results for BX005 in atopic dermatitis. The combination capabilities of our BOLT platform, along with the broad acceptance of phage inherent safety, enables us to develop, manufacture, and formulate novel phage therapy candidates that target particular pathogenic bacteria at an unprecedented speed. Having all these capabilities in-house has helped us build a diverse portfolio spanning various indications. To that end, I would like to discuss each program in detail. I will start off with BX001 in acne-prone skin. BX001 is a topical gel comprised of a cocktail of naturally occurring phage that target the bacteria Cutibacterium acne or C. acne, which is implicated in the pathophysiology of acne vulgaris. In March, we announced the initiation of our Phase 2 cosmetic clinical trial, and today, we are announcing completion of enrollment of 140 subjects, with the results at the 8-week and 12-week treatment periods expected in the third and fourth quarters of this year, respectively. The Phase 2 study will evaluate 140 subjects with mild-to-moderate acne vulgaris over a 12-week period and the key endpoints include safety, tolerability, and efficacy of the BX001. Additionally, we will evaluate the clinically meaningful improvement of acne-prone skin as well as a reduction in C. acne burden, and we look forward to reporting on these results in the upcoming months. In February, we announced positive Phase 1a pharmacokinetic results of BX002 in Inflammatory Bowel Disease or IBD, and Primary Sclerosing Cholangitis or PSC. The data demonstrated that BX002 was safe and well-tolerated when orally delivered with no serious adverse events. Additionally, the study met its objective in delivering high concentrations of viable phage to the gastrointestinal tract approximately 10 to the 10th plaque-forming units, which equals approximately a 1,000 times more viable phage compared to the anticipated bacterial burden of Klebsiella pneumoniae in the stool of IBD patients. To the best of our knowledge, this was the first-ever clinical study describing the pharmacokinetics of an orally delivered phage under a U.S. Food and Drug Administration approved IND protocol. With these results in hand, we plan to advance this program through Phase 1b trial of BX003 orally administered to either healthy subjects or IBD or PSC subjects who are confirmed carriers of the target bacteria Klebsiella pneumoniae in their gut. Results are expected in the second quarter of 2022. With key endpoints evaluating safety, tolerability, and efficacy of BX003, as measured by the reduction of the amount of target bacteria measured in stool. As you may recall, in November 2020, we consolidated our IBD and PSC programs into one product candidate named BX003 for both indications, with a single broad host range phage cocktail that targets Klebsiella pneumoniae strains. Next, I will turn to our Cystic Fibrosis or CF program and our atopic dermatitis program, in which we recently announced BX004 and BX005 respectively, as newly selected phage cocktails for each indication. We believe that our ability to quickly select these phage cocktail candidates further validates the cutting-edge methodologies and capabilities of our BOLT platform. I will now turn the call over to Sailaja Puttagunta, our Chief Medical Officer, to discuss our CF program.

Dr. Sailaja Puttagunta, Chief Medical Officer

Thank you, Jonathan. BX004 is a newly selected phage cocktail candidate designed to target Pseudomonas aeruginosa, or P. aeruginosa, a bacteria that causes chronic respiratory infections, and is the main contributor to morbidity and mortality in patients with CF. The current treatment options available to CF patients suffering from these chronic infections typically require prolonged and repeated courses of various antibiotics. Over time, their effectiveness diminishes as multi-drug resistant strains appear. BX004 has the potential to be both active against antibiotic-resistant strains of P. aeruginosa and to penetrate biofilm, an assemblage of surface-associated microbial cells enclosed in an extracellular polymeric substance and one of the leading causes of antibiotic resistance. Based on our interactions with the FDA, we need to seek guidance; but due to the well-established safety profile of phage, we could advance the BX004 directly into a proof-of-concept trial in CF subjects, thereby skipping preclinical toxicity and healthy volunteer studies. With the company's desire to address as many patients as effectively as possible, we are working closely with the cystic fibrosis therapeutic development network, a network of leading U.S.-based CF physicians. As a result, we are updating a Phase 2 proof-of-concept study to a Phase 1b/2a trial comprised of two parts to accommodate the recommendations of the cystic fibrosis development network. These are the recommendations that the therapeutic development network makes to all programs at this stage to help ensure steady consistency and patient safety. Additionally, we are pleased to announce that Dr. David Nichols, an experienced cystic fibrosis clinical investigator and clinician will be assisting us with this trial as the academic principal investigator through the Therapeutic Development Network. Part 1 of the Phase 1b/2a trial will evaluate the safety, pharmacokinetics, microbiological, and clinical activities of BX004 with a single ascending dose, followed by multiple doses in eight CF subjects that are confirmed to have chronic P. aeruginosa respiratory infections. Results from Part 1 of this trial are expected in the first quarter of 2022. Part 2 of this trial will evaluate the safety and efficacy of BX004 treatment over 10 days in 21 CF subjects with chronic P. aeruginosa respiratory infections, the same population as Part 1. Results from Part 2 of this trial are expected in the second quarter of 2022. We look forward to continuing to work closely with the Cystic Fibrosis Foundation to bring a safe and effective treatment to patients with CF. And now, I will turn the call back to Jonathan Solomon to discuss the remainder of our programs.

Jonathan Solomon, Chief Executive Officer

Thank you, Sailaja. Turning our attention to our atopic dermatitis program, we have recently selected a phage cocktail BX005 designed to target Staphylococcus aureus or S. aureus, a bacterium associated with the development and exacerbation of inflammation in atopic dermatitis. S. aureus is known to be more abundant over the lesional skin of atopic dermatitis patients compared to the skin of healthy individuals or non-lesional skin of atopic dermatitis patients. The targeted bacteria also increases in abundance and becomes dominant when patients experience flares. We expect results from the Phase 2 proof-of-concept clinical study evaluating the safety and efficacy of BX005 in atopic dermatitis patients in the first half of 2022. Finally, the last program we'll discuss today is our Colorectal Cancer Program in which we're developing synthetically engineered phage designed to target strains of bacteria found in colorectal tumors. Currently, only a small percentage of new colorectal cancer cases respond to immunotherapy, which is believed to be due to the lack of novel tumor antigens and scarcity of immune cells in colorectal tumors. Our approach enables the phage to deliver cancer therapeutic payloads directly to tumors that are hard to reach or impact. We have observed in vitro and in vivo that our phage therapy can target strains of Fusobacterium nucleatum or F. nucleatum, a bacterial species that is enriched in colorectal tumors. We are exploring phage-mediated delivery of payload genes such as doses of immune-stimulating proteins, GM-CSF, and IL-15 to colorectal tumors while also eradicating the target bacteria. Preclinical results from animal studies evaluating the use of our phage therapy in combination with checkpoint inhibitors are expected in the second and third quarters of 2021. As just described, our progress this quarter sets us up for potentially meaningful results in four indications in the next 14 months. As we advance toward mid-stage development in the microbiome space, we will continue to provide insights on restoring health to the microbiome by using phage therapies to remove bacteria that potentially drive pathology in diseases and chronic conditions. With all of our capabilities in-house and the understood safety of phage, we have the opportunity to provide patients with better treatment options. We are excited to continue investigating the clinical safety and efficacy of phage therapies for existing indications as well as possible new indications. Before I conclude, I would like to mention that we'll be holding a virtual KOL event highlighting BX003 for the treatment of IBD on Wednesday, May 26 at 8 a.m. Eastern Time. We believe that there is considerable potential for phage therapy to restore the balance in the microbiome for this condition. This will be a very interesting event with Dr. Ryan Balfour Sartor, a renowned academic expert in IBD, leading the discussion, and we hope you will join us. We look forward to keeping you informed on our progress. I'd like now to turn the call over to Marina Wolfson, our Senior Vice President of Finance and Operations to cover our financial results for the first quarter of 2021.

Marina Wolfson, Senior Vice President of Finance and Operations

Thank you, Jonathan. As a reminder, the financial information is available in the press release we issued earlier today and also in more detail in our Form 10-Q, which will be filed later today. I will walk you through some of our brief highlights. Cash balance and short-term deposits as of March 31, 2021, were $53.6 million compared to $57.1 million as of December 31, 2020. We estimate that existing cash, cash equivalents, and short-term deposits will be sufficient to fund the company's current operating plan until at least mid-2022. Research and development expenses are $5.8 million in the first quarter of '21 compared to $3.5 million for the same period of 2020. The increase is primarily due to stock-based compensation and salaries and related expenses, mainly due to the growth in the number of employees in R&D, in addition to expenses related to conducting preclinical and clinical trials of our product candidates. General and administrative expenses were $2.5 million in the first quarter of '21, compared to $2.1 million for the same period in 2020. The increase is primarily due to stock-based compensation, salaries, and related expenses, mainly due to the growth in the number of employees and an increase in expenses associated with operating as a public company, such as directors' and officers' insurance. Net loss was $8.4 million in the first quarter of 2021 compared to $5.9 million for the same period of 2020. Net cash used in operating activities was $6.4 million for the three months ended March 31, 2021, compared to $6.9 million for the same period of 2020. We'd now like to open the call for questions. Operator?

Operator, Operator

Thank you. At this time, we will be conducting a question-and-answer session. Our first question is from Kristen Kluska with Cantor Fitzgerald. Please proceed with your question.

Kristen Kluska, Analyst

Hi, everyone. Thanks for taking my questions and congrats on completing enrollment in the acne study. The first question I have here is a big-picture one. So, there was a recent study published in Nature, highlighting that the microbiome might have been more diverse in the past from comparing some samples that were up to 2,000 years old, and the authors also highlighted that the present microbiome has more of the antimicrobial resistant strains. So not sure if you're familiar with this particular paper, but I wanted to ask how you believe overtime microbiome composition has changed and how this could correlate with some of the more prevalent and chronic indications including some of what you're evaluating?

Jonathan Solomon, Chief Executive Officer

Hi, Kristen, pleasure chatting this morning. Very familiar with the paper; I think it's very interesting work that follows on a bunch of papers before. And in general, I think we see more and more a loss of diversity in the microbiome. I think there’s a greater need to kind of engineer it precisely and avoid antibiotic resistance. So I think at BiomX, we feel that this will play an essential role in picking up specific material without blasting the microbiome with more antibiotics, which is just causing more loss of diversity. And second, what we're seeing is some of these pathogens occupying niches that they dominate. So with a phage, we can kind of open up the niche and enable the engraftment of more diverse bacteria. So I think it all supports what we’re all saying in research across the board. We need greater diversity and we need to avoid using antibiotics as a therapy for these chronic indications.

Kristen Kluska, Analyst

And then, as you're progressing along the pipeline to the BOLT platform and also resorting to a personalized phage therapy approach for some indications, could you remind us of the current phage bank you have on hand and efforts to expand this? And what work would need to go into finding new phages if necessary to keep it within the rapid timeframes you've laid out?

Jonathan Solomon, Chief Executive Officer

Right. So, I think at BiomX, our conclusion has been that instead of investing in a large phage bank, we're actually investing in infrastructure and a large sample collection from various bodies of water, sewage, etc., whatever you can think of or we don't want to discuss early in the morning. You can see the progress, like I think when we came out with BX003, which is a broad cocktail that targets the strain cocktail in both IBD and PSC. That was quite an undertaking that we were skeptical about, and it took us almost two years to complete. Now with Staph aureus with BX005, within two or three months, we already had a phage cocktail that covered 90% of the strains. So I think you're seeing kind of the economies of scale and the platform mature as we learn how to handle things quickly and optimize all of our computational pipelines and robotic infrastructure.

Kristen Kluska, Analyst

Thanks. And for the atopic dermatitis study, could you walk through why you decided to evaluate a potential eight-week trial?

Jonathan Solomon, Chief Executive Officer

Sure. I'll let Sailaja address that question.

Dr. Sailaja Puttagunta, Chief Medical Officer

Thank you, Jonathan, and good morning, Kristen. The reason we are evaluating the eight-week trial for atopic dermatitis is because of the mechanism of action of phage. The hypothesis is that if we reduce the bacterial burden of Staphylococcus, that would then lead to a downstream change in the immune response and clinical improvement. So, to accommodate that, we wanted to at least allow an eight-week period to detect the downstream effects of reducing the bacterial burden of Staphylococcus.

Operator, Operator

Our next question comes from the line of Keay Nakae with Chardan Capital Markets. Please proceed with your question.

Keay Nakae, Analyst

Jonathan, you've given us the timelines to report data from the various studies. I'm wondering with respect to BX003, BX004, and BX005, what are the gating items before you advance these into the actual clinical studies?

Jonathan Solomon, Chief Executive Officer

Right, so first, good morning, Keay. It’s a pleasure to speak with you. Generally at BiomX, we don't give guidance on the initiation of studies. But as you know, the advantage of using this phage approach is that there is no talk study and no healthy volunteers study. So you can go straight to patient. Most of these are currently in various stages of GMP manufacturing, which ties back to the question Kristen brought up before. We quickly put together phage cocktails that look very promising. At that point, we can move straight to manufacturing, get ready and gear up for clinical study. That’s why we think these are maintained in the timelines to be updated on.

Keay Nakae, Analyst

Okay. And in terms of the CF study design, when we think about the BOLT platform and the ability to use the learnings from initial patients to zero in on an ideal formulation to advance, are these numbers large enough to allow you to fully optimize the capabilities of both to get to that ideal compound?

Jonathan Solomon, Chief Executive Officer

It's an excellent question. I think in CF, we feel more comfortable since there are case studies. The dozen patients that were treated have provided data that we're basing our thinking and rationale on, and we are benefiting from the support of the therapeutic development network, the CF Foundation that are all part of this. But to your point, we're going to get a lot of data from these studies. We know exactly what strain the patients have, the effects, and how their material composition looks after treatment. So far, we feel that BX004 looks very promising and could be the final product ready for market, but we can use the BOLT platform to make these tweaks. We believe there will be enough information, if needed, to make these adjustments.

Keay Nakae, Analyst

Okay. And then just back to the acne study. Congrats on completing the enrollment. From here, what do you need to keep close tabs on to make sure that when we get to the readout, no other unforeseen variables enter into the equation?

Jonathan Solomon, Chief Executive Officer

Keay, just a clarification question, you mean from the clinical aspect or like business development?

Keay Nakae, Analyst

Yes, the first, Jonathan.

Jonathan Solomon, Chief Executive Officer

From the clinical aspect, okay. I'll let Sailaja address that.

Dr. Sailaja Puttagunta, Chief Medical Officer

Thank you, Jonathan, and good morning, Keay. Yes, we're very pleased that we completed enrollment in this study and feel like we are on track to deliver top-line results from the 8-week endpoint in Q3 and then from the 12-week endpoint in Q4 of this year. In terms of unforeseen variables that affect those deliverables, we don't foresee any major obstacles, Keay, and we believe we are on track to deliver.

Operator, Operator

At this time, our next question is from the line of Joe Pantginis with H.C. Wainwright. Please proceed with your question.

Matt Keller, Analyst

Good morning, everyone. This is Matt Keller on for Joe. Thanks for taking the question. I’ve got one for you. Related to BX003, based on the previous data showing impressively high levels of gut PSC you guys have shown, how confident are you that you're in the right dose range? And relatively, how do you see fitting into possible FDA discussions down the road when it comes to identifying a minimally effective dose?

Jonathan Solomon, Chief Executive Officer

Right. Good morning, Matt. I think we're confident that at the levels we've seen, there are abundant levels of phage over bacteria. What we know from the field and multiple studies is that you typically want to have around 10 phage for every given target bacteria. As a reminder, we've achieved levels that are a thousand times higher than that. So there's definitely an abundance of phage, which gives us a good therapeutic window together with the fact that the phage level stayed high for a few days. So I'd say we're fairly confident moving into the next study, that we should get high exposure levels and hopefully detect a significant reduction in the bacteria counts. In general, what we're trying to do in these initial clinical studies is to use the highest dose that is practical so you want to maximize the chance of observing an effect. If we see a strong effect, we can start titrating down the doses. But currently, the cost of goods with phage is not prohibitive, so we can move forward with the current dose, but later in clinical development we may titrate down.

Michael Higgins, Analyst

Hi guys, thanks for taking the question and congratulations on your continued progress. I have a question regarding the Phase 1/2 studies, specifically in cystic fibrosis. What dose range are you expecting to test in the Phase 1b portion? Could you provide a range from the lowest to the highest? Thank you.

Dr. Sailaja Puttagunta, Chief Medical Officer

Yes, thank you, Jonathan. So in terms of the dose change, in the Phase 1a in CF, that study we're going to start with a single dose in the lower end. In terms of specific testing, we’ll start with a single dose that will be two logs higher than the original one. And we, like with all of our other phage candidates, we don't anticipate any safety issues here and anticipate moving rapidly through the multiple dose phase of Part 1b.

Michael Higgins, Analyst

Thank you. And then just a quick follow-up in terms of atopic dermatitis same question, I suppose. What can you provide for us in terms of what doses may be tested in that study?

Dr. Sailaja Puttagunta, Chief Medical Officer

Okay. In the atopic dermatitis study, we're planning to use one dose relative to placebo in that study and move that forward. We do believe that that will be the effective dose, so there's no dose-ranging study planned for atopic dermatitis.

Michael Higgins, Analyst

I guess this is a follow-up on that. What gives you confidence that you found the right dose to take into the Phase 2?

Jonathan Solomon, Chief Executive Officer

So I can jump in. I think here on the atopic dermatitis front, we benefit from the knowledge that we've seen in acne. What we've observed to date is that we usually want to go with the highest dose that we can. As Sailaja mentioned, there's no dose-limiting toxicity to feel confident in this route. Again, we can calculate the ratio of phage to bacteria, and we feel we're well within a good therapeutic window.

Michael Higgins, Analyst

That's great and then just one follow-up on atopic dermatitis. How do you think you will work with other therapies in this study? Are they limited from using steroids, gels, and other atopic dermatitis treatments? Or is it a kind of an all-comers?

Dr. Sailaja Puttagunta, Chief Medical Officer

For the clinical study, we are not planning any exclusions there, and we're pretty much taking all comers. There will be some changes in terms of the washout periods based on existing therapies that patients have been on, but nothing really major.

Operator, Operator

Thank you. At this time, I'll turn the floor over to Jonathan Solomon for closing remarks.

Jonathan Solomon, Chief Executive Officer

So everyone, I wanted to thank you for joining us this morning. I want to thank the BiomX team who worked hard to continue to develop phage therapies across a wide range of conditions as well as shareholders for their support and the patients participating in our clinical trials. It's a very exciting period for BiomX with actually four meaningful clinical readouts in the next 14 months, and we're excited to see the next few months. So everyone, please have a wonderful day and please reach out to us if you have any additional questions.

Operator, Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.