Pieris Pharmaceuticals, Inc. (NASDAQ:PIRS) Q3 2022 Earnings Conference Call November 2, 2022 8:00 AM ET
Company Participants
Thomas Bures – SVP & CFO
Stephen Yoder – CEO, President & Director
Shane Olwill – SVP & Chief Development Officer
Conference Call Participants
Jonathan Miller – Evercore ISI
Matthew Phipps – William Blair & Company
Jiale Song – Jefferies
Operator
Good day, ladies and gentlemen, and welcome to the Pieris Pharmaceuticals, Inc. Third Quarter Earnings Call. [Operator Instructions].
At this time, it is my pleasure to turn the floor over to your host, Tom Bures. Sir, the floor is yours.
Thomas Bures
Thank you. Good morning, everyone, and thank you for joining us for our third quarter 2022 conference call and corporate update. On the call today, we have Steve Yoder, our President and CEO, who will provide a corporate overview and outlook on our pipeline; Hitto Kaufmann, our Chief Scientific Officer; and Shane Olwill, our Chief Development Officer, who will be available for Q&A. You can access the press release released this morning on the Investor Relations page of our website at www.pieris.com.
Before we begin, I’d like to caution that comments made during this conference call may contain forward-looking statements involving risks and uncertainties regarding the operations and future results of operations of Pieris, including statements related to the timing and progress of our clinical trials and preclinical programs, including the anticipated timing for the reporting of data, our partnerships and our financial position, and actual results or events may differ materially from those expressed or implied by such forward-looking statements. Factors that might cause such differences are described in our filings with the SEC, including our annual, quarterly and current reports. The information being presented is only accurate as of today, and Pieris undertakes no obligation to update any statements to reflect future events or circumstances.
With that, I will now turn the call over to Steve.
Stephen Yoder
Thank you, Tom, and thank you to everyone for joining us today for our third quarter 2022 earnings call. Today, I will give an update on how our lead programs are progressing, what upcoming catalysts to expect and exciting new programs we have announced recently. We are driving towards numerous catalysts and inflection points over the next year across both our respiratory and our IO franchises.
More specifically within respiratory, in addition to preparing for the Phase IIa readout and subsequent opt-in decision for elarekibep, also known as PRS-060 or AZD1402, we are advancing a pipeline of wholly owned, highly differentiated, inhaled respiratory products. Similarly, within IO, we are expecting to have initiated expansion of PRS-344 in co-development with Servier while anticipating clinical starts of 4-1BB-based IO assets by collaborators Seagen and Boston Pharmaceuticals as we continue to be a leader in the realm of targeted 4-1BB costimulation. By early next year, we expect there will be 3 4-1BB Mabcalin, or antibody-Anticalin fusion bispecifics, in active clinical development. But before I go into these details, I will give a more in-depth overview on the respiratory franchise.
In the Phase IIa trial of the dry powder formulated elarekibep, an inhaled IL-4 receptor alpha inhibitor that we are developing with AstraZeneca for the treatment of moderate to severe asthma, I’m pleased to report that AstraZeneca has completed the enrollment of Part 1b, which is the safety of the 10 mg cohort, while enrollment continues for Part 2, which is efficacy of the 3 mg cohort versus placebo.
AstraZeneca also is making great strides in addressing enrollment challenges encountered for the efficacy portion of this study. During last quarter’s earnings update, we announced that AstraZeneca was pursuing regulatory and ethical submission across all jurisdictions where the study is active with the objective of improving speed of enrollment and focusing enrollment into the 3 mg cohort. AstraZeneca has since completed these submissions in all territories with acceptance and implementation tracking according to expectations.
With these changes being implemented, top line results from this study are expected to be recorded in third quarter of next year. These results will include the safety data of the 1 mg, 3 mg and 10 mg dose cohorts and efficacy data from the 3 mg cohort. As a reminder, the primary endpoint in this study is FEV1 improvement at 4 weeks versus placebo. This important data set, alongside a development plan and a budget from AstraZeneca, will trigger an opt-in decision for either 25% or 50% of cost sharing. Being in a strong position to opt in if data are positive remains one of the highest company priorities for the coming year.
Also within the AstraZeneca alliance, we do continue to advance 2 discovery stage programs alongside elarekibep. We retain co-development and U.S. co-commercialization options for these 2 programs.
I would now like to spend some time discussing the fully proprietary inhaled respiratory programs we are developing, PRS-220 and PRS-400, given that the data we have generated so far with elarekibep have strengthened our conviction in the validity and differentiation of our inhaled therapeutic protein approach. Earlier this week, we announced the dosing of the first subject in the Phase I study of PRS-220, an inhaled Anticalin protein targeting connective tissue growth factor, or CTGF, for the treatment of idiopathic pulmonary fibrosis and other forms of fibrotic lung disease.
The study will evaluate the safety, tolerability and pharmacokinetics of an oral inhaled nebulized formulation of PRS-220 in healthy volunteers. This is the second inhaled Anticalin-based programs we are bringing into the clinic, and we expect to report the outcome of this study next year. As a reminder, this work is partially funded by a grant from the Bavarian Ministry of Economic Affairs , Regional Development and Energy?, within the framework of the Bavarian Therapy Strategy to combat the COVID-19 pandemic, or also known as BayTherapie2020.
Beyond PRS-220, we recently unveiled another proprietary inhaled respiratory program at the 2022 European Respiratory Society’s International Congress called PRS-400, which is an inhaled Jagged-1 antagonist we are developing for the treatment of muco-obstructive lung diseases. A wealth of third party data supports that upregulation of the Jagged-1 Notch signaling can cause goblet cell metaplasia, hyperplasia, mucus hypersecretion and mucus plugging. Also shows that downregulation of this pathway can drive goblet cells toward a ciliary phenotype. However, systematically administered drugs targeting Notch signaling have caused systemic side effects and tolerability issues such as GI toxicities.
PRS-400 is designed to block JAG1 Notch signaling locally in the lung via oral inhalation with the objective of reversing, independent of stimulus, goblet cell metaplasia, hyperplasia and mucus plugging as well as increasing the number of ciliated cells. Preclinical data presented at ERS showed that in vitro, multiple PRS-400 drug candidates can penetrate mucus-coated epithelia to potently inhibit JAG1-induced signaling on lung epithelial cells, thereby reducing mucin expression. We also achieved in vivo proof of concept with PRS-400 candidates in an IL-13 induced mucus hypersecretion mouse model, not only by significantly improving mucus score and reducing goblet cell numbers, but also by significantly increasing a key marker of ciliary cells.
We are excited about this program because it follows the same local treatment approach via inhalation we are taking with elarekibep and PRS-220. Moreover, JAG1 represents a highly translatable target that we believe has significant potential to treat a variety of muco-obstructive diseases, and there is a strong rationale for a local inhaled intervention given the desire to avoid GI toxicities. We are continuing to work on this program in preclinical work and look forward to giving further updates in due course.
Turning now to our IO franchise. Our Mabcalin bispecifics pipeline also has some exciting updates, including a new partnered program announcement and upcoming first-in-human trial starts for program — multiple partnered programs. First, I want to note that enrollment of the dose escalation portion of the Phase I/II study of PRS-344, or S095012, remains ongoing. PRS-344 is a 4-1BB/PD-L1 Mabcalin bispecific for the treatment of solid tumors we are developing in co-development with Servier, and it is our lead IO program. We expect to present data from the study at a medical meeting next year for this program. As a reminder, we retain full U.S. rights for this program, and we will receive royalties on any ex-U.S. sales. Beyond PRS-344, Servier is continuing development of PRS-352, or S095025, which is an OX40/PD-L1 bispecific for which Servier has global rights.
We also continue to work on a number of programs as part of our IO collaboration with Seagen, and I am pleased to announce the unveiling of the first of those programs, which is SGN-BB228, also known as PRS-346, at the upcoming SITC conference next week. SGN-BB228 is a first-in-class 4-1BB/CD228 bispecific Mabcalin compound. The IND for the Phase I study for this program has recently been accepted, and Seagen plans to initiate the study in the coming months, at which point we will receive a milestone payment from Seagen. Beyond this program, Seagen continues to develop a second undisclosed bispecific program and has recently nominated the third bispecific program for initiation within the collaboration. As a reminder, we have a U.S. co-promotion option for 1 program in this 3 program collaboration.
Turning to our most recent IO partnership. In the next 6 months, we also expect the initiation of the Phase I study of PRS-342, or BOS-342, which is a 4-1BB/GPC3 bispecific Mabcalin compound licensed by Boston Pharmaceuticals, which is being developed in solid tumors. Both the Seagen program and the Boston Pharmaceuticals program represent a broadening of our clinical 4-1BB footprint in immuno-oncology, and we are excited to have the support of our many partners in advancing the various applications of the Anticalin technology. Among these several partners is Genentech, with whom we signed a discovery stage collaboration for 1 respiratory target and 1 ophthalmology target last year and which continues to progress. In addition to contributing R&D know-how and resources, our partnerships have served and continue to serve as an important source of non-dilutive capital, the importance of which cannot be overstated in these current markets.
This concludes my prepared remarks, and I would now like to hand the call back over to Tom.
Thomas Bures
Thank you, Steve, and good morning again, everybody. Cash and cash equivalents and investments totaled $69.8 million for the quarter ended September 30, 2022, compared to a cash and cash equivalents balance of $117.8 million for the quarter ended December 31, 2021. The decrease in cash is due to funding operations in the current year. Including the proceeds from anticipated near-term milestones, we will continue to make disciplined pipeline investments that demonstrate our commitment to achieve multiple inflection points across our clinical program in the next year, and we believe this cash balance provides sufficient funding into the second quarter of 2024.
R&D expenses were $13.6 million for the quarter ended September 30, 2022, compared to $18.9 million for the quarter ended September 30, 2021. The decrease is due to lower program costs as work related to the company’s sponsored Phase I trial of elarekibep was largely completed in 2021 as well as due to lower manufacturing costs across all later stage respiratory and immuno-oncology programs and lower consulting costs. These lower costs were partially offset by higher clinical costs for PRS-344, or S095012, higher preclinical costs for earlier stage programs and an increase in personnel costs.
G&A expenses were $3.9 million for the quarter ended September 30, 2022, compared to $4.1 million for the quarter ended September 30, 2021. The period-over-period decrease was driven primarily by lower professional service costs and lower facilities costs, partially offset by higher travel expenses.
And finally, for other income, for the quarter ended September 30, 2022, $1.5 million of grant income was recorded with respect to PRS-220 compared to $1.8 million for the quarter ended September 30, 2021. The decrease is due to lower overall costs incurred this quarter on PRS-220 compared to the same quarter in the prior year.
Overall, net loss was $9.7 million, or a $0.13 loss per share, for the quarter ended September 30, 2022, compared to a net loss of $16.5 million, or a $0.24 loss per share, for the quarter ended September 30, 2021.
With that, I will turn the call back over to Steve.
Stephen Yoder
Thank you, Tom. We would now like to open the call for your questions.
Question-and-Answer Session
Operator
[Operator Instructions]. Our first question comes from Jonathan Miller with Evercore.
Jonathan Miller
Congrats on all the progress, especially all the collaboration progress. I just wanted to — maybe a couple housekeeping things. The runway that you — runway guidance you’ve given, what clinical development, what internal clinical development does that include? Which of those programs, especially the ones that are slated to enter the clinic, are you funding through that runway? And sort of relatedly, you said that the middle PRS-060 opt-in level is quite easy for you to fund. Is there any risk to your ability to fund that next year, or are you really thinking about whether you can afford the higher opt-in level?
Stephen Yoder
Jon, it’s Steve. Thanks for the questions. I’ll turn it over to Tom to cover these, and then I can fill in with anything that you have residual questions on.
Thomas Bures
Yes. Thanks, Jon. Yes, so the runway includes the ongoing 220 and 344 along with 060 costs. So those are the primary clinical assets that we have, and so those are the key to our sort of SG&A playing and continued development there. So again, a reminder that 060 right now, there’s really limited costs on our books because that’s all being funded by AstraZeneca. For 220, our costs are supported by the Bavarian government that we referred to, the grant that we received, and that’s been really helpful in terms of pushing that forward and getting that into the clinic as we just announced. So that’s great progress there, and we appreciate their support. And then also 344 partnered with Servier. So about just under 50% funded by Servier there. So very cost efficient strategy, and that’s how we continue to budget this out. For those other assets that we referred to in IO moving into the clinic, those are out licensed, so we have no cost obligation related to those. So those would just be the partners’ cost. So that could be, again, next year, 5 clinical stage assets, and we’re paying for about the total of 1.
I believe your second question related to the opt-in for PRS-060. And right, like you mentioned, I think we continue to focus on the opt-in at the 25% believing, again, that is manageable, given that sort of the spread of the costs, along with the — our share of development milestones that we would continue to get on that program that are meaningful to us, it’s something that we think is, again, relatively affordable. We do have to think about, of course, the capital allocation across our programs. And I think if we were thinking about opting in at a higher level, I think that’s going to be based upon the quality of the top line results and how good those are, and really the credit I think that we’re going to be able to get hopefully externally for this program and moving into that clinical readout.
Stephen Yoder
Yes. Thanks, Tom, for that. The only color I would add to the second question is just to remind everyone that the opt-in decision that we have, which is at our discretion and could be not at all, which we would not want to do, or 25% or 50%, we do not have to make that decision until after the top line data are revealed and we can talk about them, as well as a go-forward plan and budget. So the external stakeholders will certainly have the ability to digest all of that. And there could be reasons, as Tom said, the data alone could be a basis for appreciation in value that allow us to opt in at a higher level than 25%. And of course, there are things independent, extrinsic to PRS-060 that would create value in the company. That’s why we have multiple programs, multiple franchises and several partnerships. So when we consider the landscape of potential catalysts next year, and the core being PRS-060 Phase IIa, but several other things, we are very encouraged about the ability to opt in, whether that’s at 25% or beyond.
Jonathan Miller
Great. Great. That makes sense. And then maybe on PRS-220, the data next year in healthy volunteers, what can we expect to learn from that from a translation perspective? I understand there’s not really good biomarkers, other than just targeting IPF. Can you get on target PD? Can you get some other measure out of that healthy volunteer study that will give you good confidence in your ability to deliver for patients?
Stephen Yoder
Yes, Jon. It’s a great question. At a high level, I would frame what we’re going to be looking at at the end of the Phase I study next year is the set of the data that we’re going to be generating, SAD/MAD data in healthy subjects, which will not have — I think we’ve already mentioned that — not have a wealth of biomarker data. And we know that that is a challenge with this particular intervention. However, we have 2 other important data sets that I want to keep in mind. One is the FibroGen pamrevlumab data. The data will read out. We know that they’ve enrolled the trial. We expect the pamrevlumab top line data to come out of the Phase III study about the same time, probably from mid next year. And we are working hard to generate a lot of preclinical data in parallel with our own program and benchmarking against other relevant controls. So when we have all of that, we will feel, I hope, very confident with the goal that we would make on moving forward into Phase II and also the dose. And Shane is online, and Shane can also comment a bit more on the types of nuances that one might be looking for beyond the SAD/MAD safety/tolerability data from our study. Shane?
Shane Olwill
Yes. Thanks, Steve. So they’re the fundamental things that we wanted to see in this study, but of course, we’ll also look at things, some things like taste. We’ll look at the PK exposure just to confirm that it’s in line with what we have modeled. And then as Steve said, as we build out the preclinical data set, we’ll continue to model what we believe to be the most efficacious doses based on our understanding of the molecule or understanding of Anticalins as inhaled medicaments. And also, of course, keeping an eye on that — those trial readouts such as the pamrevlumab one, which will come mid next year, we’ll keep an eye on the emergence starting to occur. And of course, consider any additional data that we can build to support our differentiated mechanism of action, but also to support the most effective Phase II study design.
Operator
Our next question comes from Matt Phipps with William Blair.
Matthew Phipps
I guess just curious on 344 for data next year. Could you remind us just is there any preference as far as tumor types for enrollment or PD-L1 expression levels? And then will the data next year just be from dose escalation, or do you think you’ll also start to get into some expansion cohorts?
Stephen Yoder
Thanks, Matt. I’ll have an overview here before I turn it over to Shane on your question in more detail. For the time lines, as a reminder, we’re currently still in escalation. We’re pleased with the pace of escalation so far as planned. And based on certain predetermined go signals that we would want to see to initiate expansion, we believe that that’s something we would be doing next year. And there’s a range of — there’s a corridor based on data sets that we would want to generate beforehand. And that could be early to mid, late next year depending on the set, and we’re going to be data driven on that. That’s really important. So when we think about data next year, I think you should be thinking about that as escalation data. I would note, though, that the protocol does allow for backfilling, and as we would go to expansion, we would still have the ability to utilize backfilling options. So we would have potentially meaningful data, PD clinical data that would also be meaningful to inform why we would have made a go in the first place into expansion as well as a rationale for why we’re picking certain tumor types in expansion. And at that time, when we announced a go in expansion, I think that would be a good time for us to acknowledge why we’re going into certain indications and put more color on those specific indications, why they emerge as a priority for us. I mean, Shane can comment on some of the nuances you mentioned. Are there any preferential tumors being enrolled? Are there any PD-1 cutoff — PD-L1 cutoffs? So Shane, I’ll turn it over to you for some of those nuances on the trial.
Shane Olwill
Yes, certainly. Thanks, Steve, and hi, Matt. So in terms of the dose escalation, so we are not — we do not have a PD-L1 cutoff from that perspective. We are also enrolling all comer solid tumors into the study. Now why are we doing that? We don’t want to be overly prescriptive in terms of picking — selecting an indication for this purpose — or sorry, for the stage of the study. We also want to be very efficient in terms of moving through the cohorts. As Steve said, the study is going well. We are certainly benefiting from all of our knowledge gained on PRS-343. We’re also benefiting from all the biomarker assays we had set up, having that institutional knowledge in terms of what are meaningful modulations on several of these biomarkers. With regards to Steve mentioned the backfilling option. So we do have backfilling options in our cohorts. We can, if we choose to, bias those towards particular indications.
With regards to the speed with which we will move from escalation to expansion, as Steve indicated, there is a bit of a dose range there that, as you know from the competitive programs, what we’re looking for here is optimal biological dose. And there is — there are predictions in terms of where one will see that. And we have the predefined conditions that we would say would warrant going into expansion in those indications that we have selected. As and when we initiate those expansions in the indication-specific expansions, we can let you guys know why we selected them. But in essence, some of the things that we were thinking about was what’s the probability of success here? We want strong proof of concept out of these escalations, but we also want a path to a BLA filing. So when we consider our knowledge of the biology, what’s happening in some of the competitor programs, and also considering regulatory path and risk/reward from a financial perspective, there were some of the things that come into the discussion when we were identifying the most high priority indications to go for once we have expansion.
Matthew Phipps
Thanks for that, Shane. I guess just one question on 060. Completed enrollment in the 10 mg cohort. Has the safety follow-up been completed yet on those? Just kind of wondering if we can check the box on that safety being okay at the 10 mg level.
Stephen Yoder
Well, remember, it’s a blinded study, and there is — after enrollment, there is the treatment period and then there’s follow-up. So it will go through the same thorough review that we put the 1 mg and the 3 mg cohorts through. So we would expect that as we had had an announcement of passing the safety gate for the 1 mg and the 3 mg cohorts earlier this year, we would expect to do a similar review and analysis and announcement in due course. But that still has to get through the dosing and the follow-ups. So although we will not be moving the 10 mg cohort into the efficacy phase, having that 10 mg safety data will be very valuable because it will — one, it will confirm if we pass the gate, it will confirm the drug is safe at quite high doses. And number two, really relevantly, it will allow flexibility beyond Phase IIa to dose beyond 3 mg if we want to do that for whatever reason. So I would say stay tuned. There’s a process and an unblinding process and assessment. And I would expect that we would do the same thing that we did with the 1 mg and 3 mg for the 10 mg.
Operator
Our next question comes from Roger Song with Jefferies.
Jiale Song
Great. Congrats for all the progress. A few quick ones for 060. One is since the protocol amendment by AstraZeneca, so can you just provide some color around the enrollment improvements? And particularly as we see the COVID still living with us, but people start to wearing masks less and less. And do you start to see normal people for the efficacy portion, or it’s kind of gradually kind of changed over time? Maybe last quick one, just a follow-up. I think, Steve, you mentioned 10 mg is for the safety. You’re not going to do this for the Phase Ia for efficacy. But is that possible — just confirm, is that possible for you to go up to 10 mg in Phase IIb or Phase III later? If that’s the case, what kind of a signal you need for you to make that decision?
Stephen Yoder
Great. Thanks, Roger. So your first question was around enrollment trends, and then the second one was, again, what — how the 10 mg and other factors could — safety data from the 10 mg and other factors could inform what we would do beyond Phase IIa beyond the 3 mg dose. For the first question on enrollment, I would say we’re not going to break out specific enrollment numbers. We haven’t done that, and we’re not going to be able to do that. However, I would say there are probably 3 factors that would impact enrollment rates. You mentioned one is just the broader environment. If masks are coming off more and if people get back to more of a normal lifestyle, if that then presents opportunities for more viral exposure challenges, would that just drive up incidence and make the throughput overall throughput higher. So that’s one factor to consider. Second one is just more site engagement. And that’s one that will I think, per se, help to improve enrollment rates. And the third point, which I think is the most meaningful, is the impact of the amendments. Remember, we said we were going to be broadening the funnel. We don’t have to go into all the details. We talked about them pretty thoroughly last quarter. But we do believe that those amendments will squarely address a lot of the reasons for screen failures in the early parts of the study. And as those filings have been made, and a number of those filings have been through the review process and been accepted, they’re now just being implemented. So it’s too early to be able to predict accurately how much they will bend the curve. But I would say that given — that getting back to normal more and more on the lifestyle, the additional site engagement that AZ is committed to be doing, and then the implementation of the amendments over the next couple of months, that collectively gives us a good deal of hope and reason to believe that we will move the enrollment up meaningfully. And we just need more time to be able to assess that. And then, of course, we would provide an update in due course whenever we have more visibility on that.
On the second question around the 10 mg, what would we do with that going forward, the 10 mg safety data. I think the way we would look at it is, one, we wanted to have confirmed safety at the 10 mg cohort. And so that will go through its process, as I mentioned in my answer to Matt’s question. And then I think it’s going to come down to, in particular, the efficacy readout. We’ve talked about what the bogey should be for efficacy in terms of FEV1 against placebo, and we think being better than the border of what’s clinically relevant would be really useful. And if it’s better than that, then that’s going to be very good. And depending on how much we think we could and want to push the dose beyond 3 mg to potentially improve efficacy even more, that, coupled with the safety assessment, would be 2 important factors that would govern that decision. So we have to be data driven. We have to then first confirm that the 10 mg dose is safe. But I think that we will have enough parameters to be able to make an intelligent decision with AstraZeneca on if we want to go higher than 3 mg and what that would be. It doesn’t have to go 3 mg to 10 mg. It could be something in between, of course. And that’s something that we would, again, opine on before we go forward in co-development.
Jiale Song
Awesome. Maybe just very quick one for the cash runway, given you have a lot of collaboration, the potential milestone payments. So just curious, before this early 2024 cash runway, do you expect you will have meaningful milestone to extend the cash runway?
Stephen Yoder
I’ll turn that one over to Tom, Roger.
Thomas Bures
Yes. So Roger, we talked in our cash runway, we do include some of the near-term milestones that we have increasing confidence and visibility into in some of our partnered assets that we’ve talked about on the call today. So those are included. I think just in context, though, they’re nice to have. They’re certainly probably more modest than some of the AZ-type milestones we’ve recorded in the past. So just for clarity, these are modest and meaningful to us. They help the cash balance. But they’re not quite at that AZ level for that because it was a later stage asset that we were putting into the clinic at that time.
Jiale Song
Got it. Thank you for confirming that.
Operator
And it looks like that was our final question. I’ll turn it back over to Stephen Yoder for closing remarks.
Stephen Yoder
Thank you, gentlemen. I just want to thank everyone again for your attention today, and thank you for your continued support of Pieris. Thanks, everyone. Have a great day.
Operator
Thank you. This concludes today’s conference call. We thank you for your participation. You may disconnect your lines at this time, and have a great day.
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