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Selecta Biosciences, Inc. (NASDAQ:SELB)
Q1 2020 Earnings Call
May 7, 2020, 3:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning and welcome to the Selecta Biosciences' First Quarter 2020 Financial Results Conference Call. At this time, all participants are in a listen-only mode. This call is being live on the webcast, live on the Investors and Media section of Selecta's website at www.selectabio.com and it is being recorded.

For opening remarks, I would like to introduce Elona Kogan, General Counsel of Selecta. Please go ahead.

Elona Kogan -- General Counsel

Thank you and good morning everyone. Welcome to our first quarter 2020 financial results and corporate update conference call. A press release reporting our financial results is available in the Investors and Media section of our website www.selectabio.com and our quarterly report on Form 10-Q for the quarter ended March 31, 2020 will be filed later today with the SEC.

Joining me today is Carsten Brunn, our President and Chief Executive Officer; and Brad Dahms, our Chief Financial Officer. In addition, Kei Kishimoto, our Chief Scientific Officer, will be available for the Q&A portion of the call.

As a reminder, during today's call, we will be making certain forward-looking statements, including without limitation statements about the potential safety, efficacy and regulatory and clinical progress of our product candidates, financial projections and our future expectations, plans and prospects. These statements are subject to various risks, including those related to the COVID-19 outbreak that are described in our filings made with the Securities and Exchange Commission, including our most recent quarterly report on Form 10-Q, which will be filed with the SEC later today.

You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of today, May 7, 2020 and Selecta disclaims any intention to update such statements even if management's views change.

I would now like to turn the call over to Carsten Brunn, our President and CEO. Carsten?

Carsten Brunn -- President and Chief Executive Officer

Thank you, Elona. Good morning. I appreciate you joining us today. While the first quarter of 2020 presented challenges due to the COVID-19 pandemic, Selecta has been able to navigate these obstacles while continually prioritizing the health and safety of our patients and healthcare providers to ensure that any risk from COVID-19 is properly mitigated to the best of our ability. The ongoing head-to-head COMPARE compare clinical trial of SEL-212 in chronic refractory gout is still on schedule and we plan to announce topline data in the third quarter of this year. To date, we have not seen a material impact on this study. However, we continue to recognize that there is inherent unpredictability associated with this ongoing situation.

We continue to work real time with our CRO, investigators and the clinical side in this trial to ensure that the patients are treated and measured in a safe manner. As a reminder, the COMPARE study is evaluating Selecta's lead product candidate SEL-212, which is a combination of ImmTOR and pegadricase in comparison to pegloticase. In the COMPARE study, a once-monthly dose of SEL-212 is being compared to bi-weekly doses of pegloticase with a primary endpoint of the maintenance of serum uric acid levels of less than 6 milligrams per deciliter at three and six months. The trial completed enrollment in December 2019 and as of April 2020, half of the patients had completed the study and all patients had reached three months of treatment.

We're also pleased to announce that our preparations for the commencement of the Phase 3 program of SEL-212 remain on schedule and we plan to initiate this study in the second half of 2020 barring any unforeseen impact due to COVID-19. We have also taken several measures from a manufacturing perspective to ensure we have enough supply of SEL-212 to complete the planned Phase 3 clinical program. Our gene therapy program remains a key priority for Selecta. In collaboration with our partner AskBio, we are jointly developing a broad portfolio of next-generation AAV gene therapies. This partnership will leverage the unique proprietary technology platforms of both companies with a human proof of concept trial to validate this portfolio of products and their potential for redosing in patients, which could represent a significant advancement in the gene therapy field. Selecta and AskBio intend to enter the clinic with this program by the end of 2020. Additionally, we plan to provide further details of the initial proof of concept study in the second half of the year. Finally, Selecta continues to advance its proprietary program in ornithine transcarbamylase deficiency. We're also excited to announce the appointment of Dr. Goran Ando to our Board of Directors. Dr. Ando brings a wealth of experience, and is a proven pharmaceutical executive with a track record of execution in both product development and commercialization. His support will further enable the advancement of ImmTOR and we're excited for him to be part of the journey. I'd also like to thank Amir Nashat, who Dr. Andrew is replacing for his long-term support. He was in Selecta from the beginning and we thank him for helping put Selecta where we are today. I will now turn the call over to our Chief Financial Officer, Brad Dahms. Brad?

Brad Dahms -- Chief Financial Officer

Thank you Carsten. Our detailed financials are laid out in our earnings press release, which we filed this morning, will be further outlined in our 10-Q. So I'll just highlight a few key items here. We ended the quarter with $74.3 million in cash, cash equivalents and restricted cash. Net cash used in operating activities was $11.7 million as compared to $20.2 million for the same period in 2019. Net cash used in operating activities for the quarter includes a $5 million receivable from AskBio related to the license agreement we signed with them in December 2019 for their Pompe disease program. $2 million of the $7 million was received in 2019 and the remainder was received in January.

As a reminder, Selecta is eligible to receive up to $237 million in development and commercial milestones, plus royalties on net sales. We believe our current cash position will provide us runway into the first quarter of 2021 and this guidance includes the commencement of our Phase 3 clinical program of SEL-212. R&D expenses for the first quarter were $14.7 million, which compares to $7.4 million for the same period in 2019. The quarterly increase reflects additional costs incurred specific to our head-to-head COMPARE clinical trial of SEL-212 and for our gene therapy program in collaboration with AskBio.

G&A expenses for the first quarter were $4.1 million, which compares to $4.5 million for the same period in 2019. The reduction in costs was the result of reduced salaries, consulting, and professional fees, partially offset by increased stock comp expense. For the first quarter, we reported a net loss of $19.6 million or $0.21 per share, which compares with a net loss of $12.1 million or $0.31 per share for the same period in 2019.

I'll now hand the call back over to Carsten for closing remarks. Carsten?

Carsten Brunn -- President and Chief Executive Officer

Thank you, Brad. As mentioned earlier, the first quarter posed unexpected and unprecedented challenges for us as it did for most companies. I'm proud of our team and I'm grateful for their flexibility, dedication and unwavering commitment to ensuring that our clinical trials and development programs continue to progress. I'm further pleased that as a result of their efforts as of today, we are on schedule for key milestones this year: the announcement of topline data from the COMPARE trial in Q3; the initiation of the Phase 3 study of SEL-212 in the second half of the year; and the entry of our gene therapy program into the clinic by Q4. Our commitment to pursuing new breakthroughs in treating diseases that can benefit from redosing of gene therapy remains strong and we look forward to generating additional value from our ImmTOR platform.

I'd like to conclude by reiterating our gratitude to the many people who have been supportive along the way, including our patients and their families, our investigators helping us with COMPARE and our great team at Selecta.

With that, we're happy to take questions.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Ellie Merle from Cantor Fitzgerald. Please go ahead.

Ellie Merle -- Cantor Fitzgerald -- Analyst

Hey, guys. Thanks so much for taking my question. Just in terms of the COVID impact on the COMPARE study, can you give us a little bit more color on what proportion of doses, if any, has been missed due to any COVID-related disruptions? If you could give us a little bit more color in terms of anything you saw in terms of missed doses so far, if at all?

And then just in terms of contingency planning, I guess if there were to be a disruption, can you remind us from the staff perspective sort of how you would treat that, and potential sort of contingencies if there were to be disruption in terms of the data collection and/or missed doses.

And then my final question is just on the gene therapy side, as you guys are moving toward the clinic and potentially dosing patients, can you talk a little bit about what would constitute a proof of concept from your perspective in terms of demonstrating the ability to do redosing and what you'd be looking for in terms of I guess immunogenicity and any sort of antibody titers. Thanks.

Carsten Brunn -- President and Chief Executive Officer

Great question Ellie. Thank you. So in terms of COVID impact, I think what's important and I think we mentioned is, in previous discussion we had that it's important to note that the drugs are administered in dedicated infusion centers as part of the metrology practices. They also administer life-saving drugs. So all these centers basically remain open throughout the COVID crisis. We had a number of sites went offline for two weeks at a time due to either a patient, not necessarily from our trial, or a healthcare provider diagnosed with COVID, but we have not -- this doesn't have an impact on the study. Patients got redirected to alternative sites and all the sites actually are up and running.

So I think that's important to note in terms of the infusions. Overall, both the PIs [Phonetic] and patients are extremely motivated. This obviously shows how severe the disease is. So to date, we have not seen a material impact actually, and obviously there are safety measures that are taken by the sites and we are closely working with the sites. A lot of the consultations are done by our telemedicine. They reduce the number of patients actually come to the infusion centers after infusion. All the infusion suites are sterilized before the next patients and disinfected. So I think all those are changed from an operational perspective. But so far, we did not have a material impact.

So in terms of contingency plan to get to your second question, so we're pleased that we have half of the patients completed the study and all patients completed three months. Right? So, and I would kind of call that the data set a pre-COVID. We're obviously working on a potential contingency plan to make potentially changes to the SAP to account for potential dropouts and there are various approaches we could take and I mean, even in a worst-case scenario, what you could do is you could do a base analysis and project out missing data for those patients between months three and six that have not completed the study. So we're working through that and we'll keep you updated around this.

In terms of gene therapy, I think that's a great question as well. And I think what we're really trying to do here with ImmTOR and gene therapy is to prevent the formation of neutralizing antibodies. And in terms of proof of concept, we believe that it's a fairly simple measure, then we would administer the gene therapy together with ImmTOR and we would check for the presence of neutralizing antibodies within a certain time frame, 30 days to 60 days after administration and would obviously look for the prevention after formation of antibodies, which is a good indicator that we're able to retreat and give a second dose.

Ellie Merle -- Cantor Fitzgerald -- Analyst

Got it. Thanks so much for the color.

Carsten Brunn -- President and Chief Executive Officer

Thank you.

Operator

Thank you. We have next question from the line of Raju Prasad from William Blair. Please go ahead.

Raju Prasad -- William Blair -- Analyst

Thanks for taking the question. I just was curious to know in the pivotal trial -- in terms of pivotal trial, do you intend on or could you enroll kind of kidney transplantation as well as Krystexxa experienced patients or would likely be naive uncontrolled gout patients? And then I have a couple of follow-ups.

Carsten Brunn -- President and Chief Executive Officer

Hey Raju, good questions. So yes, we would exclude patients with kidney transplant and we would also exclude patients that have been treated with Krystexxa prior. So we're looking to recruit naive patients to the pivotal study.

Raju Prasad -- William Blair -- Analyst

Great and then thinking about the COVID-19 situation from a different angle, have you spoke with rheumatologists that have said anything regarding the benefits of obviously increased durability or increased frequency of dosing? Is there any anecdotal information you're hearing?

Carsten Brunn -- President and Chief Executive Officer

In regards to SEL-212 specifically or...?

Raju Prasad -- William Blair -- Analyst

Yes.

Carsten Brunn -- President and Chief Executive Officer

Yes. I think, obviously one of the advantages of SEL-212 potentially is that we only dose once a month, which is a big convenience factor and -- but also, especially in light of COVID, it's only one visit basically per month. So it's definitely seen as a positive, I mean even pre-COVID is seen as a positive, but also now obviously, and there is fewer interactions with the sites. The patient only has to come in for one infusion per month.

I think the other important piece is that rheumatologists are still very dedicated to treat patients with chronic refractory gout, as if they will be taken off therapy, there is a risk of decompensation, which means they could have severe gout flares, which would oftentimes lead them to go to the emergency room, which is probably not the best place to be at the moment given COVID-19 and the other consideration is oftentimes, gout flares are treated with very high doses of steroids, with immunesuppressant, which is also something that rheumatologists try to avoid at the moment as well.

Raju Prasad -- William Blair -- Analyst

Great. And then on the gene therapy platform, so there is only couple of presentations at ASGCT. Is there anything that you're kind of learning from the increased data sets as far as treatment paradigms ImmTOR with AAV and then it looked like from the abstract in the MMA presentation that you saw maternal neutralizing antibodies were -- didn't matter [Indecipherable]. Any further color that you can provide there or will there be significant color in the poster on that?

Carsten Brunn -- President and Chief Executive Officer

Yes. We will provide additional color with the poster, but I'll hand these questions to Kei to give a bit more color at this point.

Takashi Kei Kishimoto -- Chief Scientific Officer

Hi. Yes, it was actually a very interesting observation. So we were looking at the [Indecipherable] mice that had pre-existing antibodies to the transgene and what we observed was that when we gave ImmTOR together with the AAV vector, we had much better survival even in the presence of those maternally transferred antibodies and this allowed for redosing and eventually we were able to rescue all of those mice. So it's a very interesting study and I encourage you to kind of tune into that.

Raju Prasad -- William Blair -- Analyst

Hey, thanks for all the questions and congrats on the progress.

Carsten Brunn -- President and Chief Executive Officer

Thanks so much.

Operator

Thank you. We have next question from the line of Yun Zhong from Janney. Please go ahead.

Yun Zhong -- Janney -- Analyst

Hi. So a follow-up question on the COVID-19 impact. It's good to know that the topline data is still on track. No material impact, but I wonder how much flexibility do you have in terms of timing of dosing if say a patient is not available to go to the infusion center on a specific day? Is that acceptable if you go there in an alternative day and how much room do you have in terms of the flexibility?

Carsten Brunn -- President and Chief Executive Officer

Yes, that's a great question. Yes, you do have indeed some flexibilities around the dosing. It's kind of plus/minus five days. So in case you do miss a dose, you are able to be rescheduled or we had this previously, which I mentioned. If a site was to shut down, there is obviously the opportunity to go to an alternative site to get the infusion. So, yes, there is flexibility around the dosing. I think the other piece that is important are the blood draws. And I think the protocol also allows for flexibility. The patients don't have to go back to there initial site. They can go to alternative sites or alternative labs closer to their home. We also explore potential home nursing visits for blood draws. So, we are also providing flexibility in terms of the blood draws as well.

Yun Zhong -- Janney -- Analyst

Okay. And then on the gene therapy program, I wanted to confirm that first program to enter the clinic is going to be the MMA, and will the main objective be looking at redosing or dosing patients that have pre-existing antibodies or both. And for the OTC program, are you going to wait for initial proof of concept data from the MMA program to start the OTC -- to move the OTC program into the clinic?

Carsten Brunn -- President and Chief Executive Officer

Yes. So -- I think we had the discussion in the past. So MMA was our program that we put into the partnership with AskBio. We haven't guided which program will be the first to go into the clinic. So, as mentioned earlier, we will guide throughout the year, which the first indication will be that MMA is part of the collaboration with AskBio.

In terms of OTC, we're still working through the plans, but we plan to continue with our efforts around OTC and just kind of go back to the initial question, what are we trying to demonstrate. Obviously ultimately, we want to demonstrate that we are able to successfully redose in MMA, but the initial early read we believe which would be quite impactful if we can show after the first dose we can prevent the formation of neutralizing antibodies. I mean that would enable the second dose basically.

Yun Zhong -- Janney -- Analyst

Okay, great. Thank you very much for taking the questions.

Carsten Brunn -- President and Chief Executive Officer

Thanks Yun.

Operator

Thank you. [Operator Instructions] We have the next question from the line of John Newman from Canaccord. Please go ahead.

John Newman -- Canaccord -- Analyst

Hey guys, good morning. Thanks for taking my question and congrats on all the progress given COVID. So my question is, you gave us an interesting data at the end of 2019 regarding the initial drop-out rate for the two different groups in the study. It appeared that the active control group drop-out number was higher. Just wonder what your opinion is on what we might expect during the COVID crisis given that the active control arm is dosed twice a week. Is it feasible to expect that there would be more patients potentially dropping out or missing infusions because they have to go into the center more often than your drug, which is given monthly? Thank you.

Carsten Brunn -- President and Chief Executive Officer

Yes, that's a good question John and I don't want to speculate on the data. I think it is fair to say that patients and the PIs are motivated in the study in both arms. But I think there is definitely a benefit with or without COVID to only have to come in once a month. But I don't expect any actual data, but we definitely feel very strongly as a key differentiator of SEL-212 is the monthly dosing regimen.

John Newman -- Canaccord -- Analyst

Okay. Great. If I may ask one more question. In the earlier data that have been presented for 212, the gout flares have been quite low. And I'm just curious as to how you plan to analyze the gout flares in the COMPARE study. Just curious as to what types of analyses in general that you will look to do between the two arms. Thanks.

Carsten Brunn -- President and Chief Executive Officer

Yes, and that's a great question. And as you know John, gout flares is a secondary endpoint in the study. So we will be looking at the number of gout flares, so that's built in to the analysis, but I think there's also other analysis we can do as well. For example, we can look at the use of -- concurrent [Phonetic] use of steroids, for example, throughout the study, which is a good indicator as well in terms of the patients experienced gout flares and obviously there is a clear trend in the treatment of chronic refractory gout where physicians try to reduce the use of steroids and I think that's even more acute now with the COVID crisis where rheumatologists are quite nervous around administering high doses of steroids, which are immune-suppressive.

John Newman -- Canaccord -- Analyst

Okay. Great, thank you.

Carsten Brunn -- President and Chief Executive Officer

Thank you, John.

Operator

Thank you. We have next question from the line of Difei Yang from Mizuho Securities, please go ahead.

Difei Yang -- Mizuho Securities -- Analyst

Hi, good morning, and thanks for taking my question. So just a couple. Would you expect a permanent CMO to be onboard before initiation of the pivotal trial for 212?

Carsten Brunn -- President and Chief Executive Officer

Yes, that's a good question Difei. We were very pleased to have Peter Traber as our acting CMO. Peter brings a lot of experience both from academic medicine and big pharma and biotech. And we might potentially start a search. But for now, Peter is overseeing the COMPARE trial and also the preparation for Phase 3. So -- and what's important to note as well, we have a very strong team below Peter. The project program manager has been on SEL-212 since the beginning. So we have a very experienced team below as well.

Difei Yang -- Mizuho Securities -- Analyst

Thank you. Then turning to just SEL-212 program, it seems like there is a protocol amendment lately that inclusion criteria has been broadened a little going from uric acid level of 8, down to 7. And could you help us to understand what's the implication of that change? And then if you could remind us on the statistical plan for the data analysis out of COMPARE, just so we can be ready for the Q3 readout? Thank you.

Carsten Brunn -- President and Chief Executive Officer

Yes. So we actually changed the inclusion criteria pretty early on to help with the speed of recruitment. Obviously, by definition, patients with SUA levels above 6.8 are considered chronic refractory that previously failed on semi-uric [Phonetic] lowering compounds like allopurinol for example, and at least one -- two parts present. So it is still a very severe patient population. So we don't think there is a key difference here. The key driver was here speed of recruitment.

In terms of statistical plan, I think we have discussed previously. We have not guided to that in detail, but important to note that the study is powered to show statistical superiority in terms of SUA control.

Difei Yang -- Mizuho Securities -- Analyst

Thank you.

Carsten Brunn -- President and Chief Executive Officer

Thanks, Difei.

Operator

Thank you. [Operator Instructions] We have next question from the line of Ram Selvaraju from H.C. Wainwright. Please go ahead.

Boobalan -- H.C. Wainwright -- Analyst

Hi, this is Boobalan dialing in for Ram Selvaraju. Thanks for taking my question. So about SEL-212, assuming that you will start the trial sometime in 2020, how long would you expect the trial to run? Is there any interim analysis planned? If so, what items will be designated and at what time point? And then are you planning to run only one Phase 3 trial to get an FDA approval for 212? Thank you.

Carsten Brunn -- President and Chief Executive Officer

Yes, thanks. Nice to meet you and thanks for the question around the Phase 3. So as we have guided previously, we plan to do -- to run two Phase 3 studies. They are two six months placebo-controlled studies with one study having a six-month safety extension. So that one study obviously will be the key driver in terms of timing. We plan to start the Phase 3 in the second half of this year and we feel we're still on track for that. We have not guided to speed of recruitment, but once we complete recruitment, it's basically we'll have a read-out of the six-month study and then we'll have another read-out after 12 months.

Boobalan -- H.C. Wainwright -- Analyst

Thank you. And next question, do you see that your direct competitor Horizon is pursuing additional discovery programs in the gout space to maintain its leadership? So do you have any similar plans to strengthen your gout franchise?

Carsten Brunn -- President and Chief Executive Officer

Yes, that's a great question. I mean at this point, we are strongly focused on SEL-212 and bring it into Phase 3 in the second half of this year and I think that's our key focus at the moment.

Boobalan -- H.C. Wainwright -- Analyst

Okay. And this will be my final question. So I understand that 313 and 302 were slated to enter into the clinic this year. Maybe if you can talk about, especially about the AskBio collaboration, what are the remaining gating items to be completed from your end and what are the items that AskBio have to do in order to facilitate the entry?

Carsten Brunn -- President and Chief Executive Officer

Yes, that's a good question. So I think first of all, we have not guided to the specific indication. But what's important is that, we bring both the MMA program in the collaboration and obviously ImmTOR. We are responsible for the manufacturing of ImmTOR and AskBio is responsible for the manufacturing of the AAV capsid and we are currently focused on those things and we jointly decide on the indications that we're going to move forward with.

Boobalan -- H.C. Wainwright -- Analyst

Okay, thank you so much. That's it from me.

Carsten Brunn -- President and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions] Thank you. This concludes the question-and answer portion of the call. I will now like to turn back over to Selecta's CEO Carsten Brunn for closing remarks. Carsten?

Carsten Brunn -- President and Chief Executive Officer

Yes. Thank you operator and thank you to everyone who joined us this morning. We're extremely excited about the upcoming milestones in 2020 and the continued growth of our company and our platform. We look forward to sharing further updates about the broad potential of the ImmTOR platform throughout the year.

That concludes today's call. Thank you.

Operator

[Operator Closing Remarks]

Duration: 34 minutes

Call participants:

Elona Kogan -- General Counsel

Carsten Brunn -- President and Chief Executive Officer

Brad Dahms -- Chief Financial Officer

Takashi Kei Kishimoto -- Chief Scientific Officer

Ellie Merle -- Cantor Fitzgerald -- Analyst

Raju Prasad -- William Blair -- Analyst

Yun Zhong -- Janney -- Analyst

John Newman -- Canaccord -- Analyst

Difei Yang -- Mizuho Securities -- Analyst

Boobalan -- H.C. Wainwright -- Analyst

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