Eloxx Pharmaceuticals, Inc. (ELOX) Q4 2020 Earnings Call Transcript

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Eloxx Pharmaceuticals, Inc. (ELOX -3.09%)
Q4 2020 Earnings Call
Mar 11, 2021, 4:30 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon everyone and welcome to the Eloxx Pharmaceuticals Fourth Quarter and Full Year 2020 earnings webcast and conference call. Today's call is being recorded.

At this time, I would like to turn the call over to Barbara Ryan, Eloxx Investor Relations. Please begin.

Barbara Ryan -- Investor Relations

Thank you, Victor. Welcome and thank you for joining us this afternoon for a review of Eloxx Pharmaceuticals fourth quarter and full year 2020 financial results and business update. Joining me this afternoon are Dr. Greg Williams, our Chief Executive Officer; Neil Belloff, Chief Operating Officer and General Counsel; Dr. Tom Haverty, our Chief Medical Officer; Dr. Matthew Goddeeris, Vice President of Research; and Steven McDonald, our Vice President of Finance and Accounting.

Before we begin, I would like to remind you that any statements made during the call that are not historical are considered to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those indicated by these statements as a result of various important factors, including those discussed in the Risk Factors section in our most recent annual report on Form 10-K filed with the Securities and Exchange Commission, as well as our other reports filed with the SEC. Any forward-looking statements represent our views as of today, March 11, 2021 only. A replay of this call will be available on the company's website, www.eloxxpharma.com following the call.

It is now my great pleasure to turn the call over to Dr. Greg Williams, Chief Executive Officer of Eloxx Pharmaceuticals.

Greg Williams -- Chief Executive Officer

Thank you, Barbara and welcome to Eloxx's fourth quarter and full year 2020 earnings webcast and conference call. We are continuing to advance our clinical and scientific programs for our ERSG library. Our highest priority is to complete our Phase II clinical trials for ELX-02 in cystic fibrosis and we are on track to report top line data in the first half of this year. We believe that these proof-of-concept data will be a substantial value inflection point for our company. As we previously shared, we are pleased that ELX-02 Phase II clinical trials independent safety review committees have concluded several planned meetings and allow dose escalation up to the fourth and highest dose level. To-date no drug-related serious adverse events have been reported.

We are conducting these global trials at top CF clinical trial sites and are grateful that the Cystic Fibrosis Foundation has recently expanded their financial support beyond the US to provide increased funding for our global ELX-02 Phase II clinical trial program. The expressed level of interest and support from top investigators, trial sites and patient advocacy groups has been a fantastic benefit to the program. Previously, we've shared that we continue to evaluate additional clinical trial sites in other countries where patients enrollment may be feasible. We are pleased to report that we are opening additional clinical trial sites in Australia and Canada. As you know, the Cystic Fibrosis Foundation has launched a $500 million Path to a Cure initiative, aimed at finding cures for all CF patients. The foundation's initiative is prioritizing innovative approaches for individuals who do not respond to currently available treatments. This includes those with nonsense mutations, such as G542X, which is the focus of our el ELX-02 Phase II clinical trials. Patients with nonsense mediated cystic fibrosis represent about 12% of the CF population.

According to the Cystic Fibrosis Foundation, the potential ability of an Investigational Drug such as ELX-02 to restore functional CFTR protein production in these patients could be a major advanced and substantially improve the length and quality of their lives. We believe that ELX-02 has the potential to be an important disease modifying therapy for these patients who feel left behind and have few if any treatment options. We are committed to advancing the development of ELX-02 as quickly as possible.

Substantial advances have been made in the treatment of patients with cystic fibrosis with the introduction of disease modifying therapies, including the recent triple combination Trikafta from Vertex. While the benefits to patients have evolved as monotherapy transitions to combinations and most recently to the triple combo there remains a high unmet medical need among the 12% of patients with nonsense mediated disease for whom there is no approved therapy. These difficult to treat patients are often the most severely afflicted by this disease. Patients with an F508del allele are another difficult to treat population where a single agent Kalydeco was not effective.

The next generation combination products Orkambi and Symdeko demonstrated clinically important benefit in these patients. There was a five to 11 millimole per liter reduction in sweat chloride concentration for Orkambi and a reduction of 10 millimole per liter for Symdeko. These changes were associated with increases in FEV1 in the low to mid-single digits. Trikafta, the triple combo therapy has moved the needle even higher with sweat chloride concentration reductions from 42 to 45 millimoles per liter, which were associated with 10% to 14% increases in FEV1. We're evaluating the ELX-02 as a single agent for another difficult to treat cystic fibrosis patient population, those with the G542X mutation on one or both alleles.

Our CF Phase II program consists of two open label trials, one for clinical investigators enrolling patients at sites in Europe, Israel and Australia, the second enrolling patients in the United States and Canada. Both trials focus on CF patients with at least one G542X nonsense mutation. As I mentioned earlier, our global trials are being partially funded by the Cystic Fibrosis Foundation and our protocol has been endorsed by the CFF Therapeutic Development Network, the largest cystic fibrosis clinical trials network in the world.

In Europe, our protocol has been endorsed by the ECFS Clinical Trial Network. The FDA has granted ELX-02 an orphan designation for cystic fibrosis, which confers certain improved important benefits to support development of medicines for underserved patient populations. ELX-02 has demonstrated pronounced CFTR read through in plasmid, HBE, FRT and transgenic mouse models.

We've worked extensively with the hub, Hubrecht Organoid Technology to better understand ELX-02's activity across the cystic fibrosis nonsense patient population in their library of patient derived organoids. ELX-02 demonstrates significant restoration of CFTR activity in patient derived organoids, representing over 75% of all nonsense alleles. Our screening programs continue to evaluate opportunities to advance ELX-02 and other novel molecules from our ERSG library for new indications.

As our R&D team continues to advance these programs, we expect an acceleration in the pace of publishing our results in important scientific and medical journals. As a result of our progress, we've had six scientific manuscripts published since April 2020 and we expect the steady cadence of publications for ELX-02 and our ERSG library to continue. In January, the results of our renal impairment trial were published in the Journal of Clinical Pharmacology, and the results of our Phase Ib multiple ascending dose trial evaluating the safety and pharmacokinetics of ELX-02 in healthy subjects were published in the journal, Clinical Pharmacology in Drug Development. In February, a scientific manuscript was published in the Journal of Cystic Fibrosis on the results of our evaluation of ELX-02 mediated read through using the CFTR dependent forskolin-induced swelling assay across a selection of G542X homozygous and heterozygous patient derived organoids. In October 2020, our Senior Medical Consultant, Professor Eitan Kerem, M.D, a globally renowned cystic fibrosis expert published a review of ELX-02 in the Journal Expert Opinion on Investigational Drugs.

We also had a scientific manuscript published in the Journal of Experimental Eye Research, which demonstrated the achievement of an important proof of concept milestone from our ongoing IND enabling studies demonstrating restoration of protein production in the eye when injected intravitreally in a mouse model. In a few moments, Dr. Matt Goddeeris, our Vice President of Research will provide you with some highlights from these most recent publications.

We continue to be focused on delivering value to shareholders while fulfilling our mission to provide treatment options to patients with high unmet medical needs in the most safe and expeditious manner. We are the most advanced company tackling the great challenge of developing potential new therapies for nonsense mutations and there's a high level of interest and enthusiasm in the scientific and clinical community for our programs, as well as in the business community.

We will continue to pursue partnerships where appropriate to expand our therapeutic footprint, accelerate our progress and advance our pipeline. We ended the fourth quarter of 2020 with $24.7 million in cash and cash equivalents and we are on target to deliver top line data for ELX-02 in cystic fibrosis in the first half of this year. We have a strong and experienced team with expertise in clinical drug development, basic research, and regulatory affairs. I'm highly confident that we have the capabilities and the resources needed to deliver on our goals.

I would now like to turn the call over to Dr. Matt Goddeeris, our Vice President of Research who will expand on our recent publications and ongoing research activities.

Matthew Goddeeris -- Vice President of Research

Thank you, Greg. We continue to advance our preclinical efforts across our ERSG library of molecules, working with our research partners to advance our programs. As Greg mentioned, we are pleased to have had several of our scientific manuscripts published in leading peer reviewed journals and plan to continue to present our findings at scientific conferences. In February, we published a scientific manuscript in the Journal of Cystic Fibrosis, titled targeting G542XS CFTR nonsense alleles with ELX-02 to restore CFTR function in human derived intestinal organoids. This manuscript details the work we performed using G542X patient derived organoids. As you know, G542X is the most common nonsense mutation in the population of people living with cystic fibrosis.

Like other nonsense mutations, the G542X change introduces an early translation stop in the CFTR gene, leading to a truncated and unstable protein product. Current modulator therapies designed to improve CFTR activity are ineffective when CFTR protein is not being made. To overcome this, cells must be able to ignore or read through this stop signal to produce full length CFTR.

ELX-02 is a compound that interacts with the ribosome to induce mRNA read through. Across many experiments, we observed that ELX-02 can produce active CFTR protein in organoids with G542X mutations. While no CFTR activity is found in these G542X organoids when untreated, an increase in activity is seen with increasing amounts of ELX-02. We also observed that ELX-02 increases the CFTR mRNA transcript, the molecule used to produce the protein, about five-fold in some cases. As ELX-02 advances to the clinic for people with CF due to G542X mutations, we will continue to test the molecule with other types of nonsense mutations to determine if they too may benefit from this approach.

As Greg mentioned, we also recently published results from two important trials from our ELX-02 Phase I program. In January, the results from our renal impairment study were published in the Journal of Clinical Pharmacology, the pharmacokinetics of ELX-02 tell us that the compound is excreted from the body unchanged in the urine, recognizing that some of our potential target population may have reduced kidney function. This clinical study is a critical piece in our ability to dose adjust based on renal function. In this study, we evaluated pharmacokinetics and safety in participants with varying degrees of renal impairment, and the results demonstrate the relationship between plasma exposure and a key measure of kidney function, EGFR.

The second manuscript was published in January in the Journal Clinical Pharmacology in Drug Development, covering our multiple ascending dose trial. This study included 62 healthy volunteers and covered the dose range we are evaluating in our cystic fibrosis trial. We found that ELX-02 plasma exposure was dose proportional, with no apparent accumulation and no severe or serious adverse events reported. Together these clinical studies and our preclinical efforts laid the groundwork for our currently ongoing Phase II trials.

Our preclinical progress applying novel compounds from our ERSG library of read through compounds in autosomal dominant polycystic kidney disease, ADPKD and inherited retinal disorders continue. In building the models to evaluate the ADPKD nonsense patient population, we enlisted the support of Dr. Benjamin Freedman, Associate Professor of the Division of Nephrology at the University of Washington. Dr. Friedman is an expert in differentiating induced pluripotent stem cells into three-dimensional kidney organoids capable of modeling cyst formation observed in ADPKD. We have modeled the most prevalent ADPKD nonsense mutations in these cells and we anticipate providing updates on ELX-02's ability to prevent or reduce cyst in these organoids, along with other program progress over the coming year.

Our inherited retinal disorder program continues to focus on pre-IND enabling work, sustained release formulations and evaluation of novel disease models through research collaborations. The inherited retinal disorder landscape is genetically diverse. However, we believe that a single agent read through approach may be able to broadly address multiple different inherited retinal disorders, provided they are caused by nonsense mutations. In order to expand our ocular research footprint and ensure we are evaluating the most relevant cellular and animal models of nonsense mediated blindness, we have established research collaborations with ocular disease experts at the University of Maryland, University of Wisconsin and UCLA, and look forward to sharing more results as the programs progress. As always, our latest publications and presentations can be found on our website.

I would now like to ask Steve MacDonald, our Vice President of Finance and Accounting to provide a review of our fourth quarter and full year 2020 financial results.

Stephen G. MacDonald -- Vice President of Finance and Accounting, Treasurer

Thanks Matt. As of December 31, 2020, the company had total cash and cash equivalents of $24.7 million, which we believe will fund the company's operations through top line data in cystic fibrosis, and into the fourth quarter of 2021.

For the quarter ended December 31, 2020, the company incurred a net loss of $6.1 million or $0.15 per share, as compared to a net loss of $11.6 million, or $0.29 per share for the same period in 2019. Non-cash stock compensation expense totaled $1.3 million with $1.1 million allocated to G&A and $200,000 to R&D. Fourth quarter 2020 R&D expense totaled $2.6 million compared to $5.9 million for the same period in 2019. The quarter-to-quarter R&D expense decrease was driven by reduced headcount and related salaries for the 2020 period, as well as decreases in certain clinical and preclinical research costs. G&A expense for the fourth quarter of 2020 was $3.1 million, which decreased from $5.6 million for the same period in 2019 due to lower headcount and professional services cost.

For the full year ended December 31, 2020, the company incurred a net loss of $34.6 million or $0.86 per share, as compared to a net loss of $50.9 million or $1.34 per share for 2019. Non-cash stock compensation expense totaled $8.7 million with $1 million allocated to R&D, $5.6 million to G&A and $2.1 million to the corporate realignment in February 2020. Full year 2020 R&D expense totaled $14.6 million compared to $26.3 million for 2019. The year-to-year R&D expense decrease was driven by reduced headcount and related salaries for the 2020 period, as well as reduced costs relating to certain clinical and preclinical research activities. G&A expense for the full year 2020 was $14.8 million, which decreased from $24.2 million in 2019 due to lower headcount and professional services costs. For your modeling purposes, our total shares of common stock outstanding as of December 31, 2020, were 40,157,000 [Phonetic].

This concludes the fourth quarter and full year 2020 financial comments, and I'll turn the call back to Greg.

Greg Williams -- Chief Executive Officer

Thank you, Steve. It's our highest priority to complete our Phase II proof of concept clinical trials in cystic fibrosis. We are on track to report top line data in the first half of this year. We believe that these data will be a major value inflection point for our company. We're pleased that the independent safety review committees of our ELX-02 Phase II proof of concept clinical trials have allowed dose escalation up to the highest dose level and that to-date no drug related serious adverse events had been reported.

The patient population we're studying has few if any treatment options and the potential for ELX-02 to restore the production of CFTR protein could be a substantial advance and meaningfully improve the quality and length of their lives. We are laser focused on assuring that we, our investigators and global clinical sites can accomplish these goals. We are pleased to be opening additional clinical sites in Australia and Canada. We're also gratified that the FDA has granted orphan drug designation for ELX-02 for the treatment of cystic fibrosis which confers several important benefits to the ELX-02 program.

Beyond cystic fibrosis, we continue to advance our portfolio of novel ERSG molecules. Several of these compounds demonstrate encouraging levels of read through activity and tolerability, supporting their further therapeutic development in multiple disease states. As we continue to advance our programs, there's been a marked acceleration in the number of scientific manuscripts being published in important journals and we continue to present meaningful data in scientific conferences. We thank you for joining us on our fourth quarter 2020 earnings call and we look forward to continuing to update you on our progress.

Operator, you may now open the call for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question will come from the line of Ted Tenthoff from Piper Sandler. You may begin.

Edward Tenthoff -- Piper Sandler -- Analyst

Great, thank you very much. I appreciate the update and you taking my question. Want to get a sense for what would you see as a win in these I mean read through mutant patients or nonsense mutant patients, pardon me? There's nothing really that works out well there. So what do you kind of see as sort of a threshold for success? Thanks.

Greg Williams -- Chief Executive Officer

Hey Ted, thanks for the question. So when we think about patients with no meaningful therapy, no available therapies, we think about Orkambi like and Symdeko like performance, as being the threshold for clinically meaningful changes. And those compounds also represent a reasonable threshold for regulatory approval. Just to remind you, Orkambi came in with sweat chloride concentration reductions in the five to 11 millimole per liter range. And in bigger studies over longer periods of time, Orkambi was associated with FEV1 increases in the range of 2.7% to about 5.6%. Symdeko was a little better with overall sweat chloride concentration reductions in the range of about 10 with FEV1 increases in the range of about 4%. So from our Phase II study, we would be looking for a threshold of sweat chloride concentration reductions that would be Orkambi and Symdeko like that would be in the five millimole per liter concentration reduction.

Edward Tenthoff -- Piper Sandler -- Analyst

Greg, that's very clear and very helpful. I'm looking forward to data.

Greg Williams -- Chief Executive Officer

Thanks Ted.

Operator

And our next question will come from the line of Michelle Gilson from Canaccord. You may begin.

Michelle Gilson -- Canaccord Genuity Inc. -- Analyst

Hi. Thank you guys for taking my question. I guess kind of building on Ted's questions here. Could you maybe give us a sense of what the variability is day to day of sweat chloride, I guess interpatient variability?

And then also, what are you planning to report? What are the data that we're going to get other than I guess sweat chloride and initial safety data? How many patients and you probably see you are at the highest dose cohort, but will you report data from all the dose cohorts and what territories as well? And then also, I guess building on that question, what's a good result? Is it important to see a dose response? Obviously, for the cystinosis data, we didn't quite see a dose response. So I'm just curious if that's going to be important in CF?

Greg Williams -- Chief Executive Officer

Thanks, Michelle. We appreciate the questions. You've asked a few there. So I will try to take them in turn, see if I've captured them all.

First, you asked about what would be some of the variability maybe inter-patient associated with sweat chloride concentration changes. And the literature tells us it wouldn't be surprising to see changes around eight or nine millimoles per liter kind of up and down. So it's important to have sufficient numbers to be able to really tease out that five to 10 thresholds that we've been looking for in terms of Orkambi or Symdeko like responses. We're not today providing updates on our exact enrollment and the details of what our top line data will consist of, but we will be providing those in the future. We will be pooling data across our clinical sites in Europe, Israel, now Australia. We'll also be adding data from the US as well as in Canada. So it will give you a broad dataset that represents the body of data that's available at that point in time and we would anticipate seeing a dose response.

With cystinosis, we did see a good response at one milligram per kilogram. We didn't see any response at 0.5. We saw a good response at 1. When we got to the higher dose of 2, we had two responders, but there was an issue with the third patient. We think we identified a threshold for activity in the cystinosis trial. But with more patients in the CF trial, we would expect there to be a more clear cut dose response across the four different doses that we're evaluating.

Did I cover all your questions?

Michelle Gilson -- Canaccord Genuity Inc. -- Analyst

Yes, you did. You did a wonderful job of covering all my questions. Thank you.

Greg Williams -- Chief Executive Officer

Thank you.

Operator

Thank you. I'm not showing any further questions in the queue. I'll turn the call back over to Greg for any closing remarks.

Greg Williams -- Chief Executive Officer

Well, thank you. We really appreciate your interest and your attention in Eloxx. It's an exciting time for us. We remain on target to report top line results in the first half of this year and we're looking forward to updating you as we continue to progress. Thank you.

Operator

[Operator Closing Remarks]

Duration: 27 minutes

Call participants:

Barbara Ryan -- Investor Relations

Greg Williams -- Chief Executive Officer

Matthew Goddeeris -- Vice President of Research

Stephen G. MacDonald -- Vice President of Finance and Accounting, Treasurer

Edward Tenthoff -- Piper Sandler -- Analyst

Michelle Gilson -- Canaccord Genuity Inc. -- Analyst

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