Enlivex Therapeutics Ltd

NASDAQ:ENLV

Earnings Call Transcript 2007-Q1

[Operator]

Good day, and welcome to the Bioblast Pharma Enlivex Announces Merger with Enlivex Therapeutics Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Dalia Megiddo. Please go ahead, ma'am. Please go ahead, your line is open. [Technical Difficulty]

Please go ahead Shmuel, your line is open.

[Shmuel Hess, Chief Executive Officer, Enlivex Therapeutics]

Good morning, and welcome everyone to this special webcast. My name is Shmuel Hess, the CEO of Enlivex Therapeutics and with me today is Mr. Shai Novik, Executive Chairman of the Board. We are very excited to present to you today Enlivex Therapeutics. I will start today's presentation with a brief overview introduction of Enlivex, followed by a few minutes describing the biology, the science behind Allocetra, a brief review of the major clinical and non-clinical data and finally, a few minutes on the potential markets and economics of Enlivex Allocetra of the separate solution.

First slide please. We have in Enlivex have set out with a clear mission to prevent or treat life-threatening diseases caused by an out of control immune system. We do this by utilizing the body's own immune control pathways, or in other words utilize physiological solutions already developed through evolution as a therapeutic agent. The indications we tend to treat are estimated to have $40 billion market. First sepsis, interestingly, 55% of Americans never heard of sepsis, yet, it is the third-leading cause of mortality in the U.S. following number one cardiovascular and second cancer. The second indication includes through sub indications related to post bone-marrow transplantation complications causing sever morbidity and mortality. We have successfully completed a Phase IIa clinical trial investigating Allocetra for the prevention of post bone-marrow transplantation complications, namely graft-versus-host disease or also known as GvHD. The most prominent and perhaps the direst complication of bone marrow transplantation that is not cancer relapse. The result of this Phase IIa were superb in the sense that none of the patients in the therapeutic dose group develop GvHD, and I will later on in this presentation highlight at least one more major patient and payer benefit following Allocetra treatments.

We are at Enlivex are proud of a well experienced biotech leading team. Mr. Novik joined with me today and our Executive Chairman raised $3 million investments for its former biotech company Prolor at the valuation of $9 million and was sold for $560 million. This was continued with the signing of a licensing agreement for Prolor's leading product with Pfizer consisting of $295 million down payment, $275 million upon completion of our Phase III milestone and an additional profit sharing component.

With respect to my own background, I was the CEO at a privately held biotech company Valin Technologies, a profitable enterprise with a multimillion dollar revenue and with the successful development of several biologics. The first product is already market approved in China.

We do expect to be positioned at closing with a cash balance that just the price for 2.5 to 3 years activity. Whereas during this period, we will have a multiple clinical milestone, which are; a Phase II sepsis trial to be initiated second quarter of 2019; a Phase II/III for the prevention of post bone marrow transplantation GvHD to be initiated at the end of 2019; a Phase II trial in tending to treat patients with post bone marrow transplantation complications who do not respond to steroid treatment, which will be initiated end of 2019. Perhaps worth noting that this is a sub population of patients with the most devastating presentation of GvHD with no optional treatment and with up to 90% mortality. I would like to emphasize that with a combination of an advanced therapy such as Allocetra and these unmet indications, there is a supportive EU regulation the prime program for instance that may lead to conditional marketing approval in the EU based on Phase II data alone.

Next slide please. Now that we have a general overview of Enlivex and the direction in which we are headed and before directly addressing the technology Allocetra I would like to take a few minutes for a brief overview an illustration of a typical physiological immune response and its recognition of a foreign entity for instance bacteria in the blood stream. Allow me to take you through the various stages of the immune systems response, detection, alert, resolve a problem and finally, back to its original normal relax mode. We start off with a normally relax immune system. A planned intrusion and appearance of foreign entity first responders are recruited to the scene and upon arrival release further and more intense alert signals. That in return recruits specialized immune cells aimed at destroying the invader.

The result of this attack of specialized immune cells is a fairly large population of dying cells. These dying cells are engulfed, or in other words eaten by the first responders. This phenomenon serves two purposes: A, obviously, the clearance from the blood cell of a dying cell population; and B, this exact action of eating dying cells served as a relax signal for these first responders or in return set out a series of distinguished signals, indicating a back to normal model, following a return to the originally relax status we started off with.

Next Slide please. Now, let’s dive in a bit deeper and observe this process in an abnormal situation. Fast forward to our first responders eating dying cells and supposedly sending out the relax signals. Yet, in this abnormal case, the system for some reason does not response as expect. In the contrary, it continues to send out alert signals that with an vicious cycle keeps recruiting specialized agents that are now out of real enemies and now within an over abdicative system, which as a result, begin to attack its cells, its own organs. This very specific event is what causes the most dire outcomes in diseases such as sepsis, GvHD and others. It is an immune system out of control with no true solution for relaxing.

Next Slide please. We now finally come to our solution Allocetra. Next Slide please. I will start and describing what Allocetra and follow on explaining how it solves the problem of an out of control immune system. Allocetra is a cell based therapy consisting of a large dose of cells maintaining a dying cells status. Allocetra is produced by separating a subgroup of live white blood cells from the blood of healthy donors, which then through a serious proprietary and phthisis processes, turn into dying cells ready for administration for any given patient.

Next Slide please. At this point, I assume that most of you have already a good idea of how and why Allocetra works and in such and efficient fashion. It is simply a significant boost to an already process taking place, which for some reason that we don’t entirely understand, was not enough on its own. We are simply, so to speak, over splitting those first responders with exact same food they expect to eat, dying cells.

Next Slide please. As I mentioned at the beginning of this presentation, we have successfully completed a Phase IIa study for the prevention of post bone marrow transplantation complication, specifically GvHD. I've also pointed out the fact that none of the patients within the therapeutic dose group experienced GvHD, which is in clear contrast to the U.S. historical data, as well as our own sub therapeutic dose group data.

As you may recall, I promised to highlight an additional significant benefit resulting from this study, and that is the impressive reduction in time to discharge following bone marrow transplantation. In this study, there was 50% reduction in the time to hospital discharge. This is a non-heard of result further indicating the significant benefit to the patient discharged in an excellent condition long before usually expected, but not only it is the healthcare system, i.e. the payer as well.

Next slide please. As you may recall, I have earlier described the out of control status, because of an overreacting or unstoppable signaling immune system. Here you can see an example of two representing other signals from patients in this study and their levels above expected normal threshold levels depicted in the dash black horizontal line and out of control event in red and in green, following treatment with Allocetra back to the relax normal mode.

Next slide please. As mentioned, sepsis is our first upcoming clinical trial and the unmet need is clear.

Next slide please. This is a pre-clinical data derived from an extensive study of utilizing the golden standard pre-clinical model for sepsis and rodents, the COP model, worth noting that this is a model modeling the most severe form of sepsis. Treating these animals with state of art antibiotics, the gray line, barely change the overall survival compared to no treatment and all the black lines. In sharp contrast, Allocetra combined with antibiotics treated animals presented a 10 times increase in survival, 60% versus fixed, this is dramatic.

Next slide please. Now, let's once again peek into what is happening in the background, the alert signal overreaction of an out of control immune system. Once again here are the two same as before representative alert signals at normal relax at flow in disease state with and without antibiotic treatment in black and red and yet again, I would like to emphasize the sharp contrast depicted in green the Allocetra treated animals.

Next slide please. Okay I'd like to shift gears now to a different topic. So far, we have been discussing the potential of Allocetra and rebalancing of out of control immune system. The following is a very interesting and a good example of the result of curiosity driven science. The Enlivex research team discovered a unique immune checkpoint pathway for solid tumors, which is activated by the engulfment of Allocetra. We believe Allocetra presents a significant opportunity to engage the body's immune system in effecting negative tumor micro environment, enabling anti-cancer therapies, such as CAR-T for instance, Yescarta, the latest CAR-T developed by Kite, sold lately to Gilead that has shown promise only in non-solid tumors. The effective treatment for solid tumors is still the Holy Grail.

Next slide please. As very clearly depicted in this slide, if you compare the yellow line to the blue line representing overall survival of animals with solid tumors treated with CAR-T without Allocetra in yellow versus CAR-T with Allocetra in blue, you will notice the significant improvement in overall survival of approximately 150% superior to treatment with CAR-T alone.

Thank you all. I will now hand it over the Mr. Shai Novik, who has been waiting patiently. Shai?

[Shai Novik]

Thank you, Shmuel. Hi everyone. This is Shai Novik, I'll take this part of the presentation going --we don’t have a lot of time, so going fairly quickly through the slide. Right now I'm now on Slide 16, which starts a description of the market that we see for tweaking or preventing complications post bone marrow transplantation. This is a very sizeable market, we divided into two different segments. The prevention segment for which we have a Phase II/III plan later in the year in 2019, that as Shmuel mentioned. So the concept of that is trying to provide the Allocetra infusion 24 hours prior to a bone marrow transplantation in order to completely prevent the complications before they even happen. So that is the market it is described on Slide 15.

If we switch to the next slide, Slide 16,t he second segment of that market and Shmuel mentioned those patients initially -- that's really unfortunate case of people that underwent bone marrow transplantation. There were some complications. Standard of care which is typically steroids we administered, those patients do not respond to steroids and their complications continue to worsen until they become very severe and the mortality rate is exceptionally high for those patients unfortunately. So that are subtle relation for which we are going to go after starting with the Phase II later in the 2019 and that market -- the way that we see it is about slightly over $1 billion a year compared to the 3 billion target markets for the prevention.

Let's move on to the next slide, Slide 17. In Slide 17, we talk about the sepsis market economic opportunity for our treatment. As Shmuel mentioned sepsis is essentially it is exceptionally difficult to treat there is nothing approved for sepsis, sepsis has presented multiple challenges for traditional single drug and single target therapies because of the multi factor nature of the problem. Competition is very weak but the market opportunity is enormous estimated in the U.S and Europe close to 33 billion. As you know one in three who die in the U.S hospital, dies from sepsis. So this is something that is in dire need of providing a solution and we think and believe that our solution could be highly suitable for sepsis.

Moving on to the next Slide 18. It is worth mentioning that there is a special regulatory attitudes by the European regulator compared to the FDA that is with respect to life saving advance therapy, it's called PRIME and the bottom line implication of that regulatory test is that the EU essentially allows for potential conditional marketing approval of a therapy that is life saving and with unmet medical need. After a single phase II which is open label, single arm and small number of patients. So the logic behind the EU regulator decision here is, if you conducted a phase II and you are phase II has shown that your product is safe and it has shown some indication that it can potentially save lives in an area where there is no life saving medication, it’s an unmet medical need, there is nothing to lose and they allow in this particular case they may allow the already conditional marketing approval for -- while at the same time starting at post marketing phase III.

All of the indications that we’re targeting are indications that fall in our opinion and our consultant’s opinion fall under that regulation, and so after the phase 2 that we’re going to be conducting we’re going for conditional marketing approval for all of these indications.

Moving on to Slide 19. In Slide 19, as you can see a lots of wording here but basically as a description that the bottom line is that providing here a map of the multiple clinical milestones, that we expect to have during the next two years and for the three programs that we described the prevention of complications, the treatment of third refractory patients, both in bone marrow transplantation and the sepsis program.

Moving on to Slide 20. I think it’s important that we express the way that we position the company and the way that we see the various probably comparables that also have developed life saving immuno therapies for diseases that were previously considered untreatable. So the truth is I’m referring to here are Kite and Juno, already have been sold last year obviously. But if you look at the different categories from indication which is different, recurring blood cancer versus Sepsis and bone marrow transplantation. But at the end of the day we’re talking about patients here that have very high mortality rate, unmet medical needs and the innovation is essentially the new immuno therapies in T cells. Kite and Juno are using modified T cells, we use dying T cells. And for all these indications, there were a dozens of clinical trials that didn’t really work out, because they were not in immunotherapeutic in nature, they were more of a single drug, single target approach. And so when we look at those companies, we believe that Enlivex is a company that we want to build in that mold.

Moving on to the next slide, Slide 21. Just a very quickly the product of Enlivex has already received orphan drug designation from both the U.S. and the EU regulators.

And last Slide for me, on Slide 22 the next Slide. Just worth noting that in our leadership on the Board of Directors, we also have Bernhard Kirschbaum, who is former head of R&D at Merck Serono. Avi Havron who is my partner with my former company Prolor and previously he is the guy that was the head of the development of the drug -- multiple sclerosis drug Rebif at Merck Serono, the drug that sells today more than $2 billion in sales and four other drugs that are on the market. And since one of our main investor is the largest Korean venture capital fund, Korean Investment Partners, Sangwoo Lee, who is one of the senior partner there is also on our Board of Directors.

With that, Shmuel and I have completed providing very quick overview of Enlivex. And I’m going to send it back to Dalia Megiddo to wrap up this particular presentation. Thank you, Dalia.

[Dalia Megiddo, Chief Executive Officer]

Thank you, Shai. And I’m Dalia Megiddo, the CEO of Bioblast. And following the comprehensive review of strategic alternative faced by the company, the Bioblast Board of Directors decided that the proposed transaction with Enlivex is in the best interest of our shareholders. This merger combined with our planned contingent value right will maximize the value for Bioblast shareholders as they will benefit not only from the diversified pipeline of the clinical and preclinical assets in areas of high unmet medical need currently in Enlivex, but also from the future income that will come from the further development of the Trehalose program.

Regarding the Enlivex technology you've heard the company present the technology. I would like to point out the hope that these novel platforms can offer to patient in life threatening conditions, such as graft versus host and sepsis. The terms of our deal were described in our PR and are further described in our 6-K. What I would like to mention here that upon closing current Bioblast shareholders are expected to own 4% approximately of a well financed clinical stage company with a promising pipeline and great technological platform.

As mentioned, this include the shares in the combined company, each current Bioblast shareholder will receive one contingent value right, CVR through share of Bioblast, owned prior to the closing of the merger on the record day. In other sense, each CVR owner will be entitled to receive his share of the configuration coming from potential sell or licensing of the Trehalose program. In order to be eligible for CVR, Bioblast shareholders must be a holder on record day, which will be prior to the closing of the merger estimated to occur in the first quarter of 2019. Bioblast is currently negotiating with third parties for the potential further licensing of this current Trehalose program. Once we will have more definite details, we will share it with thepublic.

With that I would like to wish Enlivex management the best of success for all everyone's sake. Shai,I'm handing back to you.

[Shai Novik]

Sure. This wraps up the presentation. Now we are opening the floor if there are any particular questions.And Paul will be assisting us with that. Thank you.

[Shai Novik]

Okay, thank you. So this is Shai. We invite everybody to pay a quick visit to our website at Enlivex.com to learn a little more about what we are doing and hopefully we'll be able to provide additional information as time goes by. So thank you everybody for joining the call. We're adjourned.

[Operator]

Thank you. This concludes today's call. Thank you for your participation ladies and gentlemen. You may now disconnect.