Lytix Biopharma AS

OSE:LYTIX

Earnings Call Transcript

[Oystein Rekdal, executive]

Good morning, everyone. Thank you for joining us today, and welcome to our first quarter results presentation for 2025. We are excited to share how we are preparing the company for the next pivotal period. We have strengthened our Board with strong and complementary competencies in commercial drug development within immuno-oncology and strengthened our management team with business development. And today, we are also looking forward to introducing our new Chairman later in this presentation.

I am Oystein Rekdal, CEO of Lytix Biopharma. And today, I'm joined by our CFO, Gjest Breistein. And before presenting the highlights, I will provide a brief introduction to our company and the innovative technology we are developing that has potential to transform future cancer treatment. Our innovative technology approach combines the benefits of direct killing of cancer cells and systemic immunotherapy and the positive results from several Phase II studies demonstrate the potential impact of our technology.

Our licensing partner, Verrica Pharmaceuticals has achieved groundbreaking results in basal cell carcinoma, potentially positioning our lead candidate as a first-line treatment for this prevalent cancer type. The robust clinical results obtained with our lead drug candidate and a commercial agreement already in place have significantly reduced risk and position us to capitalize on the growing market potential for intratumoral immunotherapy.

Lytix addresses major shortcomings in current cancer immunotherapy. The last 15 years, cancer treatment has been revolutionized by checkpoint immunotherapy. However, in most cancer types, the majority of cancer patients do not respond to immune checkpoint therapy due to lack of active immune cells within the tumor. Our technology addresses this challenge by enhancing the number of immune cells in the patient's tumor, as visualized by the photos to the right, showing a high number of immune cells in the patient's tumors after being treated with our drug candidate.

In other words, we complement the shortcomings of today's immune checkpoint inhibitors, providing a promising solution to challenges faced in current cancer treatment. Lytix innovative approach is focusing on killing tumor cells locally, followed by activation of an immune response throughout the body. This dual approach ensure a comprehensive attack on tumor cells at different locations in the cancer patients and can potentially also reduce risk of recurrence.

Let's then move to our summary of the highlights from the first quarter of 2025. In the first quarter highlights, we have made significant progress across multiple fronts. Since the last -- the quarterly report, we have been continuously working on various aspects, clinically, strategically and organizationally to bring our unique technology to patients and to the market in the most optimal manner. Verrica Pharmaceutical has had a positive end of Phase II meeting with FDA, and they plan to provide genomic and immune response data from the Phase II trial by mid-2025.

Verrica also plans to provide a comprehensive global development program update, including the design of the Phase III clinical program before -- within mid-2025. This progress in basal cell carcinoma is significant for our shareholders, as it demonstrates one commercial avenue for our lead drug candidate. In the newly started NeoLIPA study, patients at the Norwegian Radium Hospital recruitment is ongoing and where the impact of LTX-315 in earlier-stage melanoma are investigated. 8 patients are treated so far, and we expect an interim readout on the third -- in the third quarter of 2025.

In our ATLAS-IT-05 study, all patients have completed study treatment and the last hospital visit for the last patient in this study is projected in July 2025. In these late-stage melanoma patients that have previously failed to respond to several lines of treatment, positive interim data have been obtained with 40% disease control for up to 2 years now after having a progressive disease. Our next-generation drug candidate, LTX-401, is in progress towards clinical trials with a target to initiate the Phase I study in 2026. And the previous positive feedback from regulatory authorities is encouraging for our clinical development strategy.

On the business side, we have reinforced our commitment to enhance focus on commercialization by strengthening our leadership team with Dr. Ahmed Bouzidi and Brent Meadows and the new Board members that together represent extensive experience in biotech and oncology. Finally, it's encouraging to see a decline in operating expenses as we approach the completion of the ATLAS-IT-05 study. We would also like to take the opportunity to highlight how the last -- latest strengthening of the Board and the management will be crucial for navigating the complexities of bringing our innovative therapies to market.

Each of the new members brings a wealth of experience from various sectors within the pharmaceutical and life science industries and will contribute significantly to our strategic direction moving forward. The combined strength of this team will be instrumental in achieving our commercial goals and ensuring that we will effectively bring our drug candidates to the market and to the cancer patients. The new Board covers background from clinical development, venture capital, commercial operation and regulatory affairs.

And with that, I'm happy to introduce our new Chairman, Eric Falcand, who has an extensive background in international leadership and management, along with his success in over 50 licensing agreements. His extensive experience in the pharmaceutical industry will certainly help frame our discussion on the future of Lytix Biopharma. So please, Eric, we are looking forward to hearing from you why you decided to be our new Chairman and your reflection about the future for Lytix Biopharma. So please, Eric.

[Eric Falcand, executive]

Thank you, Oystein, for this very kind introduction. And obviously, just a few words. What I really found in this company is a very novel and very exciting technology, which not only has been proven clinically with a wealth of evidence accumulated over the last 10 years, but more recently, with the very interesting Phase II results that have been obtained in the partnership with Verrica in the basal cell carcinoma, which is really and needs to be confirmed very quickly in a Phase III trial.

So when you've got a very groundbreaking technology, which has been validated over the years and certainly confirmed with clinical data, this is extremely exciting. And as you say, it's -- the time is right to move for the company. You mentioned that actually not only me, but all the Board has a wealth of experience in terms of commercialization, in terms of biotech transaction, in terms of partnership, in terms of clinical development, late clinical development leading to commercialization.

And hopefully, with this Board, I think we are all very excited that we can help the management to structure the organization and to make the right partnership in order to move forward and to reach the patient as soon as possible. So these are the reasons why I've joined this Board, and it's a very interesting time indeed. Thank you, Oystein, for this opportunity to talk.

[Oystein Rekdal, executive]

Thank you, Eric, for taking your time to participate and share some of your reflection on Lytix and our technology platform. Thank you very much. Okay. Then let's move on to the clinical and operational updates. It's important to emphasize the breadth of our research and the different stages of development we are engaged in. This comprehensive approach not only showcases our commitment to innovation, but also highlights our strategic collaboration with partners and hospitals that enhance our capabilities.

One Phase II study led by Verrica Pharmaceuticals is completed, showing strong results in basal cell carcinoma, a second Phase II study, ATLAS-IT-05 in late-stage melanoma is almost completed and the NeoLIPA study in early-stage melanoma is ongoing. Our second lead candidate, LTX-401, is being prepared to enter clinical Phase I study next year. When it comes to the Phase II study that has been run by Verrica Pharmaceuticals, we have a strong collaboration with Verrica. And together, we leverage Lytix innovative and unique technology and Verrica's expertise treatment of different types of skin cancer.

With its impressive results in basal cell carcinoma and due to the challenges associated with current treatment options, particularly the invasive nature of surgery, our lead candidate, LTX-315, may offer a paradigm shift in the treatment of this type of cancer by representing a less invasive alternative and with significant benefits for the patients. In addition, due to its ability to evoke the immune system, LTX-315 has the potential to protect against the formation of new lesions, and we are very much looking forward to the outcome of the immunological analysis that Verrica expects to present mid-2025.

In addition, as announced in the Q1 presentation earlier this week, Verrica had -- have had a positive end of Phase II meeting with the FDA and plan to present the development update for the Phase III program mid-2025. We have a tight collaboration with Verrica, and we will update the market accordingly with additional information once this is available. The ongoing ATLAS-IT-05 study in late-stage melanoma is showing promising results. In this study, LTX-315 has been tested in combination with a PD-1 immune checkpoint inhibitor in patients who have previously failed to respond to various therapies, including PD-1, PD-L1 checkpoint blockade.

And all the patients had progressive cancer before entering the study. The disease control rates obtained in 40% of the patients up to 24 months with 2 patients showing partial response and complete regression in both treated and untreated tumors highlight the effectiveness in our treatment. Some of the patients have experienced significantly extended survival compared to what could be expected without our treatment. However, since it's very challenging to see long-term effects in this patient population, particularly with immunotherapy due to their weakened immune system, we are very excited to have initiated a study in earlier-stage melanoma patients with a more responsive immune system.

The study is now ongoing and is named NeoLIPA. The aim of the NeoLIPA study is to evaluate whether LTX-315 in combination with the immune checkpoint inhibitor pembrolizumab prior to surgery can improve the outcomes for early-stage melanoma patients compared to standard of care. The dual action of LTX-315 is not only aims to reduce tumor size before surgery, but also enhance the immune response, potentially decreasing the chances of cancer recurrence after surgery.

The study is ongoing at Oslo University Hospital and led by Dr. Henrik Jespersen, a leading expert in melanoma. The time line indicates key milestones and interim results are expected in Q3 this year. This study targets a naive patient population with a more robust immune system, which is important for optimal effect of immunotherapy and also represent a larger patient population than late-stage melanoma population. And we are very excited to see the interim results from this patient population and whether LTX-315 could advance treatment options for these patients.

Regarding our second lead candidate, LTX-401, it represents a promising oncolytic molecule with significant commercial potential, particularly for treating deep-seated cancer like liver cancer. With positive feedback from regulatory authorities, preparation for the Phase I clinical trial are on track with a target initiation in 2026. This molecule is designed to address various solid tumor types and the new formulation not only enhances anticancer effects, but also potentially extend patent life, which is critical for commercial viability.

Additionally, LTX-401 exhibits strong synergy with checkpoint inhibitors and the combination could potentially improve treatment outcomes. It's small molecule in nature, similar mode of action to LTX-315 and with strong result in liver cancer models, further underscores its therapeutic promise for different types of deep-seated cancer. With this, I will hand over to Gjest Breistein, who will provide you with a financial update.

[Gjest Breistein, executive]

Thank you, Oystein. Let me now walk you through our financial performance for the first quarter of 2025 and highlight how our disciplined financial strategy supports Lytix path to value creation. This slide summarizes the main elements of our profit and loss statement. The most notable development this quarter is the reduction in operating expenses. This decline primarily reflects that the ATLAS-IT-05 study is approaching completion. All patients have received treatment, and we are now finalizing data collection, cleaning the study database and preparing for the clinical study report.

With this major trial wrapping up, our cost base is shifting toward high-priority initiatives, most notably the NeoLIPA study in early-stage melanoma and the regulatory preparations for LTX-401. We continue to be highly disciplined on capital allocation. Every krona spend is directed towards activities that moves us closer to commercialization and longer-term value creation. Following the successful capital raise at the end of 2024, Lytix entered 2025 with significantly strengthened cash position.

At the end of Q1, our cash and short-term investments totaled NOK 118 million, up from NOK 26 million 1 year earlier. This provides us with a solid financial runway well into 2026 and gives us a strategic flexibility to navigate the challenging macroeconomic environment. Combined with disciplined cost control and a more focused pipeline, our current financial position reduces risk and supports continued progress toward development milestones, partnering activities and ultimately, the commercialization of LTX-315.

Here is a snapshot of our balance sheet as of Q1 2025. Our total assets and equity have increased in line with the improved cash position. Total liabilities stood at NOK 35 million, up from NOK 11.6 million at the end of Q1 2024. This increase is mainly related to the accrued expenses of the ATLAS-IT-05 study. Altogether, the balance sheet reflects a strong financial foundation to support ongoing development and commercialization activities. This slide outlines Lytix road map for creating long-term shareholder value.

Our strategy is clear and focused. For LTX-315, we see 2 key priorities, basal cell carcinoma. With the highly promising Phase II data presented by Verrica, this indication represents our fastest route to market and initial revenues. NeoLIPA. This earlier-stage melanoma study has strong scientific rationale and positive interim data is expected in Q3, could significantly strengthen our position in the neoadjuvant setting for multiple cancer indications. The ATLAS-IT-05 study has already demonstrated systemic immune activation and durable disease control in heavily pretreated patients.

As highlighted by Dr. Robert Andtbacka, these results suggest that 315 may offer new treatment options and extended survival for patients who have currently very few -- very limited alternatives. For LTX-401, we are preparing for a Phase I clinical trial. This molecule builds on the validation of LTX-315 with potential applications in deep-seated tumors, a largely untapped and commercially valuable area. Lytix is now in a position to drive progress on multiple fronts, scientifically, clinically and commercially. We are focused on executing this road map to maximize the value of our shareholders and bring these innovative therapies to market. And with that, I'll hand it back over to Oystein.

[Oystein Rekdal, executive]

Thank you, Gjest. As we conclude our presentation, I want to emphasize our persistent dedication to bring our drug candidates to patients. We are looking forward to several major upcoming milestones. Reporting of the immune response results from Verrica's Phase II study in basal cell carcinoma is set mid-2025. Additionally, Verrica will share the outcome of the end of Phase II meeting they have had with FDA also mid-2025 and present the development program update for LTX-315 in basal cell carcinoma, including the Phase III clinical program.

We expect to share interim results from the NeoLIPA study in the third quarter of 2025, which could significantly influence our next step for LTX-315 in metastatic cancer. By the second half year of 2025, the ATLAS-IT-05 study will be finalized. And by fourth quarter of 2026, we expect to start Phase I study with LTX-401. As earlier reported, we have strengthened the Board and management with commercial experience, and we will continue to focus on late-stage development and commercialization through strategic partnership, ensuring we remain on track to deliver our innovative treatment technology to cancer patients. So with this, I will hand it over to Petter Tandberg, who will take you through the Q&A session.

[Petter Tandberg]

Thank you so much, Oystein. We have received a few questions here today. Let's start on the topic of Verrica Pharmaceuticals and their upcoming Phase III study. There's been quite a few and also similar incoming questions on this topic. So maybe rather than naming them all, we'll start with one question, and I'll let you elaborate on this topic in general, Oystein. Is Verrica financially equipped to complete Phase III on their own? Or will they need additional funding or partnerships?

[Oystein Rekdal, executive]

So Lytix and we are not in a position to comment on Verrica's financial situation. But what I can say is that LTX-315 is a very valuable asset for both Lytix and Verrica. And we are very excited about the very promising and strong results in basal cell carcinoma and the encouraging conversation Verrica has had with FDA for moving LTX-315 forward. So we are very convinced that Verrica is fully committed to bring 315 forward and to the patients and commercialization, including forcing now a Phase III study be report more detail about mid-2025.

And we are -- we trust that Verrica are fully committed also to ensure necessary resources to complete -- bring the compound towards market approval with these promising results. Remember, this is very strong data in one of the most prevalent cancer of all. So I think there are no doubt that both Verrica and we have strong optimism and are fully committed, and we also will make sure that we support Verrica as much as possible to get this brought forward.

[Petter Tandberg]

Thank you. And then we have a question on the NeoLIPA study. Interim data is expected in Q3, but 8 patients have already been treated. Are you able to share any early indications or results based on the patients already treated?

[Oystein Rekdal, executive]

So we -- as you say, there are 8 patients that have been treated, then they have to undergo surgery and then doing analysis. So we will see interim results in third quarter 2025. We have strong expectation for this based on the very promising result in late-stage melanoma patients and also the results in basal cell carcinoma, which also is -- where 315 is given before surgery, which also is the case in earlier-stage melanoma. So we have strong expectation, and we are very -- we are soon being able to share with you data in third quarter of 2025.

[Petter Tandberg]

Thank you. On the financial side, we also have a few questions coming in. How long will your current cash position last considering expected costs?

[Gjest Breistein, executive]

Thank you. This is a recurrent question, and we are very optimistic entering 2025 with raising capital at the end of 2024 and have a really strong cash balance, together with the very encouraging clinical data we have seen from both Verrica and the ATLAS study. So we are very optimistic about the future of our technology, and how we're progressing this. We will continuously assess how to best support the future growth of Lytix. And the current cash balance is expected to last well into 2026. And then all the ongoing activities is being funded within that cash.

[Petter Tandberg]

And then maybe in the extent of that, there's coming question on -- is the cash burn of NOK 13 million in Q1, what we can expect going forward as an average quarterly cash burn?

[Gjest Breistein, executive]

Going forward, I expect the quarterly cash burn to be significantly lower than what we see saw in 2024 due to the ATLAS-IT-05 study being near to completion. There will be cost of closing the study, but my expectation is that it's -- will continue at a similar level and lower than 2024.

[Petter Tandberg]

And then also still on the finance side, there's a few questions coming in on milestone payments and potential milestone payments from Verrica. Can you tell us how the milestone payments is going to be paid out in the Verrica deal?

[Gjest Breistein, executive]

Thank you. The total milestone payments from Verrica is $110 million, and that's both sales and development milestones. Unfortunately, we cannot go into the exact details on the different milestones per se. But what we can say is that the next milestone payment is related to the Phase III study, as the previous milestone was related to the Phase II study. And we expect to receive more from that one milestone than we have already received so far. So -- and all in all, we're very positive about the development program in BCC, and we are high hopes that the Phase III study will be initiated and started as soon as possible.

[Petter Tandberg]

And then moving back to the NeoLIPA study. You mentioned there's been 8 patients treated to date. How many NeoLIPA patients do you expect to present data from in Q3? And when do you also expect the final readout?

[Oystein Rekdal, executive]

So in agreement with Radium Hospital, we will -- we plan to share interim results based on 10 patients that have been treated both with 315 and pembrolizumab and undergone surgery. And after that, we look at -- analyze the effect of the treatment. So 10 patients is the plan to present interim results during the -- within the Q3 of 2025. And to answer the last question, the plan is to recruit 27 patients in total and final -- top line results will be presented mid-2026.

[Petter Tandberg]

And in the extent of that, can you remind us how the primary endpoint complete pathological response is measured and what your benchmark is?

[Oystein Rekdal, executive]

Yes. So currently, there are immune checkpoint inhibitors that are giving patients in this early-stage melanoma patients with resectable tumors, meaning that the tumor is removed by surgical. And the complete pathological response means that you look at the effect of -- clinical effect on the tumor that is treated, the reduction in size, but also look into the tissue in the tumor and check whether there are viable living cancer cells or the cancer cells that died. So it's both like a clinical and pathological evaluation of the removed tumor.

And that's also what has been done -- studied with immune checkpoint inhibitors, so we can compare directly with standard of care with the combination of 315 and pembrolizumab compared to pembrolizumab alone. In addition, in this study, we will do a number of immunological analysis to also predict and follow the time for -- and the risk for recurrence in this patient population.

[Petter Tandberg]

Next question, has your business development strategy changed considering your new management appointments? What pharma interest in terms of deal-making are you seeing in earlier-stage melanoma?

[Oystein Rekdal, executive]

So to answer the first part of the question, drug development is a long journey with many different phases. We have now passed the significant milestones with the Phase II data. We are moving towards Phase III and commercialization. And normally, big pharma are taking over when Phase III studies are going to be performed. So we are now coming to a new point, evoluted into a more commercial phase and then it's very normal that you change Board members that from science to clinic to no more commercial. So this is a very normal way of building up your company together with the phases you are moving into.

Regarding interest for larger pharma into early-stage neoadjuvant setting, I think the whole community within immunotherapy understands this need to have a response immune system to really get an optimal effect of your immune therapy. And the pit is that very sick patients have a more weak in immune system and going earlier, you can expect a more responsive. So we believe that this is the reason why we see big pharma also trying to test the immune checkpoint inhibitors in this early-stage patient population. And we believe strongly that we are in an ideal setting with our compound that both have the ability to reduce the size of the tumor, but also evoke the immune system to protect against recurrence.

[Petter Tandberg]

Thank you. And we also had a question on LTX-401. Can you say something about what does trial preparations consist of for Lytix at this stage?

[Oystein Rekdal, executive]

So as I mentioned, we have a small molecule LTX-401 that has similar mode of action as LTX-315, but has some properties to -- that make it ideal towards deep-seated cancer. But also very positive, we have been able to make a new formulation, thanks to our strong preclinical and CMC teams that not only have shown increased anticancer activity, but also give the runway patent protection for LTX-401, potentially up to 20 more years.

But with this new formulation, we, of course, have to check that this is also safe. It can be upscaled. So we have, therefore, been in dialogue with the regulatory authorities where we are going to do the Phase I study that has been positive. We need to make -- and they are, of course, most concerned about -- ensure that this compound is safe for the patients. So we have to document safety. We also need to plan the protocol with the right dosing and dosing escalation. So there are a number of activities that make the preclinical package necessary to be allowed to start the Phase I study. But we are on good track, and we have very great optimism that we will move forward a very good plan for a Phase I study.

[Petter Tandberg]

We just have to be conscious of time here, but let's round up with a few more questions. Is the company's patent portfolio strong enough to protect LTX-315 from competitors?

[Oystein Rekdal, executive]

Good question. So our strategy has always been to make very broad patent umbrella protection and then follow up with more specific patents on the molecule, on formulation, on combination, method of use. So we have quite a strong patent protection, which make it quite difficult for other competitors to make similar drugs to 315 or 401.

Of course, you can never say that it will never be a new oncolytic molecule, which -- but we are far ahead. We have done a lot of research to find these compounds with the best possibility to succeed in the clinic. So we are quite comfortable that we have a very good patent situation for our compounds.

[Petter Tandberg]

And then finally, how is the CMC part going? Do you have control on scaling up production and distribution of your LTX-315 and also LTX-401 product?

[Oystein Rekdal, executive]

Yes. And as mentioned, we have experienced and excellent CMC team that makes sure that we have the right manufacturer company to upscale 401 and 315, and we don't see any hurdles with the ability to upscale both 315 and 401 for larger studies and market.

[Petter Tandberg]

Thank you. That will conclude the Q&A for today. If you have additional questions, feel free to go to our website, lytixbiopharma.com and submit them there, and we'll answer if there's any outstanding questions as well. I'll then leave the floor to you, Oystein, for some closing remarks.

[Oystein Rekdal, executive]

Okay. Thank you. So I will take the opportunity to thank you for your support and your attention. Biotech drug development is a long journey with high risk and -- but also potentially high revenue. We have made significant milestones, reached significant milestones and derisk our technology, and we are fully committed to bring this forward to the patients. But we really have to say we couldn't do it without the strong support from our shareholders and also thank the patients that are willing to take part in studies to prove that this has a future in the market.

And luckily, some of these patients have already seen very good efficacy, either complete responses or even prolonged -- or prolonged survival. So I will thank you very much for your support. Without you, we could not move this forward. And hopefully, we together will reach success in the near future. Thank you.