AbCellera Biologics Inc. (ABCL) Earnings Call Transcript & Summary

Good afternoon, and welcome to the ABCL635 Phase II Clinical Update. My name is Jonathan, and I will facilitate the audio portion of today's interactive broadcast. [Operator Instructions] At this time, I would like to turn the call over to Tryn Stimart, Chief Legal and Compliance Officer. You may proceed.

Good morning, good afternoon, and good evening, everyone. I am Tryn Stimart, AbCellera's Chief Legal and Compliance Officer. We are pleased to welcome you to AbCellera's conference call to discuss our Phase II top line data for ABCL635. Speaking on the call today are Carl Hansen, AbCellera's President and Chief Executive Officer; Sarah Noonberg, AbCellera's Chief Medical Officer; and Dr. Kelsey Mills, an obstetrician and gynecologist specializing in complex menopause care. During this call, we may make forward-looking statements based on our current expectations and in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These include statements regarding the therapeutic potential, safety profile and regulatory pathway for ABCL635. Our statements are subject to a number of risks, uncertainties and other factors that could cause actual results to differ materially from those described. Please review the Risk Factors section of our most recent Form 10-K and subsequent 10-Q filings with the SEC for a more detailed discussion of these risks. AbCellera assumes no obligations to update any forward-looking statements to reflect events or circumstances after today's date. Our presentation today, our press release and our SEC filings are available on our Investor Relations website. The information we provide about ABCL635 is intended for the investment community and is not promotional. As we transition to our prepared remarks, please note that this call is being recorded and will be available for replay on our Investor Relations website. After our prepared remarks, we will open the lines for questions and answers. With that, I will turn the call over to Carl.

Thanks, Tryn, and good morning, everyone. I have to say that we are more than excited to share our top line 4-week data for the Phase II study of ABCL635 in the treatment of moderate-to-severe hot flashes. As I said on last week's earnings call, coming into this readout, we were defining success as comparable efficacy to small molecules, improved safety profile that eliminated the need for liver monitoring and a more convenient once-monthly self-injection dosing regimen. With this product profile, we believe ABCL635 has potential to be a blockbuster product. The top line results, which were released this morning, exceed our target product profile and the efficacy data is beyond even the most aggressive upside scenario we had dared to consider. With this readout, we now view ABCL635 as a potential best-in-class nonhormonal therapy with strong differentiation against approved NK3R competitors across all important dimensions, including efficacy, safety and dosing convenience. It is exceedingly rare to see Phase II data that are so clearly positive and differentiated. Given the large observed effect sizes and the overwhelmingly significant statistics, we believe ABCL635 is now a highly derisked program. Most importantly, these data present an opportunity to really move the needle on care and to develop a product that offers a profound benefit to patients suffering from VMS. In particular, we believe ABCL635 has potential to capture a large share of 2 key markets, including the nonhormonal treatment of hot flashes associated with menopause and the treatment of hot flashes arising from hormone deprivation used in cancer therapy. It is estimated that more than 12 million women in the U.S. experience moderate-to-severe hot flashes, of which more than half or 6 million will seek treatment. Menopause hormone therapy, which is an effective treatment and currently the standard of care is unsuitable for at least an estimated 20% of these women because of contraindications, tolerability and other factors. Therefore, we believe there are approximately 1.2 million women in the U.S. alone who will seek relief from safe and effective non-hormonal treatments. Assuming only price parity with approved small molecule NK3R antagonist, this would correspond to a total addressable U.S. market of at least $6 billion annually. From this base estimate, we see a large upside potential for a highly differentiated product that offers improved efficacy, safety and convenience. This upside includes higher pricing, adoption in ex U.S. markets and broader use by patients who either choose not to use hormone therapy or who get only partial relief from hormone therapy. In addition to VMS associated with menopause, we believe there is a smaller but comparable opportunity for treatment of VMS in patients undergoing hormone deprivation therapy during cancer -- hormone deprivation during cancer therapy. This includes patients being treated with androgen deprivation therapy in prostate cancer and patients treated with tamoxifen or aromatase inhibitors in breast cancer. We estimate there are approximately 500,000 patients being treated for breast and prostate cancers in the U.S. alone. Ultimately, the impact and the commercial success of a product depends on how well it meets the needs of patients and how it fits into the reality of medical practice on the front lines. Today, we are pleased to have Dr. Kelsey Mills on the call. Dr. Mills is a world-recognized leader in menopause and women's health, a clinical associate professor at the University of British Columbia, a Board member of the Canadian Menopause Society and a practicing OB/GYN with deep expertise and specialization in complex menopause treatment. She was not an investigator on our trial, but we have invited her to share her expert perspective on the current treatment landscape and the unmet need in VMS. Dr. Mills?

Thank you, Carl, and good morning, everyone. I think everybody on this call today is aware that menopause is an incredible opportunity in the health space, but that it is not just a moment, but we are seeing this as a movement in women's health. And I would argue that menopause is likely one of the most important and urgent aspects in women's health at this time. What we see from a clinical perspective at the current time is that our historical nonhormonal options for treatment of vasomotor symptoms and other menopausal symptoms are now not generally supported by global guidelines. So we have the exception of a few small molecules and antidepressants for treatment of patients. And there is a considerable unmet need in my patients who can't, won't or shouldn't take systemic hormones to treat their symptoms. Vasomotor symptoms and sleep disruption are the 2 most ubiquitous symptoms in the midlife, and these can have incredible and far-reaching implications on a woman's mood, ability to maintain her weight, sexual function, metabolic health, cardiovascular disease risk and more. And I have a tremendous number of patients in my practice who have had a breast cancer or other estrogen receptor positive cancer or other medical complications such as heart disease, stroke, history of blood clot or simply failure to respond to menopausal hormone therapy. And so I'm left with these women who are looking for better treatment options. We do have 2 FDA-approved small molecules, but these come with considerable side effects, very cumbersome monitoring programs or as some of my patients have found lack of effect. So I am truly excited to join this call today as an academic menopause physician, and I am very excited about the opportunity of a novel agent and what it could mean for my patients in my practice who currently have a significant unmet need in their menopause care. I'm really pleased to be here, and I'm happy to answer clinical questions, but I'll now turn the call back to Carl.

Thank you so much, Dr. Mills. We really appreciate your perspective on the clinical need and the current treatment landscape for women and for practitioners. I'll now turn the call over to Sarah, who can walk us through the data for ABCL635. Sarah?

Thank you, Carl. It's a pleasure to present the Phase II data on ABCL635, which has markedly exceeded our expectations and target product profile. We believe these data support the potential for ABCL635 to have a best-in-class efficacy and safety profile and may help countless women with challenging menopausal symptoms. As a reminder, our Phase II study was a randomized, double-blind, placebo-controlled study in postmenopausal patients experiencing moderate-to-severe VMS. The planned sample size was 80 patients, but due to high patient interest, we wound up overenrolling by 15% to a sample size of 92 patients. Eligibility criteria were designed to be highly comparable to registrational studies of fezolinetant and elinzanetant with the exception of the upper age range, which we increased to 75 years from 65 years based on feedback from our clinical advisers. Study endpoints included VMS frequency, severity, patient-reported outcomes, safety and pharmacokinetics. Efficacy analyses used the intent-to-treat population of all 92 patients and MMRM methodology was used for the majority of efficacy endpoints. Our predefined efficacy analyses occurred at 4 weeks, although patients continue to be followed for 12 weeks for safety, PK and to support exposure response analysis. Patients were randomized 1:1 to receive a single dose of ABCL635 at a dose of 600 milligrams subcutaneously or matching placebo. The dose of 600 milligrams ABCL635 was chosen after a review of our safety, PK and target engagement data from our Phase I study. Patients in both active and placebo groups have the option to receive an open-label dose of ABCL635 after the 12-week follow-up visit. Overall, the ABCL635 and placebo groups were well matched with respect to clinically important demographic and baseline characteristics. Additionally, these characteristics were generally similar to prior registrational studies of the approved small molecules with the exception of a slightly higher mean age compared to both elinzanetant and fezolinetant Phase III programs and a somewhat lower mean VMS frequency at baseline compared to the elinzanetant Phase III study. As expected for the indication, the majority of patients enrolled in the study assess their vasomotor symptoms as either severe or very severe on the patient Global Impression of Severity score and both groups had a mean frequency of approximately 10 moderate or severe VMS events per day. The PROMIS SD-SF-8b is a patient-reported outcome scale for sleep disturbance and the baseline values of approximately 59 and 57 indicate a greater degree of sleep disturbance than a reference population. One of our key efficacy endpoints was an evaluation of the frequency of moderate or severe VMS events, which are recorded by patients daily and analyzed as mean values over a 1-week period. This slide shows the effect of ABCL635 plotted as change from baseline values using both the primary MMRM analysis, which included values from weeks 2, 3 and 4 as well as a prespecified sensitivity MMRM analysis that included week 1 values as well. At the 4-week time point, the ABCL635 group had an impressive mean reduction of 8.8 events per day compared to a mean reduction of 3.5 events per day in the placebo group, representing a placebo-adjusted treatment difference of 5.3 events. The benefit on VMS was seen early with a significant treatment difference of 2.6 events at week 1 and increased over time. When the same data are expressed as a percent change from baseline, the ABCL635 group experienced an 83% reduction from baseline in daily events compared to a 33% reduction in the placebo group or a placebo-adjusted treatment difference of 50%. These VMS frequency data compare very favorably to data from the approved small molecule NK3R antagonist. Notably, the benefit of ABCL635 was highly consistent across subgroup analyses and the data were robust to a variety of sensitivity analyses. Another key efficacy endpoint was an evaluation of the severity of VMS, which is reported on a 3-point scale, representing mild, moderate and severe events. This slide shows the effect of ABCL635 plotted as change from baseline values using both the primary MMRM analysis and the sensitivity MMRM analysis. At the 4-week time point, mean severity scores decreased by 1.4 points in the ABCL635 group versus 0.3 points for the placebo group for a placebo-adjusted treatment difference of 1.1 points. A significant benefit was observed as early as week 1 and was consistent across subgroup and sensitivity analyses. When expressed as a percent change from baseline, the ABCL635 group experienced a 58% mean reduction in severity from baseline compared to a 12% mean reduction in the placebo group for a placebo-adjusted treatment difference of 46%. These data also compare very favorably to data from the approved small molecule MK3R antagonist. A more intuitive way of looking at the impact of ABCL635 on VMS severity is seen on this graph of absolute severity scores over time. As mentioned, at baseline, both treatment groups had mean severity scores of 2.4, which is indicative of a mixture of predominantly moderate and severe events. By Week 4, the mean severity in the ABCL635 group had improved to a score of 1, which is indicative of mild events, whereas the placebo group, the severity scores were 2.1, which were still indicative of moderate events. By definition, mild events refer to brief sensations of heat that don't involve sweating or interrupt activities, whereas moderate events involve sweating, which are not only noticeable to others, but are distracting and can impact normal functioning. While the previous analyses looked at mean change over time for VMS frequency and severity, another valuable way to look at the data involves cumulative distribution plots, which allow you to evaluate the full range of treatment effects in the study population. In these plots, the X-axis represent the treatment effect on VMS frequency and severity and the Y-axis are the percent of patients experiencing at least that level of treatment effect. Looking at the cumulative distribution plot on VMS frequency and associated table on the left, you can see that 37% of ABCL635 patients had complete or 100% resolution of moderate-to-severe events compared to 2.2% of placebo patients. To our knowledge, comparable levels of complete resolution of moderate-to-severe events has not been reported for any nonhormonal VMS treatment. Furthermore, nearly 61% of ABCL635 patients had at least a 90% improvement from baseline in the number of moderate or severe events compared to 8.7% of placebo patients. Similarly, impressive benefits were observed on cumulative distribution plots for severity as well as shown to the right. While vasomotor symptoms are the most common symptoms of menopause, sleep disturbances are also a major source of distress for women. Sleep was evaluated using the PROMIS sleep disturbance short form survey that evaluates 8 different aspects of sleep over the preceding 7 days. On this scale, ABCL635 patients had a roughly 9-point improvement in sleep at week 4 compared to a 3.5 point improvement in placebo patients, leading to a placebo-adjusted treatment difference of 5.5 points. It's noteworthy that improvements were observed across each of the 8 aspects of the study that are listed on this slide, including difficulty falling asleep, difficulty staying asleep, restlessness and overall satisfaction with sleep. Another important outcome measure in this study was the Patient Global Impression of Change, or PGIC, which is often used to determine whether a change on a given endpoint is clinically meaningful to a patient. The instrument is a 7-point scale that asks patients to rate their vasomotor symptoms compared to the start of the study with options ranging from much worse to much better. The results of the PGIC at Week 4 are shown on this slide and clearly reflects that ABCL635 treatment had a major impact on patient symptoms. At Week 4, 71% of ABCL635 patients reported their symptoms as much better, the highest possible score available to them compared to 16% of placebo patients. and 84% of ABCL635 patients reported their symptoms as much better or moderately better compared to 27% of placebo patients. Importantly, at 4 weeks, no ABCL635 patients reported their symptoms as worse than prior to the study and only one single patient reported their symptoms as unchanged. By contrast, in the placebo group, more than 40% of patients reported their symptoms as worse or unchanged compared to the start of the study. Turning to safety data. ABCL635 demonstrated a favorable tolerability profile in this data set. This slide summarizes adverse events reported in at least 2 patients in either treatment group regardless of relationship and occurring during the first 4 weeks of treatment. While overall, there were a numerically higher number of patients with at least 1 adverse event in the ABCL635 group compared with the placebo group, there were no serious or severe adverse events in the ABCL635 group compared to 1 placebo patient with a serious adverse event and 2 placebo patients with severe adverse events. Similar to our data in the Phase I study, ABCL635 was associated with an increased incidence of headache, although the majority of events were rated as mild and transient in both treatment groups. Fatigue was also reported more often in the ABCL635 group, but all events in the active group were rated as mild. Surprisingly, we didn't see any evidence of gastrointestinal toxicity in the study despite it being consistently reported with the 2 approved small molecules. There was a lower incidence of nausea in the ABCL635 group and no events of diarrhea or abdominal pain compared to multiple patients reporting these events in the placebo group. There was one adverse event of increased transaminases in the ABCL635 group. The event was reported as mild occurring at week 3 and resolved without intervention by week 4. AST and ALT levels were roughly 2.5x the upper limit of normal with maximum values of AST of 92 and ALT of 66. The investigator assessed the event as unrelated to treatment. While not reported as an adverse event, there was also 1 placebo patient with moderately elevated liver function test and a history of NASH at baseline who experienced an ALT increase to 121 or 3x the upper limit of normal during the 4-week period. The study participant has had ALT fluctuations throughout the study period that are in line with her medical history. Looking closer at liver safety during the 4-week period, there were no liver safety signals observed in ALT, AST or bilirubin laboratory values over time. The dotted lines reflect the upper limits of normal, so the mean values continue to be reassuring. While we realize the limitations of cross-trial comparison, we felt it was valuable to show the treatment effect on our primary efficacy endpoints of VMS frequency and severity relative to data collected similarly at 4 weeks from the registrational studies of fezolinetant and elinzanetant. On the frequency endpoint, our placebo-adjusted treatment effect of 5.3 fewer moderate or severe VMS per day is considerably larger than the 2.1 to 3.3 events seen in those Phase III studies. And if we normalize by baseline frequency of events, this difference is even larger, particularly in comparison to elinzanetant. An even greater difference in treatment effect is observed in VMS severity with a roughly 3.5 to fivefold greater benefit compared to the registrational studies of fezolinetant and elanzanetant. So with these Phase II data, we are enthusiastic about the potential for ABCL635 to differentiate itself as a potential best-in-class non-hormonal treatment for VMS. In summary, our Phase II data demonstrated statistically significant and clinically important reductions in both VMS frequency and severity after a single 600-milligram dose of ABCL635. We observed significant improvement in sleep disturbances and associated vasomotor symptom burden, and ABCL635 has demonstrated a favorable tolerability profile with no clinically meaningful liver or gastrointestinal safety signals observed to date. We look forward to presenting additional data at major medical conferences later this year, along with completion of the 12-week follow-up portion of the study to support optimal dose selection. These data will then form the basis for regulatory discussions on late-stage development plans in VMS, whether it be due to naturally occurring menopause or a result of hormone-suppressing cancer therapies. I'll end this presentation on a personal note by saying that both as a menopausal aged woman and as an internal medicine physician, it is a true privilege to be advancing a therapy to address such a common, important and often overlooked and undertreated cause of diminished quality of life. And with that, I'd like to ask Dr. Mills to provide her perspective on what this data may mean for her patients.

Thank you, Sarah. I think that when I first viewed this data, my honest impression was, wow. But I would say that I am tremendously excited to review the data for ABCL635. And I am most influenced by the incredible efficacy and the likely outperformance of the existing small molecules that are the current treatment options in this space. In terms of what my patients would feel would matter for them, the lack of GI side effects seen in these studies is very significant because that's one of the major reasons why patients will discontinue use of the small molecules. I think that when I'm prescribing medication for menopausal women who already suffer from the considerable mental load of being a woman in the midlife that we all recognize that remembering to take pills or dealing with patch-changing schedules can be very challenging and often lead to side effects or lack of compliance or adherence or discontinuation. So I think ease of use of this singular dose is really special in this program. Of course, the lack of required monitoring in terms of liver signal is very important as a practicing physician. We acknowledge that currently managing patients on fezolinetant with a significantly cumbersome liver enzyme monitoring schedule is a challenge definitely for patients and the clinicians who follow them. I was also quite influenced by the PGIC scoring, which to me is so much stronger than the patient perspectives in the small molecule trials. And so I was really excited to review this data just recently. But I think the thing that stuck with me the most is I have yet to see the idea of complete resolution of VMS symptoms in moderate to severely impacted women. And to have that in 37% of the study population was an overwhelming take-home point for me. And there are many patients for whom menopausal hormone therapy can't perform that well. So for me, I see this as a possible best-in-class non-hormonal treatment. And I know that my patients who aren't candidates or who aren't getting good effect from standard nonhormonals or even hormonal therapies would be really excited to hear about the next steps from this program. So thank you so much, and I'll turn the call back over to Carl.

Thank you so much, Dr. Mills. With that, we will be happy to take questions from the phones. Operator?

Your first question comes from the line of Evan Seigerman from BMO.

Really congrats on the data. So as we think about moving this program forward, how are you going to take this great 4-week data and design a comprehensive Phase III program that mitigates the risk so you can produce something as impressive and hopefully get this to patients in need.

Thanks, Evan. We are still digesting this data. And so I think our next steps will be to collect the 12-week data to have robust discussions with our advisers. And I think the strength of this data set really opens up a wide variety of possibilities of how we might take this forward into Phase III studies to truly maximize the value of the assets and make sure that 635 is able to demonstrate its differentiation potential. So this is something that we're going to be discussing in quite a bit of detail over the coming weeks and as well with our regulatory agencies in the U.S. and abroad. I'd also just like to point out that this study data, the data quality was excellent. And thanks to our terrific clinical operations team, our data compliance is about 98.5% with patients filling in the diary. And it just shows how training sites and following closely and really having good relationships with the investigators, choosing your sites well can really result in high-quality data, and that's something that we will then take forward those learnings into Phase III.

Follow-up, I guess, kind of what do you think the single most important factor that really gives you confidence that you'll be able to replicate this data in a Phase III trial. I know it's that impressive, but what about this data set really stands out to you as you move forward?

I would say what really stands out is the magnitude of the effect size, the consistency across orthogonal endpoints that are looking at the MS symptom, overall burden, perceptibility to patients. Obviously, the treatment effect is large. And we've learned a lot from the approved small molecules conducting these studies as well as our own experience, and we plan to take these learnings moving forward.

Your next question comes from the line of Stephen Willey from Stifel.

Congrats on some pretty exceptional data. Curious, maybe just to kind of follow up on the prior question. And again, I know you're still kind of evaluating everything. But how do these data just kind of change the scope of the Phase III development program that you're thinking about and whether or not you would contemplate a superiority study in menopausal VMS? And then also just curious if these data change, if at all, the way that you're thinking about this asset strategically? And I just have a quick follow-up for Dr. Mills.

In terms of our Phase III design, as I've mentioned, we are thinking deeply about various possibilities. Our baseline plan was to conduct a Phase III program very similar to the approved small molecules. I think the strength of this data makes us consider whether we might do a head-to-head study. That's not something that we have made any kind of decisions on. It's a complicated decision. But those decisions weren't really part of our landscape as we were thinking about our target product profile of just an efficacy bar that was comparable to the approved small molecule. So I think we have to digest this data a little bit more, talk with our advisers, do some powering calculations. And I think we'll be able to get back to you later this year, particularly after we get our full 12-week data set, and we have some regulatory discussions with our Phase III studies. But it's obviously a high priority to, as I said, maximize the value of this asset and make sure that it can clearly differentiate itself amongst the competition.

And Steve, I'll just add a comment on the strategy side. So I would characterize this as early and resounding success on exactly the strategy that we've been playing out over the past many years. So building a platform with the ability to solve really tough discovery problems, trying to be very thoughtful about our choices in where we develop, looking for high conviction science for differentiation for large unmet need. And then to come out of the gate and on the first program to get data like this that is so compellingly positive is a terrific tailwind for us moving forward. It also means that we will prioritize ABCL635. Once you have one on the hook, you definitely don't let it go. At the same time, we're not backing off on the rest of the pipeline. And AbCellera is by no means a single asset company, and we intend to do our best to deliver on this again. We've now set a pretty high bar, but we're feeling pretty excited about what's there.

Appropriately so. And then for Dr. Mills, just a quick question. Just curious how sleep score improvements kind of as a driver of -- as a driver of prescribing decisions when you're considering VEOZAH versus Lynkuet? And just how important of a variable is that for patients?

Thank you for the question. Sleep is of paramount importance to perimenopausal and menopausal women. So when we have PROMIS scoring that looks really competitive, if not superior or favorable, these are huge impacts in people's decision-making to prescribe. If you can fix a woman's sleep in the midlife, that is a massive impact on her overall health function, economic output, et cetera.

Your next question comes from the line of Steve Seedhouse from Cantor.

Congrats On the milestone for the company. Just this question for the company or for Dr. Mills actually, just given you proved essentially crossing the blood-brain barrier is unnecessary. It seems to have a pretty profound effect on hot flashes. I'm wondering if you think that becomes maybe a safety advantage now for the antibody versus the orals? And like do we really know where NK3R is expressed precisely everywhere in the brain and how it might influence stress or behavior or things like that? And I have a follow-up.

Maybe I'll ask Dr. Mills to comment on whether she sees that as a favorable characteristic of [indiscernible]

Absolutely. I think any time you can limit possible side effect profile, that's really important. I think there's -- yes, I think I would leave it there. I think that limiting side effect profiles is always of value to patients and prescribers. But I think that we are looking at a possible therapeutic that is going to perform differently than the small molecules. And I think it definitely could be favorable.

Yes. And I'll just follow up on that. I mean going into this program, we really had a question about whether the preoptic nucleus, which sits clearly behind the blood-brain barrier was going to be important from an efficacy perspective. And I think this data set really resoundly answers that question and provides a tremendous amount of new biology information for scientists studying the mechanisms of hot flash.

Yes. And if I would just add one more thought is that coming in, there was a potential liability that an antibody couldn't get to the preoptic nucleus. We now know that's not important. And in fact, we see the fact that an antibody does not penetrate deeper into the brain as a potential advantage of the class over small molecules.

Just a follow-up for me. If you could comment on -- like I know you're following patients, as you mentioned, sir, through 12 weeks in this study. You'll get those data at some point that's after the single dose. And then you have an open-label extension portion as well, which I think it entails repeat dosing, but just wanted to confirm that. And also more importantly, are you planning to report the incremental data from both of those efforts at some point next year? I think that would be an interesting catalyst as well for the company.