Enlivex Therapeutics Ltd. (ENLV) Earnings Call Transcript

Hello, everyone. This is Craig Brelsford with RedChip Companies. Thank you for joining today's event with Enlivex Therapeutics, which trades on the NASDAQ under the ticker ENLV. With us today, we have Oren Hershkovitz, the Chief Executive Officer of Enlivex; and Shai Novik, Chairman of Enlivex. We will begin with a presentation in a moment, and then we'll open the event to your questions. [Operator Instructions] Before we begin, please allow me to read the safe harbor statement. This call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements pertaining to future financial and/or operating results, along with other statements about the future expectations, beliefs, goals, plans or prospects expressed by management constitute forward-looking statements. Any statements that are not historical facts should also be considered forward-looking statements. Of course, forward-looking statements involve risks and uncertainties. I now turn the webinar over to Oren and Shai. Please go ahead.

Thank you very much, Craig. So hello, everyone. Very happy that you joined this exciting event. For those of you who are less familiar with myself and Shai, I'll start with a quick intro presenting myself, and I'll ask Shai to do this as well, and then we can dive in directly into the top line data of our Phase IIa study. So my name is Oren Hershkovitz. I'm the CEO of Enlivex in the past 6 years almost. I'm immunologist by training, being doing drug development for many years, prime to joining Enlivex, I managed a company called OPKO Biologics. I led a team for 5 years working tightly with Pfizer on a late-stage development of a [indiscernible] , which is a long-acting growth hormone was eventually submitted and approved in many countries. This was actually a company that Shai founded. So I'll ask Shai to take you a little bit into the story because it's a very, very successful and important one to know us. And that's it, Shai, please go ahead.

Sure. Thank you, Oren. For -- again, as Oren said, for those of you who are less familiar with the top management at Enlivex. So this is our second company that Oren and I are doing together. The former one was named PROLOR Biotech, which I founded back in 2005, and we in-licensed some technology from Washington University in St. Louis and really started as a garage start-up, took the company public on New York Stock Exchange in 2010, and then we sold the company in 2013 to OPKO Health. That was a $590 million transaction. At that time, OPKO asked us to stick around and run the company post acquisition, which we did. And then we signed a partnership agreement with Pfizer for our lead product, which was post Phase II asset. We received at that time, $295 million just a down payment, and it was a very substantial deal. And Pfizer continued with the clinical development with the help of Oren and the team at what became OPKO Biologics. And as Oren said, we're very pleased to just report historically that the product that we developed is now called NGENLA by Pfizer, has been approved in more than 43 countries, including the big markets, Japan, all over Europe and the United States last year as well. I then cofounded Enlivex. And once I did that, I asked Oren to -- later on to join as CEO and kind of the rest of the history. So I think this is fine just for kind of reintroducing ourselves to you guys. And we want to share with you today something that is very exciting to us, at least, and we've been waiting for a long time for this to show the potential effect of our drug, ALLOCETRA in a problem that has no real solutions and affects so many people in the United States and all over the world. So I'm going to hand over to Oren to take us through the presentation. I'm going to chime in every now and then with a few slides. Thank you, Oren.

Thank you, Shai. So I'm extremely excited here to present the top line data from our Phase IIa study, as Shai said, we're going to go through the deck and go through the results, the exciting results, but we do want to -- for those of you who are a little bit less familiar with the company, just a quick overview about Enlivex. And so stay with me patient for a second, and we'll get there to present the top line data in a few slides. So again, for those of you who are a little less familiar with Enlivex, quick overview of this very unique company. We're a clinical stage company focused on really a completely novel approach to treat inflammatory diseases, which is modulation or reprogramming of unique immune cells called macrophages. Those cells are involved in many inflammatory diseases. And using our platform, we know how to affect their activity. So no -- to the best of our knowledge, no other company is using a similar approach as we do, targeting those cells. So this is really a completely new modality. We're using this approach to target substantial markets with defined as unmet medical condition, such as osteoarthritis, and we'll get to that in a second, but it's a very good example. Besides the fact that we're very unique in our modality, what makes this cell platform very, very, very unique is the fact that it's really cost effective in a way that is completely different from any other cell therapies out there. This means that it's what we call off-the-shelf drug, and it's very, very cost effective because we have a very simple manufacturing process, very simple to produce these cells. And eventually, if we're talking about osteoarthritis, it will -- our projection it will be in terms of pricing, completely competitive to drugs that are out there that are being used, although not very effective, will be very competitive in pricing as well. And this is a very important factor. So that's a quick overview about the modality, the cell platform that we're using. As Shai said, Shai and myself are -- this is our second round together, the founder of Enlivex, the scientific founder of Enlivex, professor Mevorach is a well-established scientist and a physician that developed the technology. In the management of Enlivex, we also have Einat Galamidi, our CMO, who led the development of a cell therapy in a company called Gamida that was approved by the FDA. And what I'm trying to say here is that in the management of Enlivex, we have very seasoned management with a lot of experience from the business perspective, and from a development perspective, taking drugs all the way from preclinical to approval. Maybe to add to that is the Board of Directors. So besides Shai being our Executive Chairman, our Vice Chairman, [indiscernible] , is a former Head of [indiscernible] at Merck. He was a venture partner at Flagship and all of these Board members are working together with a lot of vast experience from all the aspects that are required to take such a company into the late stage. So what we'll present today, as you may understand already, it's the top line 3 months top line data from our Phase IIa study in knee osteoarthritis in patients with moderate to severe knee osteoarthritis. So a few words about osteoarthritis. Osteoarthritis is the disease that results in cartilage damage, abnormal bone remodeling and such and eventually a lot of pain. And many of you that are listening to me now are familiar with this just because they're experiencing this. This is one of the most common life debilitating diseases. It's considered by the FDA as a serious indication. And just the market is just -- it's huge. It's really huge. We're talking about 32 million adults in the U.S. suffering from osteoarthritis. The majority of them for knee osteoarthritis. And as a consequence, the market size now is about $7 billion. It's expected to grow to around $15 billion already in 2030. And what's remarkable about this is that we don't have effective therapies for these conditions. Eventually, patients are taking pain reliefs or steroids, which are not -- they cannot use for long-term treatment and eventually are going through surgeries and knee replacement therapies and such. So there's a huge need for a huge market, and this is exactly based on the data you'll see in a second where ALLOCETRA steps in. Now one of the main reasons that this market continued to grow in such a dramatic way is the fact we're aging. And actually, osteoarthritis prevalence with age increases dramatically. As you can see in this graph, age groups of 60 and 70s and above, we're talking about prevalence of about 40%. So this is really the majority of the population that suffers from osteoarthritis from symptomatic osteoarthritis. So LAI Phase I/IIa study, that was a multi-country, multicenter study. It was a random -- it is a randomized double-blind controlled trial to evaluate ALLOCETRA in patients with moderate to severe knee osteoarthritis. And this is an important slide that I want to have for a second to explain it. It's very complicated in the way that it looks. Actually, what happened is when we sat down to design the Phase I/IIa study for the knee osteoarthritis and moderate to severe patients, we sat down with the experts, right? And we're working with the leading what we call key opinion leaders, the experts in osteoarthritis field. And they conveyed us that we should consider the fact that osteoarthritis is not a single molecular disease. It's actually a syndrome, which means that we have a heterogeneous population, right? And we did take that into account in the study design. And what we actually wanted to do is to include those population, but besides assessing safety and efficacy, we want to potentially find a strong signal in a responder subpopulation that will guide us to the future development. So this was part of the way we designed the study. It is a Phase IIa study was, it made sense to identify that group now and to continue to the late-stage development. So we took into account various factors and the baseline factors and so on. And we actually implemented in the study design. And again, this looks very complicated, but as simplified. We've implemented in the study design an interim analysis, which was independent and was outsourced to a different company that aim to identify a subpopulation of responders. So highly responder subgroup that subpopulation that based on various factors are actually responding to the drug, right, to ALLOCETRA. So eventually, we had this algorithm that allow us to identify that sub-population and even in some cases, to inform us how to increase the sample size to larger numbers in order to get a statistically significant result. So this was embedded in the study design and in the targets and the objectives of the study. And what I'm very, very happy to say is that we actually met the objectives of this Phase IIa. So we had a favorable safety profile with a positive effect and b, we identified a high responders which represent more than 50% of the knee osteoarthritis market. So they were not only more than 50% population in our study, but they're actually represented in the overall knee osteoarthritis market. They're representing more than 50% of the population, which -- and this group is aligned with our proposed mechanism of action. So this made us extremely excited because we know how difficult is -- in this very serious and unmet medical condition, how difficult is to see such a strong signal, as you will see in a second. So in terms of the study design, this was a 2-stage trial design, okay? Again, moderate to severe osteoarthritic patients, age range between 45 to 80. We included all this range -- age range. And the study consists of 2 stages. The first stage was a safety run-in, a dose escalation safety run-in. Following this stage, we had an independent safety committee reviewing the data and say, okay, you have no safety signals here. The highest dose that was selected as well as the lowest dose showed similar safety profile, and you can move on to the Phase II part of the study would actually be the highest dose tested, right? So this was very encouraging. And by the way, we published the 3 months and 6 months data from this Phase I, which, as you might remember, demonstrated already a very promising safety and efficacy data. So that was encouraging, but we were waiting for this stage that we're going to talk about now, which is the Phase IIa, a randomized double-blind, placebo-controlled stage, and we overall recruited 134 patients to this stage. They received 3 injections of ALLOCETRA or placebo, 2 weeks apart overall 1-month treatment period. Now the endpoints for this study were -- this was a Phase IIa again. So the primary endpoint is safety, of course. But we had secondary endpoints that -- which were change in pain and change in function compared to baseline, right? And the time points that we evaluated were 3 months and 6 months and overall for safety, even 12 months. The objectives here is, again, and I want to reiterate that message were to see -- to assess safety and efficacy and to see if we can see reduction, right, and pain increase in function and reduction in stiffness of D&E. This was assessed using numerical grading questionnaire. And I'm going to use the term WOMAC throughout -- a little bit throughout the presentation. So it's important to understand that WOMAC is a questionnaire, which is a validated endpoint for a Phase III registry study. So actually, the endpoints in this study are aligned with the FDA expectation for endpoints for a Phase III study. Now this questionnaire assessed pain, function and stiffness. So different subcategories in the assessment. So this is the demographics of the study overall, well balanced between the ALLOCETRA [indiscernible] group and the placebo group across all the different parameters that you're seeing here as well as age. And any other parameters we evaluated, as you would expect in a study of this size. And before I'm presenting the actual results, we need to go through a medical definition, which is primary idiopathic OA and secondary OA. As you recall, I said we saw a responder subgroup. And this primary OA stands for the classical majority of osteoarthritis resulting from the wear and tear effect that happens to the joint. And it's associated with low-grade inflammation. It's age-related mostly, and we defined it in our study above the age of 60. And also the secondary osteoarthritis is all the rest that could result from trauma, misalignment and bad repair and this type of events that usually starts at earlier ages and has a different immunological pathway than the primary idiopathic OA and that's important. And we define that as age group of below the age of 60. So the top line 3-month data and we're looking now at pain. And what we saw is 24% positive effect in WOMAC pain across the study patients, which you can see here on the left-hand side. But when we look at the primary osteoarthritis population above the age of 60, we're seeing a dramatic substantial statistically significant and clinically meaningful effect already now in this Phase IIa study. So you can see the change from baseline at ALLOCETRA group versus the placebo group. The effect size was 72% effect over the placebo group. And again, it was highly statistically significant as reflected here in what we call the p-value. So overall, we had more than 54% of the subject in this category, right? So that's the majority of the patients in the study, responding very highly in terms of the effect size, in terms of the statistically significant effect and an endpoint, which will be eventually our Phase III endpoint. So already in this subgroup, in this population here, we're seeing a dramatic effect. And I think you can see how excited we are about these results. So just to continue what we saw is this was a clinically meaningful and statistically significant effect, not just in the pain change from baseline, but actually across all the efficacy endpoints we evaluated in the study and primary osteoarthritis patients. So you can see here on the left-hand side, we're seeing the Phase III primary endpoint. So change in pain using again the WOMAC change in pain or change in pain and function in both of those endpoints, the one that I show you now with 72% effect size over placebo. When you look at the pain and function, which again are Phase III endpoints, we saw almost 100% effect. And what you're seeing here is that across all of those endpoints, we saw a highly statistically significant effect. Now in terms of the absolute change, this is aligned with what we talked and reported in our previous Phase I -- in our previous reporting regarding the Phase I part of the study, we're seeing 50% reduction almost in all of those endpoints. And the last slide here, the last column of this slide, sorry, is what we -- what is the magnitude of the effect over what FDA expects for a Phase III endpoint. So what's the minimal effect size that the FDA expects versus what we're seeing, and we're seeing something like 90% more effect already now in the Phase III endpoint. So we're totally excited. This is -- we really met the objectives here as we were planning to. And maybe, Shai, you want to take us through the next 2 or 3 slides because I want you to share the same.

Thanks Oren, sure. Thanks. So we continued with the analysis and wanted to understand whether what we're seeing was specific for the age cutoff. So if it's -- I don't know, if it's 61 or 63, maybe the numbers would not look as good or something like that, maybe it would create some -- in our minds, some questions whether maybe we're not seeing something here. So we looked at the different age groups. And as you can see here, on the left-hand side, this is what Oren just showed you, which was a 72% better performance than placebo in reduction of pain. In the middle, the cutoff is the age of 63 and above. There, in that group, the pain reduction is already 183% better than placebo. And the statistical significance is still -- even though initially, it was very strong, gets even stronger. And then when you get to the age of 65 and above, you can see that the effect above placebo is 217% reduction in pain and the statistical significance continues to increase, right? So that's in reduction in pain. And Oren, if you can move to the next slide, this is not just pain. This is if we look at the combination of pain, stiffness and function altogether. And you can see on the left-hand side that there is a 90 -- at the age of 60 and above, that primary osteoarthritis group, you see 92% highly statistically significant difference between the placebo and the ALLOCETRA group. When we move to 63 and above, it grows to 237% difference better, even better statistical significance. And then if you are still 65 and above, you get 350% better in terms of improvement in the knee with, again, better statistical significance. So -- or if you can move to the next slide, I think this is the one slide that I personally -- this is my most favorite slide of this presentation of the data. It's a little complicated, so I'm just going to spend a minute on it. On the Y-axis, we see the excess reduction in 2 Phase III endpoints that the FDA would like to see, pain reduction and pain and function, okay, improvement in pain and function. And you can see on the Y-axis, you can see the excess reduction in pain and better improvement in function, okay? So that's on the Y-axis in the ALLOCETRA group versus the placebo group. On the X-axis, you see just cut off, the age of 60 and above, 61 and above, 62, 63, 64, 65 and above. And what you see here, you see very clear demonstration of clinically meaningful, statistically significant, substantial effect size, much, much, much multiples better than placebo, and it trends with age. As you can see, it goes up with age. And by the way, each point here on each of those curves is highly, highly statistically significant because it's not just very impressive positive delta versus placebo, but highly, highly statistically significant. And to us, this chart made a lot of sense because as your symptoms start at a later age, it really means this is age-related osteoarthritis. This is not something that happened to you when you're playing basketball at the age of 42. And then at the age of 51 or 55, suddenly you have a different type of osteoarthritis. So this essentially caused us to be quite comfortable with what we're seeing here, and it's all aligned to us with the potential value of what ALLOCETRA brings to this group, which we call the primary osteoarthritis group. Oren, if you can move to the next slide.

Yes. Okay. So to summarize what we saw to this point, right? So we're seeing a highly responder population, which we define as primary idiopathic osteoarthritis and it's age related. We're seeing that a statistically significant meaningful effect at the age of 60, and it actually trends up as we go up with age as you saw. And the question was, what's the mechanism here? So I don't want to take you too much into the science. What I can say is that we know that in primary idiopathic osteoarthritis versus secondary osteoarthritis, we have different modulation of the inflammatory condition that leads to the development of that disease. And we have different cells, different types of macrophages, different type of other immune cells involved in those 2 different pathways. And we think that what we're seeing here makes sense and consistent with the proposed mechanism of action of ALLOCETRA. So it's not just because we identify that sub population, it actually makes a lot of sense for us from a mechanistic point of view. In terms of the safety profile, so ALLOCETRA demonstrated a favorable safety profile. We had no serious adverse events that were reported linked to the drug. We had overall, very favorable safety profile. As I said, we had an independent safety committee reviewing the data in the interim analysis and actually also following 3 months top line data, they went through the safety profiles with no safety signals whatsoever. What we did see is like observed in earlier clinical data in severe osteoarthritis patients, we saw some local responses following injection. Mostly, we're talking about some knee pain and discomfort. This is very typical to intra-knee injection, especially cell therapies and such. But what's important is that events were usually mild to moderate. They were transient. Patients were advised to take pain relief if they needed to. But overall, it was treatable and transient. And also important to say that it didn't lead to any dropouts or anything like that. So overall, very favorable safety profile that allows us to continue to the follow-up study. So talking about next steps, right? So all you saw up to now is, again, it's really exciting because this is an unmet medical condition. It's a serious condition, no effective treatment. And I think what we're seeing here makes us extremely passionate about pushing this program forward as fast as we can because we can actually provide a solution for those primary osteoarthritic patients potentially. So how would the next study look like? So we're talking about the planned Phase IIb study. Obviously, it will be a randomized, double-blind, placebo-controlled multi-country study. And obviously, the focus of this study will be primary idiopathic osteoarthritis patients. So we're seeing age of 60, 65 and above. And again, this is more than 50% of the total knee osteoarthritis patient, right? So if we're talking about 14 million, for instance, adults with knee osteoarthritis in the U.S., we're talking about more than 7 million or 8 million patients just in the U.S. right? The study, the Phase IIb will follow the same route of administration and dose regimen, which means 3 injections of ALLOCETRA versus placebo every 2 weeks, 3 injections in total. We're assuming about 75 patients per arm. Again, we did -- we're not presenting this year, but we did what we call sample size calculation based on the data we currently have. And as you saw, we already have in the current study, statistically significant and meaningful effect. So 75 patients per arm is probably is expected to provide a very meaningful and statistically significant outcome. The primary endpoints in this study will be 3-month change from baseline in WOMAC pain. I think by this time, you understand what WOMAC is, the validated questionnaire, the Phase III validated questionnaire or a combination of WOMAC pain and WOMAC function, both are FDA acceptable and expected endpoints. And obviously, safety and tolerability as well as secondary endpoints such as the NRS and other endpoints that we will assess. So this is kind of, I guess, a road map that presenting our short- and long-term target milestones, and I'll walk you quickly through all of this. So we're expecting the 6 months readout from the current Phase IIa study around November. The Phase IIb, we do expect to have the regulatory approval Q1, Q2 '26. And then the first patient dose Q2, Q3 '26. And then we'll have the Phase IIa 12-month readout. As I told you, we're doing the safety follow-up and additional assessments, and that's expected in Q3 2026. We're expecting to complete enrollment beginning of '27 and the 3 months top line data coming at Q2 '27 and 6 months top line data at Q3 '27. Now -- we're planning to initiate -- now that we have this exciting data, we're planning to initiate or even to take it one step further our potential collaboration with partners. So we're initiating partnership discussions. And we think for us, this is very similar to the point where we were at PROLOR, that Shai shared with you before. We had a Phase II data and which allowed us to go based on a randomized controlled study, allow us to go to an in-depth discussions with potential partners, and that's exactly what we're planning to do with this data.

Oren, maybe I can...

Sure. Go ahead.

Just another word on this. All of you who are on this webinar are probably veteran investors in small cap and in pharma and biotech. And you kind of -- you all know that sometimes there is a delta between data that Wall Street -- how Wall Street reads data and how pharma -- I mean, larger companies read data. And we are quite pleased. I mean, we -- it's our -- okay, it's our opinion and our belief that we will have, I think, a lot of interest to listen to the story and go deep into this data. This data, we think, is of very high quality, okay? So if you look at the classical product development, framework. I think that we are in a very good position to demonstrate the potential value to the very specific population that represents more than 50% of the total market, which is a huge market on its own with an unmet medical need. And Oren is going to show you momentarily why we're also very excited about the cost element of our product. So maybe, Oren, you can skip to that.

Sure. So to summarize what we saw from the 3 months top line data, study objectives were met. ALLOCETRA demonstrated a favorable safety profile and no related assays available as we discussed, we saw a 70% average positive effect in pain reduction and almost 100% in increased function, which are all Phase III endpoints, clinically meaningful with high statistical significance of intended Phase III endpoints in the planned Phase III population as well as across all other secondary endpoints, we had a positive effect that exceeds what we believe to be the FDA minimum threshold by more than 65%, robust and consistent effect aligned with our proposed mechanism of action of the drug. And just to emphasize, again, osteoarthritis is a growing market with significant potential unmet medical condition with primary osteoarthritis responders representing more than 50% of the $7 billion market today and again, is expected substantially to grow. And as I started, we have a very simple manufacturing process, which is highly attractive in terms of the total cost of goods, right? So the pricing of the drug, we estimate to be around $450 on average for the complete treatment, allowing us to be very competitive in pricing, which will be well within what's currently out there, and it's not recommended by organization and guidelines that guide the treatment of osteoarthritis. Nevertheless, we're facing here today is that [indiscernible] Had no other alternatives. So they do treat patients with several like non-officially recommended drugs. And we will be competitive completely to those high-end solutions. But as you saw today, with much more effective treatment and safe. So based on that, we believe that ALLOCETRA has a strong potential to become the therapy of choice for primary osteoarthritis, knee osteoarthritis patients. And with that, we'll conclude the presentation, and we'll be happy to take questions from you.

Yes. So we have -- Oren, we have -- I see that we have already several questions from the crowd. Maybe you want to start taking those just one after the other, and I'll join you.

Sure. So let's start with the first one. The question is what are the next steps following the 3 months data readout. So as I said, first of all, we continue with this study, right? So we are expecting to have the 6 months data readout, as I said, around November and to continue to follow those patients all the way to 12 months from a safety perspective. In parallel, what we're planning to do is to finalize now the protocol and for the Phase IIb study that I presented and initiate the regulatory submission for that study. And we're expecting based on these results to be able to initiate the study early next week -- sorry, hopefully, next week, early next year. And I guess that will be the next coming steps -- and so that's one.

There's a question about what is our strategy to attract potential partners. Maybe I can take that one. I think that -- look, what we've done at PROLOR was that we have presented data, which we thought was very sound and solid to different potential partners at that time, and we were able to start driving a process with a few of them that essentially culminated in a deal with a partner that from our standpoint was really the best partner to make this -- the drug that we developed at the time to be a leader in the market. And I think this is what we would like to try and do here, not just discuss this with one potential partner, but show the data, which, again, we believe is very strong and solid to multiple potentially interested parties and take the process from there. Where is this going to end? I mean, we never know. But we're definitely going to start the tour basically effectively starting at the end of September.