IRLAB Therapeutics AB (publ) (IRLABA) Earnings Call Transcript

Welcome to this live broadcasted Q1 presentation by research company, IRLAB Therapeutics. Presenting today is CEO, Kristina Torfgard; Executive Vice President, Research and Development, Nicholas Waters; and Viktor Siewertz. After the presentation, there will be a Q&A session with equity analysts, and viewers can ask their questions in the live chat. Hello, and welcome Kristina Torfgard.

Hello. Thank you very much.

So please go ahead with your presentation, and I'll be back for the Q&A.

Sure. Thanks. So first of all, on behalf of IRLAB, I would like to welcome everyone to today's webcast, where we are going to present the Q1 report. And if we start with the slides, please. And the next one is our disclaimers, and then we have the agenda, next one. So I will start and take you through the news of the period. After that, I will hand over to Nicholas Waters to take you through the R&D update. And this will be followed by a financial update by Viktor Siewertz. And I will then make a concluding words, and then we will start off the Q&A session. So the next slide, please. I would like to remind everyone and start with this slide. And this is really the basis here for our research. Parkinson's disease is a severe and devastating disease, the second largest of the neurological diseases. And as you can see here on this slide, we can see that there are a number of different symptoms and complications that those individuals that are living with Parkinson's experience. What we have is that we have 5 first-in-class candidates. And if we move on to another click there, we have 5 candidates, where they all have a unique -- can you click one more? Yes. Thank you. So we have 5 candidates in development, where we have all our first-in-class with a unique mechanism of action. 3 of them are in development in clinical stage, and 2 of them are in preclinical stage. And as you can see, they are all targeting all the different symptoms experienced by people living with Parkinson's disease. So if we move on to the next slide. We have had a very intense and dynamic first quarter of the year, where we have a number of progress, especially in the regulatory field, in the clinical field. As the first one, I would like to highlight here is the positive feedback that we received early on in February from EMA. The feedback on the mesdopetam program, what was covered both the preclinical, the clinical and also the program for Phase III. This will strengthen the potential of the candidate and also the value of mesdopetam. We have had positive results in the Phase I studies that we have performed on 757. And we have also made the decision together with MSRD/Otsuka to initiate a study in patients with Parkinson's disease and apathy. So this is according to the time line that we had and progress moving forward. And I'd also like to point out that this program is fully funded by MSRD/Otsuka. So finally, we had also the pirepemat readout in the top line data that we presented. And here, we can see that there is a significant clinical meaningful reduction in fall frequency. And this guide us both for the future designs of the clinical studies, but also we are also looking into the next steps. So I would like to go more in depth in the highlights. So if we click on the next one. So for the more important events here for mesdopetam, as I already mentioned, we had the EMA feedback, but this time, we also received feedback on the pediatric program. And what we did was that we submitted arguments that was accepted that there is no need to perform studies in children. And this will allow us now to focus only on -- in studies in adult patients, which is great. And this is in line with the feedback we received earlier from the FDA. We have also received, as I pointed out, positive feedback on the Phase III program, and this is really also in line with the FDA feedback that we received about a year ago on the Phase III program. In addition to these preclinical and regulatory activities, we have also published an interesting article in the well-known medical journal, European Journal of Neuroscience. So this is an article where more of the mechanism behind mesdopetam is described. And here, we can also see that mesdopetam clearly differentiate versus other candidates already on the market or in development for dyskinesia. And we can also see that we have a potential to move further on and broaden the indication to psychosis. So the next slide, please. For pirepemat, early on in January, the last patient went through the study, and we were able then to present the top line results in March. The first presentation, we were very proud to show that we had an effect on the fall rate. However, this was not significant, different versus placebo. Later on then, we did additional analysis, in-depth analysis, and that we could clearly show that we had a significant and clinical meaningful change also on the fall frequency for pirepemat. Nicholas will take you through more the details, of course. For 757, we had positive results, top results in the Phase I study in elderly. And these data results together with the study previously concluded in healthy volunteers, in younger subjects were able us to support to continue with the 757, and we also made the decision to initiate a study in patients with Parkinson's disease and apathy that will be starting later this year. So the next slide, please. We have also had the opportunity to present the company for investors. So we presented the company strategy and the pipeline. First, at the Insight Direkt Dagen in January. We have participated at Redeye Investor Forum twice and also Aktiespararna’, Redeye Theme quite recently in April. And you will be able to find the presentations on the web and also on our web page. So next slide, please. So by that, I would like to hand over to Nicholas to take you through the R&D update.

Thank you, Kristina, and good morning every listener. We'll go through the R&D by clicking to the next slide, please. So we start with mesdopetam. And as Kristina alluded to, we've had a quite busy period with mesdopetam from a regulatory standpoint. Next, please. This is a first-in-class compound with the properties of inhibiting the D3 receptors, which are implicated in the genesis of dyskinesia. We have -- as a side order, we worked quite hard on the IPR estate around mesdopetam in the past few years, and we have expanded the portfolio during the period, the patent portfolio, and we can now see that we can have exclusivity into the -- well into the 2040s with the patent estate we have generated so far. The lead indication, of course, is levodopa-induced dyskinesias. We've talked a lot about that over the past years. In addition to levodopa-induced dyskinesias, mesdopetam has potential to treat other types of complications in Parkinson's disease and also in other disorders. And we have generated over the past year and published data supporting the use of mesdopetam in Parkinson's disease-induced psychosis. So this could become the first drug in history, which is both antidyskinetic and antipsychotic without compromising motor function. We also have data supporting -- generated data supporting prevention of -- or the occurrence of the levodopa-induced dyskinesia. These are pre-clinical studies, of course. Another aspect of -- in the use of and data we've generated concerning mesdopetam is that it should be possible to optimize the dose of levodopa to support patients' basic functioning without inducing dyskinesia by pretreating with mesdopetam. And then we also have built a case around tardive dyskinesia, which is also driven by D3 receptors. Next, please. Going back to the regulatory work that we have done during the past period. Last year, we received feedback from the FDA on our plans and on the portfolio we've generated on mesdopetam. This year, we also had the opportunity to talk to EMA and get some scientific advice from them concerning our plans and concerning the data we've generated. And the take-home message that we have collected is that the agencies, both in the U.S. and Europe, are in agreement with how we should conduct a Phase III program for mesdopetam. So we have adapted the plans for the studies accordingly. In addition, we've done market research and looking at what health providers across the globe want to see with the new treatment in treating dyskinesia. And that is really important feedback also to adapt parts of the Phase III program to also include information from payers, what they want to see basically. And the key components that we have come up with in the Phase III program is that we will do 2 parallel Phase III studies that will comprise around 270 patients in total. That's 130 patients per study. We will also give the patients who enter into the double-blind treatment arms, they will also be offered an open-label extension after the 3-month period of treatment has ended, which means that they will be treated for as long as 12 months with mesdopetam. And this is to build the safety database. We also have agreement across the globe. All agencies agrees that we should use Unified Dyskinesia Rating Scale as the primary endpoint in the study, and we should use the sum of parts 1, 3 and 4, and we should exclude Section 2 of the Unified Dyskinesia Rating Scale, which deals with dystonia, not dyskinesias per se. The dose that we have chosen have been approved or accepted at 7.5 milligrams twice daily. And this was the dose that had the best effect in the Phase IIb study, came in significant on the Unified Dyskinesia Rating Scale, clinically meaningful changes that we saw were significant, combining Sections 1, 3 and 4. And in parallel with the efficacy studies, we will also initiate a separate safety study and that is to make sure that we get the 300 to 600 patients exposed at -- patients exposed to mesdopetam, which is needed for approval for the safety database. Next, please. Talking to the -- talking about the positioning of mesdopetam, and this is something we've been doing with experts, key opinion leaders. We've also talked to payers and health providers across the globe, looking at the positioning. And during the course of the progression of Parkinson's disease, patients start with levodopa treatment after diagnosis. And as the disease progresses, one adds additional add-on treatments such as MAO inhibitors, COMT inhibitors, but also amantadine in certain regions to manage the complications that are occurring over the course of the development of the disorder. In the late stages of the disorder today, there is a number of invasive strategies to actually manage motor function better than with the oral treatments. That is infusion therapies based on continuous infusion of levodopa or PRODUODOPA, and there is also electric stimulation or DBS, deep brain stimulation inserting electrodes in certain brain areas to control motor function. And the positioning of mesdopetam is in between the -- when the traditional management of motor complications related to levodopa is no longer working, mesdopetam fills the gap between that stage and the invasive stages. It also means that mesdopetam has the potential to actually delay the introduction of -- or could delay the introduction of the invasive treatments. And this is a very important part of the treatment algorithm where there is no treatment today. Next, please. Pirepemat. Next again. This is also a first-in-class compound, acts on alpha-2 receptors and 5HT7 receptors. Also here, we have built on the patent portfolio. We have exclusivity well into the 40s with this asset. And the objective here, the primary objective of this program is to reduce falls in Parkinson's disease, which is the biggest problem. Next, please. This is a huge complication. Almost half of all Parkinson's patients fall recurrently or every year and up to many times a month. And this is, of course, complicating the quality of life or makes it much more difficult to live a normal life. An interesting fact is that in the U.S. in 2020, the spending for handling costs related to falling in the elderly population, not only Parkinson, is around $80 billion, which is a quite large sum of money. So there is a huge market. There is big incentives for health providers to actually introduce -- help to introduce something that reduces the fall rates and thereby the cost, of course. Next, please. We presented the top line results recently for this trial, the Phase IIb trial with pirepemat. We could see that we had a general reduction in the fall rate in the study. We had a quite substantial reduction of fall rates at the 600-milligram dose in this study up to 40%, 42%. We could also see that -- but it was not significant versus Brazil, but we also saw movements in the cognitive scales, which also are in favor of treatment, but did not reach statistical significance. Gladly, we could see that the adverse event profile was consistent with previously reported clinical trials that we've conducted and the adverse event incidence was similar in placebo and in the treatment arms. Next, please. In-depth analysis, which we talked about a couple of weeks ago, and Kristina mentioned also here in the introduction. We have also looked at the relationship between plasma concentrations and the effect. And in that work, we discovered that there is a very specific band of concentrations or plasma concentration levels that leads to a reduction of falls in these patients. And this is an important discovery, which means that we will be able -- we have the potential to actually titrate patients to the right plasma concentration and thereby get the significant effect that we want in future plan or future potential studies. And this was a prespecified assessment that was mentioned in the SAP, of course, in analysis plan, and this will be part of the full report and the publications that we are working on right now. Next, please. So in summary, we actually achieved the goals that we had set out with the pirepemat study. That is to get information of the dose-related effects and also the plasma concentration related effects of pirepemat. For 757, we have the collaboration with both Michael J. Fox Foundation and with MSRD. Next, please. This is the first-in-class treatment to treat apathy in neurological disorders with a focus on Parkinson initially. And this is a complication that occurs in roughly 20% to 70% of all patients with PD and can be also higher in other indications. Next, please. So the progress during the past quarter has been quite significant in this program. First of all, we have completed the single ascending dose phase of the Phase I study. We have completed the multiple ascending dose phase of the Phase I study with results giving us results that indicates that this is a safe, tolerable and drive with very good exposure in humans. We've done an additional or completed an additional study in elderly healthy volunteers, 65 years and older, and that is to compare with later on with Parkinson's patients as well, that was successfully completed. Together, these make a very comprehensive Phase I program. In parallel, we've also completed the toxicity studies that are necessary to move to the next phase to run a study for 3 months. And we have just initiated -- or taken that decision together with our partner, MSRD/Otsuka to initiate a clinical trial in patients with Parkinson's disease and apathy. And this is a study that we plan to start during the fall this year. Next, please. Going back to the preclinical programs. Next, please. We have 2 candidates here, 942 and 1117. The 942 is the first-in-class compound aiming at treating cognitive dysfunction in neurology with a focus on Parkinson's disease for us. Both of these assets are in preclinical development at present. 1117 is a novel -- totally novel strategy and technology to treat the basic symptoms of Parkinson's disease without any treatment-related complications. Next, please. For 942, we see quite large market opportunity here. The most patients with neurological disorders enter into a phase in their life where they have dementia or cognitive decline. And the current treatments, they have their benefits, but also their complications. And we think that 942 could be a good add to function into this treatment algorithm. Next, please. During the past quarter, we have worked on the further development of the preclinical portfolio around describing the effects of 942. We've also worked on the GMP manufacturing of drug substance, which is a big task together with developing a drug a product that is the formulation of the drug substance. We have also made a decision to slow or reduce the development pace for 942 during the rest of this year. So we are now focusing on finalizing the CMC work and then postponing the toxin safety studies needed for Phase I until next year. Next, please. 1117. This is a familiar slide these days for most of you, but this is a program where we have selected 1117 as the lead compound recently. And this has the potential to be the first drug in a totally new class of treatment strategies for Parkinson's disease, the hallmark symptoms of Parkinson's disease. That is -- it has the potential to replace levodopa should we be successful. The point with this drug is that it's a once-daily treatment, which gives constant plasma concentrations over a 24-hour cycle and also activates motor function over that 24-hour cycle. And this is thought to lead to a better treatment without the complication -- motor complications, such as intense fluctuations that patients experience. Currently, we are working on the development of the large-scale production for this product. Next, please. So we've come quite far on the CMC development. It's still ongoing, but we have come quite far. In addition, we have built on the patent portfolio, and we are looking forward to initiate the IND-enabling studies during the course of the next 12 months. Next, please. So I'll hand over to Viktor to give you some insights into our financial situation.

Thank you, Nicholas. So we can go to the next slide. We have, in the end of the quarter, about SEK 89 million in cash. However, SEK 58 million of those are prepayments from MJFF and especially MSRD/Otsuka, intended to cover the cost for the 757 study that has been initiated. And just to expand a little bit on that fees. We got a quite substantial payment from them during the quarter. This has not been recognized as a revenue as of yet, but rather as a prepaid revenue. So it's in the balance sheet for everyone interested in accounting. When costs occur in these studies, for example, if we get an invoice of SEK 1 million, then this will, of course, appear in the P&L as a cost, but we will simultaneously recognize SEK 1 million as a revenue and thus reducing the prepaid revenues in the balance sheet. So even though we got the payment from MSRD/Otsuka this quarter, there is not a corresponding revenue in the P&L. A little bit technical, but I hope some of you appreciate it. So if we continue to talk about the 757, we can see the light gray bars in the middle table or panel in the bottom of the page. We can see that the cost for that program has gone down a little bit. And that is, of course, due to the Phase I studies that we have concluded or basically concluded. So the big costs for those were found in Q3, Q4. So since we have initiated the next study, we can anticipate that the cost will go up in coming quarters, as that study will cost money, of course. We also internally have an increased focus on cost control. It shows a little bit on the darkest gray bar, where we can see that the cost has decreased a little bit. The middle gray bar is the external clinical cost, which to be more precise is the cost for the Phase IIb study with pirepemat, where there is still cost. We expect those costs to be continuing Q2, maybe a little bit less than in Q1, but then we shouldn't have much of those costs going forward. The headcount remained stable, about 30 employees. And we can take the next slide, please. So net sales, SEK 4 million. And as I mentioned this is only the -- this is a corresponding cost for the 757 program that we've had. So we have an operating profit of -- or loss, of course, of SEK 28 million, and we have cash of nearly SEK 90 million. So then you can read the other numbers yourselves, I guess. So with this, I will hand over to Kristina to some concluding remarks.

Thank you. So next slide, please. So I would like just to go back to the pipeline here. And we have quite a broad pipeline. We believe that this is a world-leading portfolio in developing programs for Parkinson's disease. And as we can see here, we have 5 candidates, all first-in-class with unique mechanism. So the first one mesdopetam. We have the opportunity to take this into 2 different symptoms, I would say, both dyskinesia and psychosis. We are ready to start up the Phase III program, and we are working very hard to get a potential partner in place here. For pirepemat, we have just concluded and are evaluating the final results now in the trial, the Phase IIB study that we performed in falls and an impaired balance. We are looking into next step here, and we'll come back on that. But we can also see that we can broaden this into dementia as well. For 757 in the collaboration with MSRD/Otsuka, we have just started off and initiated preparation for the Phase Ib study in patients with apathy to start the second half of 2025. For 942, as we mentioned, we have decided for the benefit of the other candidates to hold some activities here. And therefore, we are postponing the start of Phase I into 2026. For 1117 for Parkinson's disease, the broader treatment we can see that we will initiate the IND-enabling study, allowing for going into the Phase I during this year. So next slide, please. As one of our -- as the business model really is that we have business development work and we are partnering, I will ask us to spend a few minutes on this slide. So during this quarter, we are continuing to increase the awareness of the company both in -- both externally, I would say, to different hotel partners, both small and big pharma. We have continuous dialogues with a number of potential partners and giving updates and have ongoing discussions there. So after we have the successful collaboration completed with the 757, where the highest priority and focus is now mesdopetam and pirepemat, but we are also evaluating across the portfolio also for the other candidates. So the next slide. So I will end off here, we'll take you through the upcoming milestones that we have during the upcoming 12 and 18 months. And as you can see, this will also be a very intensive and exciting period for the company. For mesdopetam, we are continuing with the BD activities, and we believe still in initiating the Phase III program. Pirepemat, to complete the in-depth analysis that we have ongoing, defining the strategy forward here in the development program as well as the BD activities to continue there. For 757, the highest priority is to start up the study with Parkinson's patients in apathy. That is what we also call a signal finding study that will be crucial for us and the preclinical activities continuing to prepare 942 and 1117 to move in to start clinical studies in Phase I. So by that, I think I will hand back to you, Mattias, and we will start the Q&A session.

Thank you so much, Kristina, and team for this presentation of your results and activities. I will soon hand over to Kevin Sule, who is equity analyst at Redeye, to ask his questions. But first, let me address the audience, and I want to remind you that you can write questions to IRLAB therapeutics in the live chat. And with that, please welcome Kevin Sule, an analyst at Redeye. Please go ahead with your questions.

Now as you mentioned, you have an increased focus on cost control and you, for example, decided to slow down the development pace of 942 in order to focus your resources on some more critical activities within the company. Now could you, to begin with, elaborate on how you've decided what sort of candidates to prioritize at this stage?

So I can start for a more general and then I can hand over to Nicholas as well. But to prioritize the mesdopetam and pirepemat, the 2 candidates that we have progressed longest with and that are closest to Phase III initiation, that's very clear, and while we have very good partnering discussions we need to have our focus there, both, I would say, internal resources and also if additional studies need to be done. But for -- then, we have 757 that we have a commitment and with -- working with MSRD/Otsuka. So they are paying for the activities, and we have our internal resources that we include in this collaboration. So we have 2 priorities as well, and this is very beneficial for us. And then we see that 1117, we have seen that there is a huge interest already for these early candidates. So we will also like to bring this forward in a quite fast speed. Maybe you would like to comment if there is...

Not much. I think that was a very well put. It's always difficult to make decisions on what to bring forward. It's a sport in itself. But of course, the clinical assets, late-stage clinical assets are the most valuable ones. Of course, we need to focus on those. With those does not come very much cost. So it's more dry work where we are working on, of course, discussions with the external board, but also compiling information, creating documentation around the programs. And that is what the team here is working on with those 2. When it comes to wet work, of course, 757, as Kristina mentioned, is the most important program where we have a partner on board, where we have milestones ahead and where we have clear objectives or milestones ahead. And we have also have so good data in the Phase I part of this development program that we really have to move that forward as quickly as possible. And as I mentioned, we have a decision to actually start a trial this year, which means that we work very hard on creating the submission packages for the Phase I -- for the signal finding study or larger Phase Ib study in Parkinson's patients. For the preclinical assets, it's always hard to make your decisions there. But for 1117, it represents such a dramatic shift and opportunity in the treatment algorithm for Parkinson's disease. That's our basic reason for choosing to invest in that rather than 942 at this stage. They were head-to-head basically going into IND-enabling studies, but we've chosen to move 1117 ahead before 942.

And you briefly brushed upon this in the presentation. But with your current main focus being on the late-stage candidates and establishing partnerships for mesdopetam and pirepemat, what is your current strategy for finding a partner? And what sort of characteristics still look for in a potential partner?

The strategy is, I think, no secret. We want to find a partner who can actually bring this to the market. So the strategy is here we need to have a partner who has the capacity to actually run trials together with us or by themselves and to build the marketing effort around the product. So this means midsize, small to midsize, but with commercial ambitions companies or large companies.

And with the upcoming initiation together with Otsuka of the Phase Ib study with 757, what are your expectations in terms of data and information that you hope to gather from the study?

That's a lot. As I alluded to, we call this a signal finding study. We are embarking on a program, which is a little bit different than previous programs we've run. And this is, in part, learnings from Otsuka and learnings from our own efforts in with mesdopetam and pirepemat. We've combine those. So now we are looking at a broad spectrum of end points in these patients, stretching from motor function, of course. This is Parkinson's patients, but most importantly, the new psychiatric aspects of -- and cognitive aspects of the treatment profile. So we are collecting data on a number of areas, which is -- which are important to describe this patient population and also describe the effect of the drug. So it's going to be a huge data set that we generate in this trial.