Lumos Pharma, Inc. (NASDAQ:LUMO) Q4 2022 Earnings Call Transcript

Lumos Pharma, Inc. (NASDAQ:LUMO) Q4 2022 Earnings Call Transcript March 1, 2023

Operator: Good afternoon, and welcome to Lumos Pharma’s 2022 Financial Results Conference Call. We’ll now turn the call over to Lisa Miller, Senior Director of Investor Relations. Ma’am, please go ahead.

Lisa Miller: Thank you, operator. Before we proceed with the call, I would like to remind everyone that certain statements made during this call are forward-looking statements under U.S. federal securities laws. These statements are subject to risks and uncertainties that could cause actual results to differ materially from historical experience or present expectations. Additional information concerning factors that could cause actual results to differ is contained in our periodic reports filed with the SEC. The forward-looking statements made during this call speak only as of the date hereof, and the company undertakes no obligation to update or revise the forward-looking statements. Information presented on this call is contained in the press release we issued this afternoon, which may be accessed from the Investors page of the company’s website and in our Form 10-K when filed.

Speaking on today’s call will be Rick Hawkins, CEO and Chairman; and Lori Lawley, our CFO; John McKew, our President and Chief Scientific Officer; and David Karpf, our Chief Medical Officer, will join for questions-and-answer session after the call. I will now turn the call over to Rick.

Richard Hawkins: Thank you, Lisa, and good afternoon, everyone. After the market closed today, we issued a press release announcing our 2022 full year financial results and clinical updates. On today’s call, we’ll keep our prepared remarks brief so we can maximize time available for Q&A. I’ll touch on the highlights in the year and in recent weeks before turning it to Lori for a review of our financial results. Then John McKew and David Karpf will join us to answer your questions. So let’s begin. As we reported this afternoon, 2022 was a year of significant progress in advancing our oral therapeutic candidate, LUM-201 in Idiopathic Pediatric Growth Hormone Deficiency, or . We are pleased to announce patient enrollment has been completed in both our OraGrowtH210 and OraGrowtH212 trials.

Given the obstacles that we faced with the impact from COVID, the Ukraine-Russia conflict, and a fire at our single OraGrowtH212 site, we are elated to be able to announce that the last subject in both trials have been enrolled, and we now expect to report primary outcome data on 82 subjects in the OraGrowtH 210 and 22 subjects in the PK/PD OraGrowtH212 trial. This accomplishment is a real tribute to the clinical team, and we expect to announce top line results from both trials in the fourth quarter of 2023. Now as most of you know, we announced the results of an interim analysis from these trials in November, and I’ll just briefly recap the data and main conclusions now. Results from these interim data on approximately 10 subjects per arm at 6 months on treatment of the OraGrowtH210 trial showed annualized height velocity for 1.6 mg per kg of LUM-201 cohort of 8.6 centimeters a year.

Meeting expectations and prior guidance based on comparisons to several large historical databases, which showed annualized high velocity of 8.3 to 8.6 centimeters a year for idiopathic or moderate PGHD subjects treated with growth hormone. Importantly, a durable response to LUM-201 was observed at 9 and 12 months. No treatment-related severe adverse events were observed. There were no trial dropouts due to adverse events and no adverse safety signals across the entire dose range evaluated. And as we stated previously, we believe these status support the selection of a dose of 1.6 mg per kg per day for our pivotal Phase III PGHD trial planning for which is now underway. As we mentioned previously, the imbalance in baseline characteristics that contributed to the faster growth seen in the growth hormone control arm should be minimized with full enrollment of approximately 20 subjects per arm.

The interim data from our OraGrowtH212 trial were supportive of the OraGrowtH210 trial data. And recall that the subjects enrolled in these trials are an enriched population identified through our Predictive Enrichment Marker or PEM strategy for selecting idiopathic or moderate PGHD patients with the potential to respond to LUM-201. Each patient has given a single dose of 0.8 mg per kg of LUM-201 during the screening process to determine if they meet the PEM cutoff prior to enrolling in the OraGrowtH trials. The primary endpoint for our OraGrowtH210 trial now anticipated for the fourth quarter of 2023 is to confirm our PEM strategy and finalize the optimal dose selection for a pivotal Phase III trial. Also in November, we hosted a key opinion leader webinar featuring Dr. Andrew Dauber of Children’s National Hospital and Dr. Fernando Cassorla of the University of Chile, both distinguished thought leaders in the field of pediatric endocrinology for a discussion of the interim data.

These clinicians share their insights about oral LUM-201 and its potential to treat children with idiopathic PGHD. They highlighted that the interim clinical data support the potential for LUM-201 as a welcome oral alternative to current therapies that require frequent injections. A replay of this event is available on our website for those who wish to review the interim results in greater detail. In our press release this afternoon, we announced the acceptance of 2 abstracts for presentation at the 2023 International Meeting of Pediatric Endocrinology or IMPE, which will be held in Buenos Aires, Argentina, March 4 through the 7, 2023. Additional data from the interim analysis of our OraGrowtH trials will be presented in an oral and a poster presentation during the conference, and we’ll announce the details of the data update once presentations have been made.

Turning to other developments. Our previously announced clinical collaboration with Dr. Laura Dichtel and Massachusetts General Hospital to explore the potential of LUM-201 in Nonalcoholic Fatty Liver Disease or NAFLD is continuing. This investigator-initiated pilot study was recently supported by data presented by Dr. Dichtel at the ENDO 2022 medical conference where she presented positive results from a trial evaluating injectable growth hormone in NAFLD, which supported the assessment of oral LUM-201 in the same indication. Enrollment in the Massachusetts General pilot study of LUM-201 in NAFLD is ongoing. And now in today’s release, we also announced an important development involving our intellectual property position for LUM-201. In November 2022, we filed a patent application titled Compactable Oral Formulations of Ibutamoren, which contains claims directed to certain improved LUM-201 drug product formulations we intend to utilize in our Phase III trial and ultimately commercialize.

The application is currently pending and if granted, would provide composition of matter protection through November 2042 for the commercialized version of LUM-201. Now before I turn it over to Lori for a review of our financial results, I want to provide an update on our evaluation of next indications for LUM-201 beyond PGHD. We’ve done substantial work internally and have consulted external advisers and market participants to assess the potential LUM-201 and other indications and geographic regions with narrowed our focus for the next indications to include Idiopathic Short Stature or ISS, with a focus on the Asian market. Growth hormone used in these markets have been growing by double digits in the last 5 years, approaching $2 billion in total with ISS being a major driver of this growth.

Our narrow target indications include Prader-Willi Syndrome, where we see an attractive global opportunity for LUM-201. And while we plan for the next steps for these opportunities, we remain committed to ensuring prudent use of our cash is focused on advancing our core program in PGHD. So with that, I’ll turn it over to Lori for a review of our financial results. Lori?

Lori Lawley: Thank you, Rick. Lumos Pharma ended the year on December 31, 2022, with cash, cash equivalents and short-term investments totaling $67.4 million compared to $94.8 million on December 31, 2021. Total cash spent during 2022 was $27.4 million, which is below the guidance given for the year of $8.5 million to $9.5 million cash burn per quarter, primarily due to lower-than-anticipated clinical trial costs incurred as a result of closing certain sites in Ukraine and Russia, lower-than-anticipated travel costs due to the continued impact of COVID in the first half of 2022 and a continued focus on disciplined management. The company expects an average cash use of approximately $9.5 million to $10.5 million per quarter through 2023 as we ramp up our efforts to prepare for a Phase III clinical trial.

Cash and short-term investments on hand as of December 31, 2022, is now expected to support operations into the third quarter of ’24 extended from Q2 of 2024. Research and development expenses were $17.9 million, an increase of $1.6 million for the year ended December 31, 2022, compared to the same period in 2021, primarily due to increases of $1.1 million in clinical trial and contract manufacturing expenses, USD0.5 million in consulting expenses and USD0.3 million in personnel-related expenses, offset by decreases of USD0.2 million in stock compensation expense and USD0.1 million in operating expenses for supplies, depreciation and rent. General and administrative expenses were $15.7 million, an increase of $0.4 million for the year ended December 31, 2022, as compared to the same period in 2021, primarily due to increases of $0.9 million in royalty expenses, USD0.4 million in travel expense and USD0.3 million in other expenses, offset by decreases of $0.4 million in personnel-related expenses, $0.4 million in stock compensation expense, USD0.3 million in consulting expenses and USD0.1 million in operating expenses for supplies, depreciation and rent.

The net loss for the year ended December 31, 2022, was $31.1 million compared to a net loss of $30.4 million for the same period in 2021. We ended Q4 2022 with 8,267,968 shares outstanding. Additional information may be found in our quarterly press release filed this afternoon. And with that, I will hand the call back to Rick to conclude for us.

Richard Hawkins: Thank you, Lori. And to recap, our Phase II clinical trial, evaluating oral LUM-201 in PGHD are now fully enrolled, and we’re in a position to report top line data from both studies in the fourth quarter of 2023. Our confidence in these trials is based on the results of the interim data reported last November and corroborated by expert opinion leaders and growth-related disorders. Additional data from our OraGrowtH trials will be presented later this week at the IMPE conference, and we anticipate additional data presentations at other major medical conferences over the course of 2023. We continue to support the exploration of LUM-201 in the treatment of NAFLD through a pilot investigator-initiated trial, and we have narrowed our focus for future indications for LUM-201 to 2 compelling opportunities in attractive markets.

In addition, by prioritizing our PGHD program and being conservative with our cash usage, we’re extending our current cash runway guidance into the third quarter of 2024. We also submitted a patent application for a novel drug product formulation of LUM-201, which have approved will extend composition of matter protection for the commercialized version of LUM-201 through November of 2042. So 2022 was a productive year for Lumos and we’re positioned for 2023 to be even better. We believe we are poised to demonstrate that orally administered LUM-201 has the potential to disrupt the worldwide growth hormone market has been dominated for almost 40 years now by injectable products. We’re excited to continue to advance our programs and look forward to disclosing pipeline data in the fourth quarter of 2023.

Thank you all very much. So operator, we’re ready to take questions.

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Q&A Session

Operator: . Our first question comes from the line of Charles Duncan with Cantor.

Peter Rosenthal: This is Peter Rosenthal for Charles. Hi, Rick and team. Congratulations on the enrollment completion for 210 and 212 studies. So I have a question regarding the patient screen failure rate. Now that you’ve completed enrollment in 210 and 212, can you give us a sense of what the screen failure was? And how does that compare to what you expected? And yes, we’ll start off there.

Richard Hawkins: Yes. I think our failure rate is quite low because obviously, we use our Predictive Enrichment Marker or PEM strategy to prescreen these patients and our investigators are really well versed in the patient population we’re looking for, and that is the moderate idiopathic patients. And David, do you want to add anything to that?

Peter Rosenthal: Yes, it was the screen rate.

David Karpf: Yes. Rick is exactly right. The screen failure rate has been less than we had predicted in the protocol, and it’s largely driven by a reduction in the screen failure because of not passing the PEM test, because the investigators are very used to diagnosing idiopathic GHD. And so because they’re screening that population, we’ve had a market reduction in the anticipated screen failure rate for PEM failure. And the rest of the regions PEM failure have been as predicted. So overall, the screen failure rate is lower than we had predicted.

Peter Rosenthal: Okay. And then in terms of the parameters that define the other PEMs, do you believe they’re going to remain the same for Phase III? Or is there a possibility of an adjustment?

David Karpf: Sure. The parameters are well defined and those will not change, which is having a baseline IGF-1 level in absolute terms, it’s higher than 30 nanograms per ml and showing at least a 5-nanogram per ml level after receiving the low dose of LUM-201, but will change in Phase III is likely how we do the PEM test, which will be simplified. So it will not be like a stim test. It will be a single dose of LUM-201 and a single blood test 1 hour later for the dynamic part of the PEM test. So that will be simplified, but the parameters will remain the same. Does that answer your question?

Peter Rosenthal: It does indeed. So I know you’ll be presenting the data at conferences in the near term. But can you give me a sense of how the data presented last quarter has been received by KOLs and more broadly by the endocrinology community. And how does that sort of translate to enabling a Phase III study? Do you get a sense that there’s an appreciation for the PEMs approach and allowing for a more, let’s say, precision medicine approach.

David Karpf: Yes. That’s a very good question. The short answer is yes to that. What I would say is that the investigators and the key opinion leaders are all very excited about the interim data because to them, it really proves that LUM-201 does what it’s supposed to do. So we have a very, very engaged investigators. They like the fact that it’s natural and it enhances the development of synthetic growth hormone as opposed to exogenous hormone. And so they remain very excited, very committed and are looking forward to working with us in Phase III.