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.

Richard Hawkins: I want to add, too, is that our clinical incentive, the Advisory Board, a group of really this team pediatric endocrinologists are also well pursing the results, and those results were well accepted, let’s put it that way.

Peter Rosenthal: All right. Good to hear. And I look forward to the upcoming presentation. So if you don’t mind just squeeze one last question in. So can you just sort of help me understand the rationale for expanding into Idiopathic Short Stature, why would 201’s mechanism of action have an effect in that patient population?

Richard Hawkins: David, why don’t we talk about mechanism of action and ISS.

David Karpf: Sure. By increasing baseline growth hormone AUC, it is very likely that ISS patient with ISS will accelerate their high velocity. It may be similar to hormone where you don’t get quite the same high velocity as you’re doing in more severe GHD kids. But it should — I see every reason to expect it should be comparable to the effects of growth hormone.

Richard Hawkins: I think if I may add one thing to that, many of those kids — almost all those kids would be expected to pass our PEM test, right? And they all have the capacity to release growth hormone endogenously upon stimulation. And that’s a key part of why we’re thinking about that population.

David Karpf: Right. I mean, showed in normal adults, you can substantially increase from baseline growth hormone and IGF-1. So there’s every reason to expect that would apply to kids’ ISS.

Operator: Our next question comes from the line of Catherine Novack with Jones Trading.

Catherine Novack: Congrats on completing enrollment. I want to talk a little bit about LUM-201 compared with the efficacy of LUM-201 versus recombinant growth hormone. I know that you’re not necessarily looking at efficacy as the primary in the Phase II, but I’m curious about what’s clinically meaningful to prescribers. Hypothetically, let’s say, you end up with LUM-201 having 8.5 centimeters AHV and GH showing 10 as may be expected. How important is that difference in the first year versus other things like safety, cost, convenience, durability when it comes to how prescribers are looking at these different regimens.

Richard Hawkins: John, I’m going to let you start with the answer and David, maybe you finish, and I’ll probably time into. So go ahead, John.

John McKew: And I think first, we’ve given you kind of the general feedback from the KOLs and the investigators on our trial about their — kind of how they’re feeling about LUM-201 and thinking about moving forward. And that’s really because the efficacy of the drug is actually running at a level of growth that we had anticipated and we had foretold based on historical data. And we’ve also, at our interim, talked about the safety profile of this drug being quite good. And I think those 2 key things of meeting the expectations on the efficacy of our drug and no safety concerns in this population, I think, are key contributors to the excitement that people have. They also have an understanding of what the expectation of growth hormone growth in this kind of less severe, moderate idiopathic growth hormone group of kids is.

And they — most of them acknowledge that we have a couple of kids who are growing outside of that range. So I think the key thing really is just to focus on the efficacy of the drug because as you said, Phase II is not powered to show noninferiority anyway. And so I think focusing on the efficacy of the drug and moving forward with that as we plan Phase III is kind of the key part that we’d like to spend our time on.

Richard Hawkins: David, do you have anything to add?

David Karpf: Sure. I would just add that to our experts, clinical pediatric endocrinologists, their expectation in this population is not to be with growth hormone. It’s actually much lower than that, which is why I think they were so encouraged by our results. I share the view having run the high trials with Skytrofa, I mean, should be barely above 10 centimeters in a more severe population in that trial. So I really expect that growth hormone in this population in Phase III will be below 10 centimeters. Just as a point.

John McKew: Yes. And just one other point is that in a true Phase III noninferiority trial, the last 2 companies to negotiate that difference with the FDA’s 1.8 to 2 centimeters. And obviously, we get a product approved, and we’re as an oral once a day, I think that there will be a significant and meaningful place as a treatment in the market as the first oral product.

Catherine Novack: Got it. That kind of leads into my second question. You may have answered it a little bit. But I want to talk about how important compliance is when it comes to efficacy in daily recombinant growth hormone. When we look at the — what you’ve cited from the GeNeSIS database, for example, we see AHV that’s significantly below control arms in recent Phase III studies for growth hormone. So does this due to higher compliance or to this age more severe growth hormone deficiency that are contributing to that difference.

David Karpf: If I could…

Richard Hawkins: Yes. Go ahead, David, do you want to start?

David Karpf: Yes, sure. The GeNeSIS database and the KIGS database that we referenced for this, first of all, compliance in the first year of treatment is actually pretty good. And we’re looking at the first 12 months of response in those large databases. So I think that the lower AHV is more because of the population, either PEM-positive in the GeNeSIS database or the less severe in the KIGS database, which more closely matches the population we’ll be studying than it has anything to do with compliance, quite honestly.

Richard Hawkins: Okay. And John, anything else you had to want to add ?

John McKew: No, that’s fine. I agree.

Operator: Our next question comes from the line of Eun Yang with Jefferies.

Eun Yang: So assuming good data in the fourth quarter this year, when you — if you embark on a Phase III trial sometime next year, how do you see enrollment taking — how long do you think enrollment would take? When do you think that you would be in a position to actually report the data?

Richard Hawkins: No, we have — let me start, David, please. So first of all, I mean, we’re really pleased with the enrollment in this trial. In spite of these really difficult times during the pandemic and losing all of our sites in Russia and Ukraine. In spite of that, we’ve done really well. And I tell you that these investigators are all experienced. They’ve all done many clinical trials, and we certainly have their attention because this is the first oral product they’ve worked with in their careers. I think there’s another set of investigators that we know about who only participate in Phase III studies, and they are high enrollers. So I think we’ll do well with that. Now we haven’t really guided the market in terms of when we’re going to actually start the Phase III study.

We of course, would have to have an end of Phase II meeting with the FDA, have them agree on our Phase III plan and move ahead. But we’re doing everything that we can currently to not only recruit these investigators and that actually got to start at the IMPE meeting this weekend in Buenos Aires. But I have everything that we can possibly do in advance, completed in order to start as quickly as we can, where we haven’t taken guidance beyond that.

Eun Yang: I see. So when do you think you’re going to be in a position to have a Phase II meeting — with the end of a Phase II meeting with the FDA. Is the first quarter next year be reasonable?

Richard Hawkins: John, I’m going to let you answer that question.

John McKew: Again, we haven’t guided on that publicly. But obviously, we have to get through the data sorted out, put in a package and wait for the FDA to grant and schedule that meeting. So I think there are a lot of factors that lay in there. But we haven’t projected that out yet to the public.

Operator: Our next question comes from the line of Ed White with H.C. Wainwright.

Ed White: So just saying on the potential Phase III, I know that you’re — you don’t really know much about it right now, what you’re going to do, but I’m just wondering if you could tell us what you’re expecting for perhaps the duration of the study? Will this be following the patients for 1 year? Will it be 6 months? How are you thinking about that? And also, I assume that you’re budgeting out for this, so just any cost expectations regarding perhaps the size of the trial? And also, the last question will be, since you lost Russia and Ukraine, where do you expect to enroll the most of the patients?

Richard Hawkins: Maybe I’ll start, and then David, if you’ll chime in here. So we projected — I mean the regulatory pathway for growth hormone and growth hormone products is really clear. We think we’re going to be is this will be approximately 160 to 200 patients, same patient population we’ve been studying in our current study, but we’ll randomize 2:1 to 1.6 versus the standard dose of growth hormone. All patients will be on drug for a year. We really haven’t talked about our budget for that study to date. So I can’t really give you any guidance on that. But I think I answered your question maybe a little bit earlier, Ed, and that is the loss of the Russian and Ukraine sites, yes, that makes a difference. But there’s a whole new set of investigators that all of us know who have been in this field for a long time, who have been prolific Phase III investigators, actually, many of whom don’t even participate in Phase II studies.

And we’re going to meet — we’ve met with those folks. We will meet with them at IMPE, this coming week, and we’ll continue to talk to them and bring them on board. So most of those sites are in the U.S., but there are other sites around the world that are prolific investigators in Phase III programs.

David Karpf: And if I could just add, I would say that I’ve been very pleased to see that the Polish investigators have enrolled more than the Russian Ukrainian investigator did in the high program. So that’s kind of a wash there. But also, I enrolled 164 subjects in the high trial in 12 months. And that was without the benefit that we’ll be having of having high-enrolling sites in like China, which have been really tremendously rapid enrolling growth hormone deficiency trials. So I think that having high-enrolling sites in the U.S., including, as Rick mentioned, some really key high enrollers who only participate in Phase III and having similar folks in U.S., in Poland, in Europe, in Australia, in New Zealand, China, Japan and Korea, I think that we are very bullish on the enrollment for the Phase III trial.

Ed White: Okay. And perhaps just looking at the other indications you mentioned today, Idiopathic Short Stature and Prader-Willi Syndrome. For ISS, would you be looking for an Asian partner? And would you be — how are you thinking about the timing to the start of a trial. Would this be a 2023 event or a 2024 event?

Richard Hawkins: As we haven’t guided on the start of such a study, I think it’s pretty obvious that there would be a number of partners there who would be interested in talking to us. Other than that, I mean, it’s pretty obvious that ISS is of high importance and expanding importance around the world, especially in Asia. John, do you have anything to add to that?

John McKew: No, I think that’s a great answer.

Operator: Our next question comes from the line of Yasmeen Rahimi with Piper Sandler.

Unidentified Analyst: This is on for Yas. First of all, congrats on completing enrollment. We just want to ask — so could you help us understand now that enrollment is complete, where you guys ended up in regards to baseline characteristics like age, MPH, starting high? And are you confident that the having outliers have been minimized, just some clarification on that.

Richard Hawkins: Good question, Lauren. And John, do you start with that answer?

John McKew: Sure. So we announced our last patients enrolled last night. So we’re working on finishing the baseline characteristics analysis for that data, and we would anticipate releasing that bigger data set at an medical conference. So I’ll just reiterate that at our interim analysis, we also released 75% enrolled baseline characteristic data, and we saw a nice shift between 50% and 75%. And then the expectations, particularly for age, are that those are going to continue to come closer together. Randomization will be more effective as we go from 75% to 100%. But we’re in the process of working through that data now.

Operator: And showing no further questions. This does conclude today’s question-and-answer session. Ladies and gentlemen, this also does conclude today’s conference call. You may now disconnect. Everyone, have a great day.