Q2 update transcript from the reddit page. Worth a read.
There seems to be a little confusion over there distinguishing between orphan drug status and fast tracking approval once results are gathered vs getting early approval.
www.reddit.com/r/ATHX/comments/d26cq7/healios_update/Healios Update
Helios, 2Q deficit shrinks Payment for rights expansion ends but burn rate rises due to clinical trials
4 hours ago
Basic strategy
Mr. Tadahisa Kakimoto: Good morning everyone. My name is Korimoto, President and CEO of Helios Co., Ltd. Thank you for your time today. Then, I would like to explain business explanation and financial results explanation materials. Although it is a basic strategy, there has been no major change since the last time.We call this a hybrid strategy, but in the short term, we will deliver products to patients with cerebral infarction and ARDS, and create a system to make a profit at an early stage. In the medium term, we will advance the iPSC platform technology inside our company, launch our own pipeline all over the world and expand it as a business. In addition, we will show that the development of new product groups will advance to next-generation cancer immune cells, organ primordia, liver primordia, etc. (on the slide).
The establishment of venture capital is under consideration at the same time, and the talk is proceeding smoothly. Create a next-generation pipeline for our next generation while investing strategically in areas such as partnerships with overseas companies who want to enter Japan strategically with cell technology, technology curve-outs, and innovative technologies. The goal is to go. There aren't many updates to the iPSC Platform information this time, but I think it's probably going well at the next financial closing. The first generation of gene editing for iPS cells has also been completed. The 3rd generation will be created, but the 1st generation gene editing has been completed. As previously disclosed, we have created a donation account with Prof. Kinooka at Osaka University, and have been studying various technologies carefully over the past few years. Especially for mass production of three-dimensional culture, we have established a technology to make cells in large quantities by turning a large tank like a sake brewery, and I would like to report it in detail in the next financial statement. think. Regarding gene editing and immune cells, gene editing of next-generation cancer immune cells has made steady progress.We are dealing with the first generation “MultiStem®”, but after the next generation of cell therapy, there are probably fewer cells without gene editing.
Combining this cell, which has the role of carrying the gene therapy technology that has been advanced in Europe and the United States, has opened up a cutting-edge medical field that fuses cell therapy and gene therapy. Is in front of you. The area of CAR-T therapy is extremely competitive, so I don't feel like touching it, but regarding other solid cancers, we are going to go out to this area of immune cells. Is also on track.
HLCR011 Change of joint development system
First of all, we will change the joint development system with Sumitomo Dainippon Pharma. As previously disclosed, Helios has been conducting clinical trials, but it has been changed to be led by Sumitomo Dainippon Pharma. Accordingly, milestones have been partially reduced. The milestone of 1.6 billion yen was originally reduced to 1 billion yen, of which 700 million yen has already been received. The development cost burden after joint development will be changed to a new framework. The details are not disclosed, but we would like shareholders to understand that our burden will not increase in particular. Regarding patent licensing for RPE cell products, overseas licenses are also non-exclusive. There is also a change in the role of the joint venture. Dainippon Sumitomo Pharma and Silagen, a 50% joint venture, are only entrusted with the production of RPE cell products.
As for marketing, both Sumitomo Dainippon Pharma and we have the right to sell, so after the trial is over, we will look at the data and decide whether to sell it. We do not need the marketing function that was previously planned to be used by Silagen, and we have omitted that function. These are the changes.
Expansion of business and capital alliance with Nikon
About expanding business and capital alliances with Nikon. With our company history, we have deepened our relationship with Nikon very closely since 2013 Series A.This time, the relationship has been further deepened, and we are proceeding to increase the number of contracts for our products while responding to 4 billion yen in funding, which will be discussed later.
Financing
It is fund raising. At the same time as expanding business and capital alliances with Nikon, we raised funds through overseas recruitment, and as a result, we were able to raise approximately 11.6 billion yen in cash.
The outline is as described on the slide, but the so-called euro bond procurement is 5 billion yen. To the best of our knowledge, this is the first time that we have raised CB (convertible bond-type bonds with stock acquisition rights) with zero-coupon bonds before sales at a Japanese bio-venture. Nikon received CB of 4 billion yen and the interest rate is 1%. In five years, euro bonds to general investors have a term of three years. The remaining 3 billion yen is so-called equity. The capital increase by third-party allotment in shares was 3 billion yen, so we raised a total of approximately 11.6 billion yen. This finance had a special purpose. There are several challenges for our stock, one is low liquidity. I thought it would be difficult to start the next management unless I improved the current liquidity, and I decided to actively invest in overseas. Thanks to the support of Goldman Sachs and Nomura Securities, this finance has been successfully completed, but the shareholders who received the third-party allotment will soon be listed in the shareholder list. The The name of CB is not listed, but the names of very top tier investors from all over the world who do not readily invest in Japanese bio-ventures are listed. I am grateful.
Since it is a CB, Nikon will not be returned for at least 3 years, and I think Nikon will not return for about 5 years, but with this we are aiming at a big catalyst while improving liquidity, we are the next big growth stage I understand that I have a base to go to. The use of funds is written on the right side of the slide. Approximately 3 billion yen will be allocated for the development costs of cerebral infarction and lungs. Expenses related to new seeds are 1 billion yen, then pipeline development expenses are approximately 3.5 billion yen, fund investment and establishment expenses are 2.5 billion yen, and working capital is approximately 1.6 billion yen.
Development pipeline progress
Although it is a pipeline, it is as written on the slide. Cerebral infarction and ARDS are progressing steadily. Regarding iPS, there was a change in the development system regarding the eyes. Overseas, it is named Dry AMD, but the pipeline that emerges from our platform technology now has data coming out sequentially. A lot of data will come out towards the end of 2019, so I think that it will be quite shuffled, but it will be important how to bring the development pipeline of the next iPS area. There are things with better marketability, those with high unmet medical needs, and things that can become the best in the world based on the world's competitive situation. By shuffling from the three orange spots on the slides that are being listed, there is a possibility of changing the positioning as a technique for reinvestment after cerebral infarction and ARDS approval. I will give you an explanation.
HLCM051 Stroke Clinical Trial Overview
About cerebral infarction. It was announced that it might be a little late in time, but the patient's response and the doctor's response are very strong. I don't know which of the double brands is to the end, but I have a response that it will be a good product. In April 2019, we finished delivering the investigational drug to all facilities, but the speed of patient incorporation after that was not as fast as we thought. As a precaution, I announced that this could be delayed.
Results of double-blind study by Asasys <Acute stage of cerebral infarction>
I would like to report the results from Europe and the US again, but as a result of the double-blind study, 16.1% became Excellent Outcome as of 90 days, and it was a very harsh endpoint with almost no sequelae. The ratio was 16%. A year later, 29%, about 30% improved to the extent that there was no sequelae.
HLCM051 Stroke Current treatment of acute cerebral infarction in Japan
(HLCM051) is a therapeutic drug that has a dosage window of 18 hours to 36 hours, but as far as we know, there are no competitor products administered at exactly the same time. Several clinical trials are underway for cerebral infarction, but since it will be conducted in about one or two weeks, it will be possible to build a market positioning as a cell therapy that will be positioned at the top of the market when approved as a product. I think.
HLCM051 Stroke Number of patients with cerebral infarction annually
Then, the number of patients, but there are many patients with cerebral infarction. It is also number 3 as a cause of death. Of the 230,000 to 330,000 people nationwide, there are 130,000 severe cases, and 62,000 people who come within 36 hours. First of all, we are conducting clinical trials.
HLCM051 Stroke mechanism
As for the assumed mechanism, in Japan, the immunosuppressive effect is clear, as JCR Pharma has already approved for mesenchymal stem cells. It is important to know which disease will be cured by the action, but I think that the secondary damage of cerebral infarction, especially secondary damage, can be suppressed well, and so is the past data from the United States, so Japan is probably the same I think that a trend appears.
HLCM051 ARDS Clinical Trial Overview
Next is ARDS. This exercise has been exercised in 2018, and clinical trials have started this year. Incorporation began in April 2019, and the trial plan is about 2 years. There are no other drugs, unmet medical needs are high, and Western data is very strong, so I think that the response of teachers in the field is good. This is a feeling that is progressing faster than it is. We made a little disclosure the other day, but we applied for orphans. The number of patients is subject to orphan designation, so it meets the standards, but if the orphan designation is successful, about half of the development costs will be subsidized by the country. Approval is expected with a very small number of patients, so we think that the probability of getting an application for approval as a final study in this study will increase sufficiently. Orphan applications will be announced as soon as they are available, but the general information is that it is normally expected to take about two to three months.
Results of double-blind test by Asasys <ARDS>
The result of a double-blind study. Again, very good results came out in the US and Europe. The typical mortality rate of ARDS patients is 40 percent, but in the “MultiStem®” treatment group, this is a dramatic effect, down to 25 percent. Furthermore, when focusing on severe ARDS patients for whom we are conducting clinical trials, the mortality rate in the placebo group is 50%, but in the treated group it has dropped to 20%, and we are proceeding with the trial with peace of mind. There a place.
HLCM051 ARDS What is acute respiratory distress syndrome (ARDS)?
Although it is a mechanism (ARDS), cytokines are produced by inflammation that occurs in various parts of the body, and a phenomenon such as clogging of a coffee filter occurs in the lung with many capillaries. For example, even if inflammation occurs in the arm, cytokines accumulate in the lungs, immune cells in the body that respond to the cytokines approach, and misunderstand that it is the same situation as there are germs, attacking the lungs It is an illness. When MultiStem® is administered by infusion, it accumulates in capillaries and is mailed to places with inflammation. In the case of the lung, there are many capillaries, and it is easy for cells to gather directly, so I think that it is more effective than cerebral infarction. That is why we estimate that the possibility of surviving 30% of people will increase from the extremely heavy situation of 50% mortality.
HLCM051 ARDS annual incidence
There are various statistics on the number of onsets per year, but about 10,000. I think this is a specific example where there are few diagnoses because there are no typical drugs. First, aiming to designate orphan diseases, we will continue to provide therapeutic drugs to 10,000 people. We estimate that it will be effective in a variety of diseases, perhaps including a severe range. However, if we look at our official predictions at this time, the idea is to aim for orphan designation limited to 10,000 ARDS patients.
HLCM051 ARDS treatment mechanism
The assumed mechanism is as explained earlier. These cells suppress the response of immune cells to cytokines that accumulate in the lungs, improving lung function. Aside from the mechanism, the data is available in Europe and the United States, and there is no additional explanation here.
HLCR011 AMD disease description
iPSC-RPE cells, but this is the same as the previous explanation. Although there is a change in the development system, Sumitomo Dainippon Pharma will proceed with this development. There is no particular change in marketability.
HLCR011 AMD RPE Cell Product Manufacturing System
Silagen, a joint venture between Dainippon Sumitomo Pharma and us, is doing well and manufacturing products. There will be no impact on the clinical trial, so RPE products are as originally planned, but handling is requested from Dainippon Sumitomo Pharma.
HLCL041 Liver OrganBud Platform①
For the liver, we are proceeding with mass production of the three types of cells shown on the slide. In particular, mass production of vascular endothelial cells has become possible. With regard to mesenchymal stem cells, “MultiStem®” can be used originally, so this has been resolved. This is a challenge where the progenitor cells of the liver remain at the end, and there are some improvements, but this is also progressing smoothly. In any case, since clinical research will start as originally planned, we are proceeding toward the Proof of Concept in humans, centering on Yokohama City University.
HLCL041 Liver OrganBud Platform②
As a business plan, we have created a company called ONL under the name of Organ Genki Institute for Innovative Research. Since Dr. Takebe is in the United States, we have received ideas for various ways to proceed, including those in the United States and those in academia. In China, as international criticism has increased and the organs of death row prisoners have become unusable, the number of organ transplant organs has rapidly decreased, and there are strong calls for alternative technologies. Interest in the development of these technologies has come from a variety of perspectives. Since clinical research on PoC for humans is also progressing, discussions are underway on future business strategies, including where to do it, what to do with it, and whether to go ahead. The In any case, first of all, it doesn't make sense if you can't make it. The problems have been solved steadily one by one, vascular endothelial cells are made, and mesenchymal stem cells are already made.Finally, we are preparing for how many livers to make and deliver to the world. Another important thing is the genetically modified iPS cells that we make in-house.Without this, immunosuppressants will be needed endlessly. The first generation has already been made, and the second and third generations will be finished toward the end of 2019, but by doing so, the so-called organ primordial is also realistic and sufficiently cost effective We believe that there will be a substrate that can be finished to match.
Summary of income statement (P / L)
This is an overview of financial results.Please note that the numbers on the slides do not reflect the numbers after the capital increase. In 2018, we paid about 2 billion yen to expand our rights with Assasis, so we used about 3.3 billion yen, but since 2019 is not there, it has decreased accordingly. On the other hand, since we are conducting two clinical trials in the final stage, the base burn rate has risen, and the total amount of use is about 1.6 billion yen. The number of employees increased from 86 in 2018 to 111, an increase of 25. I would like to make an announcement in the next fiscal year, but I have worked so far while looking at the situation that cells that have been genetically modified that will become the most advanced in the world from inside the company. No. is happy as a founder and very grateful for your support so far.
Overview of Balance Sheet (B / S)
And B / S is as written on the slide. At present, cash and deposits are increasing from here.
HEALIOS KK Leadership
The management business has also been enhanced, and Koji Abe, in particular, has been newly appointed as the head of human resources. He was originally the head of Sysmex HR. In addition, Richard Kincaid, who I introduced earlier, has assumed the position of Executive Officer as CFO, and David Smith is originally positioned in NA, but is responsible for the global production area. David Smith is the person with the number 1 employee, who started Lonza, Inc., the largest cell contract manufacturing company in the United States, and is very well-known and capable in the industry.
Overview of Helios Co., Ltd.