Inventiva S.A. (NASDAQ:IVA) Q4 2023 Earnings Call Transcript

Inventiva S.A. (NASDAQ:IVA) Q4 2023 Earnings Call Transcript March 28, 2024

Inventiva S.A. isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good day and thank you for standing by. Welcome to the Inventiva Annual Results 2023 conference call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question and answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today. Frederic Cren, please go ahead.

Frederic Cren: Thank you. Good morning. Good afternoon, everybody, and thank you for joining us today for this webcast. Before we begin, as usual, I ask you to please read the disclaimer on slide two, which should appear now. And I want to remind everyone that various statement that we may make during today’s conference or during the Q&A session will include forward-looking statement within the meaning of the Private Securities Litigation Reform Act of 1995. Today in this call, I’m joined by Jean Volatier our CFO and by our CFO and Co-founder Pierre Broqua. So, let me go back to some of the highlights of lanifibranor development program by starting by NATiV3. So, in January 23, we announced some important changes to the design of the Phase 3 evaluating lani in patient with MASH/NASH, which made the study more attractive for the site and especially more patient-friendly.

This new design is based on discussion we had with the FDA and on the alternative approach put forward by the US FDA, which includes two independent Phase 3, one based on histology outcomes, NATiV3, which would allow us if our results are positive to file for accelerated approval. And the second Phase 3 study in patient with MASH/NASH and compensatory cirrhosis, which will be our confirmation trial in order to demonstrate clinical outcomes and which would secure a positive full approval. As part of the development of lani, we were pleased that our partner, Sino Biopharm, received their ILD approval by the Chinese and MPA to initiate the clinical development in China. Sino Biopharm is participating to our global NATiV3 Phase 3 clinical trial, and we have closed to 7.23 with the first patient enrolled in China and also a breakthrough therapy designation granted by the NMPA in China.

Making lani the first drug candidate to our knowledge to receive such designation from both the FDA and the NMPA for the treatment of MASH/NASH. We also published the results, a positive result of a study conducted by Professor Cusi from the University of Florida in 2023. The study met its primary endpoint which demonstrated the reduction of [Indiscernible] patients with MAFLD/ NAFLD and Type 2 diabetes treated with a low dose of lani for six months. What was key in this study showing the effect on hepatic fat and liver, a muscle insulin sensitivity, as well as fat metabolism within just 24 weeks. The effect on insulin sensitivity is an important feature and key differentiator of lani versus other therapies approved or in develop at in NASH as insulin resistance is the feature of all NASH patients.

We have also been active on licensing as we also announced the licensing of lani in Japan and South Korea with a signature of an agreement with a Palace Pharma. This is an exciting milestone and expands our potential footprint with this agreement. We have received a $10 million up from payment and have emphasized our rights to take a stake ownership in the newly created company. In February, we reported the first SUSAR ever experience with lani and this as we were approaching the end of our screening for native NATiV3. Our team has been an ease all hands-on deck. We have made the changes to our protocol as recommended by our data monitoring committee, and we’re today back on track. We have resumed screening and also, we have started randomizing new patient in the majority of our site under centrally RRB in the U.S. and we confirmed that we target last patient first visit in first half of ‘24.

Finally, just last week, we announced a positive interim analysis over of our proof-of-concept Phase 2 clinical trial legend evaluating the combination of lani with SGLT-2 inhibitor empagliflozin. The study was designed to potentially demonstrate an additive effect of the combination and the management of weight gain that can be observed in some patient treated with Lanifibranor. The study met its primary endpoint, which was the reduction of HbA1c, demonstrated that the combination addresses the moderate and metabolically healthy weight gain seen in some patients. The study shows that both lani alone, any combination with NMPA, induce a redistribution of fat from visceral to subcutaneous fat, reflecting a shift from pro-inflammatory visceral fat towards medically — metabolically additive tissue.

This redistribution of fat is consistent with improving insulin sensitivity seen with both lani alone or the combination. Finally, lani improved markers of cardiometabolic health, the effect site appears to be further improved when lani is combined with –. These results further — our robust data our Phase 2b native. And from the investor initiative study conducted by professor [technical difficulty] we plan to present this data in scientific congresses as well as submitted for publication. We briefly cover several key financial milestone before turning it over to Jean. In 2023, we have secured the financing of approximately $39 million with equity issues. We also have secure $50 million of non-dilutive for — partner in China following the progress made in the development of Lani.

And then an additional 10 million with a signatory of the licensing agreement with pharma, which also make us eligible up to $231 million of clinical regulatory and commercial milestone as well as royalties. And also, as you are aware, in the beginning of the year, thanks to the achievement of key financial and operational milestone, we drew the second tranche of the €50 million EIB alone in the second tranche world of €25 million. We’re very optimistic for the future of Lanifibranor and Inventiva and are focusing on the upcoming important milestone, which is for us the last patient first — of Phase 3 NATiV3 clinical trial, which we expect to secure by the first half of this year. Let me give you some figure that make us confident that we can achieve the target.

We have more than 75% of the patient targeted to be randomized in the main cohort, and more than 350 are in screening. Importantly, close to 90% of the patient randomized, come from North America and the EU, which we think bode well for the quality of the result. From a financial standpoint and [technical difficulty] that we are of course, focusing our efforts to expand our cash runway. And we’re confident that the recent positive data from legend, the progress made in NATiV3 and the approval of — with no requirement of biopsy of prescribing the drug, create a favorable environment for Inventiva. The management of patient with NASH MASH will require treatment option and potential combination therapy. And we certainly think that given Lanifibranor dataset a mechanism of action, there is a significant space for a — drug with a direct antifibrotic activity and strong insulin sensitizer like Lanifibranor because clearly highlighted in the recent physician survey we conducted in the US, showing prescriber expect to write Lanifibranor for approximately 30% of their MASH patients.

We’ll now turn it to over to Jean. He will provide you with an overview of our full-year ‘23 financial reports.

Jean Volatier : Thank you, Frederic. Good morning, good afternoon, everyone. Everything has been said, I may say and the financials for ‘23 reflect a quite rich activities as you have heard. Let’s start with profit and loss accounts. So, the company’s revenues for this year amounted to €17.5 million, I guess a record ever for Inventiva, since it has been created. So, an increase by more than 40% compared to the €12.2 million recorded in ‘22. I said the revenues, derived from two things. First, the continuing milestones, to milestones from CTT Q Syn firm, the Chinese partner, $5 million. And also, for the two third of the revenues in ‘23 from the milestone, the upfront, sorry, the upfront payment of $10,000 million from AL, and also a non-cash consideration from the fair value of an option to acquire shares of the JV.

The key thing is, of course, the increasing effort in R&D. So, an increase of 82% reaching €110 million in ‘23 compared to €60.5 million in 22. Obviously, this reflect the acceleration, planned acceleration, in the ‘23 activities with regard to the clinical development for NATiV3, and also in a lesser extent with a legend Phase 2A combination trial, we have just talked about. G&A expenses amounted to €13.8 million a slight increase of 7% compared to the €12.9 million in ‘22. We consider it’s rather under control, considering the growing scope of activities of the company. To be outlined also, a net financial income of €5.1 million loss, which reflect, we’ve talked about the EIB first tranche, in ‘23, with interest rates which would be paid.

I remind that, end of ‘26, early ‘27. But of course, we incur, the expense related to this loan. And also completed by some interest that we pay for the other existing minor loans. The variation in net financial income is also due to, close to zero foreign exchange results in ‘23 compared to a greater positive result in ‘22. This is obviously related to the Euro dollar context in ‘23 compared to last year. We record for the first year the share, our share of net loss for the stake we have in the Japanese JV, with a non-cash loss of €12 million, of course, compared to zero in ‘22. And all things considered the company’s net loss for the full year, reach €110.4 million compared to €54.3 million, in ‘22. Let’s talk now about cash.

If we consider what we call a global cash position, including the pure cash and cash equivalent, the middle-term investment, we have, but that are very liquid and, and easily mobilizable and the second tranche of the European Investment Bank that we drew, mid-January, we started the year with close to €61 million in cash compared to €88.4 at the beginning of the prior year. So, it’s a decrease of close to €30 million. Obviously, it reflects the higher cash consumed by the operations, €82 million, including by the way, the €20 million cash in. Definitely, deriving from the effort in the R&D. By the way in terms of metrics for the IR&D, we must underline that lanifibranor really focused in our financial efforts. R&D in the company represents 87% of overall expense of this R&D of this 87%, lanifibranor represent 85% of this R&D expense.

And overall, for the company 75% of our financial efforts are of dedicated to this program. The negative impact, of course the operating cash flow has been partially offset by the operation that Frederic reminded, first end of August, the finance rate of €35.7 million gross in regular capital increase. For such an increase, we got the support from existing partners such as Sofinnova, Yiheng Capital, and also, we are very pleased to welcome Qatar Holding LLC, who now holds close to 10% of our shareholder base. The negative operating expense has been also offset, as mentioned by the $10 million upfront payment from Hepalys, and the $5 million related to the two milestones reached with CTTQ, first patient randomized, and the attention of the IND.

Overall, our cash position as of today, we do confirm that this will allow inventive to operate until early Q3 ‘24. I will be glad to answer any question in the Q&A session if needed, I just pass over to, to Frederic for the conclusion. Thank you.

Frederic Cren : Thank you, Jean. Before we move to the conclusion, let’s open it up for the Q&A. I see that there are some questions already.

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Q&A Session

Operator: [Operator Instructions]. We will now take the first question coming of line of Seamus Fernandez from Guggenheim Securities. Please go ahead.

Seamus Fernandez : Frederic, I just wanted to follow up on some of the data that was just presented and comments from Dr. Harrison on the call that were certainly very interesting. We have got the [Indiscernible] around data, not a lot of changes that we see in HvA1c in a diabetic patient population. Whereas, we very clearly see substantial changes in HbA1c with Lani. And then also the incremental benefits of adding an SGLT-2 would suggest that this opportunity is quite substantial. Just wanted to confirm your view of the market, his comments that he would much prefer to give his product to or give this product to diabetic patients. And then also just the confirmation that depending on the timing of the completion of last patient when, if you would strongly expect this to be the next oral MASH therapy available in the market. And I have one additional follow-up question.

Frederic Cren : Thank you, Seamus. We were actually very pleased by your comment made by Steve Harrison who said, that for — lani will be approved, if he see the patient entering his clinic with MASH and type two diabetes, he would prescribe lani over any other compound is ESC. That for us with a very nice comment because we know that there is a large proportion of patient with NASH and type two diabetes between 40 to 50. We have 60% in our Phase 3 study without looking to recruit more patients with type two diabetes. And this patient with type two diabetes actually have a form of NASH that is more severe. You tend to have a higher proportion in patients with F2-F3 and also, they tend to have a more progressive fibrosis. So that was great.

And when we look at the competitors, we really think that this activity on HBA1c, the insulin sensitivities properties that we have that were clearly illustrated by the study we did with Professor Cusi, where we saw a statistical impact on insulin sensitivity in the liver, in the muscle, is really a feature we really want to put forward and really work on stressing the importance of these properties. And we should not forget one, one piece of work that we did where we saw that a patient with pre-diabetes treated in the Phase 2b, so their diabetes stopped and their progression towards diabetes stopped when treated with lani. So, it’s really a compound lani that has a great profile for patients with stated diabetes and also with pre-diabetes.

And then to your question about do we think we are the next orally approved drug? Yes. I can confirm that because we are close to the recruitment first half of ‘26, the other oral drug that we know would be the, I think — but it’s has to start Phase 3 and the other drug in development in Phase 3 are injectables. And all the studies we have done with payers and especially prescriber, really put oral drug as a preferred administration mode versus injectables. So, I think we’re very well positioned in this field. And just as a follow-up question as it relates to the Phase 3, you commented that, I think you’ve already kind of added in a further 5% of patients recruited officially into the study and then have an additional 15% to 20%. So, it sounds like, the conviction that the last patient first visit will occur by the end of the first half of this year or during the second quarter is extremely high.

Is there sort of a, a sooner rather than later aspect to that you have higher conviction in? And then just secondarily second, maybe you can update us on the progress towards sort of the F4 patients that I believe are more exploratory as part of the study.

Frederic Cren: We’re starting to rescreen, we’re starting rescreening in the US with the site that are under central IRB and the opening of all the site is following the plan. There is one [Indiscernible] as plan. So, we are confident there is one item we don’t control will be the screen failure rate following the introduction of this autoimmune antibodies that we put in place following the recommendation of the data monitoring committee. We believe the impact will be limited, but only the future months. We will confirm that. But if the screen failure doesn’t change significantly compared to what we have experienced in the past, we should be able to meet this end of recruitment as planned for the end of H1. We have had many webinar meetings called with all our site.

They understand the situation. They are not motivated to restart screening. We really got positive feedback from how we handle this user. Then on the next Phase 3, which is a Phase 3 that requested to secure full approval and that we plan to conduct inpatient with a compensated cirrhosis, we need to have this trial ongoing. When we file for NDA, we are including patient with F4 compensated cirrhosis in the exploratory arm. We currently, out of those 200 patients, we will have approximately 30% with F4. We are not doing a second biopsy, but we have a very large set of non-invasive tests planned to be used in this patient that are stratified one to one, to one in the exploratory court. So that will give us, I think, valuable information on how lani performs in this patient and will help us finalize the discussion we have with the FDA on the design of this confirmatory trial.

Seamus Fernandez : Great. Thank you, so much, and good luck with the continued progress and congrats on the recent updates.

Operator: We will now take the next question from the line of Rami Katkhuda from LifeSci Capital. Please go ahead.

Rami Katkhuda : Thanks for taking my question as well. Just a couple quick ones from me. First, I guess, when do you expect ex-U.S. sites to begin enrolling patients again? And then, secondly, what milestones do you need to hit to draw additional tranches from the EIB loan and could that occur before the third quarter?