Lumos Pharma, Inc. (NASDAQ:LUMO) Q1 2023 Earnings Call Transcript May 3, 2023

Lumos Pharma, Inc. beats earnings expectations. Reported EPS is $-0.89, expectations were $-1.12.

Operator: Good afternoon, and welcome to Lumos Pharma’s Q1 2023 Financial Results Conference Call. [Operator Instructions]. As a reminder, this conference call is being recorded. I’ll now turn the call over to Lisa Miller, Senior Director of Investor Relations.

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, and in our Form 10-Q, which may be accessed from the Investors page of the company’s website.

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 question-and-answer session. I will now turn the call over to Rick.

Rick Hawkins: Thank you, Lisa, and good afternoon, everyone. And after the market closed today, we issued a press release announcing our first quarter 2023 financial results and providing an update on our clinical programs. As is our practice, we’ll keep our prepared remarks on today’s call brief, so we can maximize the time available for Q&A. I’ll touch on some of the highlights from the quarter in recent weeks before turning it over to Lori for a review of our financial results. And John McKew and David Karpf will join us to answer your questions. So, let’s begin. As we reported this afternoon, during the first quarter of 2023, we made significant progress and advancing our oral therapeutic candidate LUM-201 in Idiopathic Pediatric Growth Hormone Deficiency, led by the completion of patient enrollment, and both our phase II OraGrowtH210 and OraGrowtH212 trials.

And we can confirm our expectation to report primary outcome battle on the 82 subjects in the dose range finding OraGrowtH210 trial, and up to 22 subjects in the PK/PD OraGrowtH212 trial in the fourth quarter of 2023. Importantly, as predicted, baseline characteristics for OraGrowtH210 subjects converge across a 1.6 mg per kg LUM-201 and the OraGrowtH210 cohort. Between the interim data we announced in November and for enrollment. You may recall that the control arm for the interim analysis included outliers with greater growth than prior data presents. With a convergence of age and other key predictive baseline characteristics across these two cohorts at full enrollment. We now have better balanced and baseline characteristics, and therefore believe we should see more similar growth rates between these two arms at final analysis.

During the quarter, we were pleased to see updated interim data from our trials presented at the 2023 international meeting, a pediatric endocrinology or MPEG that was held in one side of Argentina in March. To present data demonstrate the LUM-201 possesses both a natural endogenous mechanism of action with potency to stimulate meaningful growth in a modern idiopathic PGHD patient population, as well as a favorable safety profile. This included an oral presentation of OraGrowtH212 data by Dr. Fernando Cassorla that further supported the pulsatile mechanism of action of LUM-201 and highlighted gross stimulated with LUM-201 and PEM-positive idiopathic PGHD subjects and a poster presentation by Dr. Alison Lunsford, demonstrating that the 1.6 mg per kg LUM-201 dose produced eight six centimeters a year annualized site’s velocity, again, in line with historical growth for modern idiopathic PGHD patients treated with injectable standard of care growth hormone.

Again, data demonstrated that LUM-201 possesses a favorable safety and tolerability profile that presented data further reinforce our prediction from the interim analysis we announced last November, that’s a 1.6 mg per kg LUM-201 dose is on track to meet growth expectations based on historical database averages. Importantly, we believe the infant medical meeting was critical for raising awareness and understanding of LUM-201 among key opinion leaders and global pediatric intercom community. Among the pediatric endocrinologist in attendance and FA they interest in LUM-201 is its potential as an oral therapeutic to treat PGHD was significant. There are those present who are familiar with Merck’s original evaluation of LUM-201 and all comers PGHD trial and the lack of success there.

Yet that trial, I should say, enroll both severe PGHD patients unable to secrete growth hormone, as well as more moderate or idiopathic PGHD subjects. Once this audience was shown Lumos Pharma’s data demonstrating that moderate Idiopathic Pediatric PGHD patients selected by our PEM strategy grew in line with historical averages. There was an acknowledgment that LUM-201 had the potential to become the first oral therapeutic to address this patient population treated solely by injectable therapies for the last four years. And we are pleased that interim data from our books or growth trials were also accepted for presentation at the upcoming Pediatric Endocrine Society Meeting later this week, including an oral presentation on OraGrowtH210 trial interim data given by Dr. Andrew Dauber, Chief of Endocrinology at Children’s National Hospital and a poster presentation on OraGrowtH212 trial interim data by Dr. Kasora, and presented by our own Dr. David Karpf.

We believe that presentations at IMPE and PES and other medical meetings will continue to increase awareness of LUM-201 among the pediatric endocrinologist’s community and garner even greater excitement for the potential for our oral therapeutic candidate in pediatric growth hormone deficiency. Now turning to other developments now. We continue to support our clinical collaboration with Dr. Laura Dichtel in Massachusetts General Hospital to explore the potential of LUM-201 in non-alcoholic fatty liver disease or NAFLD. This investigator initiated pilot study was supported by data presented by Dr. Dichtel at the end of 2022 conference. And at that medical meeting, Dr. Dichtel reviewed positive data, evaluating injectable growth hormone in NAFLD with supporting the assessment of oral LUM-201 in the same indication.

As NAFLD is a chronic condition prevalent in approximately 25% of adults worldwide, a daily oral therapeutic such as LUM-201 could provide a welcome alternative to a lifetime of daily injections of gross hormone in this indication. Enrollment in this pilot study of LUM-201 in NAFLD is continuing. As we mentioned on our last earnings call, Lumos Pharma filed a novel formulation patent for LUM-201 last year, which could have sent IP protection to 2042. Now currently LUM-201 has patent protection through 2036 for the detection and treatment of growth hormone deficiency as well as Orphan Drug Designation, which offers extended protection of up to 7.5 years and 12 years from the date of drug approval in the U.S. and Europe respectively. We expect to hear from the U.S. patent office later this year.

As previously mentioned, we believe that LUM-201 has the potential to address up to 10 other indications currently treated by injectable growth hormone. We have done a lot of work internally to assess the potential of LUM-201 and other indications and geographic regions. As we mentioned on our last earnings call, we have narrowed our focus to idiopathic short stature or ISS and Prader-Willi Syndrome where we see a sizable opportunity both in the U.S. and internationally. While we assess these opportunities, we remain committed to the prudent use of our cash and ensuring our capital allocation is focused on advancing our core program. I’m going to turn it over to Lori for review or financial results.

Lori Lawley: Thank you, Rick. Lumos Pharma ended the quarter on March 31, 2023, with cash, cash equivalents, and short-term investments totaling $58 million, compared to $67.4 million on December 31, 2022. We reiterate our expectation for average cash use of approximately $9.5 million to $10.5 million in the first quarter of 2023. Cash, cash equivalents, and short-term investments as of March 31, 2023 are expected to support operations into the third quarter of 2024. Well beyond our announcement of top-line Phase II trial results in the fourth quarter of 2023. Research and development expenses were $4.4 million for the quarter ended March 31, 2023, an increase of approximately $0.1 million, compared to the prior year period.

The increase was primarily due to an increase of $0.5 million in clinical trial expense and $0.1 million in legal and consulting expenses offset by a decrease of $0.5 million in contract manufacturing expenses. General and administrative expenses for the quarter were $4.4 million an increase of approximately $0.7 million compared to the prior year period. The increase was primarily due to increases $0.4 million and licensing expenses, $0.2 million and personnel-related expenses, and $0.2 million in travel expenses. The net loss for the quarter ended March 31, 2023 was $7.3 million, compared to a net loss of $7.7 million for the same period in 2022. We ended Q1 2023 with 8,183,296 shares outstanding. With that I will turn the call back to Rick to conclude for us.

Rick Hawkins: Thank you, Lori. To recap, our Phase II clinical trials from LUM-201 are now fully enrolled. And we’re in a position to report top-line data from both studies in the fourth quarter of 2023. Additionally, between our inner data announcement last November and full enrollment, age and other baseline characteristics for over 210 subjects converge, or converge across 1.6 mg per kg of LUM-201 and growth hormone cohorts as predicted. Given the stratification of the trial by age and the balancing effect of the additional subjects included at full enrollment. Our confidence in these trials is reinforced by additional data presented at IMPE in March and our data to be presented at PES later this week. We believe that presented data for the demonstrate that LUM-201 possesses both a favorable safety profile and a natural endogenous mechanism of action, but potency to stimulate meaningful growth in this idiopathic PGHD patient population.

We continue to support the exploration of LUM-201 for the treatment of natural through a pilot investigator-initiated trial, we have narrowed our focus for future indications for LUM-201 to two compelling opportunities and attractive markets. In addition, by prioritizing our PGHD program, and being conservative with our cash usage, we expect our current capital to support operations into the third quarter of 2024. We also submitted a patent application from LUM-201, which if approved, extended IP protection for the commercialized version of LUM-201 through November of 2022. So, 2023 is off to a good start to Lumos Pharma. We believe we’re poised to demonstrate that LUM-201 has the potential to disrupt the worldwide growth hormone market has been dominated for almost 40 years by injectable products.

We’re excited to continue to advance our programs and look forward to disclosing the top-line data in the fourth quarter of 2023. Thank you very much and operator we’re ready to take questions.

Q&A Session

Operator: [Operator Instructions] Our first question comes from the line of Catherine Novack Novak of Jones Research. Your line is now open.

Operator: Next question comes from Charles Duncan of Cantor Fitzgerald. Your line is now open.

Operator: [Operator Instructions]. Our next question comes from Leland Gershell of Oppenheimer. Your line is now open.

Operator: Our next question comes from Ed White of H.C. Wainwright. Your line is now open.

Operator: Our next question comes from Yasmeen Rahimi of Piper Sandler. Your line is now open.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.