Lumos Pharma, Inc. (NASDAQ:LUMO) Q2 2024 Earnings Call Transcript

Lumos Pharma, Inc. (NASDAQ:LUMO) Q2 2024 Earnings Call Transcript August 1, 2024

Lumos Pharma, Inc. beats earnings expectations. Reported EPS is $-0.93, expectations were $-1.26.

Operator: Good afternoon and welcome to Lumos Pharma’s Second Quarter 2024 Financial Results and Clinical Programs Update Call. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, this conference is being recorded. I will now turn the call over to Lisa Miller, Vice President 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 US 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 looking statements made during this call can 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 and 8-K, which may be accessed from the Investors page of the Lumos Pharma website.

Speaking on today’s call will be Rick Hawkins, CEO and Chairman; John McKew, President and Chief Scientific Officer; and Lori Lawley, Chief Financial Officer. Dr. Duke Pitukcheewanont, our Chief Medical Officer, will also join the call for the question-and-answer section. It is now my pleasure to turn the call over to Rick for our opening remarks.

Rick Hawkins: I’m pleased to be speaking with you today to provide an update on our progress advancing LUM-201 as the first oral therapeutic for moderate pediatric growth hormone deficiency or PGHD. During the second quarter and recent weeks, we’ve made significant progress in advancing our plans for a Phase 3 pivotal trial of LUM-201 in PGHD. Following a very positive and productive end of Phase 2 meeting with the FDA, we have nearly finalized our proposal for a Phase 3 double-blinded placebo-controlled clinical trial with a 2:1 randomization in approximately 150 patients. The FDA’s input has been instrumental in shaping our proposed trial design, acknowledging LUM-201’s unique mechanism as a growth hormone secretagogue and recognizing that a placebo-controlled clinical trial is an appropriate approach for Phase 3.

We expect to finalize the design details in the fourth quarter. Prior to our meeting with the FDA, we had not developed plans for manufacturing a placebo to match our patented form of LUM-201. Now with the decision to move forward with a placebo-controlled Phase 3 trial, additional time is required to complete the manufacturing process and create the placebo matched materials necessary for use in the study. Consequently, we’re extending our intended timeline to initiate Phase 3 into the second quarter of 2025. And this extension also allows all of us to continue managing our cash resources prudently and extend our cash runway. Additionally, in today’s press release, we announced that we have engaged Piper Sandler to explore all strategic opportunities to maximize shareholder value and advance the LUM-201 platform.

Our regular ongoing business development activities have generated significant interest in the global potential for LUM-201 in multiple markets. Given this positive feedback, we feel it’s the right time to formally engage Piper Sandler to ensure we’re thoroughly exploring every potential transaction and opportunity that serves our shareholders’ best interest. We’re confident in LUM-201’s potential as the first oral therapeutic in the expanding $5 billion global growth hormone market. We’re going to continue to focus our efforts on optimizing value for all of our stakeholders. In a moment, John and Lori are going to provide more details on this and other measures we’re implementing to ensure we are well prepared to successfully initiate this trial next year.

In the second quarter, we’re pleased to see new analyses of data from our OraGrowtH212 trial presented at ENDO 2024. The data emphasize the significance of the pulsatility pattern and growth hormone secretion for the growth response from LUM-201. They further illustrate LUM-201’s unique ability to restore natural pulsatile growth hormone secretion, achieving similar to injectable recombinant growth hormone with significantly less exposure to circulating growth hormone. These findings strongly support our planned placebo-controlled Phase 3 trial of LUM-201 in moderate PGHD. And top line results from the OraGrowtH trial were presented at three major endocrinology conferences in May this year. At the Pediatric Endocrine Society meeting in Chicago, Dr. Andrew Dauber highlighted data showing that LUM-201 at a dose of 1.6 mgs per kg a day achieved annualized height velocity comparable to daily injectable growth hormone and PGHD with a promising safety profile.

Meanwhile, at the Growth Hormone Research Society and the European Congress of Endocrinology, Dr. Peter Clayton presented detailed analysis of LUM-201’s effectiveness in restoring growth hormone secretion and increasing annualized height velocity in moderate PGHD patients. The evolving data from our OraGrowtH trials continue to attract significant interest from the Global Endocrinology Community and we’re encouraged by the growing enthusiasm from experts eager to participate in our Phase 3 trial as we finalize our plans. Now I’m going to turn it over to John McKew for more details on our engagement with the FDA and our Phase 3 planning. John?

John McKew: Thanks, Rick, and good morning and good afternoon, everyone. As Rick mentioned, following our productive end of Phase 2 meeting with the FDA, we have been diligently designing a placebo-controlled Phase 3 registrational trial. Based on the FDA’s recommendations and insights from our regulatory consultants, key opinion leaders and statisticians, we have crafted a trial design aimed at maximizing the likelihood of success. This trial will involve approximately 150 patients at over 80 global centers with a 2:1 randomization ratio of LUM-201 to placebo. One group will receive LUM-201 for 12 months, while the other group will start with a placebo for six months and then crossover to LUM-201 for the remaining six months.

All participants must meet our 10 positive criteria during the screening process before randomization. This Phase 3 trial aims to achieve two key strategic objectives. The first is to provide the FDA with a comprehensive data from a blinded-controlled trial to support the evaluation approval of LUM-201. And the second is to ensure that all participants receive LUM-201 at some point during the study, enhancing its appeal to both patients and physicians for enrollment. The study will have two co-primary endpoints. The first would be to demonstrate the superiority of LUM-201 in annualized height velocity compared to the growth on placebo. Second co-primary would be to ensure that the AHV of LUM-201 has a lower bound of the 95% confidence interval above 6.7 centimeters per year, which is the minimal clinically meaningful AHV agreed upon with the FDA.

Following the 12 month treatment period, all participants will have the option to transition into a long-term safety extension, receiving LUM-201 treatment for up to three years. We believe this extension will be a compelling feature for enrollment and will help fulfill FDA’s requirements for longer term exposure. We are confident that the trial is sufficiently powered to achieve the two co-primary endpoints. We are currently finalizing the design proposal and expect to secure final agreement with the FDA in the fourth quarter. A key component of the trial is the manufacturing of the placebo material, which we began after our end of Phase 2 meeting with the FDA. As Rick mentioned, the placebo needs to be a capsule filled with many tablets that exactly match the presentation of active LUM-201 capsules.

Additionally, we must establish all standard stability data for this newly created placebo. Although we began work on these elements promptly, producing the initial batches that met these specifications took longer than anticipated. Consequently, we chose to postpone other preparatory steps for trial initiations to manage our cash reserves effectively. We believe this is a prudent use of resources and expect to be fully prepared to launch Phase 3 in the second quarter of 2025. With the careful attention given to the trial design, we are confident in our ability to enroll patients in this pivotal trial in a timely manner. With that, I’ll turn it over to Lori for a review of our financial results for the second quarter.

Lori Lawley: Thank you, John. We ended the quarter on June 30th, 2024 with cash, cash equivalents and short-term investments totaling $16.8 million as compared to $36 million on December 31st, 2023. As Rick and John have discussed, we are managing our cash resources conservatively. By extending the initiation date of our Phase 3 trial into the second quarter of 2025, we have also extended our cash runway into the first quarter of next year. We will continue to manage our resources carefully and work with Piper Sandler to explore our opportunities to ensure we are well prepared to launch the trial effectively when the time is right. Research and development expenses for the quarter were $4.6 million, a decrease of $1.4 million for the quarter ended June 30th, 2024 compared to the same period in 2023, primarily due to decreases of $1.1 million in contract manufacturing expenses, $0.3 million in personnel-related expenses and $0.2 million in clinical trial expenses, offset by an increase of $0.2 million in consulting expenses.

General and administrative expenses for the quarter were $3.7 million, a decrease of $0.5 million compared to the same period in 2023, primarily due to decreases of $0.2 million in personnel related expenses, $0.1 million in travel, $0.1 million in consulting and $0.1 million in other expenses. The net loss for the quarter ended June 30, 2024, was $7.6 million compared to a net loss of $8.9 million for the same period in 2023. Lumos Pharma ended Q2 2024 with 8,123,186 shares outstanding. With that, I will now turn it over to Rick for his closing remarks.

Rick Hawkins: Thank you, Lori and John. And as we mentioned at the start of the call, it’s been an exciting and productive period for Lumos. Again, we’re thrilled by the outcome of the end of the Phase 2 meeting with the FDA. In recognition that LUM-201 is not another growth hormone mimetic, the FDA’s guidance supporting a placebo-controlled trial, we believe to significantly derisk our program. We’re progressing toward initiating a Phase 3 registrational trial and achieving our goal of establishing LUM-201 one as the first oral therapeutic capable of transforming the global growth hormone market, which has been dominated by injectable products for nearly 40 years. We anticipate some very exciting developments throughout this year and look forward to keeping you informed about our progress. Thank you all very much. And operator we’re ready to take questions.

Q&A Session

Operator: We will now begin the question-and-answer session. [Operator Instructions] Our first question will come from Catherine Novack with Jones Trading. You may now go ahead.

Catherine Novack: Hey, good afternoon, guys. It’s exciting that you’re able to get the Phase 3 trial design nailed down with the FDA. But I wanted to ask about your expectations for enrollment dynamics. How long is it going to take for you to enroll 150 patient study? And given that it’s a 12 month study, should we not be expecting data until late 2026, 2027? When are we going to see updates from this?

Rick Hawkins: So, Duke, will you answer that question and recall Duke is our Chief Medical Officer and he is a pediatric endocrinologist? Go ahead, Duke.

Duke Pitukcheewanont: Thank you. Thank you, Catherine. That’s a good question, right? So when we have the trial design placebo-controlled trial, we have been looking to diligently about where the site might be. So as you know, this type of placebo-controlled trial, we want to make sure now to meet the timeline 15 to 18 months like what we planned. We do believe and be confident we can get that past in that duration complete. What we plan to do is that we try to enroll the patient in different continent, especially we go including Latin America and Asia and Southeastern Europe. In those areas we have limited access to growth hormone. And we do believe that by include some of those area, we will be able to enroll those patients.

Not to mention when we announced the placebo-controlled trial, the last year earning call, we have influx of interest of the physician who interest to be part of our Phase 3. We have more than site that we need. So with expected 150 subject, 80 to 100 patient and we do believe that with 15 to 18 month enrollment, we can achieve that pretty easily.

Catherine Novack: Got it.

Duke Pitukcheewanont: Is that? What is your other question? Go ahead.

Catherine Novack: Sorry. Okay. And then sort of a strategic thought, assuming you are able to secure additional financing, are there other opportunities you could explore in the meantime to compensate for a data catalyst or data shadow from PGHD?

Rick Hawkins: Well, Catherine, we’re completely focused on PGHD, obviously. Yes, there are other indications that are out there for us to explore, but we’re going to do a prudent use of our capital to focus on where we’re going to get across the finish line first. And I don’t know, Lori, if you have any additional thing you want to add to that.

Lori Lawley: No. I think you covered it well, Rick. I think as we suggested, our goal is to manage cash conservatively and ensure that we are extending our runway to support operations and evaluate all opportunities at hand.

Catherine Novack: Got it. Thanks guys.

Rick Hawkins: Thank you, Catherine.

Operator: Our next question will come from Leland Gershell with Oppenheimer. You may now go ahead.

Leland Gershell: Hey, good afternoon. Thanks for taking my questions. Just wanted to ask, Rick, it sounded from your commentary around the potential goals with the strategic opportunities that you could be looking at, but maybe ex-US deals for LUM-201 and then initial monies from those deals could help fund your registration trial. Is that a reasonable scenario? Thanks.

Rick Hawkins: It’s reasonable, but you have to remember, Leland, on a regular basis, our business development folks have been generating a significant amount of interest on global potential of LUM-201 in multiple markets. And we’ve gotten a lot of positive feedback. And as a result, we felt it’s probably the right time to engage an investment banker to make sure that we explore every one of these opportunities and any kind of potential transaction or opportunity that really serves all of our shareholders best. So as a result, I think, it’s easy to say we got a lot of different directions we can go. We’re in active discussions with not just investors, but as you pointed out, strategics have been interested for quite some time, both for maybe either global and also their regional players.

But we’re going to really choose the right deal or combination of deals that provides us the highest value to our shareholders at the lowest cost of capital that we can. Now I can tell you we’re as a Phase 3 ready asset in a $5 billion market that we offer some really significant advantages, not just the fact oral delivery, but unique mechanism of action. I think we’re feeling pretty good about our position right now.

Leland Gershell: Okay. Thanks. That’s helpful. And then just wanted to ask, I believe you have there’s an ongoing study on the academic side in nonalcoholic fatty liver? Just wanted to see if there’s any update you can provide there. Thank you.

Rick Hawkins: Not much of an update except to say that the study is progressing in nonalcoholic fatty liver disease with our clinician at MGH. And as you know, I think we have a potential in the cardiometabolic space as a combination product. And we have some very interesting data that tells us we should spend more time there. And I think this study will also help us get to the next stage.

Leland Gershell: Great. Terrific. Thanks very much for the added color.

Operator: Our next question will come from Charles Duncan with Cantor Fitzgerald. You may now go ahead.

Charles Duncan: Good afternoon, Rick and team. Thanks for taking our question. And let’s see, I guess, congratulations on the recent end of Phase 2 meeting. I guess we’ve talked about that a little bit in the past, but I wanted to ask you a couple of more questions about that. Do you plan or are you contemplating an interim review to look at conditional power? Is there any natural cut point in which you may take a look at the patients enrolled and what kind of rates you’re seeing in terms of annual height change, even just on a blinded basis? Is there any news flow during the conduct of the trial that you could point to?

Rick Hawkins: John, do you want to answer that question?

John McKew: Sure. Hi, Charles. No, we do not plan to take an interim peak. Not a great idea for the Phase 3 study even in a blinded sense, but we do we will keep the data as pure as we can going forward.

Charles Duncan: Okay. Appreciate the rigor. The other question that I had with regard to operationalizing that protocol. I get what you’re saying in terms of manufacturing the placebo because that was a new and in many ways positive twist to the plan. But I’m kind of wondering between now and second quarter, what are some of the rate limiting steps? Is it possible that your second quarter goal is not June, it’s maybe April? Or help us understand the path to getting this trial underway?

Rick Hawkins: Yes. John, I want you to answer that question too.

John McKew: So while we are finalizing the protocol with the FDA, we are doing quite a bit of pre-work. Right now we are looking at sites, identifying investigators, identifying the best regions to work at, finalizing our placebo work, right. And as we transition to having an FDA approved protocol towards the end of the year in Q4, then we start the regulatory reach out for all the ex-US regulators. We go to the EMA, we go to some of the other regions. And then that starts the process of us negotiating contracts and budgets with each one of the 80 plus sites that we intend to have in the Phase 3 trial. So I think there really is quite a bit of work for us to do after the FDA finalizes the design with us that will take us that period of time. Q2 is three months long, so we’ll be in that window. I don’t have any more precise estimates for each of ours.

Charles Duncan: Okay. And then with regard to the FDA finalizing the protocol, if you will, as you just mentioned, are there any outstanding issues? Do you see this as a Gantt chart thing or do you believe there are points of, call it, debate that you really want to get their input on? At this point, do you have full alignment?

Rick Hawkins: Please continue, John.

John McKew: Yes. I do think there’s points of clarification on the specifics of the design. And remember we have to proceed with the FDA’s timelines for back and forth interactions, right? So that’s really where we are right now.

Charles Duncan: Okay. My last question is perhaps for Lori. I’m wondering if you’ve been able to put pen to paper. I imagine you have been able to subsequent to the end of Phase 2 meeting to kind of plan the budget for this trial. And I’m wondering where you’re landing in terms of all-in capital or plus cash needed to at least complete enrollment?

Rick Hawkins: Sure. Go ahead, Lori.

Lori Lawley: Sure. So if you recall, Charles, and great to talk with you today. We previously have said and we’ve continued to say about $85 million to $100 million will support operations through 2026. And so that has been the goal in terms of the capital we’re looking to bring into finance the Phase 2 and to initiate the Phase 3 trial. As we initiate and finalize the plans with the FDA, we’ll issue additional guidance around timelines from an enrollment perspective and we may update those numbers as we finalize that trial design.

Charles Duncan: Okay. That’s great. No, I didn’t recall that. So I appreciate you reminding us. So, thanks for taking the questions.

Rick Hawkins: Thank you, Charles.

Lori Lawley: Thank you.

Operator: Our next question will come from Yasmeen Rahimi with Piper Sandler. You may now go ahead.

Unidentified Analyst: Hey, good afternoon team. This is Jun-Goo on for Yas. Thanks for taking our questions. First, could you remind us of the rationale for the formulation change from Phase 2 to Phase 3? Do you need to do any additional bioequivalence studies with the mini tablets? And secondly, could you provide a little bit more color on what types of potential strategic opportunities are considering at this junction? Thank you.

Rick Hawkins: I’ll let you go first, John, in terms of bioequivalents or any other types of studies.

John McKew: Yes. So the rationale for the change in formulation was really threefold. So we wanted to, if you remember, we are dosing by weight across a wide rate range with an oral product. So switching to this mini tab in a capsule allows us to make three different dosage strengths by just varying the number of mini tablets, the same mini tablets inside a capsule that allows us to have a much tighter dose variance across that large weight range. And it also gives us the opportunity for several different routes of administration. The larger kids and the older kids who are able to swallow a capsule or able to just take their capsules. The younger children who might have a harder time can open the capsule up and take a mini tablet or even a mini tablet in a soft food like puree banana that will ease kind of the treatment burden across that whole age range that we’re talking about in our trial and commercially.

And, yes, there would be a bridging PK study that we have already completed.

Rick Hawkins: So to answer your second part of that question is, yes, you can imagine. I mean, our BD folks have done a great job and outreach to all the markets. And they’ve really generated considerable interest and we’ve had ongoing discussions. Once again, we can’t be specific about those discussions, but I’ll say that at least that they’re not only strategic and strategic markets, but even beyond. So both global and regional type of players who are interested. We’re going to be very careful and look at all the possibilities and potential deals that are on the table and the combination of whether it be financing or strategic is really going to be an interesting exercise over the next coming weeks months. I think we’ll leave it at that.

Unidentified Analyst: All right. Thank you very much. That’s very helpful.

Operator: This concludes our question-and-answer session as well as the conference. Thank you for attending today’s presentation. You may now disconnect.