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Edited Transcript of PIRS earnings conference call or presentation 9-Aug-18 12:00pm GMT

Q2 2018 Pieris Pharmaceuticals Inc Earnings Call

BOSTON Aug 27, 2018 (Thomson StreetEvents) -- Edited Transcript of Pieris Pharmaceuticals Inc earnings conference call or presentation Thursday, August 9, 2018 at 12:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Allan Reine

Pieris Pharmaceuticals, Inc. - Senior VP, CFO & Treasurer

* Louis A. Matis

Pieris Pharmaceuticals, Inc. - Senior VP & Chief Development Officer

* Stephen S. Yoder

Pieris Pharmaceuticals, Inc. - CEO, President & Director

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Conference Call Participants

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* Biren N. Amin

Jefferies LLC, Research Division - MD and Senior Equity Research Analyst

* Emma Kathleen Nealon

Oppenheimer & Co. Inc., Research Division - Associate

* Jonathan Miller

Evercore ISI Institutional Equities, Research Division - Associate

* Matthew Christopher Phipps

William Blair & Company L.L.C., Research Division - Analyst

* Pamela Ann Barendt

Cowen and Company, LLC, Research Division - Associate

* Umer Raffat

Evercore ISI Institutional Equities, Research Division - Senior MD & Senior Analyst of Equity Research

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Presentation

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Operator [1]

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Greetings, and welcome to the Pieris Pharmaceuticals 2018 Second Quarter Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

I'd now like to turn the conference over to Allan Reine, Chief Financial Officer. Please go ahead.

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Allan Reine, Pieris Pharmaceuticals, Inc. - Senior VP, CFO & Treasurer [2]

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Good morning, everyone, and thank you for joining us for our Second Quarter 2018 Earnings Conference Call. On the call today, we have Steve Yoder, our President and CEO; and Lou Matis, Senior Vice President and Chief Development Officer, who will be available for Q&A.

We announced financial results this morning, and you can access the press release on the Investor Relations page of our website at www.pieris.com.

Before we begin, I'd like to caution that comments made during this call may contain forward-looking statements involving risks and uncertainties regarding the operations and future results of operations of Pieris, including statements related to the timing and progress of our clinical trials and preclinical programs. Our partnership and our financial position and actual results or events may differ materially from those expressed or implied by such forward-looking statements. Factors that might cause differences are described in our filings with the SEC, including our annual, quarterly and current reports. The information being presented is only accurate as of today, and Pieris undertakes no obligation to update any statements to reflect future events or circumstances.

With that, I'll hand the call over to Steve.

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [3]

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Thank you, Allan, and thank you to everyone for joining us today for our 2018 second quarter earnings call. Before giving a corporate update and discussing our pipeline progress, I will give a brief introduction to Pieris Pharmaceuticals. We are a clinical-stage biotechnology company, focused on developing Anticalin-based treatments for oncology and respiratory conditions.

Anticalin proteins are engineered lipocalins, proteins that naturally bind and transport different molecules throughout the body. The small size and stable structure of Anticalin proteins can give them distinct advantages over traditional monoclonal antibodies.

For instance, Anticalin proteins can offer alternative delivery routes, such as inhalation, be formatted for distinct agonistic activity, engage a broad spectrum of targets and have lower manufacturing costs. Our high-throughput drug discovery platform allows us to carefully select the most appropriate drug candidates in our quest to address clinically validated pathways in novel ways, resulting in high differentiation over conventional drug modalities and reduced target biology risk compared to so-called first movers on that target.

We believe this R&D strategy allows us to better manage drug development risk compared to approaches that address targets without clinical validation. Our localized engagement of the IL-4 receptor alpha target via inhalation and our tumor-localized activation of 4-1BB are excellent examples of this strategy.

In complementing this R&D strategy, our business strategy of co-developing certain programs with partners while maintaining commercial opportunity rights in the U.S., enables us to pursue a broader pipeline of candidates that we could on our own. This strategy also provides nondilutive capital to help fund our proprietary pipeline.

Now turning to our core value drivers. Our lead oncology asset, PRS-343, which is a fully proprietary immuno-oncology bispecific drug candidate composed of 2 Anticalin proteins targeting 4-1BB that are genetically fused to an antibody targeting HER2. This molecule was designed to preferentially activate tumor-specific T-cells in the tumor microenvironment through a unique agonistic mode of action with the objective of providing a larger therapeutic window than that of traditional monoclonal antibodies engaging this target.

Our lead respiratory asset, PRS-060, is an inhalable IL-4 receptor alpha antagonist addressing the same target as the clinically validated dupilumab for the treatment of uncontrolled asthma. This molecule was designed to target a validated pathway in a localized way through inhalation and not only could result in a high-value commercial opportunity, but also could serve as proof of concept for the novel delivery potential of our drug class. We are developing PRS-060 in collaboration with AstraZeneca, and we retain co-development and co-commercialization rights in the U.S.

Additionally, our noncore asset, PRS-080, is a half-life-optimized Anticalin to treat anemia, currently in an ongoing Phase IIa trial. Although anemia is not a key focal area for Pieris, this aspect can provide further drug class validation as we continue to establish a position of leadership in immuno-oncology and respiratory diseases.

Beyond the proprietary pipeline, I would now like to provide an update on 2 of our older partnerships.

Recently, we received notification of Roche's intent to terminate our research collaboration and license agreement in immuno-oncology, effective August 21, 2018. This partnership, which was signed in 2015, included the discovery of Anticalin proteins specific for an exploratory target chosen by Roche. As part of the collaboration, our platform technology select -- successfully produced a number of discovery hits specific for the target, from our Anticalin libraries. And while we're disappointed that we were not able to further advance our Roche research collaboration program, we appreciate that there can be extreme challenges when addressing exploratory targets, and are nonetheless pleased that Roche remains a supportive partner as we are on track to initiate in the second half of this year a PRS-343 combination trial with atezolizumab/Tecentriq based on a drug supply agreement with Roche.

And moving on, we also received notification of Sanofi's intent to terminate the development of our tetraspecific Anticalin program targeting Pseudomonas aeruginosa, this is effective August 23, 2018, and stems from a collaboration signed way back in 2010. Pseudomonas aeruginosa is a pathogen with advanced antibiotic-resistant mechanisms that is associated with several serious illnesses. As part of the collaboration with Sanofi, we developed this tetraspecific Anticalin protein that potently and selectively binds 4 classes of iron-chelating siderophores produced by Pseudomonas aeruginosa, altogether comprising the engagement of 10 distinct targets. Now with the demonstrated ability of our Anticalin tetraspecific molecule to bind to each target in an iron-bound and iron-unbound state, this multi-specific protein effectively engages 20 targets as 1 fusion protein, which was a significant feat in protein engineering by Pieris.

As part of this termination, Sanofi will transfer all related materials, data and reports to Pieris, who will gain full control over the program. We intend to review this data package and consider our strategic options thereafter. We're grateful to Sanofi for a productive 8-year relationship from which we learned a great deal in the process, and we will consider if there is a path forward to continue develop this Tetracalin once it reverts back to Pieris.

Now the partnerships with both Sanofi and Roche were important to Pieris during a formative time in our history, as we sought to establish initial drug-class validation of Anticalins, and we believe these partnerships served this objective well.

In the last few years, however, we have honed our target biology capabilities and pivoted the focus of our company towards 2 core areas, respiratory diseases and immuno-oncology. We have also applied this know-how to develop first-in-class fully proprietary drug candidates like PRS-343, and were able to sign company-transforming partnerships within these 2 therapeutic focus areas with AstraZeneca, Servier and Seattle Genetics.

These partnership agreements represent a new partnering strategy for the company. They demonstrate a collaborative approach to target selection as opposed to our earlier model, which involved Pieris developing Anticalins to a target preselected by the partner. They also entail higher upside for the company as per the options to both co-develop and co-commercialize these assets at different stages in their development, along with attractive tiered royalty potential.

As we move into a later stage of development as a company we will prioritize partnering opportunities that fit within this new paradigm. I will provide more detailed updates on these existing partnerships in connection with an update on our overall pipeline, starting with immuno-oncology and followed by respiratory disease.

In immuno-oncology, our lead and fully proprietary program, PRS-343, is currently in a Phase I dose-escalation trial for the treatment of HER2-positive solid tumors. We are focusing specifically on HER2-positive tumors where standard treatments have failed or stopped working. To date, we have enrolled patients with a diverse population of HER2-positive tumor types. And to our knowledge, our program is the first bispecific costim T-cell agonist to enter the clinic, reinforcing our position of leadership in this biology. We believe that our bispecific approach is more elegant than those of traditional monoclonal antibodies, in that PRS-343 is designed to activate tumor-specific T-cells selectively in the tumor microenvironment, leading to effective immune-mediated killing, while reducing the systemic toxicity associated with conventional systemically active 4-1BB-engaging antibodies.

Last quarter, we gave an update on patient enrollment for the dose-escalation Phase I study of PRS-343. And the study, which is evaluating the effects of our drug in these HER2-positive solid tumors, continues to enroll well. As of our last update in early June, we had dosed cohort 7 and screened cohort 8. We have now successfully dosed cohort 8 and are continuing to move through the escalation cohorts at a healthy pace, which we believe demonstrates investigator excitement for the drug.

This -- the trial design allows us to backfill patients into cohorts as well as overenrollment beyond a classic 3+3 setting, which we believe can give us a more complete dataset as we assess the safety, tolerability, pharmacokinetic and pharmacodynamic effects of our drug. We will also be assessing paired biopsies for relevant biomarkers, particularly for the proliferation of tumor-specific CD8 immune effector cells in the tumor microenvironment in post-treatment biopsies as well as looking at other markers indicative of an active immune signature. We plan to report results from the trials in the fourth quarter of this year.

Now continuing on with 343, we recently received regulatory approval to initiate the combination trial for PRS-343 plus Tecentriq/atezolizumab, which we plan to commence in the second half of this year. The combination of our drug candidate, 343 with Tecentriq, is based on a significant body of evidence in the literature that demonstrates the potential synergy between 4-1BB agonism and antagonism along the PD-1/PD-L1 axis.

As we continue to make progress in evaluating our drug as a monotherapy and as a combination therapy with atezolizumab, we are also considering studying PRS-343 in tandem with other agents, especially ones that can help turn so-called cold tumors hot or lead to increase CD8 T-cells and other 4-1BB expressing immune cells in the tumor microenvironment. And our [corporate end] strategy entails expanding our immuno-oncology franchise as we intend to make headway with that expansion by filing 2 INDs next year. One of the INDs will be for a proprietary candidate, and one will be part of our collaboration with Servier.

This completes the immuno-oncology update, and I would now like to turn to our respiratory pipeline. We initiated a single ascending dose study for PRSO 60 in December of 2017 and we have completed the inhaled cohorts of that study. We plan to provide an update on the study results later this year. In addition, we recently initiated a multiple ascending dose trial in healthy subjects who have controlled mild asthma that will evaluate not only the safety, tolerability and PK of our drug candidate, but also its capacity to reduce fractional exhaled nitric oxide, or FeNO, in the subjects dosed with PRS-060 versus placebo, which we believe can demonstrate an initial biological signal of efficacy.

As a reminder, we are developing this program in collaboration with AstraZeneca. And although we are sponsoring the Phase I trial of this program, AstraZeneca is reimbursing the cost. After the completion of the Phase I trial next year, we will hand the program over to AstraZeneca, who will run the Phase IIa trial in collaboration with Pieris.

Once the trial is complete, we may exercise our option to co-develop and separately to co-commercialize this program in the United States as per our collaboration agreement.

Beyond PRS-060, we recently initiated an additional program on an undisclosed respiratory target as part of a collaboration with AstraZeneca. This program is 1 of 4 that we plan to develop as part of this respiratory alliance. And as a reminder, we have opt-in rights to co-develop and co-commercialize 2 of the 4 additional programs.

Beyond this, we have also begun activities on our own proprietary respiratory pipeline following a rigorous target selection process. And I am happy to say that we have initiated 2 proprietary respiratory programs in the second quarter.

Beyond respiratory disease, I'd now finally like to give a brief update on our noncore program, PRS-080, in anemia. This program is currently in a Phase IIa trial in patients with a specific type of dialysis-dependent anemia, known as functional iron deficiency anemia. PRS-080 is a potent hepcidin antagonist which is known as the master negative regulator of iron metabolism. One of the effects we are evaluating in this trial is the change in hemoglobin levels after 5 weekly doses of PRS-080.

ASKA Pharmaceutical has an exclusive option for this asset in Japan and other Asian territories. And if data are positive, we will seek to partner the program outside of the ASKA territories.

This concludes my prepared remarks, and I would now like to hand back over to Allan to guide you through our financial results for the second quarter of 2018.

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Allan Reine, Pieris Pharmaceuticals, Inc. - Senior VP, CFO & Treasurer [4]

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Thank you, Steve. We've recognized revenue of $11.7 million for the quarter ended June 30, 2018, as compared to $1.9 million revenue in the quarter ended June 30, 2017. This increase in revenue is primarily related to the increased level of activity with respect to our collaboration agreements with both Servier, which commenced in January 2017, and AstraZeneca, which commenced in June 2017.

In the current period, we also recognized revenue under our collaboration with Seattle Genetics, which commenced in February of 2018. In addition, we recognized the remaining $1.5 million of the upfront payment under our collaboration with Roche upon the agreement termination.

Research and development expenses were $9.2 million for the quarter ended June 30, 2018, as compared to $5.4 million for the quarter ended June 30, 2017. This increase in R&D expenses reflects advancement across our pipeline of programs as well as preparation and advancement of clinical activities.

General and administration -- administrative expenses were $4.8 million for the quarter ended June 30, 2018, as compared to $4.3 million for the quarter ended June 30, 2017. This increase reflects higher personnel costs, professional services for audit and legal as well as an increase in general and administrative costs to support the growing business of our company. This was partially offset by transaction fees for our license and collaboration agreements recorded in the first half of 2017.

Other income was $1.9 million for the quarter as compared to $1.4 million for the quarter ended June 30 last year. The $3.3 million increase is attributed (sic) [attributable] to $700,000 of interest income on our investment portfolio and $2.6 million of gains due to the strengthening U.S. dollar on foreign-denominated assets in comparative (sic) [comparable] periods.

The net loss for the quarter was $0.2 million compared to a net loss of $10.1 million per share for the quarter ended June 30, 2017.

Turning to the balance sheet. Total cash, cash equivalents and investments as of the quarter end totaled $151.7 million as compared to $82.6 million as of December 31, 2017. This increase was driven primarily by the net proceeds from our offering in February, the $30 million upfront payment as part of the Seattle Genetics immuno-oncology collaboration and the $12.5 million milestone payment from AstraZeneca achieved in the fourth quarter of 2017, which was paid out in the first quarter of 2018. This was offset by $22.2 million approximately of operating cash expenditures during the year.

With that, I will turn the call back over to Steve.

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [5]

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Thanks, Allan. Just to conclude, we are making great progress on our clinical and preclinical pipeline as well as with our anchor alliances with AstraZeneca, Servier and Seattle Genetics. We're on track to report data for all 3 clinical stage assets, which is PRS-343, 060 and 080 later this year and to file 2 INDs next year as we have been guiding.

Thank you for joining us on the call today. And we would now like to open the call for any questions you might have.

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question is coming from the line of Umer Raffat with Evercore.

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Umer Raffat, Evercore ISI Institutional Equities, Research Division - Senior MD & Senior Analyst of Equity Research [2]

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I wanted to touch up quickly on the 343 program and Jon Miller wanted to touch up on the respiratory. But perhaps starting with the 343 program, can you, since we're getting close to the data, perhaps catch us up on, a, the exact prior treatment status of each of these patients? If you've seen any responses to date? And also perhaps clarify the dosing schedule? Because I know there's 11 cohorts, but I also know you have the optionality to try out every 2-week or every 4-week dosing, just so we're all very clear? And I'll let Jon ask the follow up.

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [3]

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Thanks Umer. Steve here. I'm just getting -- you want a pretreatment schedule, you asked about any responses, and then the dosing schedule that we might -- the flexibility we might have in the trial. Correct?

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Umer Raffat, Evercore ISI Institutional Equities, Research Division - Senior MD & Senior Analyst of Equity Research [4]

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Yes.

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [5]

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And maybe I think I'll maybe let Lou go ahead and take a stab at the answer?

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Louis A. Matis, Pieris Pharmaceuticals, Inc. - Senior VP & Chief Development Officer [6]

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Yes sure, thanks Umer. In terms of the pretreatment, obviously, most of the patients, not all, are fairly heavily pretreated. We're seeing really a very diverse range of HER2-positive cancers. The patients with breast cancer and gastric cancer have obviously received HER2-directed therapy previously. And patients with other HER2-expressing cancers have received multiple other lines of treatment, but not necessarily HER2. So as to the results so far, we're not really guiding at the moment on whether we're seeing responses or not. As you know, we're doing biopsies pre- and post-treatment, looking for evidence of biomarkers that would be reflective of an immune effect. And we're also, of course, looking at -- in the subsequent biopsies as well as, of course, in scans whether the patients are responding or not. And we'll be reporting on all of this later this year.

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [7]

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And then the last question was dosing.

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Louis A. Matis, Pieris Pharmaceuticals, Inc. - Senior VP & Chief Development Officer [8]

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Oh, yes, with the dosing, we've been sticking to the every 3-week dosing that was the primary dosing regimen in the protocol submitted to the FDA. And what we can say confidently is that from the standpoint of the pharmacokinetics, they're looking very much like you would expect with trastuzumab and other monoclonal antibodies, which is extremely gratifying since this is, obviously, a new protein construct with a trastuzumab variant linked genetically to the 2 anti-4-1BB Anticalins. And the PK is, as I said, is tracking very beautifully in terms of exactly what you would expect to see from trastuzumab. And since trastuzumab is given on an every 3-week basis, we feel confident that the every 3-week dosing regimen, dosing schedule, is appropriate for our drug right now. We see no reason to alter the dosing schedule at this point.

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Jonathan Miller, Evercore ISI Institutional Equities, Research Division - Associate [9]

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Great. This is Jon Miller. I have got 1 follow-up on the 060 program. I'm looking at the FeNO cutoff for enrollment of 35 ppb. How does that compare to competitor cutoffs using the eosinophil measures? Why did you pick a cutoff that seems to be middle of the mild range? How do you think of FeNO as a biomarker relative to eosinophils?

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Louis A. Matis, Pieris Pharmaceuticals, Inc. - Senior VP & Chief Development Officer [10]

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Well, of course this trial is a trial in patients with mild asthma, and so this is not patients with moderate-to-severe asthma. So eosinophils would not necessarily be -- elevated eosinophils would not be necessarily seen as a marker in this patient population. On the other hand, together, this was -- the conditions and the cutoffs and so forth for FeNO measurement and what we anticipate seeing in terms of the drugs effective at reducing FeNO post-dosing, were very carefully mapped out between us and AstraZeneca, actually, based on some other trials in which other Th2 targets like IL-13 were examined for having a FeNO effect as well. So the FeNO levels were chosen based upon previous experience, based upon what's known with respect to the levels of elevated FeNO that can be seen in a mild asthmatic population. And we've taken, actually, what we think is a fairly rigorous approach to expecting to see a significant reduction in FeNO as a go/no-go criterion for moving the product forward.

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Jonathan Miller, Evercore ISI Institutional Equities, Research Division - Associate [11]

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Great. That makes sense. It seems like the eventual development path here is going towards moderate and severe asthma. How do you feel about mild asthma results translating into the more severe population?

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Louis A. Matis, Pieris Pharmaceuticals, Inc. - Senior VP & Chief Development Officer [12]

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We think it's certainly superior to having done a -- what might have been done in terms of this trial, which is to actually do the multiple-ascending dose study in patients with -- in healthy volunteers, rather. And obviously, mild asthmatics are very different in terms of other parameters, like, I just mentioned, eosinophils, from the moderate-to-severe asthmatics. But overall, with respect to FeNO, it's really considered now to be a very robust and accurate marker of pulmonary inflammation. And so -- and as you're -- I'm sure you're aware in all of the trials in the moderate-to-severe asthmatics, FeNO is also looked at as well and the drugs that are effective in those patients, including, for example, dupilumab, also reduce FeNO. So I think, overall, FeNO is now considered in asthma generally as a very predictive marker of reduction of pulmonary inflammation if you can lower FeNO.

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Operator [13]

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The next question comes from the line of Chris Shibutani with Cowen.

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Pamela Ann Barendt, Cowen and Company, LLC, Research Division - Associate [14]

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This is Pam Barendt, on for Chris Shibutani. We're really looking forward to the initial clinical trial readouts toward the end of this year, for 343 in particular. Could you help frame for us how we should be thinking about the results? Remind us what kind of results for key endpoints you're trying to achieve? And what endpoints, in particular, will be most important for informing your plans for next steps?

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [15]

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Okay. Thanks for the question. I think we'll, again, let Lou start with this answer, given the scientific nature here.

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Louis A. Matis, Pieris Pharmaceuticals, Inc. - Senior VP & Chief Development Officer [16]

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Yes, thanks, Steve. So with respect to PRS-343, as I mentioned earlier, as we move forward through the cohorts and the trial is recruiting extraordinarily well. There's a lot of excitement from all of our investigators. As you know, obviously, it's a multiple dose-escalation trial. And so we want to be able to establish the PK safety, immunogenicity of the drug, how well tolerated it is. So obviously, that's -- those are the primary endpoints of a Phase I dose-escalation trial in these patients. In addition, we have serial biopsies, and what we can say is that all of our sites are complying beautifully with that. And we're getting very high frequency of patients getting the pre and post biopsies that we've asked for. So we intend to be mining a considerable amount of data from that. And that data will include, as you might expect, evidence of immunologic activity within the tumor microenvironment; increases or not in CD8-positive T-cells as well as CD8 T-cell Treg ratios, which is another emerging biomarker in pre- and post-treatment studies in immuno-oncology drugs as evidence of likely clinical response. We're also doing RNA analysis and looking for what would be known as an inflammatory signature that develops with the drug. And so clearly, we'll be reporting on that. And then we'll also be reporting on evidence for objective responses in the patients with respect to tumor shrinkage. So with respect to PRS-060, we'd be reporting the Phase I study. And in that study, obviously, we'll be looking at -- and that was in healthy volunteers. So we'll be talking about the drug's -- [both] pharmacology, how well tolerated it is, lack of immunogenicity. And in addition, we may have some assays to demonstrate drug activity against the target, even in the healthy volunteers. This being said, we're now moving with the -- a multi-dose escalation in patients with mild asthma, but that won't be reported out until next year.

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Operator [17]

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The next question is from the line of Biren Amin with Jefferies.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [18]

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I think last month you disclosed that you enrolled 15 patients in the 343 Phase I trial through 6 cohorts. So given your comments today that you've enrolled more patients in a 3+3 typical design, did those additional patients come in at cohort 7? And I guess, what led to your choice to increase patient enrollment beyond a 3+3? Was it DLTs or some other reason?

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Louis A. Matis, Pieris Pharmaceuticals, Inc. - Senior VP & Chief Development Officer [19]

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Yes. So we've actually -- we're moving forward seamlessly through all of the cohorts. As I said, we have (inaudible) tremendous enthusiasm. And actually to be honest, the reason that we're increasing the enrollment in different cohorts is because we have so many patients that are being brought in or being proposed to us by all the sites, we're letting every patient that the sites wish to enroll to get enrolled because the higher the numbers we get at each dose cohort, the more reliable the data will be from the standpoint of what we see at a particular dose with respect to immunologic activity, safety and so forth. So really, it's -- the reason why we're enrolling more patients is a good one. It's -- and all of the investigators are extremely appreciative of the fact that they're not having to [particularly] compete at each dose level for getting their patient in. So that's the primary reason. And since then, we've been enrolling seamlessly through each cohort. Again, if the patient gets treated and with the safety at 3 weeks, if there's a go, we start enrolling the next cohort. And so we've had no delays whatsoever.

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [20]

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Right. Thanks. And, Biren, just to also add to your question around if there was anything DLT-related that caused us to overenroll, let me make it clear that no, that there was no DLT-related reasons for overenrolling beyond 3 patients. We've injected a lot of flexibility into this protocol, where we can, for example, dose up to 10 patients in a cohort. And we're using -- what we're trying to do is get to as real-time biomarker data analysis as possible, and that doesn't happen overnight, of course, but try to get real time as possible in order to inform at which dose levels we might want to more deeply interrogate drug activity in a particular cohort. And so that is the reason for overenrolling at the present time.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [21]

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Got it. That's helpful. And, I guess, just a couple of more follow-ups on 343. The data that you present later this year, the interim update, will those patients be considered patients that are valuable and have received at least 2 scans when you present the data?

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [22]

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I'll let Lou take that one.

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Louis A. Matis, Pieris Pharmaceuticals, Inc. - Senior VP & Chief Development Officer [23]

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Yes, thanks. Yes -- I mean, the data are significant in terms of being able to assess what their tumor microenvironment looked like prior to therapy and then following therapy. So yes, we will be presenting before and after data.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [24]

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So I guess, when you talk about tumor microenvironment, we're talking about CD8 counts. And so what would you consider to be a meaningful increase in terms of CD8 positive counts?

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [25]

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Yes, that's a very interesting question. We've been discussing that with a lot of our clinical advisers. And so there -- it's very interesting. And without -- we don't have the bandwidth to go into all the detail, but it actually varies in their own experience tumor by tumor. And I think that it's a matter of looking at maybe twofold increase in CD8 T-cells as one marker, but -- or even more than that. I think that the other way in which this is looked at is that if you can see, as I said, one of the parameters we're looking at, which is an emerging market, which is the difference, the change in the CD8 to Treg ratio within the tumor microenvironment, as a relative measure of the presence of effective T-cells versus T-cells that might be inhibiting the immune response against the tumor. And that's clearly one of our markers going forward as well. So I don't think within the field, there is a magic number of what percent fold increase in CD8 T-cells, for example, one needs to see. In addition, of course, the phenotype of the T-cells as well showing that they're effector cells. So we'll be looking at other markers to determine what the phenotype is of those CD8 T-cells as well as their numbers.

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Biren N. Amin, Jefferies LLC, Research Division - MD and Senior Equity Research Analyst [26]

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And are we going to be able to correlate biomarker response or lack of response to antitumor activity in terms of clinical response, when we see the data?

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [27]

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We would certainly hope that, that would be the case.

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Operator [28]

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Our next question is comes from the line of Hartaj Singh with Oppenheimer.

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Emma Kathleen Nealon, Oppenheimer & Co. Inc., Research Division - Associate [29]

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This is Emma, on for Hartaj. For the 2 INDs you plan to file in IO next year, do you expect to be in a position to disclose those targets and perhaps present any of the preclinical data at SITC? Or is there maybe another medical conference we should look to for that update?

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [30]

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Hi, Emma, Steve here. We're not guiding specifically on what we'll disclose and when. We have -- we do reiterate our intention to provide more color on our preclinical pipeline in the second half of this year in the context of medical conferences. Specifically when, we're still thinking through that. And I would expect that prior to the filing of those INDs, we will have disclosed a rather robust dataset on each of those programs in order to demonstrate why we would be excited about moving those projects into the clinic, not just looking at druglike properties, but the synergistic datasets from a biology perspective regarding the particular dual target engagement that we would be using with the bispecific. So stay tuned.

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Operator [31]

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(Operator Instructions) Our next question comes from the line of Matt Phipps with William Blair.

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Matthew Christopher Phipps, William Blair & Company L.L.C., Research Division - Analyst [32]

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Just 2 quick ones. First, you mentioned 2 proprietary respiratory programs you guys started working on. Can you just maybe mention at this point whether those are in asthma or some other type of respiratory disease? And then on the Roche collaboration, I realized you probably can't say too much at this point, but was that a standalone Anticalin or some half-life Anticalin? And how far had it reached in kind of discovery or development at this point?

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [33]

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Thanks, Matt. With regard to your first question, we're not specifically detailing what specific indications we're pursuing with our respiratory franchise at this early stage. But I can say we are continuing to follow what we believe is a very sound R&D strategy for Pieris, which is to pursue known targets in new ways. So don't expect that these are targets that you would never have heard of before. And we do not believe that we're necessarily confined to just asthma. And as a reminder, the AstraZeneca collaboration is not limited to asthma. So we're going to continue to focus on those targets where we think the biology is epithelial in nature and/or where we believe that the therapeutic window could be made far superior by engaging locally. And we also would want to communicate the specific target details only in connection, again, with a robust dataset that justifies why we are excited about pursuing those targets. And then your second point around the Roche collaboration, I mean, we are bound by the confidentiality provisions of that agreement, but going back to what we've said publicly, we have disclosed that this is a really novel IO target, where we were exploring the potential benefits of a multi-paratopic approach, thereby gaining multi-epitope engagement through various Anticalins that would be genetically linked as a fusion protein, which itself could be potentially a drug candidate and/or could be genetically linked to antibodies within the Roche/Genentech franchise as we've done with 4-1B (sic) [4-1BB] linking it to our HER2-engaging antibody and as well as what drove the collaboration with Seattle Genetics. Where the project was? It was in lead identification for some of the epitope-engaging Anticalins. It was in optimization for others. And ultimately, I think it's a question of getting comfortable with pharmacology in order to justify further investments, and given the exploratory nature of the program I think it was not an unwise choice to decide not to pursue that target at the present time [because then] again, Pieris would not prioritize that target. So this does not align with our strategy of focusing on clinically validated targets where we know what to look for. It's a very different type of target. And for that reason, we will not, based on the current data that exists in the literature, exists in the industry, we will not be pursuing this program.

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Operator [34]

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Ladies and gentlemen, we've reached the end of the question-and-answer session. I'd like to turn the call back to Stephen Yoder for closing remarks.

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Stephen S. Yoder, Pieris Pharmaceuticals, Inc. - CEO, President & Director [35]

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Great. I just want to thank everyone for your participation and attention today and for your continued support of Pieris. We look forward to keeping you updated on the progress through the remainder of this year. And thank you for joining, and wish you a great day.

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Operator [36]

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This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.