Inventiva - Earnings Call - Q4 2024

Transcript

Speaker 0

Good day, and thank you for standing by. Welcome to the Inventiva full year 2024 financial results webcast and conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Frédéric Cren, CEO and co-founder. Please go ahead, sir.

Thank you, operator. Good morning. Good afternoon, everyone. Thank you for joining us to discuss our 2024 full year financial results. We issued a full year press release this morning, and the webcast will be available in the investor section of our website. I want to remind everyone that various statements that we may make today during this conference call and during the Q&A session will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Joining me on this call is Jean Volatier, our Chief Financial Officer, and Pierre Broqua, CSO and co-founder. I will first cover some of the key highlights for 2024 and some recent updates of our activities. Before I leave the floor to Jean, we'll go over the full year financial results. Of course, we'll have some time at the end of the call for a Q&A.

On the highlights for 2024, 2024 ended on a very positive note, and we started 2025 strong, ready, and enthusiastic for what is ahead of us. In 2024, we have made significant strides in the clinical development of lanifibranor. With the tremendous support and commitment of our clinical trial site, we've been able to close screening for our phase three, NATiV3, early January 2025. We can therefore confirm that we target the completion of recruitment in H1 2025 as previously guided. This will start the countdown to our top line result expected in the second half of 2026, making lanifibranor the second oral drug that could be approved in the United States in MASH.

In addition, to be very close from reaching completion of enrollment in 2024 and in the first quarter of 2025, we had three Data Monitoring Committee meetings with positive recommendations to continue NATiV3 without modification to protocol. The most recent one took place in February 2025, during which the safety data of more than 1,200 patients randomized in NATiV3 were reviewed. With this progress in our phase three, we're truly at an inflection point in our company's journey, and we have already begun strengthening our team to ensure we're fully prepared for successful regulatory submissions and the commercialization of lanifibranor. In 2024, we also reinforced our clinical data set for lanifibranor with the publication of the positive results of LEGEND, our combination proof of concept trial with lanifibranor and empagliflozin in patients with MASH and type 2 diabetes.

The primary endpoint was met with a statistically significant reduction in HbA1c with lanifibranor alone and in combination. Insulin sensitivity was improved, consistent with other studies, and additional improvement was observed in combination with empagliflozin. Markers of liver injury were significantly improved, and this improvement was solely driven by lanifibranor. The second goal of this trial was to look at the potential mitigation of the weight gain when adding an SGLT2 inhibitor to lanifibranor. We were very pleased to show that the combination of lanifibranor with empagliflozin completely mitigates the weight gain. Furthermore, lanifibranor alone and in combination leads to a shift towards metabolically healthy adipose tissue. Finally, meta-analysis data suggests that GLP-1 has a similar effect when combined with PPAR. This study is particularly significant given the high prevalence of type 2 diabetes among patients affected by MASH.

We're convinced that the profile of LANI is ideal to treat patients with advanced fibrosis and diabetes, patient populations which are hard to treat, and high risk to progress to cirrhosis. We're looking forward to looking more in depth at our LANI effect when combined with other drugs, particularly GLP-1, as we have randomized approximately 15% of patients on GLP-1 in the phase three study. This year, we also announced that our partner Epalis has launched the clinical development of lanifibranor in Japan with the initiation of a phase one study. We believe that with the licensing agreement that we have in place in Japan, South Korea with Epalis, and in China with CTTQ, lanifibranor will be ideally positioned to potentially become the leading oral drug in MASH in these two important geographic areas.

Looking now at the organization and at the governance, we're committed to make LANI a success story for patients, and this is definitely a priority for Inventiva. We're focusing on change and challenging all our resources and efforts into achieving this goal. As part of this process, we are reinforcing our development team to ensure that we're fully prepared for regulatory filing and the potential commercial launch. In February, following a strategic review, we announced the decision to focus all of our resources to the development of LANI. Unfortunately, this decision comes with a stop of all preclinical activities not related to LANI and would lead to a reduction of approximately 50% of our workforce. I want to emphasize that this was not an easy decision. Our research team has been core to Inventiva for the past 12 years and has been instrumental in the development of LANI.

We are currently in negotiation with the Worker Council, and while I'm unable to comment further at this stage, we're committed to working together through this transition. Regarding the governance of Inventiva, we also reinforced it, and we reinforced our board of directors with the appointment of three new board members. The first one is André Turen, the President and CEO of the Boston-based Biotech Matchpoint Therapeutics and former global head of business development at Sanofi. In December, Srini, the founder and partner of Samsara Capital, joined us, and we also nominated Mark Krosanski as Chairman of the Board. You all know, you all are familiar with Mark. He's been the CEO and founder of Intercept and has shaped the MASH market over the last years. Mark brings us, of course, a wealth of experience in both the MASH field and the US, along with deep expertise in financial strategy.

We're excited to have him on board as we work together to achieve our mission of bringing lanifibranor to patients and driving meaningful progress in the treatment of MASH. Now, finally, before I hand over to Jean, the financial situation, in 2024, we successfully closed on several dilutive and non-dilutive financing operations, raising approximately a total of $184 million in gross proceeds. Most of these amounts come from our three tranches of financing of $125 million each. This financing came from existing and trusting investors, and especially new investors. We received the first tranche in 2024 and will be eligible to receive the second tranche following the announcement of end of randomization, and we should have then met all operational conditions necessary for this second tranche. Let me now turn over to Jean, who will provide you with more details on our 2024 financial report.

Speaker 3

Thank you, Frédéric. Good morning. Good afternoon, everyone, and thank you for joining us on this call. Yesterday, as said, we have issued our press release covering the full financial results for the fiscal year 2024. Of course, I will provide you with key highlights. Happy to answer more detailed questions during the Q&A time. I'll start with the cash position and cash flows. We have reached at the end of 2024, EUR 96.6 million of cash position versus EUR 36 million at the end of December 2023. Therefore, a net positive variance of close to EUR 61 million. As a matter of fact, this represents half a year roughly of annual OpEx. Key fact, as said by Frédéric, is of course the $184 million, EUR 170 million of raising under different operations, dilutive and non-dilutive.

The fourth principle are, of course, the raising of the second tranche of €25 million drawn in January 2024 from the European Investment Bank. The second in July 2024 was the raising of €20.1 million with the issuance of royalty deals. The biggest one, of course, related to the up to €348 million finance structure transaction announced in October 14, 2024, represents €116 million net proceeds received during the fourth quarter. Eventually, we received also the milestone, the first milestone of CTTQ, our SinoBioPharm, our Chinese partner, as part of the financing in October. You remember that there are three tranches, three milestones related to this transaction. Also, we can come back on that. Therefore, we have confirmed, we do confirm the cash runway guidance disclosed previously, meaning we can operate until September 2025 without the contemplated second tranche of the financing.

After the contemplated second tranche of the financing, we should reach September 2026. Let's talk now about the key figures of the profit and loss account. We have recorded revenues in 2024 of EUR 9.2 million, and it refers to the milestones I talked about earlier with CTTQ, compared to EUR 17.5 million in the same period in 2023. The other income line is stable at EUR 5.5 million compared to EUR 5.7 million. It represents, as usual, essentially the R&D French tax credits. Of course, the most important line is the R&D expenses, which still represent more than 80% of our global operation expense, amounting to EUR 19.9 million in 2024 compared to EUR 110 million in 2023, showing a decrease of 17%, which was due to the delays we have to face in 2024.

To be noted that, as announced during the second half of 2024, these R&D expenses have started to increase again following the restart of the patient recruitment in 2023. The marketing and business development line is still not significant at EUR 2 million, stable compared to 2023, but with the approaching of the end of the phase three, expected to increase in the near future because we start preparing the NDA filing and the commercialization capabilities. In terms of G&As, reaching EUR 15.8 million for 2024 compared to EUR 13.8 million in 2023, so a slight increase of 14%. We have had a complex year in terms of transactions, but also we have reinforced our IP position, and therefore we have a slight increase, in particular in other legal and compliance fees.

There is a rather unusual amount, as you can notice in the net financial loss, EUR 86 million compared to EUR 5 million in 2023. Two items, one-off items of EUR 33.4 million, which is related to a specific IFS retreatment, non-cash, related to the fair value of the second tranche to be realized with respect very soon and has to be treated as derivative instruments since considered as a call option instruments. We have also this year EUR 12.2 million of non-cash interest related to the loans and related to the royalty certificates amortization. Bottom line, the company's net loss for the full year established at EUR 184.2 million compared to EUR 110.4 million in 2023. I will now turn it over to Frédéric for the conclusion and Q&A. Thank you for your attention.

Speaker 0

Merci, Jean. We have made important improvements, significant strides, and I'm confident that we have a tremendous opportunity ahead of us with lanifibranor. If we look at 2025, we anticipate announcing the completion of randomization and the release of the second tranche of $127 million from our structural financing. Today, we are the only phase three that is recruiting currently and evaluating a novel liver-targeted drug candidate. We have a robust data set, including our phase two, in which we observe an improvement of one-stage fibrosis in just six months of treatment. The demand for MASH treatment is clear, and the available treatment options are still limited today to a single mechanism of action. We believe that given the heterogeneity of the patient population and the broad prevalence of MASH, having multiple oral treatment options will be a game changer for patients. Thank you, and we are now open.

We now open the floor for questions.

Speaker 2

Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now go to our first question. One moment, please. Your first question comes from the line of Ritu Burrell from TD Cowen. Please go ahead.

Hi, everyone. This is Nicole online for Ritu. Just a quick question. Are the background doses for the patients on background doses of GLP-1s, are they low-dose diabetic doses, or are they also composed of high-dose for weight loss? Just a quick follow-up, how many patients do you guys estimate that you have enrolled that are on background SGLT2 inhibitors? Thank you.

Speaker 0

On the first one, I'll answer, and then I'll let Pierre on the SGLT2 if you like. Oh, go ahead. You know both. Go ahead.

Speaker 1

No, GLP-1 is mostly antidiabetic dosing. It's not only semaglutide. It's other, well, semaglutide is included, but you have also other GLP-1 agonists.

Speaker 0

By the top of my head, you had between 6-8% of patients on SGLT2 inhibitor at baseline.

Great. Thank you.

Speaker 2

Thank you. We will now go to the next question. Your next question comes from the line of Shan Harmer from Jefferies. Please go ahead.

Hi. Thank you for taking my questions. I know you expect to complete enrollment within the first half of this year, but what's your level of confidence in randomizing that last patient in the main cohort by April 30 to secure that EUR 116 million capital increase? Secondly, given it's likely you have cash, including this second tranche, just to the readout in Q2 2026, what are the plans for any additional financing? I know you previously communicated that it would make sense post the data to have a partner. What's the level of interest here from pharma to be able to close the deal as quickly as possible? Thank you.

Speaker 0

There are many questions. The first one on the confidence of recruiting before the end of April, I would say it's high confidence given we have communicated to all sites to stop screening at the beginning of the month of January. We took that decision because we had sufficient patients already randomized and sufficient patients in screening to reach the target of 969 patients, which are the patients that we need to enroll in the main cohort to achieve 90% of powering with the assumption of the SAP. The average screening period is between 10-12 weeks. We feel very optimistic that we meet that end of April objective. On your question about partnering, there is a lot of interest in the MASH market.

I would say finally, given that we've been going through a series of failures in the field, luckily some companies have reported positive data. More importantly, Madrigal's drug has been approved. There is no need of biopsy to prescribe it. The commercial launch has been very solid, and they're definitely in the direction of a blockbuster potential. That drives a lot of interest. We believe we have a very strong package. We are the only oral drug currently in phase three development. Most likely, once we will announce the end of enrollment, we can reassert that will be the next oral drug to be potentially approved. Given the result we have had in the phase two b, we feel extremely strong on the commercial success of lanifibranor.

On how we manage our resources, of course, we're actively managing our financial resources, and we're confident that the step we're taking will allow us to execute on the clinical trial. We work and we're committed to advance the clinical program and ensure the long-term value of LANI. Of course, while we do that, we continue evaluating all options to secure the funding needed to achieve our objective, which is to execute the clinical trial, file for NDA, and commercialize LANI first in the U.S. and then in the European Community.

Thank you.

Speaker 2

Thank you. Your next question comes from the line of Annabel Samimi from CEAFL. Please go ahead.

Hi. Thank you for taking my question. Just on the screening again, is there any specific rate-limiting step on that screening that could derail that last person who is enrolled into becoming an actual randomized patient in the primary arm? Secondly, I guess now that, as you've alluded to, the MASH market appears to be forming with the first approved treatment, the profile of FGF21s are emerging, and there is additional data emerging on incretins being able to drive MASH resolution. Has the way you think about the market and the population that LANI would be most appropriate for changed at all? How do you see this market fragmenting with the potential introduction of LANI?

Speaker 0

Thank you, Annabel, for this question. It is very interesting. To your first question, what can derail the randomization of the last patient? Once the patient is in the screening pool, we have a certain amount of period of time to complete all the examinations that are on the protocol. During that period, we need to do all the lab tests. We need to do the biopsy. The biopsies are digitalized, and they are read centrally. It is all that process that takes between 8-12 weeks. Once the patient is randomized, there is an appointment. He needs to show at the hospital, and then he is randomized in the study. That is why this period takes a certain period of time. There is a total amount of time for that period.

At a certain moment, if we see that the patient does not present himself to an appointment or the site is not reactive enough, and this period of time to screen and randomize the patient is overdue, we can screen fail the patient automatically. That is why that confidence that we will randomize the last patient as guided before the first half of H1 2025. On your second question on where we see LANI play a role in the market shape, as I said before, Madrigal launch really showed that there is a huge market. It is even more so because we believe Madrigal is not a tremendously efficacious drug. We believe the market will further develop when we arrive with a more efficacious drug. Also, semaglutide with the commercial marketing of Novo will help enlarge the market.

Where we see LANI work clearly, and this is something we get extremely positive feedback, is we have a drug that is really ideal for patients that have advanced fibrosis, F2, F3, and on top, F type 2 diabetes. This is a large population. We estimate that more than 50% of patients with MASH have type 2 diabetes, especially in the F2, F3 population. This is a population which has a fibrosis progression that is faster than the overall population. They are more difficult to treat. The profile of LANI, where we can see fibrosis reduction in six months, we can see resolution of NASH, and especially a strong insulin sensitivity activity with a drug that helps you control your diabetes, is a profile that resonates very well. Lastly, and that's something really important to highlight, is that pan-PPAR, it's a well-known mechanism with endocrinologists and diabetologists.

In the U.S. alone, you have close to 6 million prescriptions of PIO. PIO is, as you know, old PPAR gamma. Let's call it a first-generation PPAR gamma with a profile that is really less attractive than ours. Still, even if generic, even if it's not promoted, you have 6 million scripts every year written in the U.S., which really demonstrates that these diabetologists, endocrinologists are very familiar, very used to prescribe PPAR's mechanism. They will be, we think, attracted by the profile of lanifibranor.

Fantastic. Thank you very much.

Speaker 2

Thank you. Your next question comes from the line of Ed Art from HC Wainwright & Company. Please go ahead.

Speaker 3

Hi. Good morning, everyone. Thanks for taking my questions. Just a couple from me. I just wanted to get your thoughts on R&D expenses throughout the year, considering both the impact of the recent reduction in the workforce and the elimination of the early programs, but also as well the full enrollment of NATiV3 in a few months and the carrying expenses of that. Also relatedly, just wondering if you could help us understand any potential milestone payment receipts for this year that you would expect. Thanks so much.

Speaker 0

Joel, do you want to take these questions?

Speaker 3

Sure. For the profile, let me say, of the R&D expenses this year, as I said, decreased by 17% because we know we have to face some operational problems. We have restarted the recruitment in Q2. The decrease versus last year and versus budget also, which represents basically something like EUR 20 million, represents this momentum for 2024. If we talk about 2025, we come back, I would say we come back to the normal way. We expect compared to this year a slight increase in the expenses, as I mentioned, because we will start, and Frédéric said also, we will start to prepare the commercial capabilities. We will focus on the NDA filing also. It should increase, let's say, by 10-20% compared to this year.

With regards to the expected milestones, as of today, what we know about are the milestones related in connection with the transaction, as you know, because there are three milestones expected from our Chinese partner, CTTQ. One has been raised, have been collected in 2024, and there is one milestone per tranche. We are contemplating the second tranche of the financing in 2025. Together with the second tranche, we may receive, we will receive the second $10 million milestone. Practically, it is paid 30 days after the last randomization disclosure.

Great. Thank you so much.

Welcome.

Speaker 2

Thank you. Your next question comes from the line of Jacob McKeel from KBC Securities. Please go ahead.

Hi there, and thanks for taking my question. Looking ahead to the top-line data in the second half of next year, I was just wondering if you can share with us how soon after the last patient completes their treatment you will be able to share the results, and perhaps how does that tie in with your cash runway being till the end of Q3 2026?

Speaker 0

Yeah, towards the last patient, where the last patient, last visit, I guess we'll need to wait for a couple of months to publish the top-line data. Then, as we said, once we will have the last patient randomized, we'll have, of course, more clarity on when that date will be. In terms of financing, once we have raised the second tranche, which we expect to raise pretty soon, we'll be in a clear position to show that we have the means to deliver on our clinical objectives.

Okay. Thank you. Maybe one more question. If you can, perhaps just remind us on the deal with Epalis in Japan, what a phase three program would look like there, and would that be entirely funded by your partner, or do you have to contribute to that?

Yeah. That's a very good question. All our licensing in Japan, South Korea, and China, all the clinical development that are done locally are financed by our partners. In Japan, the current phase one and the phase three will be financed by Epalis. We will have no impact on our finances. Similarly, the ongoing phase three in China is totally financed by CTTQ, SinoBioPharm.

Okay. Thank you very much.

Speaker 2

Thank you. Your next question comes from the line of Rami Kathuda from Lifestyle Capital. Please go ahead.

Speaker 3

Hey, guys. Thank you for taking my questions. I guess first, how are you guys thinking about the design and timing of an outcome study? Where does the FDA require you to be with it prior to the filing of an NDA for LANI?

Speaker 0

Yeah, the outcome study. There's been a couple of months ago, a new guideline from the FDA. It's very clear. The study, the outcome study, needs to be underway at the time of NDA filing. This is exactly the plan we have internally and that we have discussed with the FDA, which is to run an outcome study in patients with compensated cirrhosis. This trial will be underway when we file for NDA. Currently, we plan to file for NDA in the first half of 2027.

Speaker 3

Got it. I guess with enrollment nearly complete here, can you remind us of the powering assumptions in NATiV3 for the combined endpoint?

Speaker 0

Yes. The study is powered at 90%, nine-zero. We used the data from the phase 2b, which, as you know, is a six-month trial. We used what we believe is a cautious approach. We looked at the placebo effect. We have increased it by some percentages. Similarly, the effect size was reduced by a couple of percentages for both doses. That is what we used for the powering at 90%. Why do we believe this is a prudent approach? It is because the phase 2b was a very successful trial. We met the primary endpoint and also the key sensory endpoint. It was a six-month trial.

Given the mechanism of action and also the data that has been published by our competitors, and if you look at data 12, 18 months, you clearly see that with longer periods of treatment, we believe the effect size of LANI will actually be greater than what we saw in the phase 2b. To answer your question, that's how we powered the study.

Speaker 3

Got it. Thank you very much.

Speaker 2

Thank you. As a reminder, if you would like to ask a question, please press star one and one on your telephone keypad. We will now go to the next question. Your next question comes from the line of Ellie Merler from UBS. Please go ahead.

Hi, everyone. This is Jasmine, on for Ellie. Thank you for taking our question. A question on the combination of LANI and SGLT2 inhibitors. Going forward, what are your plans to study this? Do you think you'll need to generate more data here to support this combination used by physicians? Secondly, how important do you think the mitigation of the weight gain with this combination is going to be to physicians and patients, particularly in the segment of MASH patients that are also obese? Thank you.

Speaker 0

Thank you, Ellie. On your first question, we have no plans to develop a fixed-dose combination LANI plus SGLT2 inhibitors. Why we did the study? Because I think it's important to have data that show that the metabolically healthy weight gain that you see in patients with that, in some patients treated with LANI, it's approximately one-third to half of the patients that gain weight. We have demonstrated that this weight gain is metabolically healthy. We have demonstrated that there is a plateau effect. It's actually a weight gain that stabilizes after six to nine months of treatment. Nevertheless, some patients probably will be looking for an approach besides the lifestyle or beside the diet to control this weight gain.

We wanted to show that if you combine LANI with an SGLT2 inhibitor, you manage to retain the benefit of both drugs and at the same time mitigate the weight gain. That was shown with that study. We also believe that the data that we are generating right now in the phase three with patients with GLP-1 will help show that that's actually a very good combination, adding GLP-1 to LANI to retain the advantages of both drugs, but also mitigate the weight gain. It will also be a nice combination to address the weight gain.

Speaker 2

Thank you. There are currently no further questions. I will hand the call back to Frédéric.

Speaker 0

Thank you, Frederic, and thank you, everybody, for attending. Great set of questions. You have understood that our next milestone is the end of randomization. It is going to be, of course, for us a strong event, but also, I think, for the MASH community because it starts the clock for an important phase three that we will read out. When I say important, because if you look at the profile of LANI, we really have a drug that can be a game changer for patients that are suffering from MASH. With that, I really thank you for your strong support over 2024. As I said, we have ahead of us, I think, a very exciting 2025. I am sure we will have several opportunities to discuss throughout this year. Thank you very much.

Speaker 2

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.