Nanobiotix - Earnings Call - Q4 2024

Transcript

Operator (participant)

Update and welcome to the Nanobiotix Business Update and Full Year 2024 Financial Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentations, there will be a question-and-answer session. Please be advised that today's conference is being recorded. At this point, I would turn the call over to Craig West, Senior Vice President of Investor Relations of Nanobiotix. Please go ahead.

Craig West (SVP of Investor Relations)

Thank you. Good afternoon and good morning, and welcome to the Nanobiotix Conference Call to discuss our full year 2024 financial and operational results. Joining me on the call today are Laurent Levy, Co-Founder and Chief Executive Officer, and Bart Van Rhijn, Chief Financial and Business Officer. As a reminder, today's call is being webcast and will be available on our website for replay. On the next slide, slide two, I would like to remind you that this call will include forward-looking statements, which may include statements regarding the progress, success, and timing of our ongoing and planned clinical trials, collaborations, regulatory filings, dates of presentation, and future research and development efforts, amongst other things. These forward-looking statements are based on current information, assumptions, and expectations that are subject to change.

They are subject to significant risks and uncertainties that could cause the company's actual results to differ materially from our current expectations. Accordingly, you are cautioned not to place undue reliance on forward-looking statements. Please review the full description of risk factors that can be found in the documents we filed with the AMF in France and SEC in the United States, which are available in the Investor Relations section of our website, along with the press release issued yesterday highlighting our corporate and financial results for the period. In addition, any forward-looking statements represent our views only as of today and should not be relied upon as representing our views as of any subsequent date. While we may elect to update these forward-looking statements at some point in the future, Nanobiotix undertakes no obligation to update them to reflect subsequent events or for future circumstances.

With that said, I'd like to turn the call over to Laurent. Please go ahead.

Laurent Levy (Co-Founder and CEO)

Thank you, Craig, and welcome everyone. Today, we're going to talk about the progress we've been making with NBTXR3 or JNJ-1900. Also, we'll give you some financial highlights and operational highlights for 2024 and 2025. We'll end this call with a Q&A session. We have made very good progress toward our pathway to sustainability and growth, starting by continuing pushing and developing this collaboration with J&J. In 2023, we've been signing this $2.6 billion deal plus royalties with J&J and now pushing into different directions and different indications. If you think about just the two first indications in lung cancer and head and neck cancer, those two first only could represent over 100,000 patients addressable in the U.S. and EU5 alone, which could lead to a potential $10 billion market.

As you will see, we have many things ongoing, and this collaboration is progressing well, but it's not the only thing that would lead us to sustainability. There is also the new platform we are developing. This year, we've been launching our new platform, first-in-class product with Curadigm. We'll talk about that a bit later. First, let's move to the next slide and see how do we tend to address one of the largest untapped markets in oncology. Slide six, you can see our pipeline. As you will remember, NBTXR3, our product, is a product that is very versatile, a product that is tumor agnostic, patient agnostic, and target agnostic, which means that we could literally combine that in many indications in oncology, as you can see in our pipeline.

We have been progressing a lot this pipeline this year in different indications, including two very important ones: the NANORAY-312, which concerns elderly patients in head and neck that are frail and ineligible to cisplatin, but also the lung stage III program that J&J started this year. Let's move to the key development we have been doing, starting with NANORAY-312. This is our pivotal phase III study in locally advanced head and neck cancer. It is a global study, 500 patients, randomized one-to-one. What we have been doing in 2024 is first aligning on the transfer to J&J of this program. We did that midstream of the development of the NANORAY-312. Why did we do it? Because we thought it was the best thing possible to do with this study.

Rather than waiting for the final data before transferring, which would have caused some delay post-result, we said that it would be much better to do it now in order for J&J to be ready, assuming the data are positive, to push the return and start registration of the product. We expect to complete this transfer around Q3 of this year. That is for the NANORAY-312, which is progressing and now being transferred to J&J. On the other side, J&J has started a new trial named Converge. It is a randomized phase II study in unresectable stage III lung cancer. The first patients have been dosed in January this year. This trial progressed quite well. Moving to the next slide. Those are not the two only developments or clinical developments that have progressed. We also have early-stage studies that are progressing across solid tumor.

Let's start with head and neck recurrent and recurrent metastatic cancer patients that are eligible to PD-1. Our phase I study, 1100, has been showing last year some positive data showing safety, feasibility, and also very good disease control and tumor response. We expect to give this year an update on this trial, both on patients that are first-line PD-1, but also the refractory to PD-1 on the completion of this two cohort. We've been also progressing in pancreatic cancer. That's one of the trials we are doing with MD Anderson Cancer Center. It is about patients that are locally advanced or borderline resectable. We've been completing phase I and got some really encouraging outcomes in terms of safety profile of the product, but also in terms of efficacy.

As we've seen such a good result for phase I, we decided with MD Anderson Cancer Center to expand into a new cohort, which this time will be the same treatment within the standard of care, meaning radiation plus chemo plus nanoparticle for pancreatic locally advanced cancer patients. This second cohort has started and is recruiting well. We should expect also this year to get results from the escalation part and the expansion part of the trial before the summer. In lung cancer, we recently published some data coming also from MD Anderson Cancer Center. They have completed the dose escalation part of phase I in non-small cell lung cancer that already received some previous treatment and that are eligible for re-irradiation. The data were really good in terms of safety and feasibility, again, very consistent versus other trials we've been showing.

We start to see even early some very interesting signs of efficacy, meaning local control of the tumor, which is essential for those patients. As you can see, we have been progressing the pipeline, and we'll continue as we expect many more clinical data coming this year. In parallel to NBTXR3 or JNJ-1900, we've been launching Curadigm, our fully owned next-generation nanotherapeutic platform. This is based on nanoparticle and nanophysics, and again, something that we expect to be useful for many, many patients, millions of patients, but not only for one indication or one therapeutic area. It is something that we expect to be used in many therapeutic areas in combination with many types of products. As you may remember, those are nanoparticles that are designed to temporarily occupy the liver.

While the liver is busy with those particles, when you inject something else in the patient, the liver accumulation will be decreased, and to a certain extent, will completely change the bioavailability of the second product that you inject. This has a strong potential to increase efficacy or decrease toxicity of existing products. Where we think it could be really, really big is because we can create all-new therapy with a unique competitive positioning, something that we work on internally to start building our own pipeline. As I mentioned, this is a technology that could be widely applicable. Therefore, this is an ideal candidate or candidates, I should say, to make potential multiple partnerships. That is a strong activity we are leading this year, talking to biotech and pharma industry.

On the top of progressing our collaboration and platform development, we also have added two new board observers to the Nanobiotix board, Margaret and Anat. We would like to welcome them for the contribution also they already have brought to the company and the future contribution. We intend to confirm those observers and make them full members at the next general assembly. That is it for this party. I am now going to give the mic to Bart to give you some operational and financial highlights.

Bart Van Rhijn (CFO)

Thank you, Laurent. Good morning and good afternoon, everyone. Moving to the next slide. As Laurent mentioned earlier, Nanobiotix has had an extremely productive year, and we've been executing our disciplined financial strategy to move the company towards long-term sustainability and growth. Subsequent to our progress in 2023, in which we signed the license agreement with Johnson & Johnson and completed the follow-on offering, recent activities include the receipt of the first milestone payment in May 2024, when we received the $20 million payment related to NANORAY-312 progress. Continuing this execution, we announced last month the signing of an amendment to the global licensing agreement for NBTXR3.

This amendment has several important provisions, including removing the vast majority of the Nanobiotix funding obligation for NANORAY-312, releasing J&J from select future potential milestone payments, and safeguarding Nanobiotix' path to sustainable cash flow through hundreds of millions in potential milestone payments related to lead programs expected in the coming years. As a result of these changes to the license agreement, we have extended our cash runway to mid-2026. These changes should result in a meaningful reduction in cash burn beyond mid-2026, as the full cost of a phase III study will no longer be reflected in our financials. We are continuing to actively explore further financing options, preferably non-dilutive, to extend cash feasibility into 2027. This is rooted in the belief that our first platform provides a path for Nanobiotix to reach financial stability in the next few years.

As we advance to the next slide, we show here the elements of the amended agreement over time. We can share with you what has transpired so far, as well as our outlook should data readouts and regulatory approvals come in positive. The left column represents elements of the agreement that occurred already or are ongoing. This includes the EUR 80 million already received, made up of the upfront equity and the first milestone I mentioned previously. There are many elements of the agreement ongoing, such as tech transfer, product supply, J&J investing in duplication of our manufacturing capabilities, and starting the randomized Converge study in non-small cell lung cancer. In the middle, you can see that there are EUR 200 million plus of medium-term milestones that we expect in the next two to three years. This should lead to a sustainably financed company with the increased commitments from J&J.

When we look at the right-hand side of the slide, we can see that we maintained the royalties. We maintained the $220 million per new indication developed by Nanobiotix, which would require funding by Nanobiotix, as well as more than $2.3 billion relating to long-term milestones of the ongoing programs, development, and regulatory milestones of potential additional indications, sales milestones that are indication agnostic, as well as the LianBio milestones for Greater China region. I'll describe these more in a moment. The settlement of these items allows Nano to focus on supporting J&J regarding the operational success of NANORAY-312, as reflected in the amendment. As we turn to the next slide, I wanted to share a recap of the overall structure post the amendment. We've presented this before, and these are post-amendment numbers.

As I already indicated, royalties have not changed, and the $105 million in total has been removed from the first and third bucket from a milestone perspective. The first bucket now reaches up to $1.77 billion, and the third bucket, which was the LianBio bucket, now Janssen bucket, reaches up to $165 million versus $205 million prior related to the Greater China region. In total, the agreement and rights assignment represent a potential of $2.6 billion in milestones, with potential for additional milestones from indications we may develop and fund, and we'll receive tiered royalties from the low teens to low 20s as % of sales. Now, let's turn our attention to the full year 2024 financial highlights on the next slide. Negative revenue of EUR 7.2 million was recognized in 2024, compared to EUR 36.2 million for the year ended December 31, 2023.

Significant revenue was recorded in 2023 in connection with the execution of the license agreement with Janssen, as well as the recognition of the NANORAY-312 development milestone. The negative revenue impact recognized in 2024 results from the transfer of NANORAY-312 study sponsorship to Janssen signed at the end of 2024, which amounts to negative EUR 19.3 million revenue impact, which is driven by a one-time recognition of a net liability towards Janssen to reflect this new situation. This net liability is made up of the refund obligation the company has towards Janssen regarding the NANORAY-312 total remaining costs that will remain with the company, which is offset by residual contract liability and R&D services recognized in 2024.

This net liability was recognized at the time of the execution of the amendment and is a result of the application of IFRS 15 revenue recognition accounting treatment, which generates a cumulative negative catch-up. To be clear, this negative revenue amount is a non-cash item and therefore does not impact Nano's cash position. This one-off negative impact is partially offset by other revenues recognized in 2024 that conversely do positively impact our cash position, including sales of clinical products and supplies for EUR 5.9 million, technology transfer services billed to Johnson & Johnson for EUR 1.8 million, and research tax credits for EUR 3.3 million. R&D expenses consist primarily of preclinical, clinical, and manufacturing expenses related to the development of NBTXR3 and totaled EUR 40.5 million for the 12-month period ended December 31, 2024, as compared to EUR 38.4 million for the 12 months ended December 31, 2023.

The 5% increase in net R&D expenses was primarily due to an increase of clinical development activities driven by the cost related to NANORAY-312 and the phase I multicohort trial of RT-activated NBTXR3, followed by anti-PD-1 checkpoint inhibitors, also known as study 1100, as well as the full year impact of R&D positions that were recruited in 2023. When we turn our attention to selling, general and administrative expenses, these were EUR 20.5 million for the year ended December 31, 2024, compared to EUR 22 million for the year ended December 31, 2023. The 7% year-over-year decrease is mainly due to one-off fees incurred in 2023, consisting of license agreement execution and equity issuance-related legal expenses, next to one-off fees paid to a financial advisor for EUR 1.9 million in total.

Net loss attributable to shareholders was EUR 68.1 million, a year-over-year increase of 72%, or EUR 1.44 per share for the 12-month period ended December 31, 2024, which is primarily attributable to the one-off negative revenue recognition accounting impact, which again was a non-cash item. This compares to a net loss of EUR 39.7 million, or EUR 1.08 per share for the year ended December 31, 2023. As we look at cash and cash equivalents, as of December 31, 2024, Nanobiotix had EUR 49.7 million in cash and cash equivalents compared to EUR 75.3 million as of December 31, 2023. Based on the current operating plan and financial projections, Nanobiotix anticipates that the cash and cash equivalents of EUR 49.7 million as of December 31, 2024, will fund its operations into mid-2026.

To conclude, we have a disciplined capital allocation approach, and our recently amended licensing deal arrives at a structure that puts the company on a path towards a sustainably financed company, subject to milestones or regulatory approvals coming in positive. We are very excited regarding the potential of NBTXR3 or JNJ-1900, and are focused on bringing this first-in-class radioenhancer to the market together with our partner. Now I will turn the call back to Laurent. Laurent?

Laurent Levy (Co-Founder and CEO)

Thank you, Bart. Let's see what's coming in the next 18 months for Nanobiotix. As you can see on slide 16, we expect to get a very important milestone next year, namely the end of recruitment of the ongoing phase III in head and neck. That should lead, assuming the data are positive, to potential registration. There is also the stage III randomized phase II in non-small cell lung cancer that J&J has started that should start reading in the not-too-distant future. What is coming for this year is more data. Starting with the head and neck refractory patients that are eligible to PD-1, either as a first-line or second-line or third-line treatment. We expect to get data on those two cohorts by the end of 2025.

The non-small cell lung cancer trial coming from AFDA has been published just a few days ago, but there will be more coming from the MD Anderson Cancer Center, where we'll have the full data of the pancreatic cancer phase I trial that should be published before mid-year this year. For the second part of the year, we're waiting also the first data coming from the last cohort, coming from the 1100 trial, which are patients that received multiple IO treatments and some others that got refractory. We have injected our product plus radiation, continuation of PD-1, to see if we can rescue those patients. Most of the patients here have been melanoma patients, and we're really eager to present those data. Finally, coming from MD again, the esophageal phase I first data, we will start updating this program by the end of this year.

As you can see, there will be a lot to say from now to the end of the year while waiting for some of the key important milestones in locally advanced head and neck cancer phase III or lung stage III randomized phase II run by J&J. In a nutshell, for today, what we would like to take away is, first of all, we're moving forward with the partnership with J&J. It does evolve and progress really well. We have continued also to show the potential and opening the potential of NBTXR3 in multiple indications. This year, or last year, sorry, has been a good time to introduce our new platform, Curadigm. Equally importantly, not only are we growing our different options to develop products to help patients, but we're really moving toward financial sustainability and growth for the company.

Last year, we've been clearly strengthening our financial position. Finally, we're coming with the end of the year, where we expect many more clinical readouts and more to come. With that, I'll conclude the first part, and we'll open the session for Q&A.

Operator (participant)

Thank you. As a reminder to ask a question, please 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. Once again, please 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 are now going to proceed with our first question. The questions come from the line of Jonathan Chang from Leerink Partners. Please ask your question.

Yen-Der Li (Equity Research Analyst)

Hi, good morning. This is Yen-Der Li for Jonathan Chang. Thanks for taking my questions. I have two questions. The first one, could you provide more details on the recently initiated phase II Converge study by J&J? Specifically, when can we expect to see the initial data, and what factor gives you confidence in the study's potential for success? Thank you.

Laurent Levy (Co-Founder and CEO)

Thank you. Unfortunately, for now, we can't tell anything more that the trial has started and progressing well, and we'll come to our partners to define when will be the first readout of this trial. Now, concerning the other part of the question about why this population and what should we expect and what do we think NBTXR3 could make a difference here, I think it's in going to the continuation of having consistently showing very good local control induced by our product when combined with radiation. In this specific population of locally advanced non-small cell lung cancer, so stage III patients and resectable, that usually get the Pacific regimen, which is radiation, chemo, and followed by PD-1, assuming they did not progress in between, there's still a low bar in terms of local response.

More generally, in oncology, when you have good local response for locally advanced cancer patients with ARPMET, then this translates into PFS and OS, what we have seen in head and neck, what we see in other indications. Clearly, the point here is to bring much better local control to those patients. That is the context of this randomized trial. Now, what we start seeing across different indications, as I mentioned, show already good local control brought by NBTXR3, and we think the recent data generated by MDA is also a good sign of what could happen in the Converge study.

Yen-Der Li (Equity Research Analyst)

Understood. Thank you. Very helpful. My second question is about the upcoming pancreatic cancer data presentation. We're curious how will the information presented there be different from the press release last year? If the results are promising, what would the next step be for NBTXR3 in this indication? Thank you.

Laurent Levy (Co-Founder and CEO)

Thank you. End of last year, we announced the completion of the phase I that was including an escalation part and an expansion part, and just gave the top line overall survival for the patient. What we should expect as a readout for this is the full data, including efficacy, safety, some of the potential biomarkers that have been used, so that MD Anderson Cancer Center is working on that aspect right now. There is already a next step that has started when we announced that FDA approved an amendment to the protocol that is adding a new cohort. This new cohort is about giving the full standard of care to patients. Just as a reminder, the first part of the trial was patients that get chemo induction, then followed by radiation plus NBTXR3.

Now, that's not the full standard of care that those patients usually receive, as they usually do chemo induction, radiation, plus chemo. In this expansion part, we have added the chemo on the top of radiation plus NBTXR3, and therefore should expect, according to the existing known manufacturing, a better synergy and even more efficacy than what we've been seeing in the first part of the trial. This part of the trial is rotating, and we will tell soon when we should expect data on that.

Yen-Der Li (Equity Research Analyst)

Thank you. Very helpful.

Laurent Levy (Co-Founder and CEO)

Thank you.

Operator (participant)

We are now going to proceed with our next question. The questions come from the line of Sean Hamer from Jefferies. Please ask your question.

Hello. Thank you for taking my questions. Just on, I guess, what portion of costs are you still liable for the NANORAY study, and what are they related to, and how much of it have you can disclose? Secondly, I appreciate this might be more of J&J's responsibility, but what's the most recent communication you've had with FDA on the NANORAY program? I think the recent shake-up in the administration and the FDA has caused concerns that some programs might be deprioritized, or there may be sort of delays in meetings. What have you been hearing? Thank you.

Laurent Levy (Co-Founder and CEO)

Thank you. Maybe let me take the second question, then I'll pass the mic to Bart to answer the first one. I mean, we interacted with FDA or other agencies on different matters, and J&J is doing the same. As our program already well engaged, we don't have experience, to the best of my knowledge today, any delay in meetings or interaction. Things look normal to date.

Bart Van Rhijn (CFO)

Thank you, Laurent. Happy to follow on. Thank you, Shawn, for the question. With regards to the remaining cost with Nanobiotix, that is relatively immaterial. As we've guided the public, the vast majority of the costs are now with J&J that has taken over the obligation to fund further to the exchange of milestones that we announced two weeks ago. That may lead to some payments in 2025, 2026, and 2027 that remain on our end, but they're in the single-digit millions in those respective years and are not impacting the cash runway in a meaningful way.

We've guided the cash runway to mid-2026, but the removal of the vast majority of this phase III trial cost will benefit us beyond mid-2026, and that burn rate will come down if one takes a look at our annual R&D expense, of which the majority relates to the NANORAY-312, directly or indirectly. One should expect that we will have a very attractive cost run rate post mid-2026. Thank you.

Operator (participant)

We are now going to proceed with our next question. The questions come from the line of Michael Schmidt from Guggenheim Securities. Please ask your question.

Michael Schmidt (Senior Managing Director and Senior Biotech Analyst)

Hey, guys. Good morning. I just had a bigger picture question. Now that the NBTXR3 program has essentially transitioned fully to J&J operationally and financially, I guess, as you think about the company longer term, what are some of the R&D initiatives internally at Nanobiotix that you think could create additional value longer term beyond NBTXR3?

Laurent Levy (Co-Founder and CEO)

Thanks, Michael, for the question. Maybe first of all, let's say that we're not yet done with NBTXR3. We still have a lot to do. You're fully right when you say that J&J now is taking a good part, a majority of what is happening with NBTXR3, with the Converge trial, with the transfer of the 312, and so on. This transfer is not yet done. As we mentioned, it should be in Q3 this year. There's still a lot to do around the manufacturing, around preclinical, around preparing everything that should go and will go in the dossier for registration. Outside the 312, which is today a big part of the investment in resources of Nanobiotix that now J&J is taking, there's still a lot in parallel. This, we think, will continue for the coming few years.

Now, it is true that this shift of the 312 is also opening some doors for us, not only because we are going to spend less money, but also we can free some resources to continue to work on our other platform, and mainly the Curadigm platform, which is the platform we want to push after NBTXR3, which is a very broad applicable platform, not only to potential early deal and partnership, but also to develop our new internal pipeline. We expect to give more detail on that before the end of this year.

Michael Schmidt (Senior Managing Director and Senior Biotech Analyst)

I think you mentioned earlier, but how much additional R&D spend in 2025 and 2026 will be on NBTXR3 versus other programs?

Laurent Levy (Co-Founder and CEO)

Bart, do you want to take that one?

Bart Van Rhijn (CFO)

Yep. As I'm muting, what will remain essentially is the 1100 study, MD Anderson, preclinical and discovery work, as well as Curadigm. Each of those are single-digit millions. The burn will come down quite significantly on the R&D side with the 312 study making up the majority of the R&D spend. That is millions per quarter less. The beauty of the Curadigm program is that, as explained to the market, it's a platform that can be partnered, whether it's with existing new drugs or drugs that have failed. We expect that the burn will be very efficient in that regard. It will go up versus what it is now, but it will, on a net basis, with the removal of the phase III liability, be significantly less on a net basis going forward.

Michael Schmidt (Senior Managing Director and Senior Biotech Analyst)

Thank you.

Bart Van Rhijn (CFO)

Thank you, Michael.

Operator (participant)

We are now going to proceed with our next question. The questions come from the line of Swayampakula Ramakanth from H.C. Wainwright. Please ask your question.

Thank you. This is RK from H.C. Wainwright. Good afternoon, Laurent and Bart. A couple of quick questions here. This is for Bart. You were talking about the runway, which currently stands till mid-2026, and you were also saying there are potential ways for you to extend it into 2027. What could be the potential non-dilutive ways? Also, how much of a gap is there for you to fill so that you can take it up to 2027 or into 2027 from where it stands currently?

Bart Van Rhijn (CFO)

Thank you, RK. We feel that the enterprise value is significantly disconnected with the market cap. Therefore, dilutive options are not our preference. We have EIB debt in our cap structure, and adding more debt, we believe, is not the ideal way to go about things. Other non-dilutive financing options, such as royalty financing, we believe hold good promise for the company, given the type of asset this is. Just to remind, it is a very versatile asset. Laurent mentioned it in the call. It is tumor agnostic, combination agnostic, target agnostic. We see significant engagement and investment by our partner, J&J. We expect that to continue. It is a very interesting asset for many of the providers in that space. As our burn will come down quite significantly, we do not need a lot of money; it would be low teens to get into 2027.

It just behooves us, at this point in time, to remove the finance overhang and get into a safe harbor because there's tremendous value in this asset that needs to result in value creation for our shareholders. We want to make sure that we do that so that there's no finance overhang and people can just appreciate the technology, the versatility of it, that is partnered with a partner that we believe is an ideal partner for this asset and bring it, hopefully, in many indications should data readouts be positive.

Thank you for that, Bart. Laurent, just thinking about R3 for a second. Having seen the data that we have seen so far, both on the safety side and on the efficacy side, to me, there does not seem a real reason why this should not get into the market. Granted, it may take a little bit of time, but there is no reason to think that it should not get to the market. However, what could be potentially the reasons why it cannot get to the market? I was just thinking about it because, based on what we know about the molecule, I feel quite confident, but other than the timing part of it, are there any other things that I am being blindsided?

Laurent Levy (Co-Founder and CEO)

Thank you, RK, for the question, the $10 billion question. I think we could have had a different answer to this question depending on timing. You would ask for it. In the past, we would have indicated manufacturing is always a risk. Getting some first randomized data is always a risk until you have them. Not having a partner to market the product or to make sure we can develop broadly would have been a risk, and many other things. I think where we stand now, I think all those usual big impactful risks that the biotech is facing are behind us. I will say that we are in a very de-risked situation right now. There is never 100% guarantee in any of the things. I think what we should just do is wait.

There's not too much time to wait now to get to the next big inflection point and to, on our side, help J&J to move as fast as they can and to bring this product to market.

Thank you for that. The last question from me is also on the Curadigm asset. Probably I've asked this question in the past. What's the gating event that needs to get done so that you can initiate a clinical program? Is it resources or is it time in the sense getting all the material together to start a program?

I think it's essentially timing. We have enough resources to push this program. As Bart mentioned, at the stage of development, it is. It does not cost a lot of money. Also, as we want to really emphasize the partnership activity on that, there probably will be a big part of it that will be done on other times. We're working on our internal pipeline and also have been starting interacting with many biotech and pharma. We have a good number of MTAs already signed and on their way. Things are moving. We hope that I will give much more info by the end of this year.

Thank you. Thanks for taking all my questions.

Thanks, RK.

Operator (participant)

Thank you. As a reminder to ask a question, please 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 are now going to proceed with our next question. The questions come from the line of Eric Musonza from UBS, please ask your question. Hello, Eric. Your line is open. You may ask your question.

Actually, this is Dave Guy from UBS. Can you hear me?

Laurent Levy (Co-Founder and CEO)

Yes, David.

Yes. Great. Yeah, just actually two questions for me as well. Regarding the NANORAY-312 file, you're planning to enroll patients with and without cetuximab. These patients who receive cetuximab will likely have a longer survival. Could you help us understand what percentage of patients are going to be enrolled with cetuximab and what percentage will not have cetuximab? Just curious if there's going to be a cap in terms of patients who have the cetuximab background.

Thanks, David. Cetuximab is not the biggest used drug in head and neck when it comes to frail and elderly patients. Nevertheless, that's something that is in the standard of care guideline. When you look at it, not many people are using cetuximab. The reason why this drug has been added is because they are in the guidelines. We need to leave the choice open for physicians to use it or not. That's one. In order to make sure that the trial is balanced and there is no bias, we've made cetuximab used as a stratification factor. We should assume a balanced number of patients getting it in both arms.

Now, why cetuximab is not used that much in those patients is because when you look at the detail of the Bonner paper, what you see is that for elderly people, the cetuximab use is detrimental versus radiation alone. Of course, looking at the overall data, you see a benefit for cetuximab, but this benefit is exclusively driven by younger patients. At the end of the day, we think that cetuximab in this trial will have either a neutral effect. We should not expect more efficacy coming from it, or a plus, a little plus. If there is some small benefit, we should assume that this benefit will be at the minimum equal in the arm with NBTXR3 or better if we anticipate synergies. That is why we do not think cetuximab in this trial will play a key role.

That's really helpful. There is another question on the upcoming data readout. There are many updates in 2025, including the placement data from the relapsed metastatic head and neck cancer in combination with PD-1. Can you just share with us mechanistically how do you think R3 will be additive to PD-1 to exert better systemic benefit for those metastatic patients?

Sure. First of all, before getting to the benefit of systemic activity of NBTXR3, I just want to remind that for all patients getting PD-1, the first time they will get PD-1, there are usually one-third of those patients that are only locally relapsed, one-third that will have local relapse plus met, and a third only will have met only. Most of the patients, the 60% I mentioned previously and beyond, they're coming from the failure of previous lines of treatment. Before getting into any systemic activity of NBTXR3, we should just remind that those patients getting PD-1, they also need and primarily need a local control.

That's what our PIs are mentioning quite repeatedly when we talk to them, that systemic control in head and neck metastatic patients or locally relapsed plus met is good, but usually does not translate into a direct link to PFS and overall survival. There is always this need, an important need to control the local tumor. That is where we know NBTXR3 could play a key role first. Even if we do not look at the systemic effect, we have a strong potential to improve outcome for patients just based on local control. Now, when it comes to systemic, we have been proven in multiple studies with MD Anderson that when we combine R3 to radiation versus radiation alone, we can trigger a much deeper systemic immune response with different mechanisms. This has been fully extended studied in a preclinical model by James Welsh.

What we start seeing, and that's part of what we would like to show in the next set of data we will explore for the 1100, is really those two things: local control and systemic control. We clearly see that the magnitude of effect we see cannot just be linked to local control, not to what extent we have the systemic control. That's something we are exploring.

That's really helpful. Thank you so much for congratulating progress.

Thanks, David.

Operator (participant)

There are no further questions at this time. I will now turn the call over to Dr. Levy for his closing remarks.

Laurent Levy (Co-Founder and CEO)

Thank you. Listen, thank you, everyone. It was another fruitful conversation. We will have plenty of news to deliver this year, so we are going to go back to work and prepare that for you. Thank you for your attention, and I will wish you a very good day. Let's talk soon.

Operator (participant)

Ladies and gentlemen, this concludes today's presentation. Thank you once again for your participation. You may now disconnect your lines. Thank you and have a great day.