Greetings. Welcome to Entera Bio Fourth Quarter and Fiscal Year 2018 Earnings Conference Call. At this time, all participants are in listen-only mode. [Operator Instructions] As a reminder, this conference is being recorded. I'd now turn the conference over to your host Michael Wood of LifeSci Advisors. Mr. Wood, you may begin..

Thank you, operator. Good morning everyone and thank you for joining us on the Entera Bio fourth quarter and year end 2018 earnings conference call. On today's call, we're joined by Dr. Phil Schwartz, Chief Executive Officer and Mira Rosenzweig, Chief Financial Officer.

Earlier today the company issued a press release for the quarter and full year 2018 results as well as a business update. The release is available on the company's website and also filed with the SEC. During today's call, we'll be making forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These include statements that address future operating, financial, or business performance or strategies, expectations.

Forward-looking statements are based on management's current expectations and belief significant risks and uncertainties that could cause actual results, developments, and business decisions to differ materially from those contemplated in those statements.

Those risks and uncertainties, include but are not limited, to the timing and conduct of the company's clinical trials, the clinical utility of a company's product candidates, the timing or likelihood of regulatory filing approvals, intellectual property position, and the financial position, as well as those described in the risk factors in the company's annual report on Form 20-F and future filings with the SEC.

So, I'd now like to turn the call over to Entera's Chief Executive Officer Dr. Phil Schwartz. Phil, please go ahead..

Thank you, Michael and thank you all for joining us today for our first conference call with investors and the analysts as a public company. 2018 was a very important year in the growth and evolution of Entera Bio.

We signed a significant research collaboration and license agreement with Amgen, advanced our key clinical development programs, completed our IPO listing on the NASDAQ, and added considerable talent to our management team and Board of Directors. We are pleased with last year's progress and excited to start this year.

We look forward to updating you on our progress as the year develops. From the perspective of Entera's strategy, there are two important ways in which we intend to create value. First, we offer a unique and powerful oral drug delivery technology that allows us to deliver large molecules and proteins orally rather than by injection.

We intend to continue our strategy of leveraging our technology platform by exploring strategic collaboration and licensing agreements with biotech and pharmaceutical partners.

Any future partnership could provide us with critical validation of our technology, access to potential non-dilutive capital and future sources of revenue in the form of milestone payments and royalty.

The second part of the strategy is the advancement of our proprietary drug pipeline in osteoporosis, a multibillion-dollar opportunity and hypoparathyroidism, a rare indication for which we have been granted orphan drug designation, as well as several other indications.

We will continue to opportunistically add new molecules to our pipeline as they present themselves. We have control of the development of these product candidates and can retain full global rights or out-license them as we see fit.

The drug delivery platform we have developed is designed to act synergistically to transport and protect large molecules and biological therapeutics.

As a reminder, the two most common issues with developing oral therapies for large molecules of biologic are that they are not readily absorbed by the gastrointestinal tract and they are rapidly degraded by a myriad of enzymes and acids which they encounter. We believe that our platform can address both of these challenges.

Moreover, our technology is not simply about taking injectable and infused products and putting them into an oral form for greater patient convenience or for greater patient preference over injection. There are some biological drugs that cannot be delivered as an injection as they may cause a severe injection site reaction.

They may stop working as an injection after just a few weeks or they may induce the production of antibiotics, which neutralize the drug's activity. These are just to name a few of the possible ways that these types of drugs can fail.

The power of our platform was underscored in our recent collaboration with Amgen, a highly respected top five global biopharmaceutical company which illustrates the potential value these deals can bring to Entera. Amgen spent almost two years testing our technology in their own labs before entering the formal agreement that we announced in December.

Entera will be eligible to receive aggregate payments of up to $270 million which are tied to achievements of various clinical and commercial milestones.

These milestones include Amgen's exercise of options to select additional programs to include in the collaboration as well as pure royalty payments ranging from low to mid-single-digits based on the level of Amgen's net sales.

Under the deal, Amgen has currently selected one preclinical large molecule program in their pipeline for Entera to help partner in its development and has the option to select up to two additional candidates from their own pipeline. In January of 2019, we received from Amgen an initial technology access fee of $725,000.

The programs are an inflammatory disease and other serious illnesses and are each in large therapeutic classes with multibillion-dollar sales potential. Importantly, the molecules that Amgen has selected will not compete with anything in our proprietary pipeline.

On a scientific level, this partnership is especially interesting for our platform as the molecules work done by Amgen are significantly larger and distinct from the parathyroid hormone drug which we have focused our energies on in the past.

We are excited about our partnership with Amgen and believe it serves as an important validation of our platform technology and the potential for future partnerships. We are currently in discussions with multiple biotech and pharmaceutical partners for additional non-dilutive strategic collaboration.

Potential partners can leverage our technology to enhance their proprietary pipeline and we believe the results will be important for large molecules and/or biological therapies that ultimately help the needs of patients. We look forward to updating you on our progress. Let's shift gears now and move to Entera's proprietary programs.

Starting with our old parathyroid hormone drug EB613 for the treatment of osteoporosis. In late 2018, we received the positive feedback and guidance from the FDA and a pre-IND meeting regarding our development plan. The FDA suggestions were summarized the formal meeting minutes that we received in January of this year.

The meeting focused on the 505 (b)(2) regulatory pathway and the use of bone mineral density graft rather than fracture incidence is the primary endpoint in a registration trial to support a new drug application.

Based on our interactions with the agency, we believe that the Phase 3 study will only require BMD, bone mineral density as the primary efficacy endpoint and that a fracture study will not be required.

This will allow us to save significant costs and time in running our Phase 3 study compared to prior studies of the commercially available PTH injection drugs Forteo which required a fracture endpoint. Clinical trials with fracture endpoints usually require thousands of patients and take many years to enroll and complete.

Additionally, we believe the FDA has guided us regarding our 505 (b)(2) study such that it will require approximately 800 patients, 400 for the Forteo hour and about 400 for the EB613 hour oral PTH.

In order to achieve a non-inferiority endpoint in the Phase 3 study, the final number of patients needed to power this study can only be determined once we have concluded or dose ranging study, which we will be initiating in the coming week.

We note that the osteoporosis market has seen very limited introduction of any new approved all therapies over the past decade and revenues in this market are currently being primarily driven by the sale of injectable treatments. This is a very underserved market.

Entera's Oral PTH has been shown to produce a blood level for a pharmacokinetic profile similar to Forteo, which is approved for the treatment of osteoporosis in postmenopausal women and men who are at high risk of fractures. The potential osteoporosis drug market in the U.S. is estimated by industry sources at approximately $19 billion.

We believe there is significant opportunity to win market share and expand the market with the once-daily pill that has comparable efficacy to injectable Forteo. Our next step in the clinical development program will be to conduct what we anticipate to be a relatively short Phase 2a dose ranging study.

The purpose will be to study both safety and determine the optimal dose to advance into our Phase 3 pivotal study. We expect to start this study in the second quarter of this year and we anticipate enrolling approximately 160 osteoporosis patients.

The trial will last for about six months and we'll analyze a number of bone markers as well as bone mineral density and safety endpoints. Assuming a favorable outcome from the study, we will then conduct a single Phase 3 multicenter study comparing Entera's old PTH with Forteo over a 12-month period to begin in 2020.

Let's move to our second proprietary drug, our oral PTH program in hypoparathyroidism. Hypoparathyroidism is a rare condition in which the parathyroid gland fails to produce sufficient amounts of parathyroid hormone, with the parathyroid hormone produced last biological activity.

Parathyroid hormone along with vitamin D and the hormone calcitonin play critical role in regulating levels of calcium and phosphorus in the blood.

Due to a deficiency of parathyroid hormone patients may exhibit abnormally low levels of calcium in the blood hypoglycemia and high levels of phosphorus hyperphosphatemia which may cause a number of severe long-term conditions including kidney stones, kidney failure, cardiovascular effects, and sometimes even dementia.

Hypoparathyroidism affects approximately 60,000 people in the United States. Hormone replacement therapy in the form of commercial PTH injection has been available since 2015. However, we believe that an oral form of PTH would have significant advantages beyond just being oral and treating this chronic condition.

Entera's oral PTH candidate has been awarded orphan drug designation in both the United States and the Europe.

In November, we reported positive results from the first part of our Phase 2 pharmacodynamic and pharmacokinetics studies confirming that oral PTH is effectively delivered into the bloodstream and activates biological pathways that PTH is known to regulate.

This follows our previous Phase 2 study which was conducted in 17 subjects over a four months period of time which showed very excellent efficacy in treating this disease.

Oral PTH has been shown to positively impact the levels of serum calcium, phosphate and act of vitamin D as well as induce and almost 25% decrease in 24-hour urinary calcium in hypoparathyroid patients treated for just one day.

The second part of this PK/PD study has evaluated a low and high dose regimen of oral PTH administered three times a day PID. And also included the norm in which patients were treated with Natpara, the commercially available PTH replacement therapy.

We expect to present results of this data by mid-2019, which will provide input for the design of our anticipated pivotal clinical trial. On the personnel front, we have added a number of high quality officers and Board members. First, in September 2018, we appointed Arthur Santora, M.D., Ph.D., to the position of Chief Medical Officer of Entera. Dr.

Santora has more than 30 years of experience in the biotech industry including leading the development of new drugs for osteoporosis and other indicative disorders. Art began his career at the FDA and played an important role in developing regulatory guideline for the approval of osteoporosis drugs. Dr.

Santora spent the majority of his career with the clinical research team at Merck where he was responsible for much of the clinical development of Fosamax, the most widely prescribed osteoporosis medication. We are really thrilled to have Art on our team due to his tremendous success and expertise in this therapeutic sector.

On our Board, Gerald Lieberman, was appointed as the Chairman of Entera's Board of Directors last August. He brings a wealth of operational, finance, and public company experience, having held power positions that include the President of AllianceBernstein and the CFO of Fidelity Investment at the corporate level.

Moreover, Gerry has been a director of a number of major pharmaceutical companies including Forest Laboratories and Teva Pharmaceuticals. In January of this year, we also appointed Gerald Ostrov as a new independent Director to our Board.

Gerry has extensive executive leadership experience from the time at several of the world's leading pharmaceutical companies including the Chairmanship of J&J's Health Care business and the CEO of Bausch & Lomb. We welcome Gerry and are excited to have him join our team.

Finally, we recently announced Mira Rosenzweig; our Chief Financial Officer will be leaving the company in mid-April to pursue other professional opportunities closer to her home. Mira has served as CFO of Entera's from 2014 and will continue to serve as CFO until mid-April.

We are very appreciative of Mira's significant contributions to the progress of Entera over the past several years including the successful completion of our IPO on the NASDAQ last year. We wish her continued success in her professional ventures.

We have initiated a process to appoint a new CFO and following the [indiscernible] 15.40 in mid-April we have retained and outsourced CFO of company until a replacement is hired. With that, I would like to turn over the call to Mira for a review of our financials.

Mira?.

Thank you, Phillip and hello everyone. I would like to sincerely thank Phillip and the rest of Entera's employees involved in excellence for the opportunity to work with them in the past five year. I wish Entera great success in the future.

Our full results appearing the financial statements and our 20-F for the year ended December 31st, 2018 filed earlier today. Revenues for the year ended December 31st, 2018 were $500,000.

The $500,000 revenues recognized in 2018 will be right from our agreements signed with Amgen under which we received an excess fee of $725,000 as Phillip mentioned earlier. We did not have any revenues filed today signing of the agreement with Amgen.

Research and development expenses for the year ended December 31st, 2018 were $8.5 million compared to $2.8 million for year ended December 31st, 2017 an increase of $5.7 million.

The increase was primarily due to an increase in expenses for materials, clinical manufacturing and production capabilities for advancement of clinical studies and certain pre-clinical activities.

In addition, an increase in payments to subcontractors and CROs associated with the performance of the Phase 2 PK/PD clinical trial and increase in salaries and employee related expenses including share-based compensation expenses. There was also an increase in other R&D expenses mainly for regulatory matters.

General and administrative expenses for the year ended December 31st, 2018 were $2.8 million compared to $8.6 million for the year ended December 31st, 2017, a decrease of $5.8 million.

The decrease in G&A expenses was primarily due to the decrease in share-based compensation expenses offset by an increase in consulting services, legal and accounting fees related to our financing efforts, and insurance expenses.

Financial income net for the year ended December 31st, 2018 was $0.6 million compared to $0.1 million for the year ended December 31st, 2017.

Financial income net for the year ended December 31st, 2018 resulted mainly from the change in the fair value of convertible loan, preferred shares and warrants to purchase preferred shares that were recorded as financial liability at fair value through profit or loss up until our IPO when they were converted to ordinary shares and warrants to ordinary share and were classified as equity.

In addition, a change in the fair value of the warrants issued at the company's IPO that are recorded as a financial liability for both profit and loss. Our comprehensive loss for the year ended December 31st, 2018 was $10.3 million compared to $11.2 million for the year ended December 31st, 2017.

On July 2nd 2018, we completed an IPO in which the company offers 1.400 million ordinary shares and warrants to purchase up to 700,000 ordinary shares and we receive consideration net of issuance cost of $9.6 million. As of December 31st, 2018, our cash balance was $11.5 million and as of March 15, 2019, our cash balance was $9.6 million.

We intend to continue to invest our cash resources in our R&D plan, G&A and our working capital need. I will now turn the call again to Phillip..

Thank you very much, Mira. We are really excited about the momentum we have in our business and we look forward to updating you on our progress going forward. With that, we would now like to open up the call to your questions.

Operator?.

Thank you. We'll now be conducting a question-and-answer session. [Operator Instructions] Thank you. Our first question is from the line of Jason McCarthy with Maxim Group. Please proceed with your question..

Hi. Good morning. This is actually Naureen Quibria on for Jason this morning. Congrats on the progress. I guess I want to start first with the EB613 program. I was just wondering now that you've completed your discussions with the FDA and you'll be starting the Phase 2 a dose reading study.

Will that be actually done in Israel or will it be done here in the U.S.? And I wanted to also -- I was just wondering can you confirm also with regards to the Phase 3 program, with it confirms that you only have to do one study as opposed two..

Thanks very much. It's an excellent question. As regards to the Phase 2 a dose ranging study which involves 160 people, we're going to be looking at three different doses three different dose levels in that study. That study is a relatively small study and will be conducted at about four or five centers in Israel.

We're going to be commencing that study in the coming weeks as I mentioned the first output of that study will be bone markers which are extremely highly predictive of the efficacy of the drug in terms of changing bone mineral density.

And the second endpoint on that study will be bone mineral density which will read out after six months at the end of the study.

As regards to clarity on the profile of whether we would have to do two Phase 3 or just one Phase 3 and the Phase 3 as we mentioned briefly in the 20-F would likely involve somewhere around 800 patients and would be obviously in numerous centers around the United States the European Union to come in terms of that that it would only be dependent on what the FDA would see in terms of our Phase 2 data if the Phase 2 data.

If the Phase 2 data is confirmatory of the effects that we have on bone then there is a high probability or good likelihood that the FDA would allow us to do just one phase 3 pivotal study. This is not unusual for 505 (b)(2).

If for some reason the results of our Phase 2 study were ambiguous then they might ask us to do an additional Phase 3 study or an additional Phase 2 study to add onto our Phase 3 study. I hope that addresses your question.

Do you have another question perhaps? Or is that okay?.

Yes, that's very helpful. Thank you so much.

And can you just describe the Amgen collaboration a little bit? And are you able to provide the little more color on the indications that they may pursue?.

No. We can't unfortunately. We're under confidentiality. Whatever we're able to review we revealed in the 20-F and the attached documents. We can't say that it's in the inflammatory space.

I can tell you that in general the focus of the Amgen collaboration as we sort of alluded to her mentioned too is for being able to utilize the drugs which otherwise could not be utilized as an injection because of various factors that are involved.

So, in other words it's a drug that they believe therapeutically works extremely well but they can't give it as an injection for any one of a myriad of reasons which I mentioned originally in my discussions in my opening remarks..

Sure. Yes. And that's very helpful.

So, do you think you might be able to report similar partnerships within this year that might be exacting a lot?.

It's possible. We are in discussions with a number of different potential partners. And it's definitely possible.

I would say that probability of usually these things take a number of months to execute and the probability has gone up because we're dealing with multiple partners, but obviously we have no guarantee of what type of agreements will sign in the future. We're optimistic though..

Sure. And I have just one last question with regards to the EB612 program. You know you stated that with the results from the Phase 2 portion would likely report out mid-2019.

So, if it's positive, would you expect to initiate a Phase 3 by the end of the year?.

That theoretically would be possible. But I think that it would probably be limited by our bandwidth in terms of a company of our size and even our prioritization. At this point in time we really feel like osteoporosis is our priority.

So, if we have sufficient capital to enlarge the company significantly and to be able to deal with two Phase 3 clinical trials simultaneously then we would go ahead and start that. But at this point in time, we're not planning on doing that right away.

We may also try to partner that drugs just like we would try to partner the osteoporosis drug as I mentioned..

All right. Thank you so much. That's it for me..

Thank you..

Thank you. At this time, I’d like to turn the floor back to management for further remarks..

I would like to thank everyone for joining the call and look forward to reporting more good news and other good things later in the year, and everyone should have a great day. Thank you so much..

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