Good morning, and welcome to the Evelo Biosciences First Quarter 2020 Financial and Operating Results Conference Call. At this time, all participants are in a listen-only mode. [Operator Instructions] Please be advised that this call is being recorded at the company's request. At this time, I'd like to turn it over to Jessica Cotrone of Evelo.

Please proceed.

Thank you, Carmen. Good morning, everyone. This morning, we issued a press release that outlines the topics we plan to discuss today. This release is available at www.evelobio.com under the Investors tab.

Today in our call, Simba Gill, Chief Executive Officer; Mark Bodmer, President of R&D and Chief Scientific Officer; and Duncan McHale, Chief Medical Officer, will review our first quarter 2020 financial results and recent business highlights.

Before we begin, I'd like to remind everyone that statements made during this conference call that do not relate to matters of historical facts, including statements about our objectives and anticipated clinical milestones for 2020, the impact of any of our monoclonal microbials and the timing and results of any clinical studies and the sufficiency of cash to fund operations should be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Such forward-looking statements are intended to be subject to the safe harbor protection provided by the Reform Act. Actual results could differ materially from those indicated by the forward-looking statements due to the impact of many factors.

Participants are directed to the risk factors set forth in Evelo's quarterly report on Form 10-Q for the quarter ended March 31, 2020, and the company's other filings with the Securities and Exchange Commission. Any forward-looking statements made today speak only to Evelo's operations as of today.

Evelo disclaims any duty to provide updates to its forward-looking statements even if these subsequent events cause the company's views to change. It's now my pleasure to pass the call over to Simba..

Thank you, Jessica, and good morning, everyone. Thank you for joining us to review our progress in the first quarter. I'm pleased to report today that we have additional clinical data that support the potential of EDP1815 as an effective anti-inflammatory drug. We also have encouraging initial evidence in triple-negative breast cancer with EDP1503.

Importantly, we announced last week the submission of an IND for a Phase II study of EDP1815 for the treatment of COVID-19, and by intervening early in the disease, we may be able to prevent progression of COVID-19. We expect to report data from this study in the second half of this year.

We have responded to the COVID-19 pandemic by accelerating key plans for clinical development and for scale up and manufacturing of EDP1815. If we see positive data, we aim to be in a position to supply product for millions of patients by early 2021 and to scale from there onwards.

We have also continued to generate new clinical data, which informs our understanding of the activity in humans of different formulations of our products. We have now observed positive effects with the enteric formulation of EDP1815 in 3 separate human clinical studies.

We did not see meaningful clinical responses with our newer alternate formulation in either atopic dermatitis or psoriasis. Based on these results, we're advancing into our Phase II dose-ranging study in psoriasis with the enteric capsule formulation. Mark will expand on the relevant results.

We also continue to advance EDP1867 into clinical development and to explore the potential of our platform in areas including neuroinflammation and metabolism. 2020 will continue to be a year filled with clinical data, and I will review our revised and expanded clinical milestones later in the call.

Let me now turn the call over to Mark to tell you about new results with EDP1815..

Thank you, Simba. During the past quarter, we've learned a lot about the clinical pharmacology of EDP1815. This comes from new results of two clinical studies. First, an immunopharmacology study with the enteric capsule formulation; and second, interim data with the ultimate formulation of EDP1815 from the Phase Ib study.

I'll start with immunopharmacology. This study tested the ability of EDP1815 to reduce an antigen-specific inflammatory response. It's similar to the delayed-type hypersensitivity studies we use preclinically as a standard measure of efficacy.

It's the most direct test of whether the striking effects of the small intestinal access mechanism in preclinical models translates to humans using an objective, quantitative and blinded end point. 20 healthy volunteers were dosed for 28 days with either EDP1815 in the enteric capsule formulation or placebo.

They were immunized with an antigen, keyhole limpet hemocyanin, or KLH, on day three of dosing. An inflammatory reaction was then induced by second injection of KLH in the arm on day 27.

Inflammation was measured using a technique called laser speckle contrast imaging, which measures the skin blood flow at the site of the reaction, a key feature of inflammation. Readings were compared immediately before the second injection, and again, after 24 hours.

Sticking with EDP1815 resulted in a 15-fold lower blood flow in the inflamed skin than placebo, a reduction in the inflammatory response of over 90%. This is clear-cut clinical proof of mechanism using an objective and quantitative end point.

It shows that the small intestinal access functions in humans and can be used to modulate systemic inflammation, which is consistent with preclinical data and with the data we released last year from two cohorts of individuals with mild to moderate psoriasis who have demonstrated the reduction in both PASI and lesion severity scores.

As Simba mentioned, we're also announcing interim data from the Phase Ib trial cohorts of psoriasis and atopic dermatitis individuals treated with the alternate formulation of EDP1815. We did not see clinical effects in either cohort. We believe this has to do with a different way in which the drug is released in the two formulations.

The entire capsule releases a bolus of EDP1815 when the capsule disintegrates in the small intestine, leading to a high concentration of drug. The alternate formulation transitions gradually from the stomach to the small intestine, and so it does not reproduce the bolus release and high drug concentration.

This can be reconciled with the preclinical results, dose response being more dependent on the maximum concentration of drug from the total exposure over time, a recognized aspect of the pharmacology of some drugs.

In summary, we now have three separate clinical cohorts showing efficacy with the enteric capsule formulation of EDP1815 in a practical dose range to in psoriasis previously reported and immunopharmacology study reported today.

Together, the clinical data with EDP1815 significantly reinforced by the human immunopharmacology results are evidence for the potential of EDP1815 for the treatment of inflammatory diseases. The future studies you'll hear about from Duncan will be done with the enteric capsule formulation.

Before handing over to Duncan, I'd like to tell you about the scientific rationale for taking EDP1815 into the COVID-19 trial for which we announced the IND submission last Thursday.

As I'm sure you're aware, emerging data on COVID-19 suggests that life-threatening complications are associated with hyper inflammation cytokine storm, which lead to multiple organ failure and can be fatal.

Preclinically, EDP1815 has been observed to induce broad resolution of inflammation with effect on multiple inflammatory mechanisms that modulates Th1, Th2 and Th17 pathways, down regulating cytokines, including TNF, IL-4, 5, 6, IL-12, IL-13 and IL-17.

Several of these have been implicated in the cytokine storm associated with severe complications of COVID-19. And of course, earlier in the quarter, we announced clinical biomarker data from the Phase Ib psoriasis study showing reductions in multiple systemic mediators of inflammation, including IL-6, IL-8, TNF and IL-1 beta.

And these effects are achieved with a convenient oral product that has had placebo-like safety and tolerability in all studies to date. This profile suggests the potential for EDP1815 as a treatment for COVID '19 as well as a range of viral-induced inflammatory conditions, including complications of flu. And with that, let me hand it over to Duncan..

Thank you, Mark, and good morning, everyone. I'm pleased to provide an update on the next steps for our inflammation and oncology programs. I want to start with the potential we see for EDP1815 in the treatment of COVID-19.

As we announced last week, we're honored to partner with Rutgers University and the Robert Wood Johnson University Hospital to evaluate EDP1815 in a Phase II study for the treatment of COVID-19. This study will be led by Dr. Rey Panettieri, one of the world's leaders in respiratory disease.

The decision to test the potential of EDP1815 to prevent the life-threatening complications associated with the hyper inflammation and cytokine storm in COVID-19 is based on preclinical and clinical data, showing its ability to modulate multiple key cytokines, as Mark has described.

The COVID-19 study is a Phase II double-blind placebo-controlled clinical trial that will assess the potential of EDP1815 in the treatment of hospitalized patients with newly diagnosed COVID-19.

The study will initially enroll 60 individuals to determine if early intervention with EDP1815 can prevent or reduce the deterioration of lung function that is associated with the progression of COVID-19 symptoms and the development of COVID-related complications.

Individuals will be treated with EDP1815 or placebo on top of standard of care for 14 days. The primary end point of the study is the reduced requirement for oxygen therapy. Key secondary end points include total symptom duration, progression along the WHO's scale of disease severity and mortality.

Now in parallel with the COVID-19 study, we continued the setup for the Phase II dose-ranging trial of EDP1815 in patients with mild to moderate psoriasis.

The design of the study is unchanged apart from a small increase in sample size, which we have implemented in order to increase our power to tell each dose level apart from placebo and to provide some buffer for a higher-than-expected dropout rate due to coronavirus infections.

Simba will discuss the impact of COVID-19 on time lines later in the call. And moving to our oncology studies. As Simba mentioned at the beginning of the call, we have seen encouraging initial evidence to support the use of EDP1503 as a potential treatment for triple-negative breast cancer.

Because of this, we've decided to prioritize the development of EDP1503 in this tumor type.

As a reminder, this study is a Phase 1/2 open-label single-arm study designed to evaluate the effects of EDP1503 in combination with KEYTRUDA in a range of tumor types, metastatic microsatellite stable colorectal cancer, triple-negative breast cancer and PD-1, PD-L1 relapsed solid tumors.

Initial analysis of the clinical data has showed no remarkable safety signals, and the futility hurdle for triple-negative breast cancer was successfully passed. With the new focus on triple-negative breast cancer, we are halting recruitment in the other arms of the study but will follow all currently recruited subjects who are still in the study.

Let me now turn the call back over to Simba..

Thanks, Duncan. I wanted to conclude with revised milestone guidance given the initiation of our Phase II trial in COVID-19 and the ongoing COVID-19 pandemic and its current and anticipated impact on clinical size initiation and patient recruitment.

We expect data from the Phase II study evaluating EDP1815 in COVID-19 during the second half of this year. If EDP1815 is effective in limiting the symptoms and progression of COVID-19, we will also explore its potential in diseases impacted by hyper inflammation and cytokine storm, including influenza.

We will also initiate the Phase II dose-ranging study of EDP1815 in mild to moderate psoriasis in the third quarter of this year, with interim data expected by the middle of 2021. We will focus EDP1503 on the treatment of TNBC and, and we expect clinical data from this group of patients in the second half of 2020.

And we will continue to advance our fourth product candidate and first nonreplicating monoclonal microbial EDP1867 into the clinic in the first quarter of 2021. The Phase Ib trial will evaluate the potential of EDP1867 to treat individuals with atopic diseases, either asthma or atopic dermatitis.

In closing, let me express my gratitude to the Evelo team and to our partners. The exceptional work has enabled us to progress our research and clinical development plans during the COVID-19 pandemic. We look forward to updating you further as we progress our programs during 2020, and we'd now like to open up the call to your questions..

[Operator Instructions] And our first question is from Matthew Harrison with Morgan Stanley. .

This is Connor, on for Matthew. So we just had two quick questions.

Could you just provide some insight on how you feel about maybe time lines and the data in general regarding EDP1815 and overlapping that with the recent data from Otezla in mild to moderate? And then just quickly, after prioritizing the enteric capsule formulation and then based on the release times, how do you expect this to impact your data sets going forward?.

Connor, thanks. So I think three questions. Let me answer the first two in terms of time lines, how we invest EDP1815, link it to the Otezla situation, and then, I'll let Mark answer the question about the enteric capsule formulation.

So in terms of time lines, the -- what we're obviously dealing with is the impact of COVID-19 in terms of clinical trial initiation and clinical trial recruitment. So we've taken what we considered to be relatively conservative assumptions, recognizing that none of us can actually predict the impact of COVID-19.

So in that context, the guidance that we gave factors that in, and we have to see obviously how COVID-19 impacts things, but we're assuming we're starting the Phase II psoriasis dose-ranging study in the third quarter.

We would otherwise be starting in this quarter, and we've assumed that there will be some significant type of recruitment, hence, the guidance that we'll have results from that Phase II psoriasis dose-ranging study by the middle of next year.

Obviously, depending on the impact, we could see results potentially as early as Q1 of next year or sometime in Q2. And it's very difficult for us to predict accurately what the actual situation will be. So that's how we're looking at time lines from that perspective, Connor.

Obviously, in terms of 1815 to treat COVID-19, we have arguably the opposite situation and that we would expect that to recruit reasonably quickly on an assumption that COVID-19 will continue to be with us for the foreseeable future. And that's, again, reflected in our guidance. So hopefully, that's helpful with regards to your question on time line.

With respect to 1815, I'll let Mark embellish on this when he talks about the enteric capsules from a scientific and a clinical perspective.

The core point is that we now have, as I mentioned, three separate clinical studies and three separate clinical sets of data, which strongly support the potential EDP1815 as a very effective anti-inflammatory agent in psoriasis, and we expect beyond psoriasis as well. So we're feeling very positive about EDP1815.

As it links to Otezla, our view has always been the big unmet need in psoriasis. And most other inflammatory diseases today is actually in patients with mild to moderate disease. And that's always been our initial target entry point, as you know, Connor.

And within mild to moderate disease, we think the overall profile of EDP1815 is extremely well-suited.

The data we have to date with the EDP1815 in psoriasis as much as we can compare with historical data on Otezla suggests we have something that is at least as efficacious as Otezla and something that has a much more attractive safety and tolerability profile.

And then we haven't given formal pricing guidance, but we have made it clear that central part of our strategy across the whole company is to develop medicines which are affordable for large patient populations. So we would expect to have a pricing advantage versus Otezla as well.

So just to recap, we are at least as efficacious as Otezla based on the comparative data that we're able to make at this stage. We have something that appears to have a much improved safety and tolerability profile, and we expect that we will have a pricing advantage as well. So we think we're very well positioned versus Otezla.

Let me hand over to Mark to talk about enteric capsules. And Mark, you may well want to say something additional about how we're feeling about EDP1815..

I will do that. I'll say a little bit more about what we think is going on there. And then to your question, Connor, about the impact, I can answer that, I hope, clearly as well.

So if you recall, the preclinical data we have showed that we had a dose benefit with the alternate formulation in mice, and that dose benefit could have been due to any one of the number of the factors, including cyto release, the bolus concentration release, which I mentioned earlier in the call.

And the other factor is asset sensitivity, which we were not controlling for in the earlier formulations in the preclinical studies. So there were a series of possible factors where we didn't hit it with the alternate formulation. We went into man. And a couple of comments on that.

One is it turns out that the dose effect that we saw in mice wasn't needed in man. We didn't know that at the time we were proposing the clinical trial for this because we didn't have the comparative dose response data in man with EDP1815.

So to Simba's point, I think the alternate formulation is essentially moot because the clinical data in the other 3 cohorts has given us what we need.

And I have to say, actually, as an immunologist, and I talked to other immunologists about this, the data that I told you in the immunopharmacology study where we directly replicated the mechanism is very powerful data.

I know it doesn't tell you a lot about what this is going to do as a drug, but it does tell you that the small intestinal access is functional in humans, which, of course, has been one of the big questions about our platform since we started this.

Specifically, the question about impact, actually, there is none, because we manufactured both formulations of GMP material in parallel, so we were able to make the switch from one to the other without skipping a beat, which actually has been the reason why we've been able to go directly into regulatory submissions for doing COVID-19 studies.

And we have the drug available for starting those studies as soon as we get the approval to do it. And of course, we are continuously manufacturing material drug substance is the same. Actually, we have supplies and drug substance. We'll continue to manufacture it for the future studies as well.

And it might be worth just pointing out there that despite the pandemic of supply chain and manufacturing, it has not been disrupted..

Understood. Thanks for the response. .

Thank you. And our next question comes from Chris Shibutani with Cowen. Please go ahead..

Thank you. Good morning team. Two questions. One, I think historically, you've done some of your clinical work in the UK and a question simply based upon the context of how we're seeing different geographies. We're confronted with challenges related to this pandemic in different ways.

Can you just remind us what the geographies are for the studies that you are contemplating studying over the near term? And then secondly, with the cash runway of $58 million, and thinking about what the R&D spend is like, again, in the context of some potential modifications, could you help us understand how you feel about the runway that you have to support these programs, if there's any framing of that kind of time line that's possible?.

One, we have factored in the delay of the Phase II dose-ranging study in EDP1815 in psoriasis, and that obviously means a deferment of the Phase IIb dose-ranging expense. So we're benefiting from that.

We took, as soon as COVID-19 was declared a pandemic, we took a hard look at all of our expenses across the company and have essentially deferred and/or cut certain expenses without compromising our ability to move forward the key clinical programs or to continue to invest in the platform and the pipeline. And that's benefiting us as well.

And then there's some benefit from the fact we're now focusing on TNBC with EDP1503 in the oncology setting. And so overall, that's actually extended our cash runway from where we are, from where we were before, Chris. So we're now especially getting broad guidance that we have cash into Q1 2021..

And our next question comes from Matthew Luchini with BMO Capital..

Simba, this is Na, on for Matthew. Two questions from me. One, on the TNBC. Can you give us a little bit more color on what you saw that gave you the confidence to keep going in TNBC? And then another one on the psoriasis Ib data.

Based on what we saw before, where you saw the reduction in LSS and a trending, a similar trend in PASI score, what happened today where you completely did not see any clinical response? Can you just clarify that for us? And then also if, when are you going to make the detailed data for oncology and the psoriasis available to us?.

Thanks, Na. So on TNBC and the 1503 program, a couple of points. So just a reminder, as you know, Na, that's a combination study with Merck's KEYTRUDA in a clinical collaboration with Merck. So we have agreed with Merck that we're not going to disclose any additional data until a clinical conference, we haven't said at which clinical conference.

I can't tell you exactly when that will be, but certainly, second half of this year. And all I'm able to tell you now, Na, in terms of the TNBC data that gave us confidence to proceed, is that in a small number of patients with TNBC, we are seeing clinical responses.

And the proportion of clinical responses we're seeing, if those are maintained, would be very encouraging in terms of having a potential product. So the goal is now to obviously recruit an additional number of patients so that we can see as we expand the number of patients being treated with TNBC, we're maintaining those clinical response rates.

So that's the color I can add right now. But again, we will provide more data at clinical and scientific conferences in the second half of this year. With regards to your question on 1815 in psoriasis. Let me, first of all, be very clear.

So the enteric formulation of EDP1815 showed, as you were suggesting, positive data in lesional severity and PASI scores in two separate cohorts of psoriasis patients. What we reported today with that same formulation is a third positive set of data in a human clinical immunopharmacology study, which Mark reported.

So we're very confident in the immunology and the clinical response data we have with EDP1815 with the enteric formulation. What we also reported was with the newer alternate formulation that we did not see a clinical response.

And the reason we didn't see a clinical response there is, we believe, because of the formulation, the details of exactly why that newer formulation did not recapitulate the results we've seen preclinically, we're still working through now. Mark talked about the different possibilities.

But there's something about the formulation, which, in the translation from mouse to man, has led to a lack of clinical response. But to be clear, the most important point is the enteric formulation we continue to have a lot of confidence in.

And we reported today a third set of human clinical data that confirms in the next level of detail, and in a quantified way, the impact we're having with EDP1815 with the enteric formulation in humans. So we're being very confident with that. So hopefully, that answers your question..

Yeah. Wonderful thank you. Thanks for taking question. .

Thank you. [Operator Instructions] Our next question is from Roger Song with Jefferies..

Hey good morning team. Thank you for taking questions. Two quick ones for oncology program. So since you're prototyping the TNBC program, which is kind of, obviously, very kind of significant amendments here, so just curious, your view on the potential line of therapy given your -- in combination with KEYTRUDA.

And then we know Cabilly recently approved kind of a later line of the therapy, and they are doing lots of other combination regimen well, which is the -- your thoughts around competitive landscape moving forward for the triple negative..

Good morning. Thanks for the question. So I think you just summarized the competitive landscape. So by definition, we need to have something that will be competitive with the newer combinations that are coming through, and that's something that we believe we have the potential to do with the data that we have to date. So it needs to be confirmed.

But to be clear, we factored in the new approval. And as you know, response rates in combination are now at around the 30% level, with some of the newer combinations that are either being studied or, as you said, with Cabilly, have recently been approved.

So we factored that in, and you can take it as a given that we assume that we have something that will be competitive with those newer combination products..

That's great. That's great. Okay. And then another quick one for oncology as well. If you succeed in triple negative, and I know you have done some other tumor type but they're not either kind of as robust to clinical response.

But would you expand into other tumor type in the future or you just think you're -- at least for 1503, you will focus on TNBC a lot..

Yes. No. If we see positive results with the next wave of TNBC patients, we'll almost certainly expand, Na -- Roy, sorry, because what will have shown is that 1503 is impacting systemic immunity against the tumor in synergy with KEYTRUDA and checkpoint inhibitors. And if that's shown, then there is potential that's much broader than TNBC.

So we will expand and highlight the other -- obviously, we need to see the data, Roy, but that would be our intention, to expand. If we confirm efficacy that is competitive, to your previous question, with other combinations, then highly, we'll expand to the other tumor types..

And I'm not showing any further questions in the queue. I would like to turn the call back to Dr. Simba Gill for his final remarks..

So I just want to thank everybody for their continued interest in Evelo, and also, as I said in my prepared remarks, thanks, our team at Evelo as well as our partners who've done a remarkable job keeping things moving forward during the COVID-19 pandemic with marginal impact on all of our activities across research and clinical development.

So thank you very much, everyone, and we look forward to updating you on continued progress as we go forward through 2020..

And with that, ladies and gentlemen, we conclude today's program. Thank you for your participation. You may now disconnect..