Chemomab Therapeutics Ltd - ADR Stock

Greetings, and welcome to the Chemomab Therapeutics and Scipher Medicine Merger Announcement Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Barbara Lindheim, Head of Strategic Communications and Investor Relations for Chemomab. Thank you. Please go ahead.

Good morning, and thank you for joining today's conference call to discuss the merger agreement between Chemomab Therapeutics and Scipher Medicine. The link to this webcast is available at the Investors page of the Chemomab website and at the homepage of the Scipher's corporate website. There will also be a presentation deck containing information relevant to the merger posted on Chemomab and Scipher website shortly.

Before we begin, I would like to remind you that today's discussion will contain forward-looking statements regarding Chemomab, Scipher, the proposed merger, the concurrent financing, the expected ownership and leadership of the combined company, the anticipated use of proceeds and runway and the planned development of nebokitug for rheumatoid arthritis.

Certain statements in this conference call other than purely historical information may constitute forward-looking statements within the meaning of the federal securities laws, including for purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on the parties' current knowledge and their present beliefs and expectations regarding possible future events and are subject to risks, uncertainties and assumptions that could cause actual results to differ materially and adversely from those set forth or implied by such forward-looking statements.

These forward-looking statements involve a number of risks, uncertainties, some of which are beyond the combined company's control or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, and those uncertainties and factors described under the heading Risk Factors in Chemomab's annual report on Form 20-F for the year ended December 31, 2025 and Chemomab's other filings from time to time with the SEC.

Nothing in this conference call should be regarded as a representation by any person that the forward-looking statements set forth herein will be achieved or that any of the contemplated results of such forward-looking statements will be achieved. The combined company does not undertake or accept any duty to make any updates or revisions to any forward-looking statements.

I will now turn the call over to Dr. Adi Mor, Co-Founder and Chief Executive Officer of Chemomab Therapeutics. Adi, please go ahead.

Thank you, Barbara. It's a pleasure to be here today with Reg to discuss this important new chapter for Chemomab, Scipher and our investors. I believe that the proposed merger of our companies has the potential to benefit our shareholders and the millions of patients in need of better therapies for serious conditions involving inflammation and fibrosis. This transaction is the culmination of a comprehensive review of strategic alternatives by Chemomab's board and management team. We assessed many potential partnering opportunities to advance our lead asset, nebokitug, over the years and feel confident that the merger with Scipher, a leader in AI-powered precision medicine, and the planned development of nebokitug as a novel precision medicine for rheumatoid arthritis are the best option going forward.

As we announced this morning, Chemomab and Scipher Medicine have entered into a definitive agreement under which the companies will combine in an all-stock transaction. Upon closing, the combined company is expected to operate as Scipher Medicine Corporation and trade on NASDAQ under the ticker symbol SCIP. Dr. Reg Seeto, Scipher's Chief Executive Officer, would lead the combined company, and I am very pleased to join the combined company's Board of Directors.

From a transaction perspective, pre-merger, Chemomab's stockholders are expected to own approximately 32% of the combined company, and premerger Scipher stockholders are expected to own approximately 68% prior to giving effect to the concurrent financing, which is expected to dilute both parties pro rata. Chemomab's stockholders will also receive contingent value rights, CVRs, providing the opportunity to realize additional value upon achievement of specific milestones subjected to the terms of the CVR agreement.

Importantly, the transaction is supported by a committed $30 million private placement from Scipher's existing investor syndicate of top-tier biotech investors, including Northpond Ventures, Khosla Ventures, Blue Owl Healthcare Opportunities, Neuberger Berman and others, which together with the revenues from Scipher's growing precision medicine business is expected to fund the combined company through the planned readout of nebokitug Phase II trial in patients with rheumatoid arthritis in the first half of 2028.

The transaction has been unanimously approved by the Board of Directors of both companies and is expected to close in the fourth quarter of 2026, subjected to required approval and customary closing conditions. At Chemomab, we developed nebokitug, a first-in-class anti-CCL24 antibody with a dual anti-inflammatory and anti-fibrotic mechanism of action and therapeutic potential across a broad range of inflammatory and fibrotic diseases where CCL24 biology plays a major role.

We're initially focused on rare diseases, successfully completed the Phase II SPRING trial in primary sclerosing cholangitis, which established clinical proof of concept and validated the role of our CCL24 target as an important contributor to the fibro-inflammatory disease cycle. Over 48 weeks of treatment, nebokitug demonstrated a favorable safety profile with no serious treatment-related adverse events. Importantly, treatment with nebokitug resulted in improvements in anti-inflammatory and anti-fibrotic endpoint across a range of relevant disease biomarkers.

Nebokitug has now been administered to more than 100 patients across 5 different clinical studies consistently demonstrating a favorable safety profile and evidence of therapeutic activity. What makes this proposed merger so compelling is the strong science and precision medicine-based de-risking strategy, powering the nebokitug clinical program in rheumatoid arthritis.

Scipher has developed and has deep expertise in rheumatoid arthritis. It develops and markets PrismRA, the only CMS-approved test for RA patients that predict treatment response. It is designed to identify the sizable population of patients with rheumatoid arthritis who do not benefit from the TNF inhibitor blockbuster drugs that currently dominate the RA market. Scipher's independent analysis powered by its rich AI precision medicine platform, identified CCL24 inhibition as the top ranked clinical stage therapeutic opportunity for RA, strongly validating the strategic rationale for combining Scipher's platform with Chemomab's CCL24 program.

As a first-in-class anti-CCL24 antibody with favorable safety and positive evidence of anti-inflammatory and anti-fibrotic activity in a Phase II trial, nebokitug was understandably an attractive option. I also want to note that the Chemomab research team who pioneered the study of CCL24 as a powerful driver of inflammation and fibrosis believe there is considerable evidence for the therapeutic potential of nebokitug in rheumatoid arthritis, and our clinical study to date have shown activity in biomarkers and pathways that directly shows relevance to the RA disease process.

We believe this transaction provides Chemomab stockholders with meaningful ownership in a combined company that is well funded to advance nebokitug into a large indication with a substantial unmet need with well-established clinical endpoints and a de-risking precision medicine clinical strategy. By applying precision medicine to patient selection, we believe this strategy has the potential to substantially de-risk the study and increase the probability of clinical success. And for many of our stakeholders who supported the development of nebokitug as a potential treatment for primary sclerosing cholangitis, the opportunity remains for further partnering in this indication.

I will now turn the call over to Reg Seeto, Chief Executive Officer of Scipher. Reg?

Thank you, Adi, and good morning, everyone. I want to begin by explaining why Scipher pursued this transaction and why we believe the combination of Scipher's precision medicine platform and Chemomab's anti-CCL24 antibody creates a unique and differentiated opportunity in rheumatoid arthritis. A $24 billion global market size that leaves far too many patients inadequately treated today.

First, for those who are new to Scipher, a few words about my background and why I decided to join Scipher. Trained as a physician-scientist and the global bio-pharmaceutical and diagnostics CEO and Board Director with a deep and varied background in building growth companies across both bio-pharma and diagnostics. Two years ago, before joining as Scipher's CEO, the Board and I agreed there would be the opportunity and support to evolve Scipher into a therapeutics company.

What I saw in Scipher was a company that built an incredible transformative technology that could predict the patient's response to drug treatment. This was highlighted by PrismRA, the only approved CMS molecular treatment response signature in immunology. What was clear to me in 2024, and is just as clear now is that the greatest potential impact of Scipher's proprietary AI network medicine platform will be during drug development. We should be able to understand which patients respond to a drug during a time when it is developed, not after approval, especially in immunology where the failure rate is high.

Oncology has already demonstrated the power of precision medicine and has successfully targeted patients with high response rates during drug development. This has led to more choices with the right treatments for patients and their physicians. Ultimately, I see Scipher as the next generation of precision medicine as we target treatment response using multimodal and multi-omic signatures.

I thank Scipher's Board for their support beginning to make this vision into reality. Second, in immunology and rheumatology, there remains a significant unmet need with current treatments as both the physician and an immunology patient, I'm aware of the limitations of our current approach, which relies too much in trial and error. As a result, 2 out of 3 patients in RA today do not achieve low disease activity or remission. Immune-mediated diseases are chronic, and we need treatments that can achieve low disease activity and remission. On behalf of immunology patients across the world, I believe biopharma can do much better and that the technology to advance this vision now exists through Scipher.

So beyond being a patient, what makes my perspective truly unique is my deep experience in both precision medicine and therapeutics. This is why the combination of Chemomab a clinical stage company that is a novel, safe and well-tolerated asset with a first-in-class mechanism of action with demonstrated anti-inflammatory and anti-fibrotic activity and Scipher, a company known for its pioneering work in precision medicine makes so much sense.

Before joining Scipher, I was the CEO of CareDx, a leading precision medicine public company in transplant medicine, where we rapidly expanded by building a differentiated set of novel diagnostics and created a future platform for growth with data and digital solutions. Prior to this, I held executive roles at large, midsized and small therapeutic companies across all functions ranging from business development, clinical, commercial and corporate strategy. These include being the Chief Operating Officer at Ardelyx, Executive Vice President, Corporate Development Strategy at MedImmune, the biologics division of AstraZeneca and in senior commercial roles at Organon and Boehringer Ingelheim.

Turning now to the nebokitug opportunity for Scipher and Chemomab. We have 4 topics to cover. First, I'd like to describe Scipher's technology, including our RA assets and why we're focused on RA as our first commercial opportunity. Second, I'll discuss why nebokitug was our first choice to develop in RA. Third, I'll outline the clinical development plan and our precision medicine approach. And fourth, I'll finish by noting how we are financing and funding for the nebokitug opportunity.

Now on to Scipher. Scipher was built around the conviction that precision medicine can transform immunology in the way it has transformed oncology. We spent years developing Spectra, our AI network medicine platform which integrates large-scale transcriptomic data and network biology to identify molecular treatment response signatures and support target selection in complex immune-mediated diseases. The commercial proof point for this approach is PrismRA. The first and only CMS-approved like the treatment response signature, designed to help guide targeted therapy selection in rheumatoid arthritis.

PrismRA has already been ordered by more than 1,700 rheumatologists and used in over 45,000 individual patients. In real-world data submitted to CMS, PrismRA guided patients achieved low disease activity at a 2x higher rate and remission at a 3x higher rate than external controls receiving standard of care treatment with statistical significance across reported outcomes. As we look at entering the therapeutic development arena, we focus on RA opportunities given the large $24 billion plus global market in which about 2/3 of patients fail to achieve low disease activity with current therapy.

Additionally, there's been limited innovation in the field with the last novel drug mechanism for RA approved in 2012. Notably, there are currently no novel RA drugs in Phase III development in the United States. If successful, this program could deliver the newest novel therapeutic in RA since 2012 and become the first precision medicine approval in rheumatoid arthritis.

As noted, RA affects millions of patients globally and is currently characterized by trial and error prescribing. Even worse, the current market-leading therapies have safety issues and include black box warnings. We believe RA patients deserve better treatment options and more precisely targeted treating disease.

Now on to Scipher's assessment of CCL24 and its role in RA. We believe using molecular treatment response signatures to guide treatment selection improves RA treatment decision-making and provides a real-world foundation for Scipher's broader precision medicine strategy. We used our platform to systematically identify current targets in clinical stage development for those predicted to have the highest efficacy response. Across our analysis, CCL24 emerged as the leading target. Nebokitug's anti-CCL24 mechanism of action ranks in the top 1% of targets analyzed on our clinical platform for predicted RA efficacy providing a strong biological rationale for the clinical advancement of CCL24 blockade by nebokitug and in a precision medicine selected RA population.

Next, we looked at external validation by both Chemomab and third-party literature evidence. Chemomab's Phase II SPRING trial showed that nebokitug produced statistically significant reductions in key inflammatory and fibrotic biomarkers in moderate to advanced PSC patients. These biomarkers that are directly relevant to the inflammatory and fibrotic pathways driving RA disease. Importantly, it showed a favorable safety profile that has been administered in 5 trials with over 100 treated patients. There is considerable external evidence supporting the role of CCL24 and CCL24-blockade in RA including preclinical animal models.

In addition, recent independent publications have further reinforced the mechanistic rationale, including reports that CCL24 is up-regulated in arthritis patients and CCL24 promotes fibrosis through the CCR3 TGF-beta pathway. Early this year, a Nature Immunology publication demonstrated TGF-beta-agonistic fibroblast signaling which is directly impacted by CCL24 is a key driver of treatment refractory RA.

In general, the fibrosis component of RA has not been directly addressed by current therapies and we are excited to assess the impact of nebokitug with its anti-fibrotic activity on the disease. Taken together, Scipher's platform analysis, the Chemomab's clinical biomarker data and the external literature all support our confidence in advancing this program into RA.

Now on to Scipher's clinical development plan incorporating precision medicine. We believe Scipher is well positioned to execute this development program because we've built unique RA capabilities. We have RA specific clinical infrastructure, including over 30 clinical sites recently participating in our PREDICT trial, which was designed to expand our RA precision medicine test menu. We have established KOL relationship within the rheumatology community and with an efficient commercial team that can be scaled rapidly. In addition, we have both CAP- and CLIA-certified laboratory in North Carolina with the PrismRA assays analyzed.

The planned Phase II trial is designed to use PrismRA to prescreen and identify the 2/3 of patients who don't achieve low disease activity and/or remission with TNF inhibitors, the current standard of care in first-line treatment. We believe nebokitug's mechanism of action has potential to show differentiated benefit in this patient population, especially with its dual anti-inflammatory and anti-fibrotic activity. Again, as a reminder, we know that in most refractory RA patients, the disease is driven by ongoing fibrosis. The planned study uses well-established RA end points including the composite ACR20 index, which measures the efficacy of RA patient treatments at week 12 as the primary endpoint along with standard secondary endpoints.

The primary goal is to demonstrate that nebokitug can achieve stand-alone efficacy on the ACR20. The study plan itself enrolls approximately 140 patients at global sites across 2 dosing cohorts and a placebo cohort. We currently expect to submit the pre-IND package in the second half of 2026 and subject to regulatory feedback, dose the first patient in the first quarter of 2027, with top line Phase II data anticipated in the first half of 2028.

Beyond screening for this enrollment eligibility, Scipher has identified a preliminary CCL24 biomarker response signature. We believe this signature can further stratify patients most likely to respond to nebokitug. Following completion of this Phase II study, we plan to use the patient samples collected during the trial to fully validate the CCL24 biomarker signature with the goal of supporting a companion diagnostic strategy for the Phase III program.

In essence, we're taking a 2-stage precision medicine approach to derisk development. First, we use PrismRA to identify TNF non-responders. Second, we apply the CCL24 specific response signature to enrich for patients most likely to benefit from nebokitug in Phase III. Together, these steps create a true precision medicine approach a strategy that's designed to maximize patient benefit and also increase the probability of clinical success. This is a model that has driven the most successful precision medicine approvals in oncology, pairing a novel drug and its companion diagnostics that were developed and validated together.

Now on to financing, funding and key milestones. We're proud that Scipher is supported by top-tier biotech investors who are committing $30 million in a PIPE financing. The new funds, along with Scipher's precision medicine revenues are expected to fund the combined company through the planned top line Phase II readout in the first half of 2028, which we view as a key near-term potential value inflection point for our investors.

So in summary, we believe the precision medicine developed approach using a first-in-class anti-CCL24 therapy with a demonstrated safety profile and a very distinctive dual action with anti-inflammatory and anti-fibrotic mechanism could represent a differentiated option for many RA patients. This disease remains active despite current therapies as this will provide a first new option to newly diagnosed -- also new option to newly diagnosed RA patients.

So in closing, I want to thank the Chemomab team and their Board for their confidence in Scipher and for their commitment to bringing the nebokitug to this next chapter of development. We believe the combined company will have a rare set of assets, a validated data-rich AI-powered precision medicine platform for drug development and a revenue-generating commercial RA precision medicine diagnostics business, including infrastructure.

We'll have a clinically validated first-in-class anti-CCL24 antibody with good safety and therapeutic potential across multiple, multiple inflammatory and fibrotic conditions, including RA, with a true medicine development strategy approach, linking Phase II biomarker data to companion diagnostics. This will set the stage for a potentially de-risked Phase III program in RA.

And we've committed financing to reach our major Phase II data readout and potential inflection point for new company. We look forward to working closely with Adi and the Chemomab team as we complete the transaction and advance toward this trial initiation. I will now turn the call back to the operator.

Ladies and gentlemen, thank you for your participation and interest in Chemomab and Scipher. This concludes today's presentation. You may disconnect or log off at this time, and enjoy the rest of your day.