Q3 2019 Earnings Call
Good afternoon, ladies and gentlemen, and welcome to the Q3 2019 autonomy Inc. earnings Conference call. At this time all participants are in listen only mode. Later, we'll conduct a question answer session and instructions will follow with that time, if anyone should of course.
Since during the conference. Please press Star then zero on your touched on Calix, Alan I know liked it turned the conference over to your House Mr., Stephen Catherine from Westwicke Partners. Please go ahead.
Good afternoon, and welcome to Autonomies third quarter 2019 financial result in business update conference call.
Joining me on the coal from Otonomy are Dr., David Weber, President and Chief Executive Officer, and Paul Care, Chief Financial and business Officer.
Before I turn the call over to Dr. Webber I would like to remind you that today's call will include forward looking statements based on current expectations.
Statements represent management's judgment as of today and may involve risks and uncertainties that could cause actual results to differ materially from expected results.
Such statements include but are not limited to timing of results. It's just recruitment enrollment plans for and design and conduct of the phase three clinical trial from tibbett ex the phase one two clinical trial for OTO 313, and the phase one two clinical trial for auto for 13.
Expectations regarding preclinical development, including but not limited to the potential benefits have been activities under the collaboration agreement between AGTC and autonomy expectations regarding the benefits and value potential of otonomys programs expectations regarding funding of clinical development.
Hi, Graham Advancement and company operations into 2021 and expectations regarding financial guidance, including operating expenses for 2019 and 2020.
Please refer to Autonomies filings with the FCC, which are available from the FCC or on the autonomy website for information concerning the risks factors that could affect the company.
I will now turn the call over to date Weber, President and CEO of autonomy.
Thank you Stephen good afternoon, everyone and thank you for joining us on this call to discuss Autonomies business update and third quarter 2019 financial result.
We made significant progress in the third quarter toward our goal of reporting results from three clinical trials in 2020.
Most importantly, we advanced enrollment in the phase three trial with activity and the nearest disease with all participating countries actively enrolling patients.
For OTO 313, we successfully completed the initial safety cohort initiated enrollment in the exploratory efficacy cohort or the phase one two trial and tenant as patients.
And finally, we received FDA clearance to initiate a phase one two trial.
For 13 inpatient beds hearing loss, which was an important milestone for this innovative program.
The successful completion of these trials is our highest priority and greater focus.
In parallel we continue to advance multiple preclinical programs addressing important unmet needs and neurotechnology, including a recently announced gene therapy collaboration targeting the most common cause it congenital hearing loss.
I'll provide an update on our clinical programs and overview of this collaboration and my brief comments.
So highlight the financial results from the quarter and lower spending guidance for the year.
It's important to note that our existing capital fund the company through the three clinical traveling next year and into 2021.
I plan to keep my remarks brief and we can then open up the call for any questions.
Beginning with you attend the next phase three trial them in years disease, we updated the timing in our earnings release today, we expect results in the third quarter of 2020, which is a slight adjustment from our original timing update data late in the first half of 2020.
We are pleased with the progress we have made on enrollment of the trial and the timing reflects a care and methodical approach, we've taken and site selection and patient recruitment.
We have 60 sites enrolling patients across all participating countries.
As a reminder to conduct and design of this study is based on the successful efforts to trial and we plan to enroll approximately 160 patients in the United States and Europe .
The next product candidate in our clinical development pipeline and OTO 313 sustained exposure formulation of the Nm day receptor antagonists 'cause cycling in development for the treatment of Tendonitis.
We have successfully completed the initial safety cohort of the phase one two trial and are now enrolling patients in the second cohort, which is the exploratory efficacy part of this study.
Cohort two will enroll approximately 50 patients with persistent tentative who will be assessed across a number of endpoints include including the tenant dysfunctional index, RTL, hi, which is a validated clinical instrument that measures tenant does severity and its impact on patients.
Importantly for entry into cohort two patients must have a T. Five score that exceed some specified level to ensure adequate disease severity baseline.
Patients in cohort to receive will receive a single intratympanic injection of OTO 313, or placebo randomized one to one and our followed for two months.
We expect results and the second quarter of 2020.
Our third clinical stage program is auto for 13, a sustained exposure formulation of brain derived neurotrophic factor or bdnf that we are developing for the repair of come clear Synaptics empathy.
Recent research has identified damage to synaptic connections as the underlying pathology in noise and age related hearing loss that manifests in speech and noise hearing difficulty.
Neurotrophic factors, including Bdnf have potential therapeutic effects in the coakley up by promoting the survival of spiral gangway on neurons, increasing their right our growth and reconnecting neurons with cochlear hair cells after damage.
As I mentioned in my opening comments, we have recently initiated a phase one two clinical trial and expect to have resulted in the second half of 2020.
This isn't ascending dose safety and exploratory efficacy study.
Will enroll up to 40 patients with speech and noise hearing difficulty.
Patients will receive a single entered tympanic injection of OTA for 13 or placebo and be followed for three months.
A number of efficacy endpoints will be evaluated.
Including electrophysiological measurements, I'm hearing function and speech and noise hearing tests.
We are excited to be the first company conducting a clinical trial of a therapeutic for snapped apathy, which has been an active area area of Neurotechnology research during the past decade.
We believe that OTO fourthirteen will not only provide clinical benefit for the many patients with impaired hearing and a noisy environment, but more generally for the large population of patients with lots of hearing function due to aging or noise exposure.
In addition to auto for 13 for snapped up I think we have also have ongoing preclinical development for auto six ex FX, which is our hairstyle regeneration program to treat patients with severe hearing loss.
Clear here itself play a central role in hearing by converting sound waves until electrical signals that are then transmitted to the brain via auditory nerve.
It is well established that damage to herself through aging excessive noise or exposure to other toxic chemicals leave to hearing loss. Unfortunately for humans, we can not naturally regenerate hair cells like no non million spcs, such as birds and chicken.
However, it is possible to active activate regenerative pathways via drug intervention, thereby providing an approach to treat this pathology.
We have demonstrated hairstyle regeneration in a non clinical proof of concept model using a class of small molecules and have identified a candidate for further development.
Between our auto for 13, and auto six X X programs, we address two of the critical path apologies believed to underlie acquired forms of hearing loss.
And with our recently announced strategic collaboration with AGTC, we extend the reach of our pipeline to now also include genetics hearing loss.
The goal of this program is to develop an a. the based gene therapy to restore hearing in patients with sensor sensorineural hearing loss caused by mutations in the GAAP junction protein beta to gene otherwise known as JB too.
Mutations in this gene are the most common cause of congenital hearing loss accounting for approximately 30% of all genetic hearing loss cases.
Patients farm with this mutation can have severe to profound deafness in both years.
Identified in screening test now performed routinely in newborn.
The collaboration Leverages, the expertise technology and capabilities of each partner, allowing each of us to do what we do best.
In addition, this structure is highly cost efficient by utilizing each partners existing resources sharing the workload and splitting the cost.
We look forward to sharing more information about this program in the future.
Taken together, our clinical and preclinical programs comprise the broadest and most advanced product pipeline in the emerging field of Neurotechnology and.
And we have the cash on hand to support which advancement.
As you will know from our financial statements in the earnings release and 10-Q, we finished the third quarter with 68 million in cash and short term investments.
We can mid continue to manage on spending levels carefully.
And are in fact, lowering our non-GAAP operating expense guidance by 5 million for full year 2019.
We also expect as we've previously stated that 2020 operating expenses will be lower than 2019, and then our current capital will fund the Companys operation through the three clinical trial Readouts and into 2021.
In summary, we have positioned autonomy for a breakout year in 2020, the pivotal phase III trial, OTO 313 phase one two trial and auto for 13 phase one two trial provide multiple value creation catalyst for the company and we are laser focused on there.
Successful completion.
We look forward to bringing this message to investors through an expanded set of outreach activities, beginning this quarter and continuing into 2020.
To this point, we will be attending the Piper Jaffrey Healthcare conference on December 3rd in New York and participating in a hearing loss panel and investor meetings at the Evercore ISS conference in Boston on December 4th.
Operator, we're now ready for questions.
Ladies and gentlemen, if you have a question at this time.
Press Star then the number one key on your touched on Thomas Allen.
If your question is been answered or you restrain disease cellphone Vicki Please press the pound Keith.
Your first question comes from the line of Tyler Van Dam from Piper Jaffray. Your line is open.
Hi, this is on for Tyler.
Thinking ahead to be a dividend.
Can you kind of set the bar for us.
Patients and what are meaningful changes in these patients.
Actually we expect a similar.
The benefit like we saw universe.
What about person.
Great.
Thank you Terra yes, what you can expect if somewhere to what we reported for reverts to and the phase Twob trial. That's in our corporate deck. We continued to focus in the primary outcome is on DEFINITY Vertigo days and change in DEFINITY Vertigo days.
And importantly, achieving the P value that we've discussed with the agency. We have as you know one successful trial with diverts too. So it really is duplicating that trial to provide two separate.
Thus full phase III trials for submission of the India. So the data would be consistent with what we've shown previously the trial design is the same the endpoints are the same.
And the data that we would expect to present, both to investors and to the FDA are the same as averts too.
Okay. Thanks, a lot for that right can I ask them for.
For the.
13.
Can you explain more about.
My question.
Maybe inform future registrational endpoint and approval.
So you're looking for regarding.
Hearing quality there.
Yeah. Thank you so the Ts I is a validated considered a validated instrument. It was actually developed developed by consortium.
Researchers and if it lays out in that.
Testing, which is represented by 25 questions that cover things like intrusiveness of the tentative sense of control that the patients have.
They're cognition their ability to sleep their auditory function and and more quality of life like zero emotional state is in that five through those 25 questions.
It's it's established through the validation of that work of what represent generally a meaningful change is 13 point.
And based on the work that has been done there.
And we also understand the classification that patient so patients that typically are less than 25 on the T. Fi score considered mild, whereas 2025 to 50 or moderate and higher than that or 50 and severe.
Generally physician to consider any patient has 25 and higher to be patients in need of treatment.
That will be our primary outcome.
Because we do believe that is as I've said, a very measurable and validated instrument. We are also assessing separately other types of rating scales, such as tentative loudness and annoyance and then also a patient global impression of change basically where we're asking the patients of how they perceive there tenants.
Since the beginning of the steady to understand their overall.
Perception of change.
Yes. Thanks.
If I can ask one more question about the gene therapy pipeline.
Okay.
So you mentioned in the press release.
Regarding that.
Targeting the patients.
JV too.
Then there are identified.
Greetings and newborn.
And your target population will include.
Newborn hearing.
Hearing loss due to that mutation but.
We also now that the same genes that are responsible for.
Okay.
Environmental hearing loss.
Okay.
Aging.
Patients also be included in your target population.
No not initially at least this will be focused more on the pediatric population because they are the most severely threatened with.
With hearing loss and progressive hearing loss. So typically this can be picked up on newborn screening.
And patients will continue to progress from there. So it's very important to catch them at an early stage and so that will be our our initial focus for the gene therapy.
Okay, great. Thanks.
Thank you.
Your next question comes from the line of our investment from inch.
Your line is open.
Hey, guys. Thanks for taking the questions I have a few.
With the owed to the next phase three a that enrolling a little bit slower than we had modeled can you just remind us what you're doing differently. In this trial, maybe from averts, one such that a more deliberate enrollment speed is potentially an indicator of.
[laughter] likelihood of success and I've a couple others. Thanks, yeah. Thanks already have taken one at a time that's fine so.
Great question and that actually is the key is we are very focused on being.
A very.
Careful here and very deliberate in our enrollment.
We think that it's very key to success of the trial based on our learnings from Averts one as we've discussed previously the real learnings was around averts, one close to control the placebo response and manage the patient expectation by us.
And that was really kind of focused on three major areas and one of those was careful site selection. So we have gone through obviously now we have 60 centers enrolling across all participating countries that took time, we needed to make sure. We got it right right clinical centers and write investigators and we feel very confident.
And the group that we've assembled that are now all participating in enrolling.
So that was the first from there it's really careful selection of the patients.
In this case there are no there is no advertising going on direct to patient.
Unlike with the Averts, one where there were investigators who are reaching out in the general population. This is all very controlled in targeted patient.
Enrollment and so.
It's very in that regard it does take time. It is important that investigators are identifying these patients and carefully selecting them. So we're not putting pressure.
On the investigators in terms of trying to advertise or increase or enrollment we want to be very deliberate in that patient population. So we think that the few weeks. It's a few months that we're talking about hearing extending its just a safe guard to make sure. We ultimately are able to deliver a a successful trial.
Alan as well step.
Hi, Thanks for that and just a follow up on that tentative.
To this question.
Mentioned that the T., if I improvement of more than 13 is.
Please be clinically meaningful is that what you're targeting I are you expecting any statistical significance in the small study or he just looking for any signal and if so if you do see a signal what do you think the next steps are should we expect another phase two before jumping into the more advanced.
Well, let's take that one of the time there in terms of Oh phase two phase three I think first of all this is not size for power. It is an exploratory efficacy trial because it is the first of its kind we have no prior clinical data base sizing empowering on.
It is what we consider exploratory and so we were are looking for signals through these different endpoints, including the TF.
The TIFIA as I mentioned the when the.
Instrument was.
Developed and validated by the consortium they identified 13.
Point difference since being clinically meaningful, but I should point out that said in the absence of a therapeutic that really is through other types of both behavioral treatment of tended to and even some device since that had been tried and tenant to us. So I think it'll be up to as we look at the data to understand what do we see.
A with the T five, but clearly that gives us a benchmark at least based on some prior work even if it wasn't a pharmaceutical.
Treatment.
I think clearly the patient global impression of change and the other endpoints that I mentioned that loudness perception and annoyance perception are also very key to these patients given that it is that that's allowed us and data noisy instead, it's the most.
Ability reading for them in this disorder. So that's how we look at the study.
And we would look to utilize the phase one two trial for then powering the future study with regards to phase two additional phase two phase three I think that is something that we will consider based on that data.
One of the thing so clearly with very strong signals.
The opportunity is to do what I'll call a larger phase two type phase III trial.
Or.
Obviously based on the data if we had confidence to go into a phase three from there I think one of the things that we also will want to look at however in addition to this patient population recurrent studying is to look at bilateral patients as well. So it's something that we are interested in because there are many patients that have bilateral tendonitis.
And that could potentially be eligible but that is something were one to look at probably in a separate study before including those patients. Currently we're focused on unilateral patients and that is because there has been concerned clinically.
And working with our kao else of whether patients can really I'd tell the difference if they have bilateral can they really.
Talk and understand the difference in there tend to between one year in the other organs or confusion there because of both here and so that's why we're being very careful here using unilateral patients, but I think what are the things you can probably expect from us in future work is to also include some bilateral patients to look at the bill.
30 to detect changes in those patients as well.
Say detect because I think thats the key we and our Kao Elds all believe that's showing affecting a single year will equate to treatment of both years ultimately that you'd be able to treat both years mechanistically, it's more ability to differentiate the signaling for their patient reported outcome here can they report the outcome very careful.
Fully between a one year versus the other is something I think we have to look at clinically if that makes sense.
Great.
Thanks, and at the risk of at least in my time, Oh, It wasn't loss somebody that there was a recent IPO.
Frequency therapeutics, another therapeutic company working I think on hair sell regeneration.
And I'm just curious obviously you can't speak too much to what they're doing but maybe you can just highlight how similar or different your approaches are and if you think that there'll be any key learnings from what they're doing.
Well I think one is we're very happy to see others entering the space, we think it definitely demonstrates the need and the opportunity that exists in the space and I think investors are clearly recognizing that through where where they are currently in the market.
We need that is one of the things we see as a very strong disconnect between where we are with our pipeline.
And where we sit today in the market Fourthirteen and Cokers snap up of the has has as we looked at synaptic related hearing loss, it's representing a very large population. In fact, there is increasing evidence that when you talk about hearing loss is not just hair cells as loss of.
Cookware synopsis.
In fact, you can detect snaps loss.
At an earlier stage and then you can hair sell off so theres a growing.
Thought process involved and one that we're actually focused on that you might actually be able to treat more patients and.
Who have hearing loss through treating coakley or snapped up at the so this is where we see auto for 13 as a very exciting program. We think it has a very large potential product opportunity against a very large population. Although obviously for the initial study were focused very clearly on pure what I'll call pure.
Capped off a C patients where they do not have a lot of hair sell involvement in order to demonstrate that mechanistically, but we do think theres reach over into the broader population.
And that is something that we would be looking forward that program at the same time, we know that there are patients very severe and profound hearing loss due to loss of the hair cells and that is where our hair sell regeneration program comes in which we are very focused on we've shown non clinical proof of concept data there that I think investments can put.
Right up against.
And do comparative.
Relationship to what.
Others have seen and we think we are in very good place with what we're seeing on the Nonclinical side and are looking forward to advance that toward the clinic, which would then give us two different approaches to treat the broad category of hearing loss acquired hearing loss, which represents.
The largest proportion of hearing loss patients.
Thanks, I appreciate all the answers.
Thank you.
Hi, Dan Ladies and gentlemen, if you have a question at this time.
Hi, good good number one.
Touch Todd Thomas Allen.
Your next question comes from the line. Thank you from Cowen and company your line.
Hi, Good afternoon. Thank you for taking my questions congratulate passes class few questions.
Question regarding many areas I wanted to drill down on phase three trial for dividend.
Next.
And any additional details of that enrollment that you can disclose on what percentage of fee.
Hello.
And as you press the phase three data as we add can you remind us the size is M&A opportunity.
Hi.
Okay. Thanks, Stacy I think let me take that first question and pass the second question off to to Paul care with regards to the market with regards to the phase three and detailed enrollment we really focus on timing to the results, which is why and we originally I mean, starting the study in late 2018.
We had indicated that we anticipated timing to the first half of 2019, sorry 2020.
And.
What is key for US is the update today that we have now been able to narrow that down and provided to the quarter.
Q3, 2024 of the results reporting results for that study. So that's really how we track.
And convey our progress on the enrollment as to our time of.
Turning to data.
From there I can say that we are being again as I've said being very careful about patient selection.
We're very pleased with the progress that we've made and also believe we're doing a very good job of holding to those sets of important factors that we believe could have contributed to the averts one.
Expectation by of simplicity, but response.
Hi, Stacy as Paul I'm with regard to the market size and we have a brief summary of this and our corporate deck as you know.
We believe it in the United States there over 850000 patients that have been diagnosed with many years diseases looking at historical patient centric claims data.
And.
Based on their treatment patterns, we believe that about a third of them.
Seek treatment each year.
So clearly there's more that can be done to develop the market. Its important to keep in mind that this is a market that and fed.
Is really untapped because there are no FDA approved products in the U.S. So there are no companies that have done any.
Building of the patient community tried education and awareness to referring physicians that those patients should be seen by any in tea and then even within the community. Because there are no approved treatments and none that have demonstrated safety and efficacy in the kind of robust clinical trials that we've conducted and.
We continue to conduct with the additional phase III trial.
Ian teaser still left not exactly knowing how to treat these patients so they.
Use a variety of approaches.
But we do believe that.
With the successful additional phase three trial will be first to market and that will give us the opportunity to really help us standardized how these patients are treated when they come in experiencing acute vertigo and then beyond that we're looking forward to helping build the community of patients.
So that we in fact are able to bring some of them back to treatment because now they have a reason to go back and see the anti.
So as summarized on that slide Theres also been external.
Assessment of the opportunity and we believe it's about a 500 million dollar opportunity in the U.S.
That's really helpful.
One last question on your JV Avi program any guidance on when we should expect hi, Andy filing I.
If I understand the pencil requirement flat.
Thanks.
Thanks, Stacy, Yes, I think at this point, we will look to the future to provide an update and timing with regards to that program and when we would expect to have fallen I Andy.
As well as other events around that program.
Hi, Thank you very much.
Thank you.
Im showing no further questions at this time I would now like to turn the conference back PDP.
Thank you everyone for participating in our call today, we hope to see you at the Piper Jaffrey or the Evercore ISS Conference next month and wish you a good evening. Thank you.
Ladies and gentlemen. This concludes today's conference. Thank you for participation have a when you for being delayed.