Q3 2019 Earnings Call

Your strong Ritu Biopharma feel see corporate update and third quarter 2019 earnings conference call will begin momentarily again, please standby their conference will begin momentarily. Thank.

Thank you.

[noise].

[noise] good afternoon, ladies and gentlemen, and welcome to the strong bridge VAYA pharma.

Let's see corporate upbeat and third quarter 2019 earnings conference call.

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I would now like turn the conference over to your host.

It's let's see Rocco of Aloxi or health public relation.

Now please go ahead.

Thank you and good morning, everyone. We're pleased that you could join US today for strong branch Biopharmas third quarter 2019 earnings Conference call. Joining me from strong bridge. This morning are John Johnson Executive Chairman, Scott Wilhoit, Chief Commercial Officer, Dr., Fred Cohen, Chief Medical Officer.

And Rob lot Chief Financial Officer, before we begin I would like to remind you that during this call. The company will be making forward looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward looking statements.

My friends to these risks and uncertainties are made in today's press release and disclosed in detail and the company's periodic and current event filings with the U.S. Securities Exchange Commission I will now turn the call over to John Johnson.

Thanks, Lindsay good morning, everyone and thank you for joining us today.

For todays call I would first like to be done by welcoming ROP lots to his first quarterly earnings call. Following his promotion to Chief Financial Officer in September .

As many of you know Rob is going to keep either a strong bids for the past several years driving our product acquisition strategy in his previous role as Chief business Officer.

We also announced this quarter the appointment of Rich Colander, who previously served on the company's board of directors to the newly created role of Chief operating Officer.

Additionally, on Tuesday, we announced that Matthew Paul just stepped down as President Chief Executive Officer Director.

Well take the board a mutually agreed that now is the right time to transition leadership of the company.

The board is actively seeking to hire a new CEO , who will be able to take the organization to the next level for patients health care providers employees and our investors.

Any interim I'm stepping in to help lead the organization, while the board conducts a formal cert.

On behalf of the board of directors I would like to thank Matt for his many contributions to the company over the years, and we wish them well and his future endeavors.

I am surface terrorists Congress since 2015 to my confidence in the company's vision and ability to deliver better results for patients living with rare diseases remains unchanged.

My three initial priorities.

Our first to identify a new chief Executive Officer.

Second ensuring high quality, new drug application submission for record low.

And third improved accomplished financial performance through cost saving initiatives and growing Kobe ourselves.

'cause is our first commercial product has performed well thus far in 2019. Thanks to this team's dedication to serving the many unmet needs other primary periodic paralysis community.

Can I ask achieved 5.7 million in revenue in the third quarter of 29 team.

Representing a 36% quarter over quarter increased from 4.2 million a net revenue for the third quarter of 2018.

The company is on track to meet or exceed the top end of our full year conveyance revenue guidance up 18 to 20 million.

Additionally device reached an important milestone this quarter by turning contribution margin positive.

We believe that could this will continue to generate cash for the company moving forward given the ability to leverage associated operational expenses and anticipated future growth.

With regard to our clinical development program for record load in endogenous Cushings syndrome.

On Tuesday, we announced that enrollment in our phase three logics trial is approximately two thirds complete.

The company projects up based on current observations all the patients required to complete enrollment have been identified with most moving through tied station type operation and maintenance phases.

[noise] then of course, the remainder in screening with that said, we also announced a delay in reporting topline results from the end of the first quarter of 2022, the second or third quarter of 2020.

Well I would like to underscore here is that we're doing everything we can to get this important product the patients.

And to do so we need to get it done right. So that we consume it and Andy It gives us the best chance to get this medicine to Cushing syndrome patients.

Once completed logics will provide double blind randomized placebo controlled data, maybe our clinical development program for recall of among the most comprehensive to date and then Dodger Cushing syndrome.

Later on the call federal provide some detail around the reason for this delay and why the rate of enrollment and time to topline results for logic, that's been more difficult to predict then with our prior phase III study Sonics.

Before I turn the call over to Scott for a brief commercial update.

I'd like to discuss our recent agreement in principle that we have reached with Novo Nordisk.

Disagreement pertains to the transaction, we entered into with Novo Nordisk in December 2018 for use in funding of strong bridges 23 person fill team to promote macrilen in the U.S. for up to three years.

Today, we announced that we have reached an agreement in principle to terminate disagreement effective December Onest 2019.

Novo Nordisk will pay strongbridge $6 million in connection with such termination.

Given that we are no longer supporting Novo Nordisk undercurrent business.

We have decided to eliminate approximately 23 strong bridge field based positions responsible for the Macrilen sales efforts effective December Onest 2019.

While eliminating positions is unfortunate and never an easy decision.

This is all necessary step for the company at this time in order to reduce cost and further extends our cash runway.

We greatly appreciate the commitment and the efforts of our Macrilen field team.

These actions are in no way, a reflection of their dedication and hard work.

With that I will turn call over to Scott.

Thank you John Good morning, everyone and thanks for joining us as John mentioned, we're pleased with today as performance in the third quarter and thus far in 2019 as discussed on our last earnings call. We believe that a few key refinements to the overall commercial model that were implemented early this year have contribute to a steady flow referrals from physicians that resulted in new patients stay.

Arts and improved retention rates across our entire active base of patients. These ongoing reprice refinements positively impacted this quarter's performance I would like to spend a few minutes highlighting important example of our commitment to serving patients caregivers and health care providers, who are part of who are part of or serve the primary periodic paralysis or PPP community.

That extends beyond the provision of conveys strongbridge is proud to have been the leading sponsor of the 2019 periodic Paralysis Association conference, which took place October 25 to 27th in Orlando, Florida.

Every year. This event brings together, many PPP stakeholders, including patients their caregivers and positions.

And is aimed at facilitating awareness education and come lottery among this tight knit community.

This year for the first time Strongbridge hosted an event with approximately 60 60 attendees predominantly patient focused on the power.

Ports of advocacy education and support program featured for strong bridge patient ambassadors to pick their caregivers, who shared their journey living with and managing PPP. Additionally, dr. Carolyn Jackson and Dr. definitely Rosenfield neurologist, who currently treat PPP patients were featured keynote speakers we're done.

We need to be working closely with the periodic paralysis Association and look forward to further collaborating with them as we continue to support this underserved population with Cafe us.

Before I turn the call over to Fred who will provide a key updates around the clinical program for a core that I want to reiterate emphasized that the overall commercial model and infrastructure. The strongest has built can be successful leverage across multiple rare disease franchise in markets.

I do so because it is it has high relevance the commercial potential for recall that.

We have established relationships with key cushings advocacy groups and a fully operational care connection patient services team that is well positioned to handle multiple products.

We remain enthusiastic regarding the commercial potential for record of based on our initial market assessment.

We know the Cushing syndrome market is validated with witnessed by significant unmet need physician and patient demand is high for new and innovative products and in this area and the product profile for four recall of resonates well with the endocrinologist community. Finally recall it will have the benefit of an established pathway for pricing and reimbursement within the branding Cushing said.

And in their therapeutics area.

With that I will now turn the call over Fred.

Thank you Scott.

This morning, we provided an update on the logics phase three study of record left for the treatment of endogenous Cushings syndrome.

As a reminder, logics is a double blind placebo controlled randomized withdrawal study targeting approximately 46 to 54 subject for enrollment that is intended to assess the efficacy and safety Evercore left.

The primary endpoint is the proportion of subjects with a loss of therapeutic response to record levels upon withdrawing to placebo compared with the report sonos proportion of subjects with a loss of therapeutic response, apart continuing treatment with record though.

Designed we have conservatively powered this study.

Reflecting this we project that a minimum 35% difference in the loss of responds proportions between the active and placebo groups will lead to a statistically significant inference.

Although we have made progress towards completing logic. We now project that we will report topline results for the study in the second or third quarter of 2020 .

Delay from our most recent protraction of topline results by the end of the first quarter of 2020, I would like to take a few moments to provide some context around the reasons for the delay and explain why the projection for the time it will take to receive topline results spans two quarters.

We naturally based our earlier projections for logics enrollment largely on the completed Sonic study.

Our prior phase three study had nearly identical entry criteria as logics unemployed many of the same investigator sites in the United States in Europe .

Furthermore, we learn much from the Sanex experience that wasn't anticipated to positively impact logic to enrollment such as how to provide optimal concierge level patient support services and investigator sites support to remove barriers to enrollment.

However, as we have learned more about logics with time, particularly over the past nine months or so we've come to appreciate how fundamental differences between sonics and logics in terms of design and procedural intensity have translated into differences and a willingness of potential participants to site onto and remain in large.

Next to be specific.

We now believe that the use of a placebo comparison in logics, which did not existence onyx, it's a prospect that some otherwise willing participants cannot there.

Even though immediate open label rescue therapy is available should symptoms of Cushing syndrome recur.

As for the intensity of logics.

There are twice as many visit some procedures and logics as in Sanex per unit of time.

And this also appears to be taking in tall on enrollment speed.

Taken together these factors have caused us to revisit our time to complete enrollment.

I did want to comment on the fairly large window of time. So we are allowing for reporting the topline results that spans the second and third quarters of next year.

The design of logics provides for variability in the time it takes a subject to complete each phase.

Logics is comprised of four phases screening plus three therapeutic phases.

Me walk you through those.

Screening procedures are designed to determine eligibility for the trial on average it takes about 46 weeks to complete screening.

The first therapeutic phase is an open label titration and maintenance phase.

During this phase patients receive increasing doses of record that as needed to achieve normalization of mean urinary free cortisol or U.S.C. and must maintain a stable dose for a minimum of four weeks before progressing to the next phase.

The minimum time that each patient must spend in the space is 14 weeks and we allow for up to approximately 19 weeks for completion routinely with additional time allowed on an exceptional basis.

So there is a range extending to over five weeks between the shortest our longest duration in the titration maintenance phase.

Protest summit participants are then enrolled at our therapeutic dose into the randomized withdrawal phase.

The study phase in which the primary endpoint is determined.

In the randomized withdrawal phase patients are randomly assigned to receive blinded study drug which is either active drug at their established therapeutic dose or an equivalent number of matching placebo tablets biochemical markers, including U.S.C. and patient symptoms are assessed approximately every 10 days during this phase to determine if the patient is.

Continuing to respond well to therapy or cortisol control is being lost.

Patient to have documented loss of cortisol control can be rescued immediately with open label record out and be move directly into the final study phase noticed restoration.

The need for early rescue is by protocol definition considered to be study completion for purposes of assessing the primary endpoint with the outcome assessed as you'll also response, so and early rescue can occur after about two weeks into this space.

In contrast patients you maintain their response to therapy, and who do not require rescue therapy complete all the visits and randomized withdrawal, which occurs no sooner than eight weeks and up to approximately 91 half weeks. Following the data randomization, therefore, whether or not a patient requires early rescue therapy determines that during.

One of time that a patient will require to complete the randomized withdrawal phase.

Represent cycle time variability of about seven weeks or about two months.

Taken together the protocol specified variability in the time required to complete both the titration maintenance and randomized withdrawal phases is approximately 12 weeks or about three months accounting for the range and timing to the receipt of topline results that we are reporting today.

You should be able to provide a more precise estimate of the timing of topline results. Once the last participant has completed the titration maintenance phase and has been randomized next year.

As it relates to end the submission we believe we can submit an end da approximately six months after the topline Reis logic results our reported.

As stated previously we believe that if our ending a is accepted for your view. We can expect a review cycle time off 10 months from the data submission, which is a standard could do for cycle time for review of a new active substance via the fiber five beat to Andy a pathway.

We'd like to highlight two other updates on our core lab.

First at the end of October we held a routine by annual data and safety monitoring board meeting for logic and based on their assessment of the benefits and risks of therapy.

The SMB recommended that the study continuous plant.

Second in September the Sonics pivotal phase three study of record love.

Including comprehensive results through the end of the maintenance phase were published online in the last it diabetes and endocrinology.

We're currently working on additional Sonics publications that we expect to be published in 2020 with that I will turn the call over to Rob lots, our CFO , who will review financial highlights from the third quarter before we open the call to questions Rob.

Thank you Fred.

Our press release contains details of our financial results for the third quarter of 2019.

Rather than read through all those detailed my comments today will provide context on our cash spend and runway.

Strongbridge ended the quarter with approximately $80 million of cash and cash equivalents and no outstanding debt.

Versus approximately $86 million and no outstanding debt at end of Q2.

Net cash use of $6 million in the quarter.

As we mentioned previously our cash spend can vary materially quarter to quarter.

Example, in the third quarter, our net cash used was favorably impacted by payments we received on our contract with Novo Nordisk from Q2 in Q3 services rendered and by other positive working capital changes.

With approximately $80 million in cash plus the 6 million dollar settlement with Novo Nordisk.

And with the anticipated conveyors sales growth and product profitability, we're updating our cash runway guidance.

We now forecast we can fund operations as currently planned through at least Q2 2021.

Which is beyond the projected timing for receipt of logics topline results.

And the anticipated submission of a U.S. and da former Korlym.

This updated guidance is one quarter beyond we projected previously.

And operator with that we are ready for questions.

Yes.

Okay.

Ladies and gentlemen.

If you have questions at this time please press the star in the number one.

Thats just telephone.

Good question, it's been answered or you wish to remove yourself Vicki experienced.

And there.

Your first question comes from the line of and the sales semi from cycle.

Ladies and.

Hi, Thanks for taking my question. So just on enrollment of logically you using any new tools to speed up that enrollment and is it difficult to sign patients or is it just they're hesitant.

Yeah, especially in light of the fact that they have rescue because.

Presumably the responses that you're seeing a treatment phase are pretty quick.

And then also as a matter of communication with these patients where they don't really understand the whole rescue component of it. So just wondering if you're doing anything there are changing anything there in terms of trying to enroll these patients.

And then just.

Switching to the the.

Agreements Novo Nordisk and removal of the sales force is there was there any thought to transitioning some sales should this today is a tour korlym is available just because there's potentially an opportunity.

Q2 pieces sales or do not see that opportunity you're right sized for kinase and and their there'll be no need for that and where are you on lifecycle management today, if any development there for extending.

I'd like to the drug thanks.

Okay.

Hi, Annabel. This is Fred your question was about tactics, we had been using two enrolled starting I think what's important to keep in mind number one is that we believed that we have now.