Q3 2019 Earnings Call
Quarter blending they'd be earnings calls.
All participants are in listen only mode. Later, we will conduct a question and answer session and instructions will be given that's fine.
As a reminder, today's conference is being recorded I.
I would now like to turn to go over to Ryan Kubota, Sir you may begin.
Thank you Bobby.
Good afternoon. Thank you all for joining your events fiscal 29.
Third quarter financial results conference call.
With me today for members of our leadership team.
He check and Chief Executive Officer.
Boncel Chief Financial Officer.
After Cornelia Hogs American Teller, Chief Medical Officer.
Christine Okay.
Chief.
Accounting officer.
Today after market close we issued a press release containing detailed information on a quarterly results.
You may access or at least on our company website your event.
During our call movie, making forward looking statements, including statements regarding our plans and strategies the clinical development they bigger on and other treatments for your logic diseases.
There's a caution that all of our forward looking statements are based on current expectations and assumptions, which are subject to numerous risk factors could cause our actual results could differ materially.
Accordingly, we advise listeners to review the forward looking statements disclosure to today's press release and the risk factor section of our form 10-K.
As well as our form 10-Q, which we filed later today.
Said.
Now I'll turn the call overtures CEO Keith.
Thank you Ryan Thanks for all of you have the joining us. This afternoon. This has been a very exciting a transformational quarter for your at key milestones across all aspects of our business first in December we submitted our new drug application to the U.S. food and drug administration for my background for the treatment of.
Patients with overactive bladder submission comes a one quarter earlier than we initially anticipated.
We're very excited to have submitted applications. It by the end of the calendar year and the schedule.
Second we initiated our phase two study and you are owed nine or to our novel gene therapy product for patients who were active bladder suffering with urgent urinary incontinence that fail oral pharmacologic therapy. The studies evaluating is evaluating you are to you our own I know twos efficacy safety and Tolerability of a single administration of the.
Product and we expect topline safety data towards the end of the year.
Third pursuant to the transaction between Sumitomo Dainippon pharma also known as DSP and wave at Sciences DSP is now you're a vast majority shareholder.
As part of the transaction you have entered into a loan agreement with DSP, whereby DSP provided your met with a 300 million dollar low interest interest only five year term loan facility with no repayments due until the end of the term. This loan facility provides you're about what capital well into 2021 and enabled us to payback.
The outstanding amount on a previous loan agreement with Hercules capital.
D.S.P. also expects to support your event through profitability and provide support for the commercialization of my bigger on providing access to its U.S. commercial infrastructure, including drug distribution operations and managed care sport.
Finally, your event DSP entered into an Investor rights agreement provides certain protections to your event minority shareholders for as long as DSP whole between 50% at 90% of Euro that's outstanding voting power.
We're excited about or new strategic relationship with DSP the potential benefits that brings to your man and the future of our company with a submission of our new drug application and launch preparations for I beg run well underway, we look forward to the strategic sport and proven commercial resources of DSP their drug distribution operational.
Managed care support capabilities should greatly optimize your events commercial approach us market.
Now to comment briefly on silver other important business highlights we continue to enroll patients into the into part two of the phase three courage trial, which will assess both efficacy and safety of my background in men with away be BPH, a patient population for which no product is currently approved enrollment also continues for patients into our ideas.
He added abdominal pain trial, what topline results expected later this year.
With that I'll now turn the call over to our Chief Medical Officer, Dr., clearly a halo propeller will provide more detail on our clinical programs. Thank you Keith as mentioned before we're pleased to have submitted our new drug application for by they've gone for the treatment of each of the ft. At the end up last year, let me briefly outside what to expect gardening deal with these Holly.
And the program that provides an update on our other clinical development programs.
Maybe first the submission of a new drug application to the ft. At the end of December 2019 will be waiting for the notification by the FDA acceptance of profile in March of Twentytwenty second we're expecting a 12 month review cycle, that's the ft and potential approval could occur at the end of this year we are looking.
Forward to working with the FDA during the review process.
Third in May at the upcoming anyway American Urological Association Twentytwenty annual meeting in Washington, DC, We will have two presentations.
This presentation with the arc 52 week empower extension study data and the second presentation will be that the empower data age.
Regarding the Empire extension study, we performed post talk analysis to test the difference in week. After week 52 between five B. Braun seven trucks milligram and the active compared to told her dean of the change from baseline Indeed, urge urinary incontinence I told the incontinence episodes between by be growing until charity, notably for both.
I think on demonstrated a statistically significant reduction over told to redeem.
Symptoms of urinary incontinence, our key symptoms LSB and the main reason for patient treatments Im very excited by this data and believes is further supports the strong efficacy profile look like they drop.
Let me now turning to our other clinical programs I'm pleased to report that continue to make excellent progress across all of our development programs.
Regarding our international Phase two encouraged development program for branded current event.
And benign prosthetic hyperplasia or BPH, we continue to enroll patients into part two of the trial, which over 1000 patients will be involved.
The trial is running in North America, and we will soon be initially.
Sure.
Our two of the phase three told would assist both the efficacy and safety if I think Ron in men with the CPH, the coke or maybe the imports are reduction matrix and frequency of urgency episodes for 24 hours.
Secondary endpoints are reduction in October yet, there's no which means the wagering at night avoid frosted symptom scores and safety.
In addition, the first patients from parts one separate rolled into the long term extension study, which will follow patients for a total exposure to 52 weeks.
We're excited about this program. There is currently no FDA approved products, specifically indicated for overactive bladder and met with TPH.
Now turning to our phase two eight clinical programs RBS associated abdominal pain. The study continues to grow female patients with IBX associates seat.
Patients are randomized to either 75 million carbon fiber eco placebo. The primary endpoint is at 30% reduction abdominal pain intensity on that look like rating scale.
Over 12 weeks for IBSD, which is the obvious with diarrhea respond this time with the subject with at least 30% decrease worse abdominal pain compared to the BT based on average secondary endpoints include a global baking skilled and safety in particular, a lack of negative verticals to frequency or consistency.
We expect to for topline data from this study in the third quarter of Twentytwenty.
Finally as reported recently, we initiate a phase two trial for your own I know two in December.
90, our novel injectable gene therapy for patients with only be left field oral public alleging therapy.
This is a randomized double blind placebo controlled trial that will evaluate the efficacy safety and Tolerability of a single administration, if your own item too.
Therapies administered by direct interest you choose injections into the broader wall other local anesthesia.
The trial is expected to I'd want to approximate 80 female patients.
Two cohorts.
The first cohort will we see the single administration of 24 milligram your own I know two are matching placebo. The second cohort will be sees 48 million euro and I'm sure matching placebo.
Patients will be that followed for 48 weeks the primary outcome measures to change the average daily number merge here, they're incontinence baseline two week 12, as well as assessment of safety and Tolerability for this potential therapy.
I'm pleased with the progress we made over the last quarter I look forward to providing with further updates the coming quarters now I'll pass to our chief financial update.
Thank you couldn't Ilya.
In addition to the financial results summarized in our press release, you can find additional information in our upcoming form 10-Q, which will be filed later today.
R&D expenses were $23.1 million for the third quarter 2019, compared with 21.2 million for the same period in the prior year.
In the third quarter 2019, R&D expenses were comprised of cost related to the submission of a new drug application provided on the U.S. SD eight.
Clinical development, specifically on ongoing studies in order to be plus BP edge and abdominal pain associated with ideas.
When comparing the two quarters the increase in R&D expenses is primarily due to.
$2.9 million PDUFA fee for India submission of I think on for the treatment noisy.
A $2.5 million a milestone payment as part of a collaboration agreement.
Two quick Union pharmaceuticals in connection with SDN submission of I'd be gone and an increase of $2.6 million in shared based compensation due to the acceleration of investing or start in stock options and audits use as a result of the sale agreements interest in the company for DSP.
These increases expenses were partially offset by lower clinical research organization pause commodity due to the completion of phase three empowered study earlier this fiscal year.
Gee any expenses was $16.7 million for the third quarter of 2019, compared with 4.9 million for the same period in the pride here.
The increase in June expenses is primarily due to an increase of $8.7 million in shared based compensation from exhilaration of vesting, let's sort in stock options are not as Hughes and an increase in personnel costs as well as other general and corporate expenses.
Total operating expenses were $39.8 million for the third quarter 2019, compared with 26.2 million for the same period in the prior year.
As mentioned before the increase is primarily driven by the increase in share based compensation expense, but do fluffy and cured in milestone payment.
Cash used in operations was $23.6 million for the quarter ended December 31st 2019.
Degrees of zero point $9 million as compared to the immediate prior quarter ended September Thirtyth 29 team.
Net loss was $41.3 million or $1.36 cents per share for the third quarter 2019, compared with a net loss of $26.4 million or 87 cents per share for the same period in the prior to year.
At December 31st 29 team do those cash and cash equivalents were $141.9 million.
As you know in December of last year, we entered into a $300 million low interest interest only five you don't own facility with DSP with no repayments due until the end of the tone.
At closing, we drew down $87.5 million and does have 212.5 million available to us under this facility.
Eliminating the need for any shocked equity financing.
In addition, DSP also expects to continue to support you don't read through profitability.
Looking ahead.
For the fourth quarter fiscal 2019, ending on March 31st we expect our total operating expenses to be in the range of $41 million to $43 million.
Which includes a 10 million dollar milestone payment that will become due upon acceptance of our India submission by the FDA.
Cash used in the quarter ending March 30 for 2020 will include the $48.2 million that we used to repay the Hercules Gavin alone and the $10 million milestone payment due upon acceptance of R&D.
We expect to in fiscal 2019, with a cash balance of $44 billion to $46 billion.
Turning now to fiscal 2020.
We expect fiscal 2020 to be an exciting year for us as we prepare for the launch of I think on during the first three quarters and then launch why be gone if approved by the FDA in the fourth quarter.
For fiscal 2020, which begins April slows, we expect a quarterly operating expenses to be higher than the first three quarters.
Do we hired in the first three quarters as compared to approximately $40 million of quarterly operating expenses, excluding stock based compensation for fiscal 2019.
Operating expenses will increase further during the fourth quarter fiscal 2020, as we bring US is focused on board and launch slightly gone if approved by the FDA.
With that financial update let me turn the call back over to keep.
Thanks, Jay I'd like to reiterate our excitement for what we have accomplished during this past quarter, especially the progress we have made with the submission of our new drug application for I begged, Rob and the initiation of phase two study for euro nine or to our new relationship with DSP provides us with a stronger and more stable financial profile.
Also providing access to a global platform enhance commercialization resources and other significant advantages as we prepare for the launch of that backdrop.
We remain very excited about the market opportunity for buyback Ron in a way be our belief in the differentiation by bedrock is further supported by what we believe there's been a very strong launch at the path while the market dynamics in Japan are very different than the United States current data suggested by background was able to take even we'll share.
Our premier bedrock of it in a short period of time.
In closing the third fiscal quarter of 2019 was transformational for our company marked by key milestones across all aspects of our business. We look forward to several upcoming milestones. So we'll continue to drive towards the goal of developing your event into a leading specialty urology company. These upcoming milestones include FDA acceptance of our new drug.
Application for I backdrop in a way be which we anticipate by the end of Q1 2020 are two upcoming presentations in may at you weigh in Washington, DC that includes data from our recently completed post hoc study demonstrating a statistically significant benefit of my background overtones hurting at week 52.
Phase two way topline safety data for I.B.S. associated pain in the second half 2020, the continued and they should the cohort one enrollment in phase two eight of our novel injectable gene therapy for away be euro nine or two followed by the initiation of.
Core who cohort two enrollment later this year and the ongoing evaluation of part two of the phase three encouraged trial, which will assess with efficacy and safety of my background in men with only be BPH with that I'll now open the call to questions. Operator can you open the line.
Ladies and gentlemen at this time if you have questions. Please press Star then one such seldom telephone.
Your first question comes from the line of Mr., Eric Joseph from Jpmorgan. Your line is open.
Hey, guys. Thanks for taking my question.
You kind of anticipated one of them here I'm, just curious to get a better sense of what.
You're seeing from.
You arent in launch would be over in Japan and.
Understanding that it's going to be differences in dosing and the label here in the U.S., but where are they seeing patient demand come from and what's the dynamic than with.
A mere fact drawn there.
Yes, thanks for the for the question, Eric We don't have a ton of information from Japan, particularly a we don't have insight into exactly what patients that are going after with their campaign, but we do have is that we've got to source of information we've got essentially the Japanese.
The acute via data and also it may be more importantly, we've got the sales numbers that had been reported by.
Youre and as a publicly traded company both the.
QB alike data in Japan, and also the sales numbers that were seeing.
You are and suggest they are taking a really nice percent chair.
I don't want to go into the specifics.
But we'll leave it as if we got that share within the first 12 months of our of our launch.
We would be extraordinarily happy with.
The uptake of our launch as we think everybody else would be as well.
Obviously, the reimbursement situation is different and Japan their single payer system and once you get coverage.
From the Japanese government.
Alleviates, one big hurdle that we're obviously going after phase here.
In the states, but it does give us confidence the once we get appropriate reimbursement the physicians will see the merit the and the benefits.
Bedrock.
Got it and maybe just a follow up question on your own I know two.
Can you talk a little over that the rationale for dose selection.
The 24 milligrams in the 48 milligrams.
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And I guess you also there are some placebo arms I guess for both of those cohorts can you just talked about sort of.
The randomization across the total.
The patients being enrolled.
And the the powering assumptions I get the effect size.
That is.
Adequately powered to detect.
Probably gone thanks.
Okay well. Thank you first of all this is a phase two study. So this is really early development. We chose the highest so no. We recently announced the publication our recent study of the Vsan prior.
Just want to be study, which was conducted and channels. So we chose the highest dose we showed efficacy there which is 24 milligram and then we are going to keep that dose now in the larger group of patients and then we will go into stepwise approach to doubling the dose at this was discussed with the FDA.
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Hi.
To increase these doses the placebo group will be distributed evenly amongst those two cohorts so basically.
David overall, you our own I know two efficacy was balanced.
Who is being split between those treatment groups.
And regarding that take sides of course is injectable therapy, we are expecting a larger effect, but again this is terry.
We need to see.
How how actually the efficacy will beat we have about 55% power at this point that again, we have to say into phase two study difference we powered.
Right.
So we assumed towards a higher saying hi said all drive so we.
But again.
I have to really use disclaimer.
And I think just add Eric the in the early phase one.
24.
But gram dose they who we did see any particular adverse events of concern and so we want them to do some dose finding in this to a so called.
With that those two x. I would really give us a good bad or we can really get an early read.
The safety efficacy looks like as well as durability, which is obviously important as well.
I think expectation for need.
Any anticipation that you might need or want to dose higher than 40 milligram.
I think it's as Rick protocol for that.
Well, we will see again, we need to look at efficacy and safety again, the efficacy alone of 24 milligram from the very small phase one already was good we need to also see duration.
Although those patients out for nine months and of course, if we continue we may consider higher dose, but at this point for phase two eight study we decided to go is two dose groups.
When does that doubling the dose and then see how efficacy and safety.
Great. Thanks for taking the questions.
Thanks.
Your next question comes from the line of retail burial from Cowen Your line is open.
Hey, guys to shot on for re to just one question for me in terms of the commercialization as you guys are thinking about it can you just stick to kind of the approach is you're going to be going after.
Our specifically, how you're going to be leveraging the Sumitomo partnership you have right now.
Thanks, a lot.
Sure absolutely and so.
At a high level you're event is going to maintain responsibility for we think is the largest and most important market segments. So what we what we will be building out urology.
It's worth approximately 100 and.
Sales representatives that Salesforce will also call on very high writing primary care doctors and in addition, we'll have an approximately 50% long term care salesforce, which will give us.
This is very strong coverage within the long term care facilities in the U.S. those will still be responsible and managed by your event, where we're in discussions with Sanofi and Dsps US subsidiary are particularly traded distribution.
You may be aware that small companies really get abused on the the wholesaler fees and they can be very high easily double digits and so we believe that if we can tap into their relationship I.
Agreements given that we're a subsidiary of DSP, we can get much improved.
The seller and distribution fees. Additionally, sonobi in as a very large managed care infrastructure.
They have got something with much larger than we could ever build on those teams have very strong relationships with national and regional payers.
So we are currently in discussions with them about how we can effectively.
Use that team and we think that's really important because obviously in today's Dan age coverage is critical to both the short term and long term success of any product launch and so being able to tap into a big pharma light.
Managed care structure that we think can accelerate our access will just serve to to greatly enhance our launch and then we're also talking to them back office things, where they were may be able to work with them, whether its media buying or.
Contract and.
Discount management ends of that nature, but overall, we're really impressed by everything we've seen from their suite of services so far.
We think that assuming we can get to terms with them that it will be able to really very cost effectively enhance we'll we'll be able to do it provide better on both the launch and over the long term.
Got it alright, thanks, guys.
Yes.
[laughter].
Your next question comes from the line up.
Hi, Joe from H.C. Wainwright Your line is open.
Good afternoon. This is Edward on for Rob I think you guys for taking the questions.
First is a question on the recent none of two publication.
Just wondering if you think each had any effect on the 24 milligram group and also what sort of effect do you think the low baseline incontinence values.
Had on the lesser efficacy seen also in that 60 November.
Well it is not known for away maybe that you take generally that it's sort of efficacy is linked to the number of incontinence episodes of course statistically the largest studies. It is that's where you have the minimum but I don't believes that this has anything to do again this with smaller studies that are eight today.
The age group. These are against people, who are by definition TVT postmenopausal women, which will 15, albeit we are also wondering on our goal 50, an older and also efficacy is not known and maybe that efficacy is linked to age.
Or non efficacy slate.
Okay.
So the baseline levels in the 60 milligram group.
Would you say that those are more common for patient population than what you saw in the 24 milligram group.
It's a small group I don't know if you could see more common maybe but I don't think it is.
Really.
Basically it's quite high.
Both both at the more high I mean, the number of Virgin continents episodes are relatively high and the 24 microgram, who may have had a higher one yes that is correct, but again. This study is extremely small look at the end.
So I don't think you could really draw conclusions from these small and.
Okay, Okay I understand.
I think we need an army.
Okay.
Right, absolutely and I understand as a small trial.
And just on a broader level is there any new information you can provide on some of the likely pricing for for that.
Yeah, the Diavik our guidance has really changed.
To dramatically since we last since we last spoke we really think that there is likely a range around mirabelle Enron and wherever that may or better on price is at the time that we announced our commercial launch.
Minor back on right now it's around $405.
Per month WACC and.
And so depending on the the final package insert that.
His agreed upon with the FDA, we can see band around that have essentially plus or minus 20%.
From a pricing perspective.
Alright, thank you.
Thank you.
Your next question comes on the line of right I mean from Jefferies. Your line is open.
Yes, hi, guys.
Thanks for taking my questions I'm just on the Sumitomo relationship in the loan facility can you just talk about there's any gating items that would prevent you from accessing the remaining capital.
Or any milestones that you need to achieve to access the remaining capital.
No the remaining capital actually the wage structure. It is we can make quarterly draws that those quarterly draws.
Depending upon the approved budget from the board. So on next draw for example, we reach out to them towards the end of March and let them know based upon our board approved budget how much.
We want to draw for the next quarter and that will repeat itself quarter after quarter.
Got it Okay, and then on nine no to.
No I know, it's a 12 week and point on efficacy, but are you looking at earlier time points as well I mean, when you look at some of the literature with Botox, you're seeing onset of activity as soon as four weeks. So that's something that you're measure as well and.
On the you you why reduction at 12 weeks, what should we expect.
Would it be similar to like Botox I think so there's some literature out there that suggests it's about 50% to 60% reduction on do you I at 12 weeks.
Okay. So we of course.
Earlier time point and have to be at least as good as botox, we hope it will be better, but we believe to be for it to be competitive enter continues we'll have two pieces to this boat.
Okay, and then I guess are you going to be measuring the troops are over activity and the trial.
Yeah, We will you do your dynamics and going people with or without just to sort of activity just to have made the point. It is not known for any only be drug, including botox that you trues up activity. The presence are not just in time activity. If you were dynamics and here. Thanks.
Basically the outcome, but we believe measuring it in all patients measuring your dynamics.
Got it okay.
[noise] Central leader your dynamics like Botox.
Okay.
Great. Thank you.
All right.
There are no more questions from the can you make an thinking your percentage.
Oh, just like thank everybody for joining us and we look forward to hosting our.
Fiscal yearend call at the after the end of the next quarter. So thank you very much somebody.
This concludes today's conference call. Thank everyone for joining you may now disconnect.
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