Q4 2019 Earnings Call

There's been so when I listen only mode.

An audio recordings of today's webcast will be available shortly after the call stay on Reorders web site at Reatta pharma Dot com in the Investor section.

For the company proceeds with its my remarks. Please note the forward looking statement disclosure in the company's <unk> press release.

The company will be making forward looking statements on todays call.

There are many factors that could cause results to differ from expectations, including does noted in the company's FCC filings today's statements are not guarantees of future outcomes.

Please also note that any comments made on today's call speak only as of today February 19th 2020, and May no longer be accurate at the time, if any we cast replay or transcript reading.

Following their prepared remarks, we will open the call for questions. We ask that you. Please limit yourself to one question and one follow up to that we can accommodate date as many questions as possible.

At this time I'd like to turn the call over to Vinny Jindal Vice President strategy. Thank you. Please go ahead.

Thank you.

Good afternoon, and welcome to be out of management's call to discuss fourth quarter full years 29, Chief financial results.

Everybody review of our development programs.

Good afternoon, we issued a press release summaries results and the press release can be found any investor section of our web site at Reatta form and I'll call.

I'm joined today by our Chief Executive Officer one.

Our Chief Medical Officer, Cowen Meyer, and our Chief Financial Officer might mean, Sony or.

I'll now turn the call over <unk>.

Thanks, Denny good afternoon, everyone and thank you for joining us.

I'd like to begin or call today by reviewing the progress we made in 2019.

Starting with our development pipeline last year, you announced positive results from pivotal clinical studies in CKD and neurology.

In CKD, we reported positive topline one of your results from the pivotal Cardinal Phase three study of products alone in patients with Alport syndrome.

In neurology, we reported positive topline results from the pivotal Moxy study of Omega locks alone in patients with Friedreichs ataxia.

There are no approved therapies for patients with Alport syndrome, or essay and what are the first to produce positive clinical data for a novel interventional therapy in each disease.

Additionally, we expanded our development program for Murdoch slot for rare forms of CKD with the launch of Falcon, which is studying paradox, one in patients with autism, all dominant policies to kidney disease or 80 PKD.

We also completed enrollment in catalyst a pivotal study of our docs alone in a severe form of pulmonary disease called connective tissue disease associated pullmantur pulmonary arterial hypertension or see TPH.

As a result of our recent agreement with Abbvie, we now own worldwide commercial and development rights for all of our pipeline assets, except for certain Asian territories license to Cai, we're carrying for Badakhshan one.

We maintain robust IP protection for these assets in a build and experienced commercial leadership team capable of launching paradox loan at home Avelox loan globally.

[noise] beyond our lead indications Reatta has numerous development opportunities that fit within our strategic priorities and that we intend to pursue.

In CKD as we've said previously we plan to commercially pursue the diseases in which we observe strong proof of concept data in the phase two Phoenix study.

Hi, Jane Nephropathy F SGS and CKD caused by type one diabetes. We also plan to launch studies for Omega locks alone in neurological conditions, which like ebay are driven by neural inflammation oxidative stress and impaired entering two activity.

Generated preclinical proof of concept data with our interest to activators in a number of neurological diseases that fit this profile.

Our earlier stage pipeline includes two wholly owned.

Archie a 9.1 NRT a 17 at one which have completed phase one.

Would you both orphan and broad market applications, we expect to continue developing Archie a nine at one the lead product candidate from our Hsp 90 modulator program for the treatment of neurologic diseases, such as diabetic neuropathy.

Our T. a 17 at one is a potent and selective inhibitor of oral argument T. A transcription factor involved in the past the Genesis of many autoimmune and inflammatory diseases were excited about the prospects for both programs.

Because of the results we've observed with our interest to activators across multiple organ systems and diseases I'd like to briefly touch on the pharmacology of entering two activation and why we believe that can be applied to a broad set of diseases.

This is important now that we acquired worldwide development rights to the program.

Activation of the transcription factor entering two restores mitochondrial function inhibits pro inflammatory signaling and reduces fibrosis. These are three hallmarks of many diseases that occur in numerous organs and tissue types.

In addition to activity in CKD and neurologic disease, our interest to activators have been studied and demonstrated activity in models of liver auto immune cardiovascular and metabolic diseases as well as diseases of the eye.

Therefore, we believe the interim to activators or a platform technology with significant expansion opportunities.

Of course, we're developing murdoch's loan for the treatment of patients with CKD caused by Alport syndrome, 80, PKD and other rare forms of CKD that in the aggregate affect more than 700000 patients in the United States.

Few or no effective therapies are currently approved for treatment of these diseases and we believe paradox alone can become an important therapeutic option for many of these patients.

The lead indication and our CKD franchises, Alport syndrome, which is a rare hereditary and severe form of CKD affecting approximately 30 to 60000 patients in the United States.

The ongoing phase three portion of Cardinal is the largest global interventional study ever conducted an alport syndrome.

Secondary endpoint for Cardinal is the off treatment analysis at week 52, and in this analysis patients treated with Murdoch's loan demonstrated a statistically significant placebo corrected 5.14 milliliter per minute improvement compared to placebo with a P value 0.001 too.

Based on these positive results and of course subject to discussions with regulatory authorities. We plan to proceed with the submission of regulatory filings this year for marketing approval in the United States.

We will not be commenting on the call or Q and a on our ongoing interactions with regulatory agencies.

Our lead indication in neurology is friedrichs attacks and ultra rare orphan disease that affects approximately 22000 patients worldwide and approximately 5000 patients in the United States. The pivotal Moxy study of Omega up in FX was the largest global interventional study or.

Acted in every day and successfully met its primary endpoint of change in the modified friedrichs attacks your rating scale relative to placebo after 48 weeks of treatment.

Patients treated with Omar demonstrated a statistically significant placebo contracted 2.4 point improvement in the M. farce compared to placebo. After 48 weeks of treatment with a P value of 0.01 for.

Based on these positive results and of course subject to discussions with regulatory authorities. We plan to proceed with the submission of regulatory filings. This year for marketing approval in the United States as with paradox alone, we will not be commenting on the call or acumen, a on our ongoing interactions with regulatory agencies.

I'd like to make one additional point about the Moxy results. We believe that the results are also important because they provide proof of concept that improvements in mitochondrial function from OMAP treatment may provide a therapeutic benefit and several other neurologic diseases.

The processes of neuro inflammation and impaired cellular energy production that interrupt to activation can resolve occur in other regions of the brain, causing other rare and debilitating neurologic diseases.

We've observed promising preclinical results with Omega of and related molecules and models of Parkinson's disease dementia, epilepsy, Huntingtons disease, HLS and Alzheimer's disease, we plan to develop Omar clinically for one or more of these diseases.

In 2019, we completed enrollment in the pivotal catalyst study of our dogs loan in connective tissue disease associated pulmonary arterial hypertension or CTP age.

Catalyst is an international randomized double blind placebo controlled trial examining the safety Tolerability and efficacy of our docs alone in patients with CTP age when added to standard of care base or dilator therapy.

The primary endpoint of the study is the change from baseline six minute walk distance relative to placebo at week 24.

Based on the results observed in our phase two lariat study in the design of the catalyst trial. We believe our excellent has the potential to become the first therapy approved specifically for patients with CTP age we expect to release topline results from the study mid year.

Our goal is to make murdoch's alone and Omar available for patients as possible and accordingly, I want to provide a high level summary of our prelaunch efforts.

Subject of course to approval from the FDA and other regulatory agencies were actively preparing for the commercial launch of Murdoch's alone for patients with Alport syndrome and of Oman for patients with Difei. We have a season commercial leadership team that previously played key commercial rules the company successful launching drugs for rare and orphan diseases.

In addition, our CMC team is in place and we're building redundancy and suppliers to support the supply needs for ourselves and our collaborators.

I'll now turn the call over to Manmeet to provide a summary of our financials for the fourth quarter and full year 2019.

Thanks, Laura.

Good afternoon, everyone.

Please refer to our press release issued earlier today for a summary of our financial results for the fourth quarter and full year 2019.

Let me start with our cash balance.

We maintained a solid balance sheet, ending putting 19 with approximately 664 million in cash and cash equivalents.

This includes cash proceeds coming from our financing completed and no one but 2019 amounting to approximately 492 million net proceeds.

Our GAAP net loss for the quarter fourth quarter, Oakland, 19 was 186.9 million or $5.91 Bushehr on both a basic another business.

As compared to a net loss of 25.6 million or 86 cents per share on both basic and diluted identity business for 2018.

Our GAAP net loss for the year ended December 30, plus 29 being was 290.2 million dollar or nine dollar 54 cents Porsche on both basic and diluted business.

Compared to a net wells off $80.5 million or two dollar 91 cents per share on both basic and diluted basis for the value.

The increase in GAAP net loss for the quarter and that year was primarily due to an expense of $124.4 billion record as we acquired licensed rights and the piano.

Resulting from our agreement entered in October 2019, with Abbvie reacquired the license rights.

This expense as calculated as the net present value of 340 million dollar payments related to re acquisition of license rights offset by a deferred revenue balance remaining under the I'd be collaboration agreement.

In addition, R&D expenses increased due to higher personnel and equity compensation expenses within reason headcounts and manufacturing expenses. That's it that's considered without late stage programs as we continue to expand and advance our development pipeline.

Our DNA expenses increases were driven by an increase in personal and rent expenses to support growth in our development equities. In addition to commercial readiness activities.

Moving to revenues our collaboration revenues were $2.7 million during the fourth quarter of 2019 as compared to 8.5 million in the fourth quarter of 2018.

This introduction and collaboration revenue was related to accounting off for the acquisition of the license rights from Abbvie, which resulted in the condition of deferred revenue lender to abbvie as an offset to expenses.

Moving to non-GAAP measures, which excludes stock based compensation and we acquired last slights expenses.

Our non-GAAP R&D expenses, what totaling $6.7 billion for the fourth quarter of 2019.

As compared to $24.3 million for the same period of the prior.

Our non-GAAP operating expenses were putting point $4 million for the fourth quarter of 2019 as compared to $6.2 million for the same period of the enterprise.

To summarize our non-GAAP operating expenses were $50.4 million during the fourth quarter of 2019 with for pivotal development programs and pipeline and several new stage Preqin preclinical activities.

This highlights our financial discipline and efficient capital allocation to manage our cash button.

We expect our current cash balance of 664 million to fund our operations through the end of 2021.

With that I will turn the call back over to water.

Thanks, Let me.

As our presentation today indicates we're making progress on our programs and Alport syndrome, 80, PKD essay and CGD ph and have significant expansion opportunities for Badakhshan and CKD and for Omega neurology.

We're also excited to move forward with our promising early stage programs RT and I know one NRT 17 on one.

With a strong balance sheet in a seasoned and growing commercial team.

Well positioned to commercialize our groundbreaking therapies for underserved orphan diseases in the coming years, we look forward to updating you soon on our progress.

That concludes our prepared remarks, and I'd like to thank everyone, who dialed in I'll now turn the call over to the operator for questions.

Thank you as a reminder to ask a question you May Press Star then one on your touched on telephone to withdraw your question press the pound key.

Thank you. Please keep your questions to one question and one follow up question the interest a time.

Our first question comes when you go and that some of its with Citi. Your line is now open.

Hi, This is smith on for Yigal, Thanks, very much for taking my question.

We should the updates and the detailed financial analysis.

First I guess I, just curious on how the enrollment cadence ATP Kt has been progressing and when we can expect a topline data readout for this program.

We announced last year that we initiate enrollment in the Falcon trial, 80, PKD and we have not yet provided guidance on completion of enrollment.

And when will have data.

Okay understood and then turning to the catalyst study and agreed out expected. This summer mid 2020, what are those risks associated with this program and what are the reasons to believe it should work.

So we have ample evidence that.

The drug Mechanistically.

Could affect pathways that are relevant to CGPH as you know oxen targets by energetic inflammatory component. So ph. These patients experienced mitochondrial dysfunction, increasing I've got to be activity.

And related inflammatory pathways involved in our west mediated signaling.

With liberation fibrosis.

Through boxes effects on induction of interact to and suppression of Nf Kappa B has the potential to inhibit inflammatory integrative signaling.

Well its signaling that's associated with downstream remodeling fibrosis.

And these pathways are not directly affected.

By available therapies.

And so the the trial, obviously is underway and.

And we think it's well powered based upon the phase two data.

Hi, Thanks, very much for taking the question.

Thank you. Our next question comes from Maury Raycroft with Jefferies. Your line is now open.

Hi, everyone. Thanks for taking my questions. So I guess he can comment on ongoing interactions with regulatory agencies, but can you comment on timing for when you could file for barred in Oman, and then whether you will provide an update to the street post pre NDA meeting.

Sure Maury and so as a warning noted in his prepared remarks, we are planned to file India is in the U.S. for both products loan.

In Alport syndrome, and Oman and say this year.

We will not comment on ongoing regulatory interactions other than that.

Okay, and then also as you approach to the filing for paradox wondering Alport syndrome, do you have a better sense of how much to your data or how many patients you will have to your data on.

For when you file.

We're not going to comment on on the to your data.

Okay. Okay. Thanks for taking my questions.

Yes.

Thank you. Our next question comes from Adam Walsh with Stifel. Your line is now open.

Okay, guys. Thanks for taking my questions.

My first one is just on resource allocation, you've obviously had good data in the Phoenix trial with Iga nephropathy in type one diabetic CKD and for all map you talked about.

Potentially expanding into new neurological indications like a lesser huntingtons.

What's holding you back presently now that you've raised money was it a financial constraint is that kind of a resource internal constraint and do you think we'll be able to get more visibility on on when these programs will move forward over the next year. So.

Thanks.

Yes, well at the appropriate time will definitely provide guidance about.

Which which pivotal programs are going to come next.

What we expect the timing to be.

I would say you know we've been managing an hour.

Well, our both financial and human resources, you know very carefully as a company.

And I think if you look at our if you look at the.

Opportunity for development across our portfolio I mean, as you said you know there's an opportunity to begin a number of additional registrational studies in rare forms of CKD.

We have a number of really good opportunities for our inner F. Two activators, Oh man have.

In neurologic disease, and we actually have to other really solid phase two ready assets.

Behind that with novel mechanisms and brought applications and so we've got a really deep pipeline and we're definitely or feel.

Regularly constrained by the.

The availability of both human and financial resources to pursue all of the things that we'd like to do.

Alright, Fair and then really quickly on ph if and when.

Let's say you get good data that's improved would you expect to build out a commercial salesforce to target Pulmonologists or would you just.

Marketed in CKD and month. This study stand on its own how would you approach commercial mph. Thanks, It's a good question, but I'm I'm not really going to speculate about it.

Until we know what actual FTC the data the quality of the data.

You know what the clinical benefit was an all that before we could really evaluate make make.

You know meaningful decisions about how we would go about the commercialization of it.

Thank you.

Thank you. Our next question comes from Brian Skorney with Baird. Your line is now open.

Good morning, guys just to maybe ask kind of follow up on enrollment in the Falcon study if I just look at the Cardinal phase three portion it looks like it took about a year for you guys to enroll fewer number of patients and study but.

One from a much smaller patient pool is there anything that we should be considering relative to the two studies and indications to keep in mind when thinking about enrollment timeline.

No nothing no nothing besides just kind of sample size in the patient populations would seem to be relatively similar in enrollment on launch.

As I mentioned here the trial initiate enrollment last year as we said enrollment is ongoing and so we're not going provide any more visibility into that today.

Great and then just wanted we think about the powering assumptions for the catalyst study.

Have a broad range of placebos on.

Sort of the general ph, what should we kind of be thinking about and what are your assumptions underlying what placebo would look like on six minute walk in this subgroup <unk> ph patients.

So our powering assumptions are not only based upon their data available in the literature from into numerous trial semiconductor, but also from the observed data within our Marietta faced program and so synthesizing all that the trial can detect.

A difference of approximately 12 and a half meters.

Based upon the standard deviation assumptions are those calculations.

Great. Thank you.

Thank you. Our next question comes from Charles Duncan with Cantor Fitzgerald airline is now open.

Thanks, guys for taking my question worn and team congrats on a really fantastic your progress I'll stick with questions and on the neurology side the house.

Yes, with regard to all NAV and filing in the us for Friedreichs ataxia.

Is the data that you have necessary insufficient to file.

Or is the.

Rate limiting step discussion with the agency or some other kind of clinical or non clinical work that you're dealing with tetra.

So I think Charles as you know previous to launch of part two of Democracy study. The after you provided us with guidance that can fars is acceptable as the primary endpoint.

Two of the Moxy study and that it may consider either accelerator full approval based on the overall results the trial and strength of the data.

So as we've mentioned multiple times now on the call Im going to just got we're in discussions with FDA regarding the next regulatory steps are continuing with our preparations to submit in India, we're not going quite any additional detail at this time.

Okay. That's fair and then when you when you think about that bill out in the commercial infrastructure for.

Al parts versus free drinks I guess I'm wondering are are there are synergies that you can realize in that in that approach, maybe it's back office work or would it make sense to consider.

Two different quality sales forces and then as an add on to that when you're thinking about all man and moving forward with other indications when could we see.

Initial clinical activity first call. It next steps beyond predicts.

Sure. So Chuck this is going to me Baltic oppose cushions regarding the synergies.

Commercial sales force and other so the answer is yes, and so definitely.

There are synergies as you would see not only just back office, but also also on you don't marketing market access.

And sales operation that go to use and planning activities all dot hub hop synergies, the only thing which would have as a different sales team for all mob horses bog because they will have different targets, but still as you know we have a very you know this is a rare disease and we're not expecting a huge salesforce for both of those indications.

So there are synergies on top of thought there would be very limited sales force to expand and.

For the odd.

I would also say that all mob is certainly for the good akcea. That's so such was diagnosed population.

And but nine centers of FX centers of excellence and other fee.

Centers I think they're very concentrated but few places and we will not need even like not more than.

A couple dozen gill.

All sales force over there so yes.

So the question. He has done a lot of synergies on the back office and on the marketing side anything else water like that all that and to your second question Charles and so as you know the underlying.

Biology pharmacology of Omar this is not specific to for years attacks here.

And we've demonstrated preclinical activity in a wide range of models, including Parkinson's disease.

Various forms of dementia epilepsy hunting seasons disease, LLS, even all timers disease.

We have data from ex vivo patient biopsy samples demonstrating that Omar can restore mitochondrial dysfunction in which is suppressed.

Several different forms of neurological disease beyond Fay.

And so right now we're actively trashing what the next.

Clinical trials would be we publicly stated that we plan to initiate one or more trials in the next few years with L. math.

So we expect to have some discussion about that in the future, but we're really excited about the opportunity for Omar Evan.

It had activity here in a very.

Difficult patient population ebay, where there have been approximately 15 prior failed trials.

We think that once again that underlying pharmacology as relevant so to me settings and so.

Stay tuned for more discussions and concrete guidance about our next clinical progress on that.

Sounds good well to stay Tim Thanks.

Thank you as a reminder to ask a question you'll need to press Star then one on your touched on telephone to withdraw your question press. The pound key. Our next question comes from Joseph Schwartz with SBB Leerink. Your line is now open.

Great. Thanks, so much and congrats on the progress as well I.

I was wondering if you could give us an update on the status of the ongoing CKD study for products alone in Japan.

Can you remind us of the timelines for that and.

Is the work being done there does it differ materially from what was done and beacon and being.

Sure so.

Q adherence trial called <unk>.

The phase three outcomes trial in diabetic CKD.

It's different from.

You can trial, which we conducted years ago in several ways number one it excludes patients at risk for fluid retention.

Number two.

They are enrolling a much broader range of CKD patients and number three the endpoint is different and so the primary endpoint of the trials. The composite of first of time to 30% reduction in Egypt for its confirmed or dialysis.

As far as timing a Dave publicly stated.

That enrollment was completed.

Last year.

They publicly guided to data availability from the trial in the first half of 22.

Great. Thank you and then you noted you are robust IP for both Bard and Omar I was just wondering if you could touch on that and then highlight the claims that you think or.

Most robust and.

What your expectations for a ela we are.

Sure.

So starting with a with our doxil on its its protected by a battery claims that.

Include.

Composition of matter on the novel, Hey, Morphic form of the drug.

Which has a very significant impact on that dosing.

The novelty Morphic form I believe is look about four and a half fold more potent.

And the other personal and forms.

And also there is a very broadly worded.

Method of use patents that I think brave basically go the use of paradox alone.

To improve kidney function in patients with CKD.

Which would basically be essentially right on the label.

And.

Let me correct me, but I think that we estimate that kind of with extensions based on the development history that the protection would be essentially on those from 2034.

2033 to 2034, we would have exclusivity.

That's about other what on for Bart Oxylate and all novel.

Good good up to 2035 in US, Yes, 2036 and yes.

On its composition of matter claims.

Okay great.

Thanks for taking my questions.

Thank you and I'm showing no further questions in the queue at this time, ladies and gentlemen, thank for your participation on today's conference as a reminder, an audio recording of the call will be available. Shortly after this conference call on realises web site every arda pharma dot com and the Investor section.

Thank you very much for your participation you may now disconnect.

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