Q4 2019 Earnings Call

Good morning, ladies and gentlemen, and welcome to the primary fourth quarter and year end 2019 earnings Conference call I would now like to introduce you to your host for today's call Michelle Laspaluto, Vice President of strategic planning and Investor Relations at time Eric's. Please proceed.

Operator: Good morning, ladies and gentlemen, and welcome to the Chimerix fourth quarter and year-end 2019 earnings conference. I would now like to introduce you to your host for today's call, Michelle LaSpaluto, Vice President of Strategic Planning and Investor Relations at Chimerix.

Thank you operator, good morning, everyone and welcome to the Americas fourth quarter and year end 2019 financial and operating results Conference call. This morning, we issued a press release, which outlines the topics. We plan to discuss today you can access the press release as well as the slides that we I will be well slides on our best are really.

Michelle LaSpaluto: Thank you, operator. Good morning everyone, and welcome to the Chimerix fourth quarter and year-end 2019 financial and operating results conference call. This morning we issued a press release which outlines the topics we plan to discuss today. You can access the press release as well as the slides that we will be using as well as slides that will be used in our investor section of the website. With me on today's call are President and Chief Executive Officer Mike Sherman, Chief Financial and Business Officer Mike Andriole, and Chief Medical Officer Garrett Nichols.

Investor section of the website with me on today's call, our President and Chief Executive Officer, Mike Sherman Chief Financial Business Officer, Mike is real and Chief Medical Officer care nickel before we begin I would like to remind you that the statements made on today's call include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and are subject to risk.

Michelle LaSpaluto: Before we begin, I would like to remind you that the statements made on today's call include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 and are subject to risks, uncertainties, and other factors that could cause actual results to differ materially from those referred to in the forward-looking statements. You are cautioned not to rely on these forward-looking statements. These risks and uncertainties are described in detail in Chimerix's filings with the Securities and Exchange Commission, including its Form 10-K filed earlier today. Its most recently filed reports on Form 8-K and other documents subsequently filed with the Securities and Exchange Commission. All forward-looking statements are based on information currently available to Chimerix, and Chimerix assumes no obligation to update any such forward-looking statement. With that, I would now like to turn the call over to Mike Sherman. Okay?

Uncertainties and other factors these risks and uncertainties and other factors could cause actual results could differ materially from those referred to in the forward. Looking statements. You are cautioned not to rely on these forward looking statements. These risks and uncertainties are described in detail it kind of <unk> filings with the Securities Exchange Commission, including its form 10-K filed earlier today. It's most recently filed reports on form 8-K, another dog.

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Finally, falling Securities Exchange Commission.

All forward looking statements are based on information currently available to Comerica and Comericas assumes no obligation to update any such forward looking statements.

With that I would now like to turn the call over to Mike Sherman Mike.

Thanks, Michelle and good morning, everyone, let's spend a little less than a year since taking the helmet climb Ericsson during that time weve executed on three major initiatives to reposition that company, let me start with a recap of the team's strong execution and those three areas.

Michael A. Sherman: Thanks Michelle and good morning everyone. It's been a little less than a year since I took the helm at Chimerix, and during that time, we've executed on three major initiatives to reposition the company. Let me start with a recap of the team's strong execution in those three areas. First, we restructured the organization to reduce spending by about 50% in order to preserve resources and maximize the investment we could make in promising new oncology programs. This minimized our cash burn and allowed us to exit the year with approximately $113 million in cash.

First we restructured the organization to reduce spending by about 50% in order to preserve resources and maximize the investment we could make and.

Missing new oncology programs.

This minimize our cash burn and allowed us to exit the year with approximately 113 million in cash.

Second we focus the organization on completing the development of rents it off of the or the countermeasure for smallpox.

Michael A. Sherman: Second, we focus the organization on completing the development of rinsed opivir as a countermeasure for smallpox. Last year, we completed the FDA's two required animal efficacy studies in the rabbit and mouse models. During that period, I would say we also enhanced the quality of our engagement with both BARDA and the FDA. Communication has been particularly strong over the last several months with both of those organizations.

Last year, we completed the FDA phase two required animal efficacy studies, and the rabbit and mouse model.

Each of those achieved statistically significant reduction in mortality from ortho pox virus disease.

During that period I would say, we also enhance the quality of our engagement with both BARDA Andy Yep Yep.

Communication has been particularly strong over the last several months with both both of those the organization.

Early this year, we successfully completed the PK does bridging studies. This was the gating event to request a pre NDA meeting with the FDA that meeting its now schedule.

Michael A. Sherman: Early this year, we successfully completed the PK dose bridging studies. This was the gating event to request a pre-NDA meeting with the FDA. That meeting is now scheduled.

Our strategy here, it's a leverage this late stage program in partnership with BARDA to provide the capital resources to further support our development programs in oncology.

Michael A. Sherman: Our strategy here is to leverage this late-stage program in partnership with BARDA to provide the capital resources to further support our development programs in oncology. Finally, we in-licensed D-STAT, a potential first-in-class therapy that has the potential to inhibit the activities of several key proteins implicated in the survival and viability of AML blasts and leukemic stem cells. Since acquiring rights to D-STAT, we've prepared for and successfully completed an end-of-Phase II meeting with the FDA, and during that meeting, we reached alignment with the FDA on both our readiness for Phase III and the key design elements of that trial. The FDA has also agreed with our non-clinical and CMC plan. We've captured their feedback in the detailed protocol which we have submitted to the FDA for final review. As I've seen in prior companies, when you have a capable team and you approach things objectively, and make decisions in an open and collaborative environment, strong execution tends to follow, and we're definitely experiencing that at Chimerix. Speaking of capable teams, I'm pleased to announce the appointment of Dr. Prateek Multani, Chief Medical Officer of Oric Pharmaceuticals, to our Board of Directors.

Finally, we in licensed these data potential first in class therapy that has the potential to inhibit activities of several key proteins implicated in the survival and viability of email blasts and lucky mix themselves.

Since acquiring rights studies that we've prepared for and successfully completed an end of phase two meeting with the FDA and during that meeting we reach alignment with the FDA on both our readiness for phase three and the key design elements of that trial.

Yes. He has also agreed with our Nonclinical and CMC plans.

We've captured their feedback in the detailed protocol, which we have submitted to the F. you gave for final review.

As I've seen in prior companies when you have a capable team and you approach things subjectively make decisions in an open and collaborative environment strong execution tends to follow one were definitely experiencing attic America.

Speaking of cable capable teams I'm pleased to announce the appointment of Dr. parts equal Pawnee Chief Medical officer of Orrick Pharmaceuticals to our board of directors.

Michael A. Sherman: Dr. Multani has a rich history of successful oncology drug development and, as a hematologist, will bring particular expertise to our development of D-Stats. The diversity of experience he's had across multiple oncology platforms will make him particularly valuable as we expand our pipeline of oncology therapy. So we're very excited to have Dr. Multani join our board. Let me also pass along my thanks to Jim Daley, who has served on our board for the past six years. Jim is a seasoned biotech executive and valued board member at a number of companies, and he was instrumental in our repositioning of the company in the last year. It's been a pleasure working with Jim, and we'll certainly miss him.

Dr. Montani has a rich history, a successful oncology drug development and as a hematology. This will bring particular expertise to our development a D stat.

The diversity of experience he had across multiple oncology platform as well make him, particularly valuable as we expand our pipeline of oncology therapies. So we're very excited to have dr. montani join our board.

Let me also a pass along my thanks to Jim Daly served our board for the past six years.

Jim is a seasoned biotech executive and valued board member to number of companies and he was instrumental in our or repositioning the company in the last year, then a pleasure working with Jim and and we'll certainly miss him.

Let me down now dig a little deeper into our plans for a D. Stat, we believe using a therapy with multi modal targeting very early in the treatment of heterogeneous disease like am now is the right place for this agent.

Michael A. Sherman: Let me now dig a little deeper into our plans for DSTAT. We believe using a therapy with multimodal targeting very early in the treatment of heterogeneous diseases like AML is the right place for this. The objective is to make early responses more durable, driving a higher cure rate. That's certainly what was observed in the randomized phase two trial. The strongest signal came in the form of an overall survival advantage, and that was linked to consistently more durable responses. Our initial focus is on a 7 plus 3 combination, but the rationale for the drug also applies to combining it with other emerging therapies in the space. Our overall Phase III design is really pretty standard, but we've been creative in one aspect of that design in order to provide access to information early on that further validates the mechanism of action which led to the survival advantage in the Phase II trial.

The objective is to make early responses more durable driving a higher cure rate.

That's certainly what was observed in the randomized phase two trial are the strongest signal came in the form of overall survival advantage and that was linked to consistently more durable responses.

Our initial focus is with a seven plus three combination, but the rationale for the drug also applies to combining with other emerging therapies in the space.

Our overall phase three design is really pretty standard, but we've been creative in one aspect of that design in order to provide access to information early on that further validates the mechanism action, which led to the survival advantage in the phase two trial, let me expand on our strategy related to that early assessment.

Michael A. Sherman: Let me expand on our strategy related to that early assessment, and then I'll let Garrett cover the design details. Our trial design includes an early assessment of the first 80 randomized, evaluable patients. In particular, we'll have a robust assessment of comparative rates of Complete Response, or CR, and Minimal Residual Disease, or MRD. We will also be able to evaluate DSTAT's impact on accelerating hematologic recovery. CR and MRD are the two early metrics most predictive of survival advance. CR is more relevant for event-free survival, and MRD for both event-free survival and overall survival. This data is expected to be unblinded and reported publicly. Importantly, enrollment would continue uninterrupted.

And then I'll, let garik cover the design details.

Our trial design includes an early assessment of the first 80 randomize the valuable patients in particular will have a robust assessment of comparative rates of complete response, RCR and minimal residual disease or MRT.

Well also be able to evaluate D stat impact on accelerating hematologic recovery.

See our an M. R. D are the too early metrics most predictive of survival advantage CR as more relevant for event free survival and M. R. D for both event free survival and overall survival.

This data is expected to be unblinded and reported publicly importantly enrollment would continue uninterrupted.

This design feature does a few things for us it provides important additional data validating the mechanism of action and further insight into the probability of success for the for now the final analysis at a point at which the investment in the trial would be approximately $15 million. This allows.

Michael A. Sherman: This design feature does a few things for us. It provides important additional data validating the mechanism of action and further insight into the probability of success for the final analysis at a point when the investment in the trial would be approximately $15 million. This allows us to confirm that our ongoing investment is supported by clinical data. Continued access to the maturing information will also provide insight into time to event endpoints during enrollment in the Phase 3 trial. This includes event-free survival and overall survival. It does all this without materially changing the time to complete the trial. Now we've also incorporated a feature that provides the Independent Data Monitoring Committee discretion to maintain the blinding of the data from this early assessment if what I would call exceptional advantages are observed in rates of CR and or MRD. This is not traditional futility.

Just to confirm that our ongoing investment is supported by clinical data.

Continued access to the maturing information will also provide insight into time to events endpoints during the enrollment of the phase three trial. This includes event free survival and overall survival. It does all this without materially changing the time to complete the trial.

Now we've also incorporated a feature that provides the independent data monitoring committee discretion to maintain the blinding of the data from this early assessment, if what I would call exceptional advantages our observed in rates as CR and or Marty. This is not a traditional futility. These are thresholds that are so.

Michael A. Sherman: These are thresholds that are so compelling and likely to translate to survival endpoint advantages that they would trump our desire to access more data early. This isn't our baseline assumption, but we incorporate that flexibility to accelerate development based on the strength of the data. Garrett will expand on that in a minute.

Compiling and will likely to translate to survival endpoint advantages that it would trump our desire to access more data early.

This isn't our baseline assumption, but we incorporate that flexibility to accelerate development based on the strength of the data Garrett will expand on that in a minute.

Let me briefly touch on the progress we've made with Brincidofovir in smallpox, while our longer term development strategy has shifted to oncology. This program is well positioned to provide substantial ongoing nondilutive capital to fund that development.

Michael A. Sherman: Let me briefly touch on the progress we've made with Brincid-Offavir in smallpox. While a longer-term development strategy has shifted to oncology, this program is well-positioned to provide substantial ongoing non-dilutive capital to fund that development. Between our current cash position and potential renewable procurement contracts in the neighborhood of $450 to $550 million, we have a substantial opportunity to fund additional innovation.

Between our current cash position and potential renewable procurement contracts in the neighborhood of $450 million to $550 million, we have a substantial opportunity to find additional innovation.

As you May know BARDA has a mandate to incorporate a second drug in the strategic stockpile and with other potentially competitive program still in very early development Brincidofovir. It's in a position to benefit from this second sourcing directive for an extended period.

Michael A. Sherman: As you may know, BARDA has a mandate to incorporate a second drug into the strategic stockpile, and with other potentially competitive programs still in very early development, Brincid-Ofavir is in a position to benefit from this second sourcing directive for an extended period. As I mentioned, we've submitted a meeting request to the FDA, and a pre-NDA meeting is now scheduled. We expect the minutes from that meeting to be received early in the second quarter, and we intend to announce the results of that meeting after we receive those minutes. We've been in close collaboration with both BARDA and the FDA on the work that has been performed, and we have had their support along the way. Depending on the outcome of that meeting, we expect to advance the NDA submission process and to be in a position to submit that NDA by mid-year.

As I mentioned Weve submitted a meeting request to the FDA and a pre NDA meeting is now schedule.

We expect the minutes from that meeting to be received early in the second quarter and we intend to announce the results of that meeting after we receive those minutes.

We've been in close collaboration with both BARDA and the FDA on the work that has been performed and we have had their alignment along the way.

Depending on the outcome of that meeting we expect to advance the NDA submission process and to be in a position to submit that Andy a mid year work on the NDA filing has already begun.

Michael A. Sherman: Work on the NDA filing has already begun, and FDA's support to move ahead with the NDA is also an important milestone for the procurement process with BARDA. I look forward to providing an update on that pre-NDA meeting after we receive the meeting minutes. With that, I will turn the call over to Garrett for a more detailed review of our D-STAT Pivotal Trial design.

FDIC support to move ahead with the N. da is also an important milestone for the pro career procurement process with BARDA.

I look forward to providing an update on that pre NDA meeting after we receive meeting minutes.

With that let me turn the call over to Garrett for a more detailed review of our D stat pivotal trial design Garrett.

Garrett: Thank you, Mike. As Mike mentioned, we had a successful end of Phase 2 meeting, or DSTAT, with the FDA earlier this year in which we achieved alignment on our readiness to enter Phase 3 of development and on the key elements of a pivotal Phase 3 clinical trial. We have submitted the protocol to the FDA, and it is currently under review. The proposed Phase 3 study will be a randomized, double-blind trial of approximately 570 adults with newly diagnosed AML who are considered fit for intensive induction chemotherapy. The trial will include patients who are at least 60 years old with intermediate or adverse genetic risk profiles and will also include patients between 18 and 60 years old with adverse genetic risk profiles.

Thank you Mike.

As Mike mentioned, we had a successful end of phase two meeting or do you start with the FDA earlier this year in which we achieved alignment on our readiness to enter phase three development and on the key elements of a pivotal phase III clinical trial.

We submitted the protocol to the FDA and is currently under review.

The proposed phase three study will be a randomized double blind trial of approximately 570 adults with newly diagnosed and now who are considered fit for intensive induction chemotherapy.

The trial will include patients who are at least 60 years old with intermediate or adverse genetic risk profiles and will also include patients between 18, and 60 years old with adverse genetic risk profiles.

Having a broad age range was important to the FDA.

Garrett: Having a broad age range was important to the FDA because the inclusion of younger patients with adverse genetic risk provides consistency in expected outcomes across the age group. Patients will be randomized one-to-one to receive DSTAT in combination with standard citerabine plus anthracycline chemotherapy during the induction and consolidation phase. Patients on the control arm of the study will receive placebo plus standard therapy alone. Patients with split 3 mutations will be allowed into the study and will be allowed to receive mitostaurin in addition to their standard chemotherapy regimen. Enrollment will be stratified based on FLT3 status, age, and genetics.

The inclusion of younger patients with adverse genetic risk provides consistency in expected outcomes across the age groups.

Patients will be randomized one to one to received these that in combination with standard cytarabine, plus anthracycline chemotherapy during induction and consolidation cycles.

Patients on the control arm of the study will receive placebo plus standard therapy alone.

Patients with split three mutations will be allowed into the study and will be allowed to receive modest storm. In addition to their standard chemotherapy regimen.

Enrollment will be stratified based on what three status.

Page and genetic risk.

The FDA has indicated that event free survival for overall survival are acceptable endpoints for regulatory approval.

Garrett: The FDA has indicated that event-free survival or overall survival are acceptable endpoints for regulatory approval. EFS is defined as the time from randomization to treatment failure, relapse, or death from any cause, whichever occurs first. Treatment failure in the EFS definition is failure to achieve a complete response with hematologic recovery.

Yeah fastest defined as the time from randomization to treatment failure relapse or death from any costs whichever occurs first and treatment failure in the FX definition is failure to achieve a complete response with human logic recovery.

We intend to allocate alpha to both endpoints such a success in either could be the basis for approval.

Garrett: We intend to allocate alpha to both; such success in either could be the basis for approval. The study is designed to provide greater than 85% power to detect hazard ratios of 0.7 for either overall survival or event-free survival. Other endpoints to be evaluated in the trial include minimal residual disease, relapse-free survival, time to hematologic recovery, and induction response or CR-CRI. In order to supplement the data already reported from the pilot and Phase II trials, the trial design includes an early assessment of the first 80 evaluable patients for comparative CR and MRD rates. We hypothesize that the durable responses and survival advantage that we observed in the randomized phase 2 trial were driven by a higher rate of MRD-negative disease and or more complete elimination of leukemic stem cells. We will test for measurable residual disease in the bone marrow biopsy at the completion of induction and or reinduction therapy using sensitive flow cytometric techniques, which can detect one persistent blast in a background of 10,000 cells.

The study is designed to provide greater than 85% power to detect hazard ratios have 0.74, either overall survival event free survival.

Other endpoints to be evaluating the trial include minimal residual disease relapse free survival time to human logic recovery and production response, we're CRC our eyes.

In order to supplement the data already reported from the pilot and phase two trial. The trial design includes an early assessment of the first 80 evaluable patients for comparative CR and Amar D. Ray.

We have popped decide that the durable responses and survival advantage that we observed in the randomized phase two trial were driven by a higher rate of MRT negative disease, and or more complete elimination of leukemic stem cells.

We will task for measurable residual disease in the bone marrow biopsy at the completion of induction and or re induction therapy using sensitive flow side of metric techniques, which can detect one persistent blast in a background of 10000 cells.

Garrett: Patients without measurable residual disease have lower rates of relapse and longer overall survival than those with measurable disease, even if they have achieved a complete response as assessed by conventional methods. This data will be important to confirm the mechanism. Behind these stats in this, and Conserve to continue to build enthusiasm among physicians around the therapy. Importantly, the Independent Data Monitoring Committee will review this blinded data and will have the discretion to maintain blinding of the data from this early assessment if we see what we would call exceptional advantages in the rates of complete response and or MRT. These thresholds would be significant when the expected EFS and or OS benefit is substantial.

Patients without measurable residual disease have lower rates of relapse and longer overall survival to those with measurable disease, even if they have achieved a complete response as assessed by conventional methods.

This data will be important to confirm the mechanism.

Hi, D stat in this disease and conserve to continue to build enthusiasm among physicians around the therapy.

Importantly, the independent data monitoring Committee will review this blinded data and we'll have to discretion to maintain blinding of the data from this early assessment, if we see what we would call exceptional advantages in the rates of complete response and or Marty.

These thresholds would be significant when the expected fs and or less benefit our substantial.

As an example, if the if the DMC observed a 20% advantage in CR and a 20% advantage and MRG negative rate on the D. Stat arm. They could informed the company that the study should proceed without unblinding. The early assessment results in which case those patients will contribute to contribute to the final.

Garrett: As an example, if the DMC observed a 20% advantage in CR and a 20% advantage in MRD negative rates on the D-STAT arm, they could inform the company that the study should proceed without unblinding the early assessment results. In that case, those patients would contribute to the final efficacy analysis. Otherwise, the data would be unblinded to allow presentation of the early assessment data publicly, and these patients would be included, or those that were included in the early analysis would be replaced by newly enrolled patients for the final analysis. We plan to continue enrollment while this early assessment is being performed because the pace of enrollment is fastest at the end of the trial when all sites are open. We do not expect the addition of 80 evaluable patients to materially impact the time to complete the trial.

Efficacy analysis.

Otherwise the data would be unblinded to allow presentation of the early assessment data publicly and these patients would be included or that were included in the early analysis will be replaced by newly enrolled patients for the final analysis.

We plan to continue enrollment while this early assessment is being performed.

Because the pace of enrollment is fastest at the end of the trial. When all sites are open we do not expect the addition of 80 evaluable patients Tim materially impact the time to complete the trial.

We have a lot of work ahead of us over the coming months related to the initiation of our phase three trial.

Garrett: We have a lot of work ahead of us over the coming months related to the initiation of our Phase 3 trial. When we initiate this pivotal study later this year, we plan to provide greater granularity on timelines for patient accrual, for the early assessment data readout, and overall trial completion at that time. With that, I'll now turn the call over to Mike Andriole for a review of the financials.

When we initiate this pivotal study later this year, we plan to provide greater granularity on timelines for patient accrual for the early assessment data readout and overall trial completion at that time.

With that I'll now turn the call over to Mike Andrea for review of the financials.

Thanks, scared and good morning, everyone that was Michelle mentioned in her introductory remarks earlier today, we issued a press release containing our financial results for the fourth quarter and full year 29 Kim.

Michael T. Andriole: Thanks Garrett and good morning everyone. As Michelle mentioned in her introductory remarks, earlier today, we issued a press release containing our financial results for the fourth quarter and full year 2019. Starting with our balance sheet, at the end of 2019, we remain well capitalized with approximately $113 million in capital to fund operations. Turning to our Statement of Operations, the company reported a net loss of $3.5 million, or $0.06 per basic and diluted share, for the fourth quarter of 2019, compared with a net loss of $15 million. 29 cents per basic and diluted share in the fourth quarter of 2018.

Starting with our balance sheet at the end of 2019, we remain well capitalized with approximately $113 million and capital to fund operations.

Turning to our statement of operations the trial by reported a net loss of three and a half million were six cents per basic and diluted share for the fourth quarter of 2019 compared with a net loss of 15 million were 29 cents per basic and diluted share and the fourth quarter 2018.

R&D expenses were reduced by half to $7.5 million for the fourth quarter of 2019, compared with 15.3 million for the same period in 2018.

Michael T. Andriole: R&D expenses were reduced by half to $7.5 million for the fourth quarter of 2019, compared with $15.3 million for the same period in 2018. General and administrative expenses also decreased to $3.1 million for the fourth quarter of 2019, compared to $5 million for the same period in 2018. Loss from operations was $3.9 million for the fourth quarter of 2019 compared to a loss from operations of $15.4 million for the same period in 2018. Over the past six months, we've taken significant steps to reduce our burn, culminating in a 50% reduction in operating expenses from Q1 of 2019 to Q4 of 2019. For 2020, we expect R&D expenses to remain relatively consistent with 2019, as we plan to initiate the Phase III D-STAT trial, make investments in Brin Sabafavir CMC, and prepare to submit the Brin Sabafavir new drug application mid-year.

General and administrative expenses also decreased to 3.19 for the fourth quarter of 2019 compared to 5 million for the same period in 2018.

Loss from operations was $3.9 million for the fourth quarter of 219 compared to a loss from operations of 15.4 million for the same juror in 2018.

Over the past six months, we're taking significant steps to reduce our burn, culminating another 50% reduction in operating expenses from Q1 of 2019 to Q4 of 29 King.

For 2020, we expect R&D expenses to remain relatively consistent with 2019 as we plan to initiate the phase three D. Stat trial make investments some brincidofovir CMC and prepare to submit the brincidofovir new drug application midyear.

We do expect a significant decrease in Argentina expenses compared to 29 came primarily from a reduction on compensation expense.

Michael T. Andriole: We do expect a significant decrease in our G&A expenses compared to 2019, primarily from a reduction in compensation expense. As Mike mentioned, our Phase III study for DSTAT is designed to stage investment with approximately $15 million in spend to generate data in the first 80 valuable patients, at which point we expect to validate our understanding of DSTAT's mechanism of action and confirm the level of activity we observed in Phase II. Our current operational plan projects a cash balance of approximately $70 million at the end of 2020. And, contingent on the outcome of the upcoming regulatory and procurement interactions associated with Prince of Albuquerque for smallpox, we have the potential to be profitable in both 2021 and 2022. In that scenario, we expect our current net operating loss carry-forwards to offset future operating income in those periods. With that, Operator, we'll now open the line for any questions.

As Mike mentioned.

Our phase three study for D. Stat is designed to stage investment with approximately $15 million and spend to generate data in the first 80, a valuable patients at which point, we expect to validate our understanding of the stats mechanism of action and confirm a level of activity we observed in phase two.

Our current operational plan projected cash balance of approximately $70 million at the end of 2020.

And contingent on the outcome of the upcoming regulatory in procurement interactions associated with Brincidofovir for smallpox, we'd have the potential to be profitable in both 2021 2022 in that scenario. We expect our current net operating loss carry forwards to offset future operating income in those periods with that.

Operator, we'll now open the line for any questions.

Operator: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question comes from Phil Nadeau with... Count and Co., you may proceed with your question.

Thank you as a reminder to ask a question you will need to press star one on and telephone. So it was probably your question press the pound Keith Please stand by we compile the Q and a roster. Our first question comes from feel Naidu with.

Counting call you May proceed with your question.

Michael A. Sherman: Good morning. Thanks for taking my question and congratulations on the progress. Just a few follow-up questions on the DSTEP phase 3 design, just to... Make sure that we understand. What CR and MRD rates do you think you need to see at the interim in order for the hypothesis behind DSTAT to be verified? Could you give us some sense of the bar that you need to see or the data you need to see to continue moving it forward?

Morning, Thanks for taking my question and congrats on the progress just a few follow up questions on the destock phase three design just too.

Make sure that we understand.

What's your name R&D rates do you think you need to see at the interim in order for the the hypothesis behind destined to be verified could you give us some sense of the bar that you need to see whether they do you need to see to continue moving forward.

Yeah.

Michael A. Sherman: Yeah, this is Mike. So, I think Garrett gave an example of one, and I think we've provided some detail to the DMC for those thresholds. The example he gave was a CR rate of 20 in addition to an MRD rate of 20% above what you would see in the control arm. One thing to note, if you look at the past couple of drugs that were approved in this space based on, you know, survival advantages of one kind or another, they actually didn't show a significant difference in CR and MRD, I think, so that's, I think, highlights how high we If you were to have, say, less of one or another of those advantages, in other words, all the advantages came in either CR or MRD, you can imagine it would need to be much higher than that 20% threshold. I actually prefer to wait to give any clarity or more specifics on those until after, perhaps, the FDA has finalized those criteria. I don't expect that.

This is Mike.

So I think Gary gave an example of of one and I think we've provided some detail to the DMC need for for those threshold.

The example, we gave was the CR rate of 20. In addition to an M. R. D rate of 20% above what you would see in the control arm one thing to note as you look at the past couple of drugs that were approved in the space based on.

No survival advantage, the one kind or another they actually Didnt show, a significant difference and CRM R&D I think so thats.

The highlights the how high we set the threshold.

If you were to have say less of one or another of those advantages in other words all the advantage came in either CR or MRT, you can imagine it would need to be much higher than that 20% threshold.

I actually prefer to wait to give any clarity or more specifics on those until after maybe the FDA has.

Finalize those criteria I don't expect that they would.

Michael A. Sherman: They would necessarily challenge those necessarily, but it's better always to wait until that's completed.

Challenge, those necessarily but but to better always to wait until thats completed.

Got it and.

Michael A. Sherman: Got it. And, appreciating the trial hasn't even started yet, so this may not be easy to answer, but do you have a sense of when the interim could be triggered and when the final data could be available?

Appreciating that trial hasn't even started yet so.

May not be easy to answer, but you have a sense of when the interim could be triggered and when the final data could be available.

Yes, I'd like to be able to answer that question as we get the trial initiated so were.

Michael A. Sherman: I'd like to be able to answer that question as we get the trial initiated. So we've wrapped up some feasibility work and are in the process of getting to involve sites on that, and so I think we'll be in a much better position.

We've we've wrapped up some feasibility work and are in the process of getting to engage sites on on that and so I think we'll be in a much better position.

Michael A. Sherman: I do think, certainly from an investor perspective, this notion that, as opposed to embarking on a Phase III trial of, say, 570 patients, where we're essentially in the dark from a data standpoint during that period, the notion that, with a relatively small investment, we'll have access to some really important information that then can be reported during that trial, including the later endpoints of EFS and OS. It provides some nice continued information flow to investors as we execute that trial. So that's one of the benefits of having that early assessment. We'll come back as we initiate the trial mid-this year with a more specific estimate of when that early assessment is likely to happen and when.

I do think from certainly from an investor perspective, this notion that.

As opposed to embarking on a phase three trial of let's say 570 patients where we're essentially.

In the dark.

From a data standpoint during that period the notion that.

With a relatively a small investment will have access to some really important information that then can report during that trial.

Including the later endpoints of DFS no as it provides some nice continued information flow to investors as we execute that trial. So that's one of the benefits of having that that early assessment will come back as we initiate the trial of mid this year with a with a more specific estimate of when that earlier.

Hussmann is likely to happen then one you'd wrap up the trial.

Michael A. Sherman: Got it. And then just one last question on the statistics, if I interpreted your comments correctly, there's actually no alpha spend on the interim. The penalty for the lack of a better term for taking the interim is simply that you have to enroll 80 more patients. So the total recruitment goes from 570 to 650. Is that correct? Or is there actually alpha spend on that interim as well?

Got it and then just one last question on the statistics.

Interpreted your comments correctly, there's actually know alpha spend on the interim the penalty for lack of better term for taking the interim is simply have to enroll 80 more patients. So the total recruitment goes from 572 to 650.

Is that correct or is there are actually alpha spend on that interim as well that's accurate you understand it well.

Michael A. Sherman: That's accurate. You understand it well. Got it.

unknown: Thanks for taking my...

Got it thanks for taking my questions.

Operator: Thanks for taking my questions. Oh, thank you.

Thank you.

Thank you and your next question comes from and White with H.C. Wainwright you May proceed with your question.

Edward Patrick White: Thank you, and our next question comes from Ed White with HC Wainwright. You may proceed with your question.

Hi, guys. Thanks for taking my question. So I just want to make sure I heard that right the.

Michael A. Sherman: Hi, guys. Thanks for taking my questions. So I just want to make sure I heard that right. The DSTAT trial, you said, is going to start in the middle of 2020?

The D. Stat trial, you said, it's going to start in the middle of 20.

That's right.

Michael A. Sherman: That's right.

Okay.

Michael A. Sherman: Okay. Do you have sites that are prepared to go in both the U.S. and outside the U.S., and how should we be thinking about patient populations in the U.S. versus outside the U.S.?

And.

Do you have sites that are prepared to go in both U.S. and outside the U.S. and how should we be thinking about patient populations us versus outside the U.S.

Yeah, you can imagine that the us the startup process is faster in the U.S.. So I would imagine, particularly for that first 80 patient assessment. Most of those patients are going to be coming from North America and then European.

Michael A. Sherman: Yeah, you can imagine that the startup process is faster in the U.S. So I would imagine, particularly for that first 80 patient assessments, most of those patients are going to be coming from North America, and then European sites would be coming on a little bit later and would be more important in fueling and driving the rest of the phase 3 enrollment. Does that answer your question?

Sites would be coming on a little bit later, and when would be more important than fueling and driving the rest of the.

The phase three enrollment to answer your question.

Yes, it does thanks for.

Sure.

And.

unknown: Thanks. Bye.

unknown: When you are looking at those 80 patients and if the DMC decides that they're not going to unblind and, you know, release them,

When you.

Our looking at that those 80 patients and if the DMC decides that.

They're not going on blinded.

And you know release that you don't released the data will you tell us tell investors that.

Michael A. Sherman: and you don't release the data, will you tell us?

Michael A. Sherman: Tell investors that, you know, what's going on, that we won't be, you know, because we're going to be expecting the data that we won't be seeing.

What's going on that we won't be because we're going to be expecting the data that we won't be seeing the data.

That's right and that's what that's one of the reasons why it's important that.

Michael A. Sherman: That's right, and that's one of the reasons why it's important that it's clear. The thresholds we've set on this are higher than your typical, say, futility analysis. I mean, typically, in a phased redesign, you set a threshold where you clear that threshold and continue with a study if there's at least a chance that you'd have success. These thresholds are set so that there's enough advantage that you actually have pretty significant confidence that they're going to translate to the regulatory survival endpoints in question. So if they do keep it blinded, that's certainly good news, and we can clarify. It's part of the reason why clarifying what those thresholds are is meaningful. We gave the example of at least the 20-point in both CR and MRD, and hopefully, we can expand on that after we've had the FDA review the threshold so that we can clarify if there is less of one or the other, then how big must that differential be.

That it's clear.

The thresholds, we said on this are higher than your typical say futility analysis may typically.

In a phase three design, you said, a threshold, where you clear that threshold and continue with this study if there is certain there's at least a chance that you'd have success. These threshold there said that.

There is enough advantage that you actually have a pretty significant confidence that they're going to translate to the regulatory survival endpoints in question. So if they do keep it blinded.

That that certainly good news than we can clarify as part of the reason why clarified what those thresholds are.

Is the is meaningful we gave the example of at least the 20 point in both CRM R&D.

And no hopefully we can expand on that after we've had the FDA review the threshold. So that we can clarify if there was none the less of one or the other than how big must that differential b.

Great. Thanks, Mike maybe just on on smallpox.

Michael A. Sherman: Great. Thanks, Mike.

Garrett: And maybe just on smallpox. You had said that you intend to submit it in the middle of this year. Do you foresee any potential hiccups? I assume that you have all the safety data from the CM... GMB trials and other studies, but I'm just wondering if GI issues could be a concern for approval or how you're thinking about that. I think that, this is Garrett, you know, all of that data has been published, summarized, you know, we will summarize it in more detail in the submission itself. You know, I think that we're in the process of writing all of those modules, you know, as we speak; a lot of that information is going into and being summarized in the pre-NDA package itself. So, it's really to get the FDA's feedback that there are no further experiments that need to be done and that we have completed what is required in order to support the efficacy and the bridging to human exposure. So, those are the key elements that we will be discussing with the FDA at the pre-NDA meeting.

You had said that you intend to submit in middle of this year do you foresee any potential hiccups i. I assume that you have all the safety data from that the cm.

CMP trials and other studies and but I'm just wondering if if you know its G.I. issues could be a concern for approval or how you're thinking about that.

Thanks, Ed This is Derek I.

I think that there's all of that data has been has been published summarized.

We will summarize it in more detail in the submission itself.

I think that we're we're in the process of writing all of those modules and as we speak a lot of that information is going and being summarize and pre and da package.

Itself, so it's really to get the FDA feedback.

There are no further experiments that need to be done.

And that we have completed what is required in order to support the efficacy and the bridging to the human exposure. So those are the visit the key elements.

That will be discussing with the FDA pre NDA meeting and I think it's been.

Michael A. Sherman: Yeah, I think it's been, I'd say, a somewhat unique level of communication in terms of the information as both the preclinical work has been completed in these animal models, and essentially sharing that data with both BARDA and the FDA. So I think there's good awareness of what that data has looked like all along. And so we believe that we've done what's required to advance to the NDA filing, and this is the final step to get that alignment and go-ahead from the FDA. And, of course, that then opens the door to the procurement process with BARDA.

Say somewhat unique level of communication in terms of the information as.

Both the preclinical work has been completed and these animal models essentially sharing that data with both BARDA and the FDA. So I think theres. Good awareness of what that data has looked like all along and so we believe.

What we've done what's required to advance to the NDA filing misses the final step to get that alignment and go ahead from of from the FDA and of course that that then opens the door for the procurement process with with BARDA.

Edward Patrick White: Great, thanks, Mike and Garrett. And then just, I'm wondering if you've had any meetings recently on the Hill or with BARDA, you know, regarding the stockpile, and is smallpox, you know, still a priority to get the second product in there? Or is the coronavirus sort of taking center stage? Or maybe there's other concerns with that. And this is sort of being on the back burner. Just want to get your feelings on what your thoughts are on the stockpile and how important this is still.

Great. Thanks, Mike can Garrett and then just I'm wondering if you had any meetings recently on the hill or with BARDA.

Regarding the stockpile is in its smallpox instill a priority you get the second.

Product in there or is the cooling the virus sort of taking center stage or maybe there's other concerns with that and this is sort of being on the back burner just wanted to get your feeling on on what that.

Your thoughts on the stockpile and how important this is still.

Phil: This is Phil. Yeah, it's a good question. And I don't think the emphasis or priority that importance that BARDA has put on the smallpox countermeasure is any less critical to BARDA than it ever has been. That having been said, you can imagine that BARDA is essentially all hands on deck managing the coronavirus and potential measures there. I will say that, you know, we've required engagement with them in preparing for this pre-NDA meeting, and they have not missed a beat in terms of their support for us in that process. That having been said, you know, of course, to the extent that there are competing resources, that introduces that possibility. But at this point, I have no evidence that anything has changed. The fact that there's potential government funding being allocated to that new funding being allocated, and I saw reports of that here recently, is probably also positive. But we'll continue to execute, and we haven't seen any change in BARDA's support of that in the meantime. Great.

Yes, good question that I I don't think the.

The emphasis our priority that.

Importance that BARDA is put on on the the smallpox countermeasure is.

As any any less.

Yes.

Critical to to BARDA than it ever has done.

That having been said you can imagine that BARDA is essentially all hands on deck.

Managing the kind of Corona virus and potential measures there I will say that.

Weve required engagement with them in preparing for this this pre NDA meeting and and they have not missed a beat in terms of their support for us in that process that having been said.

Of course, the to the extent that there are competing resources that that introduces the that that possibility, but at this point.

No no evidence that the that anything has has changed the fact that theres potential government funding.

Being allocated to that new funding being allocated satisfy reports of that here recently is probably also also positive, but we'll continue to execute and and haven't seen any change in Bart as so supportive that in the meantime.

Great. Thanks, Mike and just the last question that was just curious if you've had any discussions or interest from other countries regarding ex U.S stockpiling.

Michael A. Sherman: Great. Thanks, Mike. And just the last question, I was just curious if you've had any discussions or interest from other countries regarding, you know, ex-U.S. stockpiles. Yeah, we have had.

Michael A. Sherman: Yeah, we've had inquiries over time from other countries. And I think I've said this in the past, while those are opportunities that we would pursue, realistically, I think the material financial opportunity is with the U.S. stockpile. The quantities that are likely to be requested for the stockpile in other countries are relatively small. So while we'll look at those opportunities when they come, they fall behind the U.S.

Yeah, we've had inquiries overtime from other countries.

I think I've said this in the past while those are opportunities that we would pursue.

Realistically I think the material financial opportunity is with the U.S. stockpile the quantities that are likely to be.

Requested for stockpile and other countries are relatively small so while we'll look at those opportunities when they come there they fall behind the U.S.

Okay, great. Thank you.

Edward Patrick White: Okay, great. Thank you.

Edward Patrick White: Thanks, Ed.

Thanks, Ed.

Michael A. Sherman: Thank you, and I am not showing any further questions at this time. I would now like to turn the call back over to Mike for any further remarks.

Thank you and I'm not showing any further questions. At this time I would now like to turn the call back over to Mike for any further remarks.

Michael A. Sherman: Thanks, everyone, for your attention this morning. I will point out that we've updated our corporate presentation on our website, which includes some of these parameters and design features of the Phase III trial, so feel free to reference that as you look a little bit more closely.

Yeah no. Thanks, everyone for your attention. This morning, I will point out that we've updated our corporate presentation on our website, which does include some of these parameters and design features to the phase III trial, so feel free to.

Reference that as you.

Michael A. Sherman: In the meantime, I thank everyone for their time this morning and look forward to updates in the coming months. Have a good day. Thank you, ladies and gentlemen.

As you look a little bit more closely and in the meantime at thank everyone for your time. This morning, and look forward to updates in the coming not have a good day.

Operator: Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for participating. You may now disconnect.

Thank you ladies and gentlemen, this concludes today's conference call. Thanks for participating you may now disconnect.

BF-WATCH TV 2021

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