Q4 2019 Earnings Call
[music].
Welcome how best to borrow conference call.
At this time, all participants are in listen only mode.
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As a reminder, today's call is being recorded.
I would now like to turn the phone ever team and Ericsson.
Out of Investor Relations and corporate communications that to Barbara.
Good afternoon, Thank you for joining us today.
Press release recording our fourth quarter end of your 2019 financial results was issued earlier today March 12, 2020 and can be found on the Investor section of our website at <unk> Dot com.
Not received this release or he would like to be added to the company's distribution list. Please email me at IR, that's as far as pharma Dot com.
This call is also being webcast live and approximately one hour after the call a replay will be available on the company's website and will remain available for the next 30 day.
A telephone replay will also be available through March Nike.
No that today's conference call unless cats contain forward looking statements within the meaning of federal securities laws, including statements regarding the company's strategy goal product candidate clinical studies and financing matters.
Such statements are subject to significant risks and uncertainties, including those described in our press release issued today Thursday March 12, 2020, and our recent SEC filings on form 8-K, 10-K, and hence you.
Actual results or performance may differ materially from an execution indicated by our forward looking statements huge those risks and uncertainties. We caution you should not place undue reliance on any of the forward looking statements, which speak only as of today.
As usual take analyst questions at the end of the call. However, we also incurred shareholders to submit questions by email you I, our EPS of our pharma dot com on permitting we will address these questions alongside any other species.
Joining me on the call today, or Rob Nebel, Chief Executive Officer, the drill Chowdhry Chief Medical Officer male Youre kind of President and Chief operating Officer, and David Robinson, Chief Financial Officer, I'll now turn the call over to Rob.
Thank you and good afternoon, everybody and welcome to our fourth quarter and Europe Cool our do appreciate you joining us.
So today, we will provide a recap of the last quarter that summarizes results. We just announced today from two clinical studies well production.
Including positive data from the open label period, albeit call. The study that showed clinical outcomes with sustained were approved over a longer duration on drugs.
Finally, we'll share our plans for advancing our pipeline and Twentytwenty.
I'm pleased to say, we're going to 29 team with positive momentum, notably we secured additional financing by closing a private placements for total potential proceeds of up to 75 million.
Restricted our board of directors and executive leadership team and announced <unk> Oh lead development program has crossed a breakthrough therapy designation by the FDA.
Regarding the financing the deal was led by Bain capital Life Sciences with participation by existing and new investors.
Additional funding means we find ourselves entering twentytwenty in a very strong cash position and able to execute on corporate priorities.
Specifically the net proceeds from the financing should sufficiently funded the second phase three study.
The most predicts a pad, hey, Hey, Pat program as well as other operational expenses.
As always we're grateful for the supportive on best is like yourselves separate leaving the company and our vision.
In order to help us achieve decision, we recently broaden the depth of our board of directors.
Last December we announced the Doctor on finance your financing was appointed to our board.
On his deep expertise in orphan drug development and an extensive background on the development of the FDA and M&A approved orphan drugs.
Additionally, as part of the financing we welcome Dr., Richard Sun pop or a balanced capital life Sciences to our board.
With his experience includes leadership roles within biotech companies as well as healthcare investment funds and equity research on Wall Street.
Beyond the border, we expanded our executive leadership team with the appointment of Dr. bedroom chartering as Chief Medical Officer sitting with me here in Austin.
The draws appointment comes at a pivotal time as we advance them over to say program through the next regulatory milestones.
As two decades of regulatory leadership experience as director of the Fts pulmonary allergy and Rheumatology Division the very division responsible for reviewing over to exit.
Thank you for started over numerous drug development programs and approvals for pulmonary and orphan disease meds.
Got it he's on board as when he will be instrumental into devising a regulatory strategy.
Programs and guarding our interactions with regulatory body.
For more information on the draws oppressive impressive background that you hear about why he joins the borrower encourage you to read our most recent blog posts that you can find on IR page of our website.
We're pleased to have attracted these highly experienced and in fact for industry needs to serve our.
Each of their respective towns complement our existing team and will no doubt prove invaluable as we capitalize on the many opportunities that lie ahead.
Broadening out the advance from last quarter quickly touch on the breakthrough therapy designation that the FDA granted.
Moreover, decks for the treatment of acre.
We believe this designation, which was announced at the end of 29 team reflects the significance of Margaret acts as an investigational product and as an important development as we embark on the second phase three studies for the program.
Based breakthrough designation is granted to drug candidates for which preliminary clinical evidence indicates the drug may demonstrate substantial improvement over available tree.
Additionally, this designation allows for us to had increased collaboration and more frequent dialogue with the FDA as we entered this critical development period.
I will now cost the drove to summarize the Impala open label results, we announced today and shake his perspective on what the sold means for them over to excite program and Twentytwenty.
Thank you though.
Hello, everyone.
This is low growth quarterly call with footballer.
I'm happy to be here Im pleased to be speaking with you.
Let me take a preliminary introduce myself.
And medical Doctor.
Good morning, everybody during telemedicine Thunder allergies, and we'll open.
And also cover Phd and even the logic.
Our from just a large portion of my carrier in public health.
I think for nearly 20 years or better yet.
During the last 16 years of agency our was the director of the divisional closing learning Allergan, Andrew MACT luxury products from turn for drug evaluation from result.
Just prior to joining for level over the senior Vice President for Gallagher and achieve physician scientists and Astrazeneca reiterate inflammation.
Okay when the to group.
Probably ask why airlift, a big pharma for John So bar.
For me the decision about simple.
So while our focus is from developing drugs for rare skin diseases and better aligned with might explore.
Correct.
The small biotech like for water, it's different than big pharma or that gives me the opportunity.
To be involved in many aspects.
Drug development and to have a broader impact across the organization.
And perhaps most.
Ultimately sabato has an attractive pipeline.
Multiple programs like mobile correct.
Yes.
Uh huh.
Having had the opportunity to evaluate being part of my daughter seaborne before joining football.
Now having reviewed the impressive openly moved out there from the.
Sorry.
I really believe well got direct has the potential to draw for longer life patients living with her.
I hope my experience and expertise Dunhill are sure. This investigational therapy to the final phase of developing kind of game regulatory approval.
Today I will provide you with an update on both the open label period, well being honest study.
As well as simple enough Oh extension study.
Let's start with the highlight of the open label in problem a doctor we just got out.
These data which demonstrated sustained.
Continued improvement outgrowing along that exposure good drug reaffirms our confidence in their program.
As a reminder.
Symbolic of food to talk to treatment period.
You had one was the 24 week double blind placebo controlled portion of the study in which patients randomized to receive either well Greg Wow, Okay continuously.
Well go next well start date every other week otherwise called intermittent dosing.
Matching placebo.
This was followed by PDN too.
Thank you for 248 week open label period during which all patients received internally drunk driving our logo correct.
During previous well, but the whole blood period.
We also a dose frequency dependency and the key endpoints.
With the continue with administration or whole goodricke, resulting in high efficacy data with people.
I'm going to he was doing appearing to result in higher because then they within dose.
Therefore, what simplicity today's call when full growth on the group Duck had received continuous doors or well good right you're going to double blind Pete here.
Courses bills that have received with people.
Well, both beach received intermittent dosing during the open label PT Doug.
I'm happy to the board that's in the open label period improvements from baseline integration as well.
Oh, the Gsix just measure the diffusion capacity of carbon monoxide, audiophile, which was a pre specified secondary endpoint when mentoring.
Oh progressively continued to improve in the continuous dosing.
And importantly <unk>.
Hey, gradient and deal fuel improvement feeling patients who were.
Placebo transmission track to guard showed similar improvements good those seen in patients who.
Who had been in the contiguous goes into.
After looking at these two independent measures of gas exchange. We believe these doubt that they want to straight there that removing surfactant for my patients law translates into a meaningful improvement in gas exchange data.
And those improvements continued after patients were treated a bit longer Greg over a longer duration of time.
While improvements in disgusted she mergers separately in Boston.
Just wondering how that translates into a clinical benefit is equally but more important.
Let's now turn to our key secondary endpoint talking with from Georgia, Let's quickly question here or there she our Q.
Which is a patient reported outcome measure.
As reported wouldn't be a lousy impala topline data we observed.
Okay improvement with the board active treatment groups compared to placebo in the SGR Q.
Encouragingly.
But happy to see that it's Jackie improvements observed in the continuous dosing grew during the double blanket pediatric study were maintained and even for the increased labor and are building labor period.
Additionally, as with the gas exchange major.
Patients who had been on placebo the most of that improvement in actually our Q scores are producing active drug improvements that essentially caught up with those being in the group of patients will receive continuous dosing talk more about right.
Similar trends the scene in the six minute walk distance.
Changes from baseline mentoring funny.
With regard to all lung lunch the range ratio I'll discuss easier between the continuous dosing group and placebo was quite encouraging at week 20 before the double blind pediatric study.
So to treat hold on to watch the future split conducted.
Including line, we're looking to watch procedure in the continuous towards in group.
Compared to 17 into <unk>.
Pardon the reduction in the frequency of full lugs continued during the open label PD Oh the study.
We totally fine well London to watch procedure conducted during the open label follow up period.
These data suggest that treat would've been mogadore has the potential the considerably the views the need for Golden lunch and this outcome, but nothing to sustained over time because for the reviews with the longer exposure to treatment.
Lastly, it is worth noting that the dropout rate in the Impala study was quite low.
Total of 128 patients completed the open label period, our PDL two.
The study, which books the dropout rate at only 7%.
Across the entire study.
In our opinion data from the Impala open label period could not have been more convincing.
These results reinforce our confidence in the program.
And provide additional support at Logan Rex has the potential to become the flows approved drug for patients with <unk>.
Well you announced the topline data from the open live appear to be Impala today.
Please note that we expect to present more comprehensive data from the study at an upcoming scientific conference and eventually in a peer reviewed journals.
Keep you updated on these event.
Looking beyond Pete here too.
Open label Peter have been follows Trabi lets me ticket limit to bring you up to speed on Impala X.
This is our ongoing open label extension study that allows patients rolling off in power to continue treatment for up to three additional years and will help to the trona mine the longer term safety.
And usable contracts in patients with the attack.
I'm happy to report back in February of this year.
<unk> X plus fully enrolled with the talking about 16 auto 64 eligible patients.
Following the whole loan loss trend I just described in the Impella study to date only three well London Novagold had been performed among the 60 patients in the impart lot X.
Additionally, that'd be no dropouts before turning the extension studies.
No what does this all being put them all got Rex program and Twentytwenty.
Did you mean dot the direction well a lead program is very clear.
Our number one priority is to plan second phase three clinical study.
Which is likely to be no one else Impala too.
We're in discussions with the FDA regarding the follow up to study designs are important.
Initiate the study as soon as possible.
Well they cannot yet can guide them the timing of the study stock.
Common can detail on the potential design.
We are confident that the next study will only have one active drug huh.
That being in daily dosing regimen at Borgata.
Compared to placebo, but.
But those are mcgoldrick Indian color too will likely be this thing goes that was used in the in Palestine.
Fortunately great food product designation means we will get more frequent interactions with the FDA.
On a shorter time clock.
And the agency, we worked with US on the design of the study.
As conversations with them via progress and key decisions are made.
We will share material outcomes with you.
Now, having all due to a global phase three study across 30 exercise.
We believe we have the relationships and knowledge to get another study up and running with higher accretion.
In order to stop the study as soon as possible Oliver we must concentrate our efforts on the related rather two projects.
Therefore, we had no longer considering they live to fight.
Based on the cut in Dhaka in any geographies.
Robert maybe focus on activities, that's the board a timely initiation of the next phase two study.
Thank you for your time I would love pass the call to Donnelly, who will briefly review on the other programs.
Thank you Michael Good afternoon, everyone rounding out the update on Multidex I would like to touch on the microbiology results, we announced today from optimum our 48 week exploratory open label non controlled phase two study that assessed log index for the treatment of non to virtual us not to bacteria.
Oh, well NTM lung infections in patients not affected by cystic fibrosis.
The study, which enrolled patients with other much about term ATM complex or match or the more difficult to treat as much about obsesses was divided into two treatment groups most of which received market thats administered once daily.
Patients and belts treatment groups or sputum culture positive with patients and treatment. Good one being on entry myself bacterial regimen, while patients and grew up to one now.
Oh patients in the study were flat sick, they suffered from chronic infection and what treatment for factory.
The primary endpoint of the study with sputum culture conversion defined as at least three consecutive time constant sputum samples without growth of NTM joint treatment Kerry.
Results from the I.T. population showed that five out of 24 patients with match or 21% achieved sputum culture conversion with two of those patients remaining culture negative through the 12, we follow up period.
Such culture conversions, we're not observed in patients with obsesses protection.
Among the 32 patients 14 experienced serious adverse events, one of which was considered potentially treatment related.
Most common shameless intestines exacerbation, a bump campuses as one might expect.
Reflecting the severity of the disease in this patient population three patients died during the study with all of that's unlikely related to the stage.
While the results were not class, what we had hoped or we will continue to assess the full dataset of up to now to better understand the clinical outcomes.
Once we have results from our other NTM study called Encore, which is evaluating all the next for the treatment of NTM people living with she asked.
We will review our options and make decisions about the future Valentin program.
In the meantime, we expect to submit comprehensive data from Optima at an upcoming scientific conference.
In closing I will provide you with a quick update a male our pivotal phase three study evaluating paradigm for the treatment of MRC lung infection people that's yeah.
As we have got him on previous calls a target enrollment for this study is 200 and we are nearing completion.
The adult population has been fully enrolled for quite some time.
And as US this month the primary analysis population, which is patients between six and 21 years, an age and Inrone hundred 33 patients out of the target of 150.
So this leaves 17 to go.
Given our past enrollment speed and considering the Corona buyers concerns we will only continue to enroll patients in a battle until the second quarter off this year.
Taking into account our current enrollment over the last few quarters. We believe we will be able to enroll approximately 140 younger patients.
Avail had a 24 week placebo controlled period, followed by an open label Terry Thus, we anticipate sharing topline results with you early next year.
Thank you and I'll now turn to call over today, who will provide you with the financial update.
Thanks, DJ and Hello, everyone.
Let me begin by age on our cash position following responding.
As of December 31st 2019, we had cash cash equivalents in short term investments of approximately 122 million.
Which includes receipt of the first trust from our most recent finance.
The second trucks from the financing includes milestone anymore. They are exercisable at any time prior to the earlier 30 days following a defined clinical milestones.
For two years actually closed days finance.
We ended the fourth quarter of 2019 with approximately 25 million outstanding debt on our balance sheet, which has reported in the subsequent events section of our 10-K was refinanced with Silicon Valley Bay and James.
Area 2004.
With respect to the fourth quarter. Two hours now also started 1.7 million or 72 cents per share in 2019, compared with a net loss of template.
Okay, and a 29 cents per share for 2018.
Research and development expenses were 8.7 million for the fourth quarter of 2019, compared with 9.9 million for the fourth quarter 2018.
General and administrative expenses were 3.3 million for both the fourth quarter of 2019 and 2018.
And now with respect to our yearly results.
Our net loss for the year ended December 31st 2019 was 78.2 million.
Or $1.95 per share.
Which is 26.9 million was a noncash charge to goodwill compared with a net loss of 61.5 million or $1.85 per share for the year ended December 31st 2018.
Of which 21.7 billion was a non cash charge in process R&D.
Research and development expenses were 38.8 million for the year ended December 31st 2009.
Compared to 37.2 billion for the year ended December 30, Onest 2008.
The increase of one point Sixmillion for 4.3% was primarily due to development and regulatory costs associated with lower day rates for the treatment of ahab into him and NCM in patients with here as well as development costs associated with the enrollment and other phase three study activity. So the area program.
General and administrative expenses were 13.1 day and for the year ended December 30, Onest 2019.
Fair to 10.7 million for the year ended December 30, Onest 2008.
The increase of 2.4 million or 22.8% was primarily due to commercial costs related to market research and similar activities from overnight.
As well as increases in personnel.
Legal accounting insurance business development and other operating activity.
I'll conclude my remarks by comedy the recent equity financing. We believe we are well positioned to execute upon our current business plan, including our upcoming and policies to.
And now backdrop for closing remarks.
Thank you, Dave as well as the drew and timely.
Well the last year came with considerable challenges we closed the year on a high notes endo extremely encouraged about positive data from the open label period of Paula.
These data strengthen our belief that my predicts could be a potential game changer into lots of people living with they have.
I would like to thank you want to patients and their families and the investigators who participated in the study.
We're grateful for your commitments and helping us to advanced research and this debilitating disease.
With regard to them over Dixon a path, we moved into 2020, new renewed clarity on how to execute on our priorities focusing our attention on call it to.
We look forward to keeping you update as we make progress on this front.
As for NTM. He will continue to assess the outcomes of optima in combination with the results from uncle once they're available. So we can make them more informed decision about the future of this development program.
As always we appreciate your continued support.
And thank you everybody for dialing in and let me hand to pull back to Allison for analysts questions.
Thank you.
Well now begin the question and answer session. You ask a question you make Chris Star then one on your touched and Pat.
If you are using a speakerphone please pick up your handset before Preston Mickey.
It was probably your question. Please press Star then to at this time people Pos momentum some Barbara Sir.
Our first question today will come from Josh Schimmer of Evercore ISI. Please go ahead.
Good thanks for taking the questions for the update as first on animal quite explorer P.A.P. I'm can you comment on any ongoing discussions with the FDA for potential couple of rigid approval based on Philippine Hello, [laughter] data to.
Getting street trial, and it's pretty damn indication.
Can you talk a little bit of some of the central.
As these features and on the tough system commentary that Cimzia since may improve.
Patient outcomes, such as MFC out or or weight loss exit and fatigue.
So can you discuss that balance.
That's good to see how how that you're seeing a conspiracy pulmonary or it just seems exacerbations.
Characterize the exacerbations and their severities balancing that.
There was less than that.
Okay. Thank you.
Can you repeat the question that you asked on impact.
The line, but not quite well yeah sorry.
I'm, sorry, I was just asking about the established.
<unk> dialogue.
Good day.
Well filing awesome Impala study prior to <unk>.
Easter trial.
Yes.
This well.
Ongoing discussion within the company and we also had discussions with regulatory body.
[laughter] this was a decision taking into consideration everything including.
It was supposed to finish on our priority going forward. The second study and that's crammed Oh God that from the in color it's got to itself.
In large part we took into account our prior they've been trying about me.
Before it goes on in parallel to.
Oh smell of what the progress into sub approvals of bear and after yeah.
The type of data that you had CRO home in color.
At this point I'll talk is really clear to do a definite do.
Great just talking.
And you if that study along with the impart a study to have a clear corporate approval.
In Palo Verde itself.
Has.
Not coming like we did not feel.
Pretty strongly committed but are they live to fight.
And then Josh the second part of your question was on the intent studies, so I'll handover to attend we didnt quite yet one of your what does your question did you catch did you get a tenant yeah. So Chuck. Thank you for your question as I heard your question you wanted to.
No little more about that nonbank topology findings and specifically.
Made point about potential improvement on fab anorexia and maybe some other.
Or outcomes and so we have looked at.
Some of the secondary endpoints systematically and in terms of can disruptive statistics and Oh, we have no clear sign that on average a weekend dashi improvements in factors such as weight loss for six minute walk distance.
And I'm just being an open label study. It is of course incredibly hard to make judgments in small patient populations.
For the endpoints such as this in MTN.
So we feel that microbiology result is.
The most relevant here.
We will be looking into anecdotes and then just single patient tag cases more carefully to see if there is some pattern that isn't obvious in the averages and this you said, what we mean when we say that will be still evaluating outcomes more and putting that together and eventually with the encore data as well.
Okay, and then I've come it sounds about exacerbations can be NTM study and I understand you extend too much debate so.
So this would fall into the same category outside patient anecdotes, so on and like it's very difficult in this type of a study to make a judgment as to like Oh, we reducing exacerbation rates when we have no control group.
But that said like I spoke about the other types of clinical outcomes, we will be looking into some cases, where are you know, perhaps regardless of the microbiology there might still be some suppression of infection and that there could be some.
Impact on exacerbation.
Frequency.
So that's.
Definitely a.
Possible Uh huh.
Hello, Thanks very much.
Thank you.
Again to ask a question it its star then one our next quarter will come from teach out of Jefferies. Please go ahead.
Hi, <unk>. Thanks for taking my question I have no question about everything phase three trial.
You are going to enroll about 140 patients where your primary analysis.
I'm doing it he or she really <unk> I was wondering is no impact powering assumption.
Well, obviously any a adjustment of sample size downwards has some effect a indicates a it is a few percent point. So it is not a.
There are a big impact.
Okay, and then my second question <unk>.
And Impala kick in the second pilot study could you guys comment on the interactions with any that's fine.
On the sick I'm almost study our initial interaction we'll be back together.
Queued up interaction, we would like to come up with a design disagreeable with Oh yeah.
We will consider.
We're discussing that with the Yemen.
Okay. That's good no I'm not your last question and then number that you saw.
No Optima study so I'm just wondering if that GRI I bet you saw.
That's similar to Q. So what you would have expected given this easier you have to <unk>.
Yeah, I mean, obviously small studies show a numbers just prospectuses guaranteed.
We have often old subjects, or who have chronic disease and advanced disease as well.
And stuff.
Not much more to it.
<unk> alright, great. Thank you.
Ladies and gentlemen, this will conclude our question and answer session.
I'd like to turn the conference back over to Rob novel for closing remark.
And actually we got one question over you know, it's all just reading out.
Have you seen is brought a virus impacting your business at all and so are we doing about it.
Yeah, well, thank you for put a question.
The exact impact to the operate obviously is a concern with doing all the necessary precautions I'm from companies standpoint.
The impact is viewed as you've heard earlier on the avail study I'm, good, especially in patients living with cystic fibrosis I'm travel is gonna be an issue. So on the exact impact is unknown and this is why were <unk>. We've made a decision to closed the enrollment for that study.
The end of Q2 versus.
This is waiting until we get the 150.
But we are monitoring the situation and implementing whatever practices are needed to protect the safety of employees up business operations as well as I'll patients.
I think that's it. Thank you everybody. We will we will always be careful conferences as investors should you need it. Thank you goodbye.
The conference has now concluded and we thank you for attending todays presentation you may now disconnect.