Q4 2019 Earnings Call

Greetings and welcome to the stuff Biotherapeutics fiscal year 2019 financial results and recent business highlights call.

At this time all participants are in listen only mode. A question and answer session will follow the formal presentation. If anyone should require up or your assistance. During the conference. Please press star zero on your telephone keypad.

As a reminder, this conference is being recorded I would now like to turn the conference over to your host Mr. Henry hub Chief legal counsel for still biotherapeutics. Thank you you may begin.

Good morning.

To remind listeners that management will be making forward looking statements in today's call, including for example expected timeline plants.

Todd.

Programs.

Patients for discussion so possible opportunities.

Yes and collaborators.

Discussions related to the Companys financial position.

Actual results may differ materially proposed syndicated by these forward looking statements.

Various important factors, including those discussed risk factor section stopped form 20-F.

C.

2019, what we may elect to update these forward looking statements at some point in the future. We specifically disclaim any obligation to do so argues change.

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Feel free.

Thank you Henry and thank you everyone Who's joined US. This morning to review our full year financial results. Some recent corporate progress with me today, It's Rob Weiskopf, our CFO I suppose Jim car or clinical Chief clinical development Officer, and Brian Blakey, Our Chief Commercial Officer. In addition to Henry and all of that will be available for questions.

Answers.

On a premise today's call. This thing we're all working virtually is I assume you are all its well I hope everyone is carrying well during these challenging times, obviously very challenging for some of the patient populations that we service as well.

We are off to strong start and 2020 with a clear focus on advancing on a per tied towards potential approval in parts syndrome, and ultra rare genetic condition characterized by cardiac I've never <unk> maladies, often leading heart failure muscle weakness recurrent infections to lead growth and reduced life expectancy as result of mitochondrial dysfunction, we presented very strong.

Data from our ongoing open label extension study early in the first quarter of last year at the American Society of Human Genetics 2019 annual meeting that data demonstrated that treatment without remember type resulted in a significant increase in average cardiac stroke volume and more recently, we announced additional cardiac data at the American College of Cardiology.

G 2020, virtual meeting demonstrating significant improvements and left ventricular and diastolic another solid volumes as well as trends another cardiac parameters.

Also recently announced results there must be the other one natural history comparative control efficacy study in Barth patients demonstrating a greater than 80 meet or improvement in the primary endpoint of six minute walk test at one year compared to national natural history controls with a P value of 0.0005 as most significant improvements in secondary endpoint.

Instead muscle strength five times, it just stands and a multi domain responder index.

In early March we announced that the FDA granted that's rare pediatric disease designation for bars for which we may be entitled to a rare pediatric voucher should we receive approval in conjunction with an expedited review more recently, we met with the FDA to discuss the natural history comparative control efficacy study and the test power open label extension.

<unk> surrogate endpoint in functional endpoint data are meeting with productive and informative relative to our regulatory path forward and we look forward to providing further details. Once we've received the meeting minutes. We are actively exploring pipeline expansion opportunities and other rare metabolic cardium Alethia. These include Duchenne backers muscular dystrophies greedy.

The tax, yes, all of which entails heart failure as the leading cause of premature death, we've met with leading advocacy groups and we plan to convene a cardiology advisory boards to stuff endpoints in trial design, we hope to meet with up da to discuss the finish it up towards the end of this year.

Moving onto ophthalmic pipeline, we continue to enroll patients for a phase twob clinical trial, which is reclaim to be which is evaluating the effective element for tied in patients with dry and see the geographic atrophy leave fast track status on that program from the FDIC. The primary endpoint of the trial is agreed that the FDA lowber minutes visual occur.

I'd, which is low lighter night vision, a particularly compromised in patients with geographic atrophy. We're also evaluating secondary endpoints, including other visual function endpoints the rate of progression of GA by optical coherence tomography, and fundus Autofluorescence technology, that's wells visual function and quality of life questionnaires.

Since our A.M.D. trial is primarily being conducted in elderly patient population, we are experiencing some enrollment delay as a result that the cobot 19 pandemic. We're currently over cheese third thing rolls and we had anticipated completing enrollment during the first half of this year.

In light of the impact of physical distancing restrictions on clinics in patients to be conservative we're adjusting our estimate of enrollment completion to the second half of this year. We will continue to monitor the situation closely and we will make any necessary updates at this change in a meaningful way.

We submitted our phase through protocol for element, the tide and labors hereditary optic neuropathy at the end of 2019, and we look forward to receiving comments from the F.D.A. on that protocol consistent with prior guidance, we do not intend to initiate this protocol until 2021 due to financing constraints.

In January we advanced our next generation product candidate SPT to seven two which has improved yeah, that's penetration and it's a being evaluated for the treatment of Ala and round or degenerative diseases into a phase one trial to evaluate safety and tolerability pharmacokinetics and appropriate dose range. The phase one trial is a double blind placebo controlled single.

Ascending dose study enrolling up to 40 healthy subjects across multiple cohorts SP teach she's done and she was being administered orally in this study.

We still expect multiple preclinical data read out this year for us be teach you seven chew and LS as well as multiple system atrophy and for our third product candidate SPT to five nine and Sharklet Murray choose we're also progressing a novel series a small molecule compounds targeting the FERC took this pathway of felt that which is implicated in many new.

Degenerative diseases, including krieger's, the taxi and Parkinson's.

We are proud of our team for Rallings <unk> <unk> following our fourth quarter step back within manpower and three in primary mitochondrial myopathy falling short of its primary endpoints, we are extremely <unk> and the promise of our current pipeline and our ongoing programs. We expect a catalyst rich year for the company, we look forward to keeping investors.

Apprised of our virtual progress and we hope that it won't be quite such a virtual earnings call I'm going into next quarter or though obviously, that's an evolving situation with that I'd like to turn the call over to our CFO, Rob Weiskopf to review the financial results for the year Rob.

Thanks, Randy and thank you all for joining us today.

Sales in 19, we recognized 21.1 million in revenue associated with your Wuxi on arrangement and entered into an October 2019.

Revenue represents the portions of the nonrefundable upfront payments that were recognized in school upon delivery of the topline data for PNM trial.

I see in his since terminated the arrangement and as such no additional revenue will be recognized.

Research and development expenses were 44.6 million for year ended December 31st 2019 down from 53.1 million. Two year ended December 31st 2018. This decrease was primarily from the net decrease is 8.5 million in clinical trial costs due to timing of the trials that ended in 2018.

The 2.8 million decrease in contract manufacturing and he 0.9 million decrease in discovery related expenses due to the timing of activities.

These decreases were offset in part by increases of 3.6 million employee and consultant related expenses driven by the continued build out of clinical medical affairs, and regulatory functions and 0.1 million and other costs.

General and administrative expenses were 22.3 million year ended December 31st 2019, compared to 22.2 million for year ended December 31st 2018.

The increase was primarily attributable to a net 2.3 million increase in pre commercial activities, including building markets disease awareness.

Primary mitochondrial myopathy 1.8 million increase in professional services for activities attributable to operating as a public company an increase of 3.2 million in employee related costs offset by a decrease of 6.7 million in costs associated with the 2018 financing efforts.

The decrease in legal I P fees as your point 5 million.

Other expenses totaled 25.9 million for year ended December 31st 2019, compared to 21.4 million for year ended December 31st 2018.

The increase in other expenses is primarily attributable to a 22.7 billion loss on extinguishment extinguishment of debt recorded with respect to the convertible debt conversion into ordinary shares in conjunction with the company's 2019 initial public offering and zero point Sevenmillion change period.

<unk> period, and the fair value adjustments warrant liability.

These increases were offset by 3.4 million dollar change in period over period fair value adjustments of the ruble does liability associated with convertible debt decreasing interest expense, mostly related to the convertible debt $14.7 million and an increase in interest income was your point eightmillion.

We ended the year with cash and cash equivalents 50.8 million at December 31st 2019, which compares to 10.9 billion at December 31st 2018 with that I will turn the call back to really.

Okay.

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Thanks, Skus that was a that was a hiccup on my and tried to UN mute myself and I have been said asked him before we open up for questions I want to reiterate again, how pleased we are with the progress. We've made this quarter. How excited we are with the progress, we're making with our pipeline of mitochondrial targeted therapeutics and there's a rich history of.

Justin contributing to cardiac up that make it neurological diseases and extensive preclinical data demonstrating the promise of the element for tied and our other pipeline compounds. In these areas. We're confident there were poised to execute on that promise I'm happy to open up the line for any questions.

Thinking at this time I'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad confirmation total indicate your line is in the question can you maybe press start to if he'd like to remove your question from the Q for participants using speaker equipment, and maybe necessary to pick up your handset before passing this.

Darkie.

First question comes from the line of Charles Duncan with Cantor Fitzgerald. Please proceed with your question.

Good morning, Iranian team. Thank you for taking our questions and.

Congratulations on a recent progress with the with the agency.

I I wanted to ask you about that I'm reading, a recent meeting yet and and it makes sense to me that you would wait for full minutes or to be able to provide some guidance going forward.

But you characterize it as productive and informative and and I guess, we've talked in the past about a couple of scenarios going forward with regard to element per tied in bars and I'm wondering if you can provide any additional granularity on what you anticipate to be the most likely sitting there.

Ill you know if we think 12 months so from now.

Hi, so so it wasn't very productive and collaborative meeting with the F. DHS and I. Appreciate you for asking the question. We had a number of F.D.A. participants I'm very senior participants actually in attendance today, you may or may not be aware, but the division of gastroenterology and inborn error is now reorganized into.

You essentially a rare disease divisions. So they had about division for the director and Deputy director or both on the phone, it's well see office director.

And the F.D.A. I just have to give it a shout out to the F.D.A. This is obviously a very challenging time for the FDA and they have a lot going on they gotta comments in advanced at something like 10, 30 PM on Thursday night on the head of the meeting and so part of the conversation that we had with the do it with the FDA centered.

On the existing data set that we have from our existing trial and requests to provide some additional analyses I think we've mentioned in the past that we had I'm presented data to the FDA out two week 36 of open label extension, we have data out two weeks 72 of open label extension to the FDA recognized the severity of birth syndrome.

I believe recognize the challenge is that it would entail to do another trialing Barre syndrome, and so really did ask us to provide some additional analyses of the data out two weeks 72, which we've previously announced that data and it remains consistent and Ah. So we were continuing to engage with the after.

On that front really on the basis of the existing data that there's still you know I'm hopeful about filing you know in M.D.A. a in the coming months on Barre syndrome from that perspective.

That's helpful renewed do you do you have a pre NDA meeting planned or are you are they waiting relief to kinda Green light that next step should it occur after they see this additional information.

Well, so we were waiting for this meeting prior to submitting a pre NDA meeting request so that meet the tree Indian meeting is not yet schedules.

[laughter], Okay, and then as you imagine a perhaps broader a utility of element per tied into other.

You know nerd developmental disorders, such as the M.D. and and Friedrichs you I think you mentioned a cardiology advisory board when do you anticipate a holding that and when can we get some visibility on on you know quality outcomes and thoughts and.

Terms of going to the agency later this year.

But that's a great question and Jim is on the phone <unk>. We are we're trying to work through the virtual scheduling of that add for Jim we're targeting sometime.

This quarter.

Yes this quarter.

Right.

Go ahead, Jim No no I was just going to say we have you tend to you list and it's just as Randy mentioned, it's just working through the logistical challenges that exist.

So we're hoping for this quarter.

Yeah, I understand that Jim It Jim Reni is the key question for that Advisory Board.

Whether or not cardiovascular is a challenge for these patients are cannot be measured within a reasonable period of time. What is what is really this is the thing you'd like to learn and talking to them.

I'll, let you take that then.

Yes of course so.

Oh, Hi, crush in our view is that the observations.

From bars are applicable to other.

Rare disease card analyses and.

Friedreichs ataxia, and Duchenne muscular dystrophy or certainly at the top the lift so we want to get consensus that those findings are applicable to those patient populations.

We feel that they are but theres a lot of granularity involved. So for example, one does one introduce.

Element for tied in the setting of DMD for example, just knowing the progression of the Cardium, obviously that answers for most patients. What is what is the most meaningful time to introduce it what was the endpoints be et cetera. So again, just genie more Glenn granularity about how we would actually pursuit.

Those endeavors.

Okay. That's helpful last question for Rob.

Ah or it.

Yeah, Rob I guess I'm I'm on the West coast. So maybe they special has an odd kicked in yet, but but so I may have missed this but did you talk about a guidance for going forward in terms of.

Cash spend this year.

Oh no not at this point.

[laughter].

Okay and is there is there a key lever that you're waiting for to come up with that.

Well [noise].

You know I think that if we look at our cash and equivalents or.

50.8 million at December 31st and.

In conjunction with.

<unk> operating expenses through the corporate reorganization that we did.

Or foreign should be sufficient to.

I wanted to operations through multiple inflection points, including the bars and the filing the second half of 2020 as was enrollment completion of a dry AMD de study.

Okay. That's all I need thanks for taking my questions there.

Thank you. Our next question comes on line of Crystal from Wright with Nomura Instinet. Please proceed with your question.

Hey, good morning, Thank you for taking my questions.

Congrats on the progress I was wondering is S fab.

First we could touch upon some of the potential data that you maybe seeing a player next generation assets.

You started the first in human trials.

Two seven too.

In healthy subjects and I was wondering the type of data you might expect to.

He for that study that you.

You know, how we like people compare that to element for tied.

You know to understand the yet the molecules characteristics and potential flexibility going forward.

Jim do you want to take that question.

Sure.

So Chris the ongoing phase one study with two seven to for example is a it's a traditional.

Phase one first in human single ascending dose design trial so.

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The primary objective of those kinds of trials with of course safety.

The PJ. Its also a component of that so the trials ongoing and I guess, we expect to get an impression about safety and impression of TJ.

And then one time trailer I think I think hopefully then you sort of trashing not with what we're seeing in preclinical models that were running at the same time.

Okay.

Yeah, I guess I was curious if you might.

Oh, you know how they can either target.

H one type data anything else in that study just to to be able to punch markets versus old appetite or no other bioavailability data.

Could be a could be potentially helpful suggests that the molecule behaves differently from.

Element to try and the ways that you were hoping.

So is it my understanding that that won't be there, it's just sort of safety PK PD.

Safety PK PD at this point in time, you knew it sort of moving forward, we might look to essentially get sort of cnf penetration, but we that not in this first study.

Okay great.

And then secondarily I understand you start Kid.

He back from the F.D.A.

How how should we think about you know the potential in Europe for relevant for Titan bark.

Obviously, it's a relatively small population so you're like be something address falsified.

I still.

Could you maybe walk us through your plans to a trust that opportunity.

And then and then lastly, with respect to the FDA.

You need to pursue present I guess additional data analysis out two weeks 72, so it'll be on getting that meeting minutes, what like indicating factor.

The timeline.

That it takes to get data analysis to the FDA. Thank you [noise].

Okay, So I'm going to ask Brian to speak to Europe, and Barth I'll answer. Your second question first and then handed over to Brian.

In terms of timelines for additional data to the F.D.A.. We do have the week 72 analyses. It we would have to its the we have them internally. This is an open label extension supervision of those two D.F.D.A. is would be a fairly rapid you know undertaking for us we would work.

Want to update our CSR with formal outputs, which requires a data cut and a little bit more external lifting so that timeline.

It could take a little bit longer, but frankly, I'm would still fall within the original timeline for data cuts to support our and D.A. to do those formal outputs. So the provision of topline information to the FDA can happen quite rapidly from that perspective. So we you know are expecting to be able to you know turn around the.

Analyses that they've requested and get those back into them shortly.

Brian do you want to talk about Europe in bars.

I will do and good morning, Chris I hope, you're having a good morning. So we have done some preliminary work in Europe I'm talking to some of the well do you larger countries and the big five Germany, France, UK about reimbursement for bars as you would expect it is a and easier road for reimbursement for bars, because it's such a small population and because of.

The devastation of the disease. So right now we are evaluating so we're working ourselves at being able to go ahead and promoted into Europe versus where it very early discussions with some strategic you kind of doing analysis of which is better for us to do it or can be able to hand. It off so I think we'll be evaluating out over the next couple of orders to see where.

We land and then move forward with that decision.

Okay, Great and then in Europe, just with respect to promoting the product is.

Is it possible to to love for each other potential you know compassionate access use.

Takeaways, there to get drug to patients without going through the formal approval process I know some companies have previously.

Done that.

And then these processes enabled them to market the truck.

I would a formal approval yeah actually.

I was it so it's a is that how that how the company looks to us to bring them the drug to patients and in Europe region.

I'm going forward.

I I think Chris that's one of the options were definitely evaluating its true that compassion use or expanded access programs to be able to to get patients access to the drug and then convert them over and also start to reimbursement process. So one of the area. So we are evaluating along with the strategic send them just a general promotion what that would cost us to be able to do that.

Okay, great. Thank you.

Thanks, Chris.

Thank you. Our next question comes from the line of Matthew Bikini with BMO. Please proceed with your question [laughter].

Hi, Good morning, everyone. Thank you for kick in the question.

So I guess first it sounds like you know what's your what's you're saying is the company is I want to come back to the question of cash sounds like what you're saying is the company is funded until you know but ended a year essentially even with expense reductions in place them. So just want to me.

We have you guys talk little bit about how you're thinking about options to address address cash needs beyond that point you highlighted the pediatric Boucher.

Maybe talk a lot about a lot what else you're considering its business development of some sort and then you know I guess more broadly how we should be thinking about.

[noise].

I guess the relative prioritization of some of the different projects that are going on bar to persist try and the personal certain of these early programs on especially given say that but the delay in the and do you data I now being pushed you know presumably to no earlier than let's say mid 21.

Our last so just help us think through.

How are you guys just thinking about the company's evolution has removed from the ended the year as you've got these you know sort of important data points to keeping things moving as we move it to 21. Thank you.

Yeah, Thanks to the questions Matt So in terms of how we're thinking about addressing cash needs going forward. That's obviously you know, it's something that dynamic and ongoing we look at all options and explore all options and we do think that the potential of the pediatric restaurant and bar.

<unk> is.

Materials for us could it potentially you find us through Barth launch and potentially you know some additional indications expansion opportunities. So that is it's fairly material, but we would be expecting to see that potentially coming you know earliest would probably be Q1 of next year. So.

In terms of.

Other opportunities on business development, you know discussions remain ongoing there is certainly some interest, particularly in the ophthalmic programs on the B D side in terms the purchase station of projects.

I think that you know Barth really does remain our priority focused but its you know primarily regulatory spend at this point right on the open label extension remains ongoing but from a from a resource allocation perspective, those are mostly regulatory efforts that were leveraging the lifting on right now and and the related clinic.

I'll support A.M.D., we are evaluating the data in Ham D. I'm looking to really understands the impact of the recruitment slowed down I think we're gonna have better insight into that coming out of next quarter, because well I hopefully I understand the full scope. The that we did have the potential to do instrument.

Fees of D.A.M.D. data, if you recall in phase one we saw statistically significant improvements from baseline and visual function at six months. For example, so you know potential there to do it data cut earlier, it's six or nine month end versus 12. So those are all things that we have under consideration.

As we look going forward. The preclinical work, we think it's important and is not taking significant resources. It's a lot cheaper to do no studies done it is to do human studies, obviously, we do think it's important to keep moving our pipeline for it and again there is some partnering and B D interest around that as well.

Okay. Thank here and I guess, maybe in the context with a bark on D.A. can you just remind us are there any remaining.

You know either talks work that needs to be done or other preclinical activities basically what I'm thinking about is you know anything where there's animal work at where acquires regular human interaction such that that is.

You know challenge in terms of people, even being able to get into the lab today no. There any is there anything like that for either for bars.

No there is not in fact D N P. So.

Got a long regulatory history with Barclays. Your as you may recall, when we met with D. N P last spring on the Barth program. They had signed off on our preclinical package.

Non-GAAP I agree I. Thank you so great. Thank you for taking my question.

No.

Thinking our next question comes on line of Yi Chen with H.C. Wainwright. Please proceed with your question.

Thank you for taking my question Oh, given the current situation that the Corona virus.

When do you think the pre M.D. meeting is likely to occur and how soon can the company submitted the N.V. football think drilling after the meeting.

Thanks to China. So I think we're gonna have to that question probably depends on more on F.D.A. that on the non us but based on the interaction just had while it was a little awkward to do by phone with the FDA DFT. It was extremely responsive as I mentioned kind of staying up and so tenthirty.

Night to get us to get US comments well ahead of this meeting on Thursday, which is which is well ahead from F.D.A. perspective, and then you know holding the virtual meeting, which was very productive with a lot of Sta members and attendance. So it seems you know from our limited viewpoint of the world. The FDA is doing everything they can do.

Keep business moving they reiterated several times on our call that they are keenly aware that patients are waiting that it's a severe and debit it devastating disease and that you know we got a true sense, a partnership and collaboration from the F.D.A. So with that I think you know possible to have a pre N D. A meeting in the second call.

Order again, I can't speak for F.D.A., but we still think that's a possibility which would still keep us on track for NDS submission you know in the second half of this year, which was our original timeline.

Okay. Oh second question could you verified that the phase three protocol for it would show in has already been finalized it was if the quotes and it's just that youre not starting the trial until 2024.

You know we submitted that protocol in December to the FDA and we have not received feedback from the FDA on it yet so we would like to receive that feedback we did not align with up D.A. on what endpoints, we could look out in that protocol. When we met with them last spring. So we do feel that we have high level a line.

With the FDA on endpoints, but we certainly welcome their feedback on other aspects of trial design and this time before we initiate the trial, we think will enable US you know the time to get that feedback. It's always it's always better to habits going into the trial.

Got it lastly could you update us on the.

Topical ocular formulation of a number for tight you said already being developed.

So we we have used to topical ophthalmic formulation in the eligible and phase two study that we did that was with the eye drops our plan for phase three was to move to said Q, because we think there's higher concentrations in the retina and what we are looking at doing and we are this work is key.

Currently in progress is developing an Ivy t. formulation of element for Todd.

So this call ocular formulation is the same formulation that's going to be used in the future drawing the trial after phase to be.

After phase to be we are exploring the potential of using an I.P.T. formulation for AMC. Okay.

Got it.

Thank you.

Yep.

Thank you, ladies and gentlemen reminder, if you'd like to join the question Q. Please press star one on your telephone keypad. Our next question comes on line of Maury Raycroft with Jefferies. Please proceed with your question.

Hi, everyone not good morning, and thanks for taking my questions I, just said a few quick clarification questions.

First one is four to seven two for the initial phase one clinical data is that still expected QQ and I was just wondering if that phase one clinical sites posted online or.

So that is being conducted in the UK and so I do not believe it is posted online anywhere and in terms of timing of that data.

I don't think Jim it's on the line any longer because he had another call. It nine so we may face some short some small delays because of co bid on sort of in the in the subsequent cohorts of that so I would say you know Q2 into Q3, it doesn't impact any of our timelines in terms of what we're thinking about.

Initiating the other studies because the preclinical data that we need to support those won't be until end of year.

Right Okay.

Okay, and then for the mid year guidance for 'em up are tied will that be guidance, specifically based on the minutes or will be based on that FDA feedback on their request and 72 week analysis to do you view this more as an update over the summer or could it be a ball update.

I would hope to be providing an update over the summer and its I think to answer. Your question. We're we're kind of we've literally just met with 58 yesterday. So I think we need a little bit more time as a team of too you know kind of.

Give guidance in terms of he knew when we'll be submitting our next meeting request and just how we expect that back and forth to go on the wants to have to see you know again at the ace constrained, although very impressively responding to that today. So we'll have to see how that plays out over the next few weeks and but you know we hope to provide.

You know an update.

Both on sort of minutes and and hopefully you know subsequent I interactions and we would hope that to be early summer timeframe.

Okay. So it could include some feedback on the 72 week analysis as well, yes. They check airplanes on me up there. Okay. Okay. Yeah, It's Jim I, just I, just don't want to speak for them. Because this yeah. These are kind of unprecedented times. So I can't really rely on typical timelines from from their perspective, but everything we see.

I mean suggests that they are you know very responsive to us and very collaborative and so we you know we're optimistic that will be you know business as usual from that perspective, that's certainly what they've demonstrated thus far.

Okay. Thank you for taking my questions.

Yeah. Thanks morning.

Thank you, ladies and gentlemen that concludes our question and answer session I'll turn the floor back to Miss Mccarthy for any final comments.

So I appreciate everybody for hopping on the phone today appreciate the question and as you know hope everyone is doing well in these challenging times, a stay safe out there and where you know again very optimistic about the milestones that we have coming for the team is continuing to make pro.

Progress and we remain confident that we can deliver on our goals for this year. Thanks for your time.

Thank you. This concludes today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation.