Q1 2020 Earnings Call

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Operator.

Operator.

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Okay. So good day, everyone and welcome Oh, you know Pharmaceuticals Corporate conference call. This call is being recorded I will now turn the call over to Laurie Stelzer, Chief Financial Officer, I mean <unk>. Please go ahead.

Good afternoon, everyone and thank you for joining us on our call.

Thank you had a chance to review the news release, we issued today announcing our first quarter 2000, Eattwenty financial results.

At the quarter with delicately.

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Well.

Yeah. This is on that nor you want to keep going.

Sure I supported with relatively straightforward on today's call. We will go directly into a question and answer session.

Joining me on the call is all that much <unk>, our president and Chief Executive Officer, and Dr. Preston Klassen, our head of research and development.

Before we would we begin I would like to remind you that we'll be making forward looking statement that involve risks and uncertainties about our goals expectations beliefs tightening of it then or future result, including those risks and uncertainties related to the cobot 19 pandemic and its potential impact on our business.

Forward looking statements about plans and expectations related to our pipeline financial projection in 2020 financial guidance.

<unk> certain assumptions risks and uncertainties that maybe beyond our control and could cause actual results could differ materially from these statements.

A description of these risks can be found in our earnings press release, and our latest FCC disclosure document.

All forward looking statements are based on information currently available to arena and we disclaim any obligation to update these forward looking statement.

Now I will turn the call over to the operator to begin to Q in a session operator.

Ladies and gentlemen, if you have a question at this time. Please press the star and then the number one key on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the Q Beach basket pound key.

We have our first question from the line of Jim, but you know.

Wells Fargo. Your line is now open.

Hi, guys much hosting the call end up taking the questions I guess the first thing is just on the told at night theme environment could you maybe talk through the logistics, Oh monitoring things like nail scores remotely and what adjustments you got that makes the protocol just to make sure you're you're capturing data and I'm like if any interactions you had with.

Okay, and other regulators on you'll be adequacy of any adjustments, but.

Sure.

Jim This is on the me handed off the person.

<unk>.

Yeah as of right now.

To make a major adjustments or focus is really on making sure that number one oh patients enrolled in the trial have access to drug.

<unk> success, we've been successful on that front.

Number two that's patients when they need to get in brick clinic visit all able to do so oh again, we've been successful on that front and so.

Net net overall, we haven't.

Needed to make me to address this number is going through the mail score obviously.

The endoscopy finding is you something that is required on site and into the patient reported outcomes of supercuts and rectal bleeding we of course provide.

Electronic methodologies for the patients to to be entering that on a very quickly basis. So that's not an issue. So we have not needed to enter into specific discussion with the FDA about how we're conducting the trial or what we need to do.

Anything specific koby perspective, we're simply executing the trial Oh. This is a we'd normally what are now again were what we really are spending a lot of time doing understanding the impact of Cobi. He is on things like site activation drug supply and making sure that patients when they need you can get to decide.

That's it could be appropriate business.

That's very helpful precedent and then just more broadly could you just talk about lifecycle management with the TRASM audit in any efforts you have going with with alternate formulations extended release is sort of thing.

Yeah. This is good for them and let me, let me start 'em, we announced earlier the.

The Youre formulation, which is designed to.

Well, we believe is a best in class campaign, the best in class profile and make it even better we've got really point of view of life cycle management. So I'm personally more quickly talk but you'll see our programming and how we're approaching and how we'll put it into future trials.

Sure. So what we've done is we.

Taking a an initial worked phase one work with.

If you're looking at a variety of controlled release delivery profiles.

To make sure that that we could see what we thought we needed to see in terms of what an actual controlled whose formulation might look like and that was a subjective our press release and call.

On the weeks ago.

And in doing this the the entire goal was to smoothed out so to speak a the overall deliberately part three times the drug.

And see if we could take what was already we believe a best in class.

Impact in terms of cardiac conjecture that first as cardiac conduction that is inherently the S&P class.

We believe that of TRASM I had the lowest intrinsic potential of all the S. One piece I being developed today, we could take that didn't make it even less of an impact and so one of things we talked about was forgetful in our clinics that he's a waste. This is the largest clinical trials conducted to date, we saw high single digit Uh huh.

Based lighting terms that impact on heart rate, we've taken that would be controlled lease delivery profile down to single a low single digit now and if it's small absolute change from high single digit low single digits.

That's just kind of speaks to the point that we didn't have far to go back from relative perspective, it's actually a 75% reduction in the overall hardwood effect over the first four to six hours, which is really important park.

Cisco or have any block actually is greatest so we're really pleased with the deliberate profiles and now the next step is to turn that into an actual formulation and then get that formulation into our clinical program clinical trial program. We believe that we could do that in time for phase three across all of our indicate.

Issues with exception of how do you see which of course is underway right now and so we would anticipate finishing you see with the IR immediate release product launching that kind of at the appropriate time doing a market switch over to the to the controlled release. So that's kind of a high level of where that is that we view. It is a fairly aggressive early on lifecycle management play and we think is.

Gordon in terms of even further diminishing any aspect of first dose conduction effect that could be attributed to isn't b class. We think it with the trials might it will be close to nail and and then potentially spending or extending our patent franchise.

Sure, but after taking the questions guys.

Thank you.

Next question it sounds a line of Kennen Mackay RBC capital markets. Your line is now open.

Hi, Thanks, so much for taking the questions I'm wondering if you could maybe just a put it into context, how sort of be enrollment into and elevate sort of looked through throughout Q1. If you did see any changes.

And so the the pace, obviously not related to any specifics around the trial do due to colder just trying to really.

Her mother sensors around as you know how how cold. It has has impacted enrollment there. Thank you.

Sure.

Oh, you know again, we mentioned her personally as of today.

Earlier today.

Today, we remain on track no. None of this has been easy for anybody involving the clinical trials across across the board.

We were well ahead of him wore me one the slowdown started a we were affected like others in terms of sites going off line slow down in site Activations Bloodhound and enrollment the good news for US was not only when we had we also have a global study with a lots.

Dozens of countries hundreds of sites and there's some geography slowed down I just came back online.

Continue to come back online so <unk>, so that's really been.

Fortunate for us.

But again I think just like everybody else. We did experience continued experience slowdowns in site activations screenings and won't begin to broad base.

Of the trial really comes into play here. The other thing that really comes in the places the bulk of our sites in New York community based just not feed her experience. The same impact is hospital based sites.

And then finally, having all agent here as opposed to me infused agent born injected agent seems to teach them really helped.

Having said all of that and as we continue to caveat. This is an extremely difficult situation for everybody involved.

The clinical sites as well as our teams and other companies nursing position we are.

We're actively monitoring we fight every country every patient everyday and you know cool well keep updating the street in terms of our progress and how the studies progressing.

As we go forward in time, but yeah. You know we were fortunate in terms of getting lots of sites activated before the slowdown.

We're very fortunate the well ahead of Oh all of our metrics.

And what we've explained slowdowns, we've been able to be able to absorb some of that and also being able to see some of the sites coming back online.

Please come back online.

Awesome.

And maybe just a similar question on.

Your your food to be advise trial in a public dermatitis. Obviously you have a lot a lot lot of clinical catalyst coming up later this year and just trying to get a sense agenda of whether there's any cobot impact or are there if there's anything or even sort of tangentially you can pose to help put into perspective, how the rate of enrollment has changed.

Thanks, and congrats again on the progress.

Thanks, Ken will appreciate the its it almost the exact same situation were well ahead screening enrollment.

We continue to guide towards data with you ended the year on advice.

And we think we're in a good position. So we've been able to really navigate through this and like I said, none of its been easy. The teams have been doing just an amazing job and a and helps to be a host of in well ahead of when we needed to be yeah, that'd be of absorb some of the delays associated coverage.

Similar to.

The Olivier trials are again, it's a broad based trial plenty of sites. So we bought some states where.

Offline other states were still open those they close other states opened up so again, having a balance and have a broad reaching a number clinical sites isn't really useful. So we'll continue to guide toward having the topic doing data.

Before the end the year.

Great. Thank you.

Thank you.

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Next in line is alethia young from Kantar. Your line is now open.

Okay, great. Thanks for taking my question.

I just wanted to kind of continue on the kinda you have oh, what kind of a massive Richard here of the billion dollar since a lot of different pipeline programs I definitely earlier phase program to your priorities didn't hear change as it relates to like the cardiovascular program or the pain program in light of what's going on because I think.

Yeah. So the the pain program, we kept the b.

But he continues to enroll and took eye towards the end of year. So nothing really changed there definitely on some of the early preclinical things are things, we can slow down there. There's levers we can push as we mentioned in our press release, we we've really spend time thinking through.

Activities in terms of market shaping market develop thing.

Keeping the leader government kinds of the market development things that you were normally do and being able to pick a one or two quarter delay in those things.

To be up kind of fine tune some of the spending is really really important we've been able to do that and really could get a tighter handle on our ralston the year really driven not by the clinical catalyst and different things there were sort of.

Or more in the DNA buckets.

First of all Medical Affairs, and then also spending time thinking through some of the early programs and begin to prioritize their so it is definitely important at this juncture for everybody involved.

To to continue to think do things like slowdown hiring and reduced spending nonclinical areas.

But we definitely want to stay highly focused on our clinical objective and not really impact the long term value of the company in the long term delivery of the critical milestones. So that's kind of how we've approached it.

It doesn't affect anything that you might be linear casts a billion dollars [noise].

No we're working to hold our cash I'm going to get more milestones.

You know, we where we find it doesn't incredibly fortunate position.

Have the balance sheet, we do it.

Unlike a lot of other companies war.

Gonna be actively looking to raise capital. This year, we don't have a need to do that and it really allows them to weather the storm so to speak so.

Nothing else to do with the cash other than to.

Managed to our milestones.

Great. Thank you.

Yeah.

Next question.

Yes on the line of Joe Schwartz SVB Leerink. Your line is now open.

Joe.

Operator, we can't hear Joe Schwartz.

One second Sir.

Mr. Joseph Schwartz.

Hello, Sir.

Yep, Okay here Joe.

Can we got into the question I hand back into queue.

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Okay now next in line as Jason Gerberry.

From Bank of America. Your line is now open.

Hey, Jason Forgotten It can you hear me.

Operator, we sat here Jason.

Mr. Jason Gerberry. Your line is now open please ask your question.

Operator that the analysts said, they're not on mute.

And your check that their alliance connected to our.

Hello.

Hello.

Hi, I just to see.

Hi, how are you Hello can you hear me <unk> Oh, it looks like both Joe and I are now [laughter] Oh, great Hey.

I don't know anyway right.

He was the first one on the key with all that you asked for it as I don't.

[laughter] X you your they'll go [laughter] general gentleman in a scholar. Thank you I have top of doing other cultures. So I'm really glad to be able to get in here I was just wondering if.

You can give us any insight in your ability to capture endoscopy data lately have you found it challenging and how are you thinking about things going forward are you planning or do you have any thoughts on if we.

Do you get a second wave, if a you're going to be able to navigating.

Sure, let me begin a compressed and truck.

Yeah, I'll, just say that we've we've navigated the persuade or not it's purely over and it's not necessarily easy, but it's really a testament to.

Sites and the site staff.

A testament to our internal team that's really on top of everything along with our vendors ciro et cetera.

And it's a testament to the patients and the significant unmet need that that exists right. This is this is not that you're talking about the you know the.

Gee I Society that said with the avoid elective procedures, there's not really like the proceeds you get into the study because you're having an acute flair and it's actually critical then to get the follow up 12 weeks it and again, a 52 weeks where are you secret did you study.

And patients and staff and know that this is an important illness for for them for their lives you're looking for things that have added benefit for them from a clinical perspective, and so everyone's trying hard to make sure. We can get these things done Oh, we do have to stay on top of the logistics and making sure we can get patients.

Into the sites at the right time.

That is more difficult today than it was six months ago No question.

But so far we've been able to our to manage that navigate it and I'd say, it's too with the FDA credit there also recognizing.

And having that could out guidance around how sponsors are supposed to try to deal with this is best hospitals I think look moving forward as we come out of this and we May you ride experience additional waves of this its going to be industry working with ft together to make sure that we.

Don't don't have a problem with not being able to utilize well collected data.

In an area, where you need to have made some adjustments. So I think everybody you know picking the right way FDA industry, our staff sites in our patient so where we've been very fortunate to date and its common said as of right now today and it's important to caveat. It that this is today's guidance or we do remain on track with our with our clinical program.

So let me let me ask yeah. If you know on if you had a question.

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Yes, absolutely no give barry.

The differential and your confidence in Holland.

Sure. So you know not knowing the details of their trials you know we eat.

Their data their data, we don't get to see it on a patient level. So it's difficult that's exactly why they upsized. The trial, we do know that the arts three domain Mail scored delta was about approximately 26, there are three domain.

Male score deltas about 16.

So adjusting for effect size as a a big part to do with their their overall study size that that's a big piece of it again, not knowing where they did the studies you know for example, if they were hunting the world for looking for patients who are T.N.F. or biological.

Naive for example that would have taken longer M.F.C. more header genady in that patient population.

They may have had to go to countries, you know far field, India, China et cetera to build that patient database.

And and again when you move to those countries you get a larger standard deviations, which require larger sample size. So we hypothesize that some of that has to do with the fact that they have been looking for T.N.N. for a biologist now you've taken from some of that is just.

Really a function of the effects by that they still coming out of their things too. So yeah. This is just the hypothesis you know who will see the full data said when it comes out that those would be too logical reason.

They would have had to potentially upside the crime.

And and sorry. This is precedents want to jump in here I want to point out something specific though.

As we talked about in the past our program.

Gives a more sufficient streamlined program certainly fishing in terms of utilization of patients.

So previous programs and in particular animal program had two induction trials and then the clinical responders are at the end of the induction period are re randomized into the maintenance period.

Rest of the one year and that's fine that's the way it's been done in the past, but that means that you have to over enrolled or overpower. If you will be those two induction trials in order to have enough Chronicle responders to power. The maintenance study. So that is a less efficient use of patients.

We have a program where we are conducting 152 weeks study with a co primary and 20 week 12, 52, and then a second week 12 study.

So there's no re randomization opponent correspond or isn't so we don't have too upset up Scott <unk>, Oh, sorry, upsides that induction part just to enable powering of a maintenance period.

And we can discuss that with the F.J. It makes absolute sense, because the whole idea of an induction period versus the maintenance periods, where the ones that eight world, where they just doesn't change starts to make less sense Oh. So we view it as early response and later continuation of response and so that in in of itself saves on several hundred patients just from a powering perspective, even if.

All other assumptions are the same.

Alright very helpful thing gets on launch.

Next question asked some the line of.

Jason.

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There we go to the next one please.

Next in line is Alan Carr U. line is now okay.

Hi, Thanks for taking requesting <unk>.

I haven't.

Oh [laughter] for that we're gonna fly so a couple of four yeah.

<unk>.

Explicitly <unk> <unk>, you're still planning to have the the <unk> Monday in second half. The 21 is that right and then the other thing.

From the other programs and said that.

Can serve some cash in environments like how how does that impact for one eight can you give us an update on that.

Sure. So all the ongoing trials or remain on track. The studies that haven't started yet you know, we're we're still hoping to start those this year like <unk>, okay, but again, that's going to depend on what the rest of your looks like and and the ability to skirt trials again.

Very different in this environment than studies are already ongoing, especially studies that say that share clinical psych.

As far as ornate concerned as you know you know.

One study.

A lot of saying one price, including ours are on temporary hold we still expect to get that done this year and be able to move to a phase two but again, that's going to really be dependent on the X.M.L. environment. There that's a little bit out of our control in terms of phase one.

And what's your thinking understand what I'm facing timing or anything.

But what you're.

Thinking on.

Design illiterate after the cold accomplish with those two for for money.

We have undisclosed anything we're on the face team or design. So as soon as we get through.

Please wondering were able to successfully initiate pays to assuming things continue to improve in the back home environment will come out and how close it if I propose to design.

Right, Thanks for coming up this.

Thanks.

We have our next question from the line of <unk> from C.D. guideline is that little pen.

Hi, Thanks for taking the questions.

The first one Oh, that's the follow up to four one AIDS and how about the ongoing phase one trial, but do you expect to see from that anything beyond just the safety and.

Suppress them do you want it back for when they play one.

Yeah, well when you take one so you know as you said, it's it's probably safe you know one of the things we've talked about in the past is that the basically receptors actually not highly expressed in the normal state.

And so you wouldn't necessarily expect to see a lot any <unk>. So you just need to make sure that there isn't something that so you know the high level. Unfortunately safety perspective. It then.

But then we lose wrapped as possible in today's too and the focus there is clearly going to be on mechanism back with the concept, saying weak and you know how are we doing what we think we can do.

As opposed to for example, you know looking at at lengthy clinical outcomes, but as Ahmed said, we will be talking about that more as we get through the baseline.

The data and we'll go we'll talk more specifically about what we have plan for phase two but that's a compound we're really excited about and we should be able to pretty rapid fashion get to go that mechanistic kind of data.

Great and then maybe one other question any updates arena neuroscience or Beacon discovery collaboration.

Sure. So arena neuroscience continues to to do its work as we'd we'd mentioned <unk> will be coming out of self mood around mid year next still on track a lot lot of the work that's been ongoing now I'm just completing some some pre I.D. work.

Wrapping up intellectual property that have to get wrapped up.

And and then we'll we'll be out talking about it kind of in the mid year timeframe. So.

Excited about that and the work continues apace. The the Beacon collaboration Beacon of course, having lab based services and having a having a a a functioning land has experience from slowdowns as as one might expect there are also starting to come back on mine and.

Well couldn't provide update on on both of those as you get to the middle of the year in in the the the better visibility into Q3 into four allow stuff can provide better updates on those too.

Great. Thanks.

Thank you.

Next in line as much in our staff from credits today is your line isn't how often.

Yeah, Hi, everyone in this thomason from or you can you hear me okay.

We can eight times.

Right I guess, just a quick one for me maybe on cash burn curious if you can give us any more details on how to think about burden rate going for it I think you said in the press release today.

No you plan on Ah do judiciously managing tasks during the east coast 19, uncertainties.

And you have you just discuss what specifically are doing to keep that burned down and then any teller on how to think about that going forward, obviously with us the kind of yachts that we've got these ongoing uncertainties. Thanks.

<unk> Yeah. So let me, let me put the color a little bit of colors in hand off the Laurie you know the whole the.

The whole idea here is the balancing act.

How do you mean sure a long term catalyst the long term milestones, but the continuation of programs.

And at the same time be judicial about casbah and so we really don't is a slowdown hiring in certain parts of the company put things out a couple of quarters and then be able to reassess later in the year <unk> spend at some nonclinical areas things that we wanted to get done for the long term.

Most of the company systems market development those things, we can put on hold for a couple of quarters and kinda reassessed again at the end of the year <unk>. We think that's the proof way of of handling makes you don't want to pick to accompany off the rails. You you want to you know as we discussed internally.

You Wanna, we asked but not overreact.

So we want to make sure that we can fill deliver the catalyst for the company.

I'll be able to manage around the edges and that has.

Substantial impassable Burns alert do you want to.

Touch on that.

Absolutely. So Thomas we did guide to a new <unk> operating cash burn level of 400, a 430 million. So it's down from the previous guidance from for all the reasons that on that laid out and I will point out on the laughter named call. We did a guide to 95 million burn.

Into one I'm worried about it 94 still be hit that that we've reduced the last three quarters of the year to get us into that full year 400 to 439 range.

Great. That's helpful. Thank you.

Mhm.

<unk>.

Hi, This time I would like to turn it back to Mister Ed Mcmahon sheets precedent M.C.O. five closing remarks.

Thanks, everyone for joining us today, we apologize for the technical issues I think it's been sort of par for the course today.

But again thanks for your patients you know if you compare built toward the bringing these important medicines to patients and and building the company. We're tightening our focus on the execution or the ongoing clinical programs. The key timelines the key milestones and because you can explore ways to reduce spending on.

<unk> Worksite isn't it the ongoing clinical trials remain on track.

And will continue to monitor the the potential impacts will come in 19, as we get to the next quarter and we'll we'll provide timely update so so everyone's aware of what's going on I just want to take this opportunity to thank everyone for the ongoing support and and really think the arena team for their unwavering relentless work.

During that time period.

Pointed out and I pointed out of this has not been easy for anybody making sure patient safety employee safety is Paramount and then simultaneously bound balancing that with progress across our multiple opportunities. So thank you again and they stay for everybody.

Thank you for soundtracks, ladies and gentlemen, I do apologize that's what I was sort of technical issue in context.

Cities Conference call. Thank you offer participating yummy now disconnect have a bad day.

Oh.

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