Q1 2020 Earnings Call

[music].

Be recorded.

Oh, no I'd like to turn the call over to Bill Slattery of Burns Mcclellan Mr. Slattery. Please go ahead.

Thank you.

Good afternoon, and welcome to the Chemocentryx first quarter 2020, <unk> financial results Conference call earlier. This afternoon. The company issued a press release, providing an overview of its financial results for the first quarter ended March 31st 2020.

This press release, along with a few slides that you may find helpful. While you listen to this call are available on the Investor Relations section of the company's website at Www Dot Chemocentryx dotcom.

Joining me on the call today is Dr., Thomas Schall, President and Chief Executive Officer of Chemocentryx, who will review the company's recent business and clinical progress.

Following his comments Susan can I executive Vice President Chief financial and administrative officer of Chemocentryx will provide an overview of the Companys financial highlights for the first quarter 2020 before turning the call back over to Tom for closing remarks.

During today's call, we will be making certain forward looking statements, which those of you. Following the slides can see if you look at slide two.

These forward looking statements.

Based on current information assumptions and expectations that are subject to change and involve a number of risks and uncertainties that may cause actual results could differ materially from those contained in the forward looking statements.

These risks are described in the company's filings made with the Securities and Exchange Commission, including the company's annual report on form 10-K filed on March 10 2020.

You are cautioned not to place undue reliance on these forward looking statements and Chemocentryx disclaims any obligation to update such statements.

In addition, this conference call contains time sensitive information that is accurate only as of the date of this live broadcast.

May 11 2020.

Chemocentryx undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date of this live conference call.

At this time it is my pleasure to turn the call over to Tom.

Thank you Bill.

And good afternoon to everyone listening.

Thank you for joining us on our first quarter 2020 conference call.

It is only two months since our reported to you on our full year 2018 results.

How the world has changed since then.

Before I start let me express my heartfelt sympathies to all those jobs shopper and especially the those book loss loved ones. During this pandemic.

And also my deep gratitude to healthcare workers, who are battling heroically to save lives.

The destruction and deaths of this current crisis reminds us of the fundamental importance of goodwill and sadly how far short we are from a world in which we have even adequate remedies for many afflictions.

Never has the need for continued innovation in the life sciences been more clear despite the great strides to progress we have taken in recent decades.

It's no wonder biotech companies are classified as essential businesses, our passion is to discover develop and bring novel medicines to those suffering and dying from serious diseases.

The Chemocentryx platform as you can see from slide three is based on selectively.

Precisely inhibiting a specific chemoattractant receptor for a given destructive inflammatory or auto immune disease.

Importantly, and entirely unlike most current standard therapy, we do this without suppressing the whole of the immune system.

A word about how the cobot 19 had them back has affected our work.

First what has changed.

Operationally to protect our team and our community since March only a core team of our colleagues such as our lab scientists and other essential onsite personnel are working physically a headquarters.

For others, we implemented a work from home policy.

Overall business continuity is good.

Second what has not changed.

Our momentum.

Our timing for filing the NDA or new drug application for a backup in Anca vasculitis.

Our commercial launch readiness campaign for example, batches of a backup in our already underway and we are not subject to supply chain interruptions, but so far developed as a result of Kogut 19.

We are confident that we have an up a backup in for a commercial launch in income vasculitis.

Our clinical trial progress has been largely unaffected as I will explain in more detail in a moment.

Well part of this reflects the seriousness of the diseases. We are targeting we're also fortunate that intercurrent cycle of clinical trials, we were at or near complete enrollment when the full impact of this corona virus pandemic began to set in.

Yes, our momentum continues and our balance sheet remains strong supplying the fuel we need to drive forward relentlessly in pursuit of relief for patients suffering from serious orphan diseases.

With that introduction in house Kogan 19 has impacted our business I'll now update you on our progress in executing the goals previous set for this year, starting with the a backup with the vacco Pan and Anca Vasculitis, and then moving onto our 2024 site program of topline data data Readouts from.

Further for clinical studies.

As I turn to Avago Pan and slide four.

Let me remind you how deadly anca associated vasculitis is and why a new standard of care is so desperately needed.

Anchored patients carry a shocking nine fold increase mortality risk compared to healthy people.

Even more shocking is that current therapy abroad, immunosuppression actually adds to that mortality risk.

Sadly this is highlighted in the current crisis. Many anca patients are considered high risk for corporate 19.

In parts, owing to the current immunosuppressive therapies they are on to treat the anca disease.

But really maybe on the way.

Our dialogue with the FDA continues on track and we are on schedule to file our end da for a backup in mid this year.

Our confidence that we will meet this target was high the start with.

It's grown with each week that passes.

It is the confidence that is founded upon what we consider to be the super relative results achieved in the pivotal phase three advocate clinical trial in which of occupancy demonstrated statistical superiority in sustained disease remission during one year of treatment versus the current steroid contain.

Earnings standard of care group.

This exceeded most expectations since the trial was not powered for superiority.

Overall, the advocate trial revealed a compelling value proposition for of Ocho pen and Anca in the form of an all around ability to reduce the total burden of income related disease.

Notably beyond bringing the disease symptoms into remission and sustaining people in their mission as mentioned above.

In addition of occupancy therapy significantly reduce the on Mrs associated with the use of steroids.

Significantly improved kidney function over 52 weeks and actually improved quality of life in contrast to the deterioration and quality of life in those patients on the steroid containing standard of care.

Members of the anchor patients and clinician communities relate the touch effects are unprecedented in the Anca vasculitis field, bringing the hope for a new paradigm of therapy.

We plan to share expanded data from the advocate trial beginning next month at the major annual meetings of the European League against Rheumatism, or you are and at the European Renal Association European dialysis and transplant Association meeting or E. R E.

As.

We also look forward to sharing additional peer reviewed publications starting this year.

We're gearing up our organization in preparation for the potential commercial launch of the backup in the U.S.

Our Maxim is growth in the service of innovation and patient health.

Since the start of the new year, we have added dozens of new professionals to the ranks of Chemocentryx.

In recent months for example, we have added two new senior Vps in Tech operations, and human resources as well as making other key executive and management hires in areas such as medical Affairs research operations supply chain quality market access including patient.

Yes, commercial analytics managed care and more.

All of these highly trained professionals, our powder part of our intensified mission to achieve launch readiness and commercialization of of occupancy in 2021.

Turning now to our 2024 site program shown on slide five we expect to announce during this quarter. The topline results from our alumina one dose ranging study of the orally administered selective ccrtwo inhibitor CCX 140 in the treatment.

A focal segmental glomerulosclerosis or fscs.

Fscs this condition characterized by scarring in the go marry a lot and kidneys filtration units and it can lead to end stage renal disease, requiring dialysis or even kidney transplantation.

Fscs is an orphan disease indication that afflicts tens of thousands of people in us alone with over 5400, new cases, each year in this country.

There are also approximately a thousand kidney transplants annually involving fscs patients with their filtration system impaired patients suffer from excess protein in the Aaron proteinuria.

There are as yet no approved drugs for Fscs.

The company's CCX 140 has been granted orphan drug designation in the U.S. professed yes.

As you can see from slide six Illumina. One trial is a randomized controlled phase two dose ranging trial of 46 patients with primary fscs.

The study set out to measure the impact of Ccxone hundred 40, when added to the backgrounds standard of care medication, using three different doses and compared to background medication alone.

The primary efficacy endpoint in the aluminum on trial is the reduction in proteinuria after 12 weeks compared to a patients baseline a ton of entry.

Owing to the expected release of topline results in Q2, we will not be commenting further on luminant one today.

The second SGS study also part of our 2024 site program is Illumina two trial Lumina too as a single arm open label study of primary efforts Jay patients, who are very deal with a condition known as new products syndrome identified in our study as baseline proteinuria.

Greater than three grams or higher and typically considerably higher per day. This is a much rare condition and patients are as you would expect generally much sicker.

Acquiring quite intensive medical intervention.

Patients receive escalating doses of CTX 140 from five make once a day to 15 make twice a day.

We are on track to report topline results in the second half of this year.

Turning back to Ivanka Pan and forward to slide seven we have exceeded our target by enrolling more than 400 patients in the phase two Aurora clinical trial for the treatment of the chronic disabling skin disease hydrant tinnitus Supra Tivo.

Hs is it to figuring skin disorder, driven died by neutrophils. They are thought to be activated by the cfivea receptor.

And I remind all the debacle pens mechanism of action is blocking the cfivea receptor, thereby preventing destructive activation of neutrophils bye bye bye.

The Aurora trial is a double blind placebo controlled trial of patients with moderate to severe Hs who are randomized to one of three arms. The primary endpoint will be assessed at 12 weeks using the hydro denied a super Teva clinical response or high score.

During this covert crisis, we are working particularly closely with regulatory agencies and individual sites to ensure the safety of patients for study visits and the integrity of clinical data.

The large majority of our Hs sites has stayed open for Hs patients in part, reflecting the fact that this is a devastating and life altering disease.

We continually monitor progress and are on track to release the topline data in the third quarter of this year.

The versatile debacle panned is also being studied in the four of our 20 twenties foresight programs depicted on slide eight the accolade phase two clinical trial of patients with the rare kidney disease C. Glomerulopathy.

C. GE is a complemented a compliment dysregulated orphan kidney disease for which again there are no approved treatment options half of all the C threeg patients experience kidney failures.

There are two placebo controlled blinded strident strata in the accolade trial of more details on those in the next quarter's call.

Given the rarity of this disease I believe we have already met amassed one of the largest and perhaps indeed, the largest dataset onsie threeg from a randomized blinded controlled clinical trial.

The community FC Threeg experts is asking for the analysis of this data because there is a powerful belief that our trial will provide the definitive answer as to whether targeting the cfivea receptor is the way forward to a clear clinical benefit and see threeg.

Given the rarity of this disease and its devastating course, and the fact that there are no FDA approved therapies. We are rigorously protecting the integrity of the database with a view that it could be discussed in the context to potentially support conditional registration foresee threeg now.

Actually can consultation with regulators will be essential in defining this path.

I started today by expressing gratitude for the healthcare workers, who are on the front lines of this pandemic.

Before turning the call over to Susan can I have for the financial results. Let me close by also thinking all my very Dear colleagues at Chemocentryx for on the frontiers of medical science for their dedication through their efforts, we are moving ever closer to a goal of helping clinicians and patients and reward.

During also the shareholders will place their trusted us Susan.

Thank you Tom.

Our first quarter 2020 financial results were included in our precedent today and are summarized on slide nine.

Revenue was 6 million credit first quarter compared to $8.3 million for the same peering in 2019.

Research and development expenses were 19.3 million for the first quarter of 2020.

Fair to 15.4 million put the same quarter last year.

This increase is primarily due to patient enrollment owning a buck of current Aurora things to be clinical trial.

In patients with any chance on costs associated with preparing for new drug application from Pakistan.

Thanks, Gary.

These increases were partially offset by lower expenses system.

And now completely on track for current advocate paid putting on PCX, one going noumena, one phase two clinical trial.

General and administrative expenses were 8.8 million for the first quarter of 2020 compared to 5.5 million on the same period last year.

The increase was primarily due to higher employee medical expenses, including bear 13 out of pocket, Pam Anca vasculitis launch medical soccer and higher carcinoma.

We recorded a net loss for the first quarter of 21.7 million compared to a net loss of 11.9 million in the first quarter 2019.

Total shares outstanding at March 31, 2020 were approximately 61.8 million shares and we closed the quarter with 118.8 million and reporting cash on the investment.

Tom.

Thank you Susan.

To summarize.

As you can see on slide 10.

We are getting close to our goal of filing our end da for Avago Pan and Anca vasculitis with the Usftwo AA.

And our partner Vifor pharma plan to submit a licensing application to the have may later this year.

We are scaling up our organization in preparation for commercialization in the U.S. and Vifor pharma is making preparation for international markets.

Our 2020 Coresite program of topline data starts with Illumina, one resolves, which we expect to announce in the current quarter.

The results of the limited to study are expected in the second half of this year.

We have exceeded our target enrolling more than 400 patients in the Aurora trial of of Ocho Pan NHS consistent with our plan to release topline data next quarter Q3.

We also expect to announce results of the accolade trial of Avago can NC threeg by the ended the year.

And we are in enviable financial position.

The progress of our enterprise is encouraging even as it plays out against the backdrop of the current crisis.

But crises pass while contributions last.

At Chemocentryx, our resolve is from.

Our so plans propels us forward irresistible in our need for discovery.

Ineluctible in the dry to medical and innovation.

The fire of our determination burns bright to eliminate a future, where we see health and prosperity for our patients and for our shareholders alike.

With that I will now turn the call back over to the operator and look forward to your questions operator.

Yes task a question Evening's press star, one way or telephone once again that star one higher telephone to ask a question.

And your first question comes from the line of Steve seed House with Raymond James.

Hello, Steve Your line is open.

Steve you may be on mute.

Okay.

Circle back.

Your next question comes from the line of Michelle Gilson with Canaccord Genuity.

Hi can you guys here.

Yes, Michel loud and clear thank you.

Alike.

Hi, Susan I'm, Thanks for taking my question.

I Oh I am bonds for you guys that you guys can't move into your new facility at the height I was hoping that you could answer price you why are the remaining gating factors for filing for a backup hand.

As we kind of heading to the middle this year.

Thank you Michelle.

We're right on plan, it's a massive documents as you can well imagine so most of it. It's just been a mass action kind of exercise at this point there are no extraordinary gating items things that we talked about in the past work Aggressing have indeed progress very nicely so as far as we know we.

No hang ups in any of the critical path areas CMC and the like of all gone well.

So, yes, I would say that right now, it's just a matter of buttoning up the rest of the package and.

Filing it certainly in time for our.

Good year deadline.

All right.

Just also on hiker nine cents per Ti Vo, obviously high score is.

Complicated assessments.

And can't really be done by anyone that's not tied trained.

So I I was just wondering if you're pursuing any sort of complications in assessing high scores for the hydrogen as separate Kiva study.

Yes, it's a very good question and very apt in these times. So a couple of things have worked in our favor I'll back up a little bit to say that we were obsessive about training people in the high score before we started the study and they had to pass a certification in order to be able to started enrolling patients.

We've also been very fanatic about the standardization of the score and how it's done creating and encouraging absolutely the use of continuous worksheets another records.

All the this is by way of trying to eliminate some of the inherent variability in the high score and to certainly control placebo response.

So we've done all of those things and indeed during the blinded part of the high score determinations as data came in blinded. We were we have been fanatical about monitoring the blinded assessments and if something doesn't make sense in terms of nice score our medical monitor is on the phone with those investigators.

And they go back to the inconsistency and they work them out so training has been extreme.

Standardization, it's been an object of obsession and monitoring during the blinded phase has been another key feature in such ways. We hope to have the high score, which is meaningful and well within the normal varian variability of a score like that to the rest of your question.

We were very fortunate in that the majority of our subjects had already enrolled in the Aurora trial.

And they had in fact cast the 12 week primary endpoint.

Prior to the major part of the pandemic so although we.

We know we will get more data even the data we collected still still entirely buying that to us by the way, but we knew that we had enough data for the primary endpoint already captured in the trial to have a reasonable power to ascertain the primary endpoint as planned so that was the worst case.

Scenario, which obviously will not come to pass because we we now know for example that the majority of the Hs sites have stayed open.

And we are also doing other things like making.

Every efforts to make sure the high score for primary endpoint determination for those minority of folks that have yet to past 12 weeks will happen.

As plan, that's number one and that we've made really good progress on that.

For occasionally for there are ways to do the high score.

Not as perfectly one admits but even with telemedicine, there's been some breakthroughs there and Weve worked carefully with agency guidance and advising the agency, where we've been on where there will be any issues around high score determinations.

I will say to that Weve availed ourselves to some whole home health care visits as well all of this adds up to I think the reasonable supposition on our part based on evidence to date.

That we will be able to have the high score data that matters to determine whether the drug is epic efficacious.

Based on the 12 week primary endpoint, so I feel we're in pretty good shape for that.

Okay, Great just just one more if I can [laughter]. Our you know testing patients for 2019 in your Ivanka Pan clinical studies right now I nearly talks about this in the last call on Hep C. Amy be implicated.

But I I was just curious if you're testing patients on key to see if you do have some key studies.

Supporting the mechanism.

We've got no formal testing program and be a backup hand studies. If they are getting incidentally tested those results will likely be entered into our records, obviously and we could do some retrospective analysis, but no Michel we're not doing a formalize study.

Of testing patients either for covert 19 or for antibodies against same.

So that's all I have to say about the the studies it with ongoing Avago Pan work.

We are very keenly interested in the mechanism of action covert lung damage and as you know and others no.

C a and C. A receptor certainly have been spotlighted as potentially playing a role unproven, but potentially and we've been deeply considering.

Whether there are two couple of programs one and one in Europe when in the U.S. said, we might get involved in but so far we've not made a decision.

And certainly will alert the community we opt could do so.

But clearly that this crisis is lasting a little bit longer than anyone had hoped and so there may be some more careful clinical work to be done with novel agents. At this point, we're not doing that work, but we'll certainly keep the community price if we we opt to get involved.

Okay, great. Thanks.

And looking forward to them no one data.

Thank you Michelle.

You have a question from the line of speed, Steve seed House with Raymond James.

Yes, Hi, this is a tomorrow running on for Steve can you hear it.

Yes fair just fine. Thank you, okay, sorry about the technical difficulty.

So the Soviet had a question about the or HF study you talked about the enrollment exceeding expectations could you remind us what delta and high score was the study powered for and listening dropout rate hasn't been a problem, but could you just talked about whether it's been impacted by corporate 19. Thank you.

Very good question. So the dropout rates certainly up to the week 12 primary endpoint should not as already alluded to.

Even under normal practice should not affect our ability to detect meaningful difference in the primary endpoint, we probably over the longer term as you know after the 12 weekend point.

The folks in the trial go into an open label phase. Although there there are two doses and they are blinded to dose. So there will be additional data to be had from the 24 week additional period.

And there we put we do expect not to have quite as Richard dataset, owing to cobot, which has only to be you know the understood.

Having said that as I as I mentioned the major actions in the first 12 weeks and I don't think will be affected there and dropouts were more or less as predicted.

So we have obviously this is a large trial 390 patients in three groups.

Howard to look at about a 20% difference in high score with greater than 90% power. So I think we're really adequately powered to a phase three level and that would be between any of the to any of the individual dose arms versus placebo, the even greater power we in the stats plan.

In avail ourselves of additional analyses of pooling all all patients on of occupancy. So it's a highly powered and as I said, we've been very obsessive about high score training standardization and monitoring during a blinded phase so I'm quite confident that we'll be able to deter.

Herman.

A clinical response, if we see one.

Okay, great. Thank you and our other question.

So it's about potential code liking studies, you mentioned that you're potentially looking at getting involved.

And now it seems that.

In the sensor to sort of minority of companies that have complement inhibitors and have not yet this year that the clinical study included 19.

Could you maybe talk about some of the factors.

That will make to get involved and and the programs are considering thank you.

Well, it's a very it's a very an interesting an important question. So.

Notwithstanding that other complement intervention companies are involved and although we get sometimes interesting hence that there may be things that are in important happening in the clinic.

I think Chemocentryx art.

We have a certain.

Especial cert certain circumstances or special and risk with respect to timing of our program. So as you know we've just completed the first large pivotal trial with interesting and I think very important positive results and Anca vasculitis. The drug has not yet licensed in yet we're now just applying for our first.

License, so the timing of Avago Pan and its ability to help people with known disease with a large dataset from a randomized controlled trial.

Is something we.

Carefully obviously consider in the equation. Moreover, I think the biology of Cologuard is very interesting to us as well and so yes. There is some very really reasonable hypotheses that morbidity and mortality driven by the acute lung.

Injury in this virus and other related kind of viruses the acute respiratory distress syndrome is certainly consistent with the complement activation of neutrophils and being involved the so called cytokine storm.

But is also true that complement as part of post defense fundamentally including viral host defense. So obviously the timing of intervention is very very key and I don't think anyone in the world yet knows.

Hey, whether or not the hypothesis is fundamentally.

The driven at the level of of excellent.

Mechanism evidence, but certainly know and yet knows about the precise timing of intervention to even if the hypothesis is one that one is strongly believing in so.

We do believe there's better evidence around that now we do believe that there is a point of intervention and there are couple of much more carefully designed clinical programs that are one I think has already been approved in the UK and they were evaluating whether we should be one of the agents who will be a multiyear.

Agents study with very careful data collection very careful controls and comparisons so that the lapse of time has allowed for more careful studies to be design and more careful protocols to be constructed so thats interesting to us and it's also interesting to us that.

We are now that we have very good handle on our data package for the other programs. We can certainly devote a lot more time and attention to whether or not coven intervention study is something that we could meaningfully make the contribution to so I acknowledge that we were not.

The among the first companies to jump in at the very first moments of this crisis and I think that while those contribution across the board whether with complement intervention or other kind of interventions have been very important and I applaud dose.

Launchers.

We've yet to get really good evidence from some of those early approaches about what is the way forward.

So maybe we have a little bit more evidence now a little bit more understanding of how to manage.

Such trials and so as I said, we're day to day involved in this analysis and the discussion and.

We will at the appropriate time be involved if it is scientifically.

Based in evidence and whether you know the trial can yield useful information in our opinion.

Okay. Thank you very much.

Thank you.

Your next question comes from a line of a new Palm Rama with JP Morgan.

Hi, guys.

Just touched on the call Tonight.

Any pattern.

Glad to hear aren't doing while in banks interesting question.

So so that's one for Mike and the cap you mentioned the prime time to present data at you aren't even today.

Our next month.

Just to remind us what additional key a massive restructuring backed on advocate data any subgroup analyses, we should be time particular attention to you.

So much.

Thank you Tessa great question, so era as well as ULA are.

We will be virtual meetings this year as probably most of guest.

But we have been confirmed it both those meetings, we meaning the.

Some of the key clinical investigators for presenting some of the data in I think fairly high profile session. So as soon as we have the details of when those presentations will be released and what form will certainly alert everybody.

The data will be I think very interesting because.

As you know we put out the topline data.

And it's pretty clear that the results are very robust with a backup and we have lots of people in a remitted state when when one looks at the primary endpoint based on the Birmingham Vasculitis activity score at week 26 numerically better than this Peter.

So.

And.

Very good job that people under emission by six months there sustained dinner mission stay in remission that week 52 in a.

Very statistically significantly superior way to the standard of care arm. So that's important.

The numbers are very robust in that primary endpoint. So you can infer from the arithmetic that the sub groups are all doing well that you're exactly right. We will be looking at subgroup analyses beyond the top line. So for example, we know we.

Hi.

Our team whose background therapy.

And it and the standard of care as always our.

Plus X.

So we'll.

Sure.

So it really.

That's usually associated with the clinical diagnosis of GP a.

The other auto antibody is empty mile approximates.

Which is typically associated with the clinical diagnosis of Npls and there's some clinical distinctions between those two groups mph disease with NTM PEO antibodies much more highly related to very intractable kidney dysfunction hard to manage patients and so we'll be.

Looking at that as well.