Q2 2020 Strongbridge Biopharma plc Earnings Call

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Thank you and good morning, everyone. We're pleased that you could join us for strong bridge bio pharma second quarter 2020 earnings conference call.

Joining me from strong bridge. This morning are John Johnson, Chief Executive Officer, Dr., Fred Cohen, Chief Medical Officer, Rob Luck, Chief Financial Officer, Scott Wilhoit, Chief Commercial officer enriched Colander, Chief operating officer.

Before we begin I would like to remind you that during this call. The company will be making forward looking statements that are subject to risks and uncertainties that may cause actual results to differ from the results discussed in the forward looking statements reference to these risks and uncertainties are made in today's press release and disclosed in detail in the company's periodic and.

Correct that filings with the U.S. Securities Exchange Commission I will now turn the call over to John Johnson.

Thank you Wendy.

Good morning, everyone and thanks for joining us today.

Before I begin I hope that everyone on the eastern seaboard, especially those in the direct path of the tropical storm or able to whether it safely.

My thoughts and well wishes go out to those communities and the people to sustain them.

That said some of this roberts t. numbers, including myself or calling in from impacted areas. So we want to apologize in advance for any potential background noise or unintended just connections with our telephone lines today.

This call marks the first one reminder, role as Chief Executive Officer, after serving as German a strong for instance, 2015 and most recently as executive Chairman. It was my pleasure to accept disposition and to continue working hands on with the board executive leadership team and our talented employees.

To further deliberate upon stronger its mission to make a positive and meaningful difference in the lives of patients with rare diseases.

To begin I'd like to highlight a few the key events you Miss corridor.

Importantly, these achievements were made to spike it puts just the coated 19 pandemic and its impact on how we conduct day to day business.

The second quarter America high score that not revenue ever for today, Yes, we reported 7.8 million for the quarter, a 28% increase compared to 6.1 million during the second quarter of 2019.

As a result, we saw 38% growth into various revenue in the first half the 2020.

Paired with the same period in 2019.

Despite units the ones certainly with Alcobra 19, what impact both their field teams ability to interact with prescribers and patients as well as potential patient visits with doctors, we experienced a reduced but continuing slow new patient referrals and new start smoking ban.

This was coupled with a continued trend of high retention rates with existing patients.

I want to recognize the dedicated efforts of our patient services team, who worked closely with patients to ensure access and minimize any interruptions or unnecessary gets continuations with therapy.

Given the strong performance deserved in the first off this year, we expect to achieve or potentially see the higher end up our full year 2020 revenue.

It's worked to the.

Which ranges from 22 million to 26 million.

Additionally, and as we have pretty we stated that we have also been engaging in lifecycle development activities applicable to our conveys business.

We expect to provide more detailed information on those later this year.

Second under the steadfast efforts of our medical team led by Fred Corlanor, Chief Medical Officer, we are nearing the completion of our pivotal phase three studies for record <unk>, and then botch into switching syndrome.

Recently, we announced the achievement of the last participant completing the last study visit in the randomized withdrawal phase.

Oh, the phase three logic study.

We are looking forward to reporting topline data in September.

Rob will go into more detail about lots of shortly however, I do want to take a moment to underscore how proud I am of the team's ability to keep the korlym clinical program on trial doing such a challenging and unprecedented time for our industry country and global community.

Enrolling in managing the progression of clinical trials in rare diseases, often considered a tremendous suite of Oh.

The complexity of a pandemic intimates and what Brad and his team of accomplishes remarkable.

Therefore, I want to extend my sincerest gratitude to our clinical team the patients and their families who stuck with us and the health care providers, who helped to make this happen.

Finally, before I turn the call over Fred I want to address the strategic financial decisions. We made recently just strengthened the overall financial position of the company.

And they have 20 to one a strong bridge and its subsidiaries entered into a 30 million dollar debt facility with Avenue venture opportunities Fund LP.

Funds within the Avenue capital.

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Well, it's under the terms of alone the granite alone strong bridge to borrow 10 million a closing the agreement also provide strong brands with two potential additional tranches of up to $10 million each.

Assuming the full draw down of the 30 million, we were able to extend our ability to fund operations.

The first quarter of 2022.

As many of them from quarter to commercialization, we recognize there's more value, but we can bring to the words each community with the capabilities. We have built as a result, we will be keeping an eye towards potential new assets that can enhance the laws are rare disease patients and build value for shareholders.

With that I will now turn the call over the fraud.

Thank you John.

The second quarter, what's the significant one for our phase three clinical development program for recall that in antagonists Cushing syndrome in May we announced a logic study completed enrollment with a total of 44 study participants and rolled into the randomized withdrawal phase of the study.

And in early July the company now since the last participant that completed the last study visit in the randomized withdrawal phase of logics with a total of 43 patients completing the randomized withdrawal phase.

That's very minor Echologics protocol out for a range and the target a participant sample size for a moment and this range what's depended on the observe rate up discontinuations randomized withdrawal, which determines the number of primary endpoint completers.

The protocol targeted at approximately 42 primary endpoint Completers, which would have provided approximately 99% power to detect a loss of therapeutic response rate of 17% in the leap acutely conscious arm.

70, and 78% in the placebo arm as compared with an all hypothesis.

Based on simulations if the loss of response in the record that bar shows an absolute difference of 35 percentage points for more using a data set up just 42, Completers Oh, the primary endpoint and inferences statistical significance.

<unk> statistical significance is highly likely therefore, the 43 completers.

We have support the robustness of our primary endpoint analysis.

The company anticipates that it will report the topline results from the logic study in September importantly, the topline results will include the primary and key secondary efficacy endpoints, he safety findings and disposition or patient numbers at various stages in the study.

In June 2020, we conducted a pre NDA meeting with a division of general endocrinology of the FDA to review plans relating to our proposed new drug application submission for record, though with an anticipated submission date approximately six months following are reporting on topline results from logic.

Based upon feedback received from the division during the meeting we believe Echologics and Sonic study results together, we're providing sufficient clinical studies basis for a subject to preview of an idea.

And that it will be a review issue as to whether the data will be sufficient to support a group.

As with any regulatory review process, there can be no assurance that the division will determine that the totality of data included in the N D. A submission, including the results from our saw Nixon logic studies will be sufficient to long approval of the idea for Rick more or less.

We believe that if it ends here. He has accepted by the FDA review, we can expect to review cycle of 10 months from the date of submission, which is the standards Paducah cycle time for review of new active ingredient. The is a five or five be two after you pathway.

Barring any on anticipated FDA review process modifications due to the ongoing coping 19 pandemic.

And without I will turn the call over to Rob loves our Chief Financial Officer, who will review the financial highlights from the second quarter before we open the call up two questions Rob.

Thank you Fred.

Our press release contains details of our financial results for the second quarter of 2020.

Rather than read through all of those details my comments today, we're focused on some key financial results.

We ended the quarter with approximately 60 million in cash inclusive of the net cash received from the first tranche of our debt facility, which John spoke about.

We also saw 26% reduction in second quarter operating expenses compared to 2019, which can be attributed to a combination of reduced head count favorability from reduced costs due to co bid.

Reductions in our clinical trial expenditures.

And timing.

Therefore, assuming the full draw down of our $30 million death is still city, we remain on track to fund operations at least through Q1 of 2022.

After the timing anticipated for record that day approval and launch.

Giving us flexibility to further finance the company optimally.

And operator with that we are ready for questions.

Thank you.

And as a reminder, ladies and gentlemen to ask a question we need to press star one of your telephone to withdraw your question. Please press the pound key.

Please standby we've compiled kuni roster.

And our first question comes from the line of Chris Howerton with Jefferies. Your line is now.

Great.

Thanks for taking the questions in a echo your sentiment John just hope everybody out there is doing well and hope your team is okay.

Thanks, So yeah. So I guess you know to start a Fred I just wanted to kind of explore a little bit in terms of the language that you're describing with respect to the approvability of a Andy a submission you know given that some address that was recently approved with.

The randomized withdrawal designed.

Are you just kind of being a hedging your language a little bit or is there something that is concerning about the regulatory path with respect to Cushing syndrome.

And then secondarily with respect to conveyance revenue, maybe for John or <unk> or Rob would you expect to revise guidance moving forward. If you see another strong quarter, let's say in the third quarter Thanksgiving.

Hi, Chris This is Fred.

So with regards to your question I don't know for hedging up there, but I do I do think it's important for.

People to recognize that the FDA just not comment per se on Approvability other data package, particularly in this case, where they didn't have the results for logics, you know that they could even opine upon but your point as well taken there was recently an approval of a drug in the same or similar category for Cushings disease known as is.

Theresa or as a larger stat.

[noise] that wasn't approved on the basis up a single pivotal.

Registration trial, so that was a randomized withdrawal study with a similar.

Type of randomized withdrawal phase as compared with the logic study. So I think it's fair to say, we remain optimistic and at the results well you know will speak for themselves [laughter]. Okay. So basically the point being that you and no one else obviously wants to put words in the FDA Mount and get it you know less.

And do they review as as they see fit.

Yeah, that's exactly right. We think the ER the data will be for itself then will serve as the basis for a substantive review.

Great. Okay. Thanks Fred.

And then Chris as it.

Relates to cover US first off I'm glad you asked the question, whether we're shooting to low as opposed to can't really reached a number but I.

I would say this we've been very cautious with and and a bit conserve it though.

With the cobot uncertainty.

You know, where it's not that we anticipate any issues per se in the fourth quarter. We have plenty of supply offer US you know, it's really the unknown look what told would could cause it if we see.

Substantial issue in third and fourth quarter.

As you might expect we monitor this sales in activity.

Daily weekly and monthly yesterday.

We did the July review.

For two bass when it was very strong and so we certainly we'll keep an eye and tried to give you a you know more defined number as a colder themselves you know itself and we can see a little bit more what's happening with that with these states and somebody asked and that's being taken.

And our ability our field teams ability to to get in there.

We have seen the field team become more successful.

Yeah operating in a virtual environment.

Felt a little bit of a secret sauce that it's been working for us as of late.

I'm very pleased with their performance and certainly very proud of the performance of the patient services team in retaining patients and what we've heard back from them certainly use that cafe us.

And its efficacy and helping them to potentially avoid going into an emergency room has been a big factor.

In their inherent so we look forward to serving those patients going forward.

Great and if I may maybe just one more question with respect to give it is I know that we've had discussions in the past with respect to lifecycle management strategy I'm, just curious if if and when you might be able to provide some updates on the on some some of the things going on in the background.

Sure I'll ask rich Colander, our chief operating officer to comment on that rich.

Chris Thanks for your question, Yes, we continue to actively work with the patent office as as we've mentioned prior we filed more than a dozen patent applications in the U.S. three PCT patent applications.

As you recall the first of these applications with the office were filed in the fourth quarter of 2018.

We're working very closely with outside counsel as we prosecute these patent applications.

All of the inventions, describing these patent applications relate to methods of using the active ingredient you've asked in a manner consistent with the realized provides labeling that we received for the product back in November of 2019 in terms of a timeline.

As I had mentioned, we're working actively with the office and we expect to get back to the market. Sometime later this year with some more a more information.

Okay, all right well well thanks for taking the questions in it and again I Hope you all though.

Thanks, Chris.

Thank you.

Next question comes from the line of Hartaj Singh with Oppenheimer and company. Your line is now.

Great. Thank you for the questions going again like guarantee agency.

So looking forward to thank you just a couple of questions one is.

Fred had noticed that you had far fewer discontinuations in logic.

Well, it's not just the an artifact of the study design logics nurses sonics or is that.

So that their learnings that you've been able to apply a in terms of managing patients on the core lines as you get them through these in a fairly rigorous he's Peter and I just got a quick.

Thanks Heartaches threat.

I think a little both primarily to design the randomized withdrawal stays as you know has an open label titration and maintenance period that preseason and once.

Patients into the randomized withdrawal phase, though have already demonstrated that they've responded well to the draw Jim have been able to stabilize maintain a normalized mean U.S.C. for at least four weeks and so from that perspective.

The more stable from a disease control standpoint, presumably feeling pretty good on the drugs and so.

Factors that that may lead to discontinuation at that point, such as lack of efficacy aren't really issues anymore.

Adverse events likewise, if they occur they tend to occur more frequently earlier in the stuff. So for those reasons. The study design you know definitely made a huge contribution to that and the other factor as you mentioned as learnings we have learned a lot about the drugs since starting sonics back in 2014 and.

I think we we provide clear and maybe more effective guidance to the clinicians treating the patients in terms, just how to manage their expectations and how demand it titration effectively we've definitely.

Got better at that so I would say so say.

Great. Thanks, right and then the other question is also just for you we choose not to him.

Remember that when logics.

All right here and a half the two years ago Strongbridge announced that they then that the company to undertake logics.

You know to be able to go to the FDA and with a stronger rationale for potential Qualex well. One big reason was just have a bigger safety database. Tom can you just talk a little bit about that just remind us again, how much larger will logic sneak that safety database and then secondly, you don't Sonics you also evaluated.

Hi, key cardiovascular secondary endpoints will you be updating those also with logics holdings will be primarily.

Phonics.

Thank you for the questions.

Yeah sure so with regards to the safety database, we database, we haven't yet disclosed the numbers that we dosed in logic to achieve the 44 door randomized but.

Suffice it to say that the safety database will be quite a bit larger.

Then just sanex I think important importantly, we're gonna have several dozen patients who will have more than a year's worth a therapy.

And a smaller number of patients who will have a multiple years of therapy on the drug at the time of the NDA submission, which is a facilitated by our third phase three study known as optics, which is an open label extension study. So in fact, we've already had at least one or two.

Patients that I'm aware of that have been on the drug for about four years at this point and that's important because you want to see for any chronic disease trial going out with a lifelong disease that patients can stay on it for multiple years. So the safety database you know just put that in perspective is going to be very much.

Competitive with what the other approved drugs you know into categories. Other branded drugs that has that had been at the approved.

You know what they have provided for it for their reviews of what it will certainly be competitor with those.

In terms of I'm, sorry, what was the second part of your question.

Oh sure the the five cardiovascular secretary and talking about you validated in Sonics, yes. So we looked at cardiovascular risk markers. Thanks for reminding me. So we will provide.

In the topline release, the key secondary efficacy endpoints healogics not all of the same endpoint.

I'm not remeasurements sonics or are.

Being looked at as key secondary efficacy endpoints in logics, because we only have that eight week time period to show changes between the active and the control arm. However, we will show we will share data on the markers that we measure things like.

Glycaemic fasting glucose.

Body weight.

If it changes.

We will share those results with you from the logic stuff and of course, we have the open label contrition maintenance.

Part of the study that that won't be part of the topline.

In that regard, but will be part of the submission that we made to the FDA.

With the final results.

Great. Thank you Fred excellent questions.

Thank you.

Thank you and our next question comes from the line of Annabel Samimy with Stifel. Your line is now open.

Hi, all of this is avatar Jones on for Anadarko, and if I could act two questions.

First given there was a range of targeted patients and logics enrollment stopped at 44 patients, but can you provide a little more color on the powering assumptions for the primary endpoint and whether enrolling patients puts fewer patients with any strain on achieving statistical significance.

Hello.

Sure yes so.

I think.

I I talked about a little bit on the call.

This study was well powered we had actually based on.

Achieving.

42, Completers, which was in the protocol, we had assumed 42 quarters, we ended up 43.

That we would have 99% power based on our hypothesize difference between the group. So we had hypothesized the loss of response rate or 17% in the <unk> would you be QD economists arm versus a loss of response rate of 78% in the placebo arm.

Versus the no hypothesis, which has no difference between the two so that's a delta a difference in absolute percentage points of 61 percentage points.

And then we did some clinical trial simulations that said okay.

The it asked the question.

Given given what we did you know enroll the numbers that we did on ROE or what's the likelihood of achieving statistical significance.

And we found that.

At least 35 percentage point Delta the difference between the active and placebo last response rates at least 35 percentage points on that Delta.

Yes, it's a very high likelihood.

Over 95% likelihood of achievements, it's a statistical significance so that.

That I think speaks to the robustness of.

You know what kind of Carl.

Got it that 35 or six months try it sounds pretty promising.

And secondly, a loss of response to the primary endpoint for withdrawal period, but can you remind us how you're looking at liver enzymes during the maintenance and withdrawal period and how the FDA, we'll be evaluating this data relative to placebo.

Yes sure so.

The the liver enzyme evaluation that we presented and Sanex is a pretty standard evaluation and we rely on the FDA guidance for evaluation of drug induced liver injury in the pre marketing phase. So we follow that guidance very closely and work, but you know worldwide key opinion leader.

Yes, and liver injury to present the evaluation of the.

The liver markers and so we looked at for example, the threshold of greater than three times upper limit of normal and greater than five times upper limit of normal with the latter being an important consideration because it's a greater than five times, where the signal from the noise is sufficiently separated that you have higher costs.

And as that there is a possibility of a drug induced liver injury, we reported that Sonics for example that 3% of the study population had at least one value that was of transactions that was greater than five times. The upper limit normal. So we'll be looking at similar data on similar threshold analyses and a lot.

Our next study obviously I can't report anything to you today without having the results in hand, but shortly.

September when we present the topline results. We will include among those results the.

Extent of the.

Liver enzyme evaluations through the end of the randomized withdrawal phase.

Logic study and most likely we'll put that into context of what we saw im sorry.

Okay. Thanks, so very gosh.

Thank you.

Thank you.

Our last question comes from a lot of Jonathan while they've been with JMP Securities. Your line is now.

Hey, good morning, and thanks for taking the questions and congrats on the progress just a couple inner core live I guess, Fred can you discuss how important patient reported outcomes are in terms of improving quality of life for these cushings patients and if that's data will get in the top line as well.

Yes, thanks in terms of.

Quality of life.

It's something that we looked at and we looked at it and Sanex. We saw improvements are granted that's an open label study logics of course double blind controlled study on you know provides a different way of looking at the same data, but over a shorter time period. So I believe that we will be presenting that I can confirm.

I'm not with you after the call, but I believe that is part of the topline package, it's certainly something that we've measured in logics.

Serially throughout both the open label as wells the randomized withdrawal portion of the study. So we do think the quality of life assessment is very important one quality of life is compared to a substantial degree in patients with Cushing syndrome and in Sonics. We showed that so we were largely going to reverse the.

Impairment of quality of life in the patients who completed the maintenance phase sorry.

Great and then can you discuss a little bit of the commercialization strategy in terms of targeting and Tiering physicians are centers of excellence and any synergies with your current salesforce.

Yes, thanks for the for the question, Jonathan I'll ask Scott Wilhoit, our Chief commercial officer to address the question Scott.

Yes, good morning.

We.

Reported out in fourth quarter.

Teen some.

Search that we conducted and as part of that presentation, which is part of our July investor deck. We.

Line preliminarily kind of our targeted approach and when you look at this marketplace thinks that the good news is that it's a it's a it's a fairly concentrated.

The point for Us and so what were we'll we'll be doing is looking at kind of medical claims data.

Claims data as proxies.

To narrow in on the endocrinologists that we live in.

In the early launch phase.

Just from a general perspective, we believe there's likely about 8000 endocrinologist.

Among those about 1500 2000.

Our nurturing indifferent specialist or community physicians.

That have these types of patients.

And approximately 125 to 150 pituitary centers, so what kind of use that kind of stalled as it has to think about our resourcing and preliminarily, we're thinking that probably 25 to 45 customer facing positions at launch.

It would be sufficient and just for clarity that when that wouldn't be inclusive of sales team members.

Our patient access managers, who interact with both physicians and patients.

As well as our MSL that would be focused on this so not only in the commercial but in France, a medical affairs group as well.

And so that will give you just kind of generally how we're thinking about targeting what we're fine that of course as we get asked logics data in the early next year.

As it relates to your question about synergies as Weve previously reported the good news here is that we've got a commercial infrastructure in place.

To support conveyors, and that's marketing marketing analytics.

17 number sales team.

Patient access managers in place patient advocacy and we intend to fully leverage that so that gives us a lot of optionality when we think about.

How would utilize that infrastructure, including our sales team. So we haven't made that decision yet, but sufficed to say that we got a good way not fully leverage that we got the optionality as we go forward.

Jonathan I would I'd Echo, what what Scott and I think importantly, what Scott in the team has built here you know from an infrastructure standpoint is very Leverageable, we will add people are exactly how many.

Now, we'll give you more of an update on that going forward.

But suffices to say that today. This has been a great starting point for us to build the infrastructure. We've got a lot of learnings the team as evidenced by this quarter's results is functionally functioning exceptionally well.

And we look forward, assuming positive data and the net gain approval to to launching recall them into this market.

Great. Thanks, again and congrats on the progress.

Thank you.

Thank you.

This does conclude today's question and answer session I would now like to turn the call back to John Johnson for closing remarks.

Thank you in closing I am truly energized by both the near term in the long term prospects for the company.

Recent efforts undertaken by the management team, coupled with very strong revenue performance quarter over quarter for convey us have resulted in a healthy financial position for the company, which not only extends our financial runway and flexibility, but will enable us to grow and create value for our stakeholders over time.

Importantly, we achieved much of this recent success and have maintained at admits an unprecedented time in modern history.

I'm. So proud away. This team has navigated such uncharted territories and continued to deliver upon our collective goals.

Thank you again for joining todays call him for your continued support as we prepare for a number of upcoming milestones that will be transformational for this company.

I have a great day.

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

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