Q2 2020 Arena Pharmaceuticals Inc Earnings Call
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Good day, everyone and welcome to Arena Pharmaceuticals, Corporate conference call. This call is being recorded I'll now turn the call over to Laurie Stelzer, Chief Financial Officer of Arena. Please go ahead.
Good afternoon, everyone and thank you for joining US today, we hope you had a chance to review the news release, we issued announcing our second quarter 2020 financial results.
As the quarter with relatively straightforward and our guidance remains unchanged. We will go directly into a question and answers this session on today's call.
Joining me on the call are on that Lungi, our president and Chief Executive Officer, and Dr., Chris Campbell, Our Chief Medical Officer, and head of research and development.
Before we begin I would like to remind you that we'll be making forward looking statements that involve risks and uncertainties about our goals expectations plans beliefs timing of events or future results, including those risks and uncertainties related to our pipeline financial projections 2020 financial guidance and the co.
Added 19 pandemic and its potential impact on our business.
Forward looking statements involve certain assumptions risks and uncertainties that may be beyond our control and could cause actual results to differ materially from these statements.
Description of these risks can be found in our earnings press release, and our latest FCC disclosure documents. All forward looking statements are based on information currently available to arena and we disclaim any obligation to update these forward looking statements.
Now I will turn the call over to the operator to begin the Q and a session operator.
Thank you as a reminder to ask the question you will need good press Star then one on your Touchtone telephone to withdraw your question from the Q. Please press the pound key please standby will be compiled the culinary roster.
Our first question comes from at least the young with Cantor Fitzgerald. Your line is now open.
Hi, this is an on for Lithia.
Could you speak to why the cultivate studied and ground might be more challenging to execute in the coke environment versus elevate or is kind of the uncertainty there more related kipp prioritizing enrollment and you see given the significant site overlap.
Hi. This is on that let me take you take a stab at then Chris can add new color.
It's not any more or less complicated than elevate the big differences that elevate is up and running.
Where's.
The cultivate program had to get initiated so anything that's.
Any programs, we said this before any programs that are being initiated.
Our little bit more difficult Nicole the environment are substantially more difficult Cove environment in some cases compared to a programs are already up and running.
In terms of site, so I think thats that's the.
But that's sort of the short answer.
Yes.
Exactly right.
Just one follow up I mean, this might answer that as well, but looking ahead to connex year, and obviously all with the.
A copy out but assuming success any topic. During this year is there a scenario where you might choose to them prioritized.
Allocation over cones are those really kind of independent and one another.
They are independent you were building out we think about this in terms of franchises. We've got the GI franchise with the three indications and then the Durham with the two indication. So they are they're all moving forward.
Great. Thanks.
Thank you.
Thank you.
Thank you. Our next question comes from Marty I'll start with credit Suisse. Your line is now.
Yeah. Thanks for taking my question, Amit I'm going to give you translate that sort of repeater.
I was wondering if you could talk about the just kind of the overall as we can probably escape and maybe it's kind of evolving if you could talk a little bit about kind of where you see the unmet need and what that competitive environment looks like for novel oral agents and then obviously relative to kind of when you are different while delivering the phase two pretty complicated for TRASM margin in animals recall I guess.
You are the you're the lead player in the that's going to cloud security, So curious kind of how that.
How about has your thinking about what the borrowers tend to have a kind of commercial success from drug going forward as we could be culture.
Thanks.
Yes, Thanks, Marty I, let me start with the bar question because it leads directly back into the first part of your question.
Which is a competitive landscape.
I think it's important to just recall that every time, we enter new therapeutic area, we look at a new occasion.
We do extensive amount of work both scientifically.
In terms of both the desk research the animal models, but we also do a lot of work from a market environment point of view and just understanding how the product would make a difference in.
For these patients.
In terms of the bar you know if you look at easy changes relative to placebo. They range from kind of the high teens for some of the JAK inhibitors of up to the Fortys has a pretty broad range.
We think that anything in that range.
Would be a viable commercially viable program based on the market research. We've conducted extensive market research suggests a couple of things one that despite a dps tremendous success.
Yeah, we've seen that it has actually penetrated a relatively small percentage.
Of the overall moderate to severe atopic thermark it.
And number two there still is a wide open space for.
For an oral agent that has a safety profile the substantially different from the JAK inhibitors.
As I think most people are well aware dermatologists are much more.
Attune to safety concerns compared to say Gastroenterologists, who are much more to the safety concerns compare to rheumatologist. So there is there sort of a.
They are sort of a very interesting proposition here, where a once a day or will that has efficacy in the range.
As I discussed and has a safety profile consistent with what we've seen historically was the TRASM odd.
We think thats a recipe for a home run program. So.
In terms of.
Patient acceptance in physician acceptance, so all of our market research.
Suggested.
If we're able to deliver efficacy data again in that range.
That we'd be onto something very important in terms of commercial program.
Great. Thanks comment.
Yes, Thanks Marty.
Thanks.
Thank you on next question comes from the out in Canada with Guggenheim Partners. Your line is now.
Hey, guys. Thank you for taking my question. The first question I have is on the.
Topic dermatitis trials. So the on has a 12 week treatment period and the four weeks follow up period. So the question is when you announced the data would you be announcing data.
The 12 week endpoint or will you also include data.
For the 16 for 16 weeks to show due to better Deanna helpful.
Okay.
Yeah. Thanks for the question.
Our primary endpoint is at 12 weeks and so this initial analysis will be focused on that the 16 week data is really around safety.
The remember in in between 2016 weeks subjects are all study drug and then they can enter into the open label extension after that so the efficacy data week 16 is not particularly insightful and then later on will be analyzing the durability from the open label data at a future date.
Got it and then in that trial are you a line any topical or systemic therapies and then what happened to patients.
Oh.
Neither rescue and the final question I have is on the CR formulation when should we expect the next update.
One could you actually move that into patients or will we see any data anytime. This year early next year. Thank you.
If I may have Chris take the first part I'll take the CR, yes, sure. So we have strict obviously controls on what types of systemic and lowering therapy is allowed.
And.
Obviously, we want to make sure that.
There's no other kind of systemic therapies that could be impacting.
Treatment for the topic during the morning therapy kind of depends on on what that looks like and so again just to control there in terms of what can be.
Effective and ensuring that there are no.
Concomitant medications that could be impacting our ability to discern a signal.
So that's the main piece there how much do you want to talk about the controlled release, yes, so on the CR side.
We hope to be back into a series of clinical studies.
Early next year, and we'll probably have additional data later in the year.
And that's still a little bit up and up in the air given that.
Many of the phase one sites are still close down to the call. It. So we're progressing our internal work.
Which has more to do with the physical formulation.
And and ensuring that we have the CMC side of it buttoned down.
And then there will be.
Heading into some additional work again, depending on site signs availability.
Okay, great. Thank you so much.
Thanks.
Thank you. Our next question comes from Kennen Mackay with RBC capital markets. Your line is now.
Hi, This is what kennen. Thanks for your question Oh for the first question is the way the economic terms basically more crowded August multiple check what selective inhibitor. It's great that does mineable integrate top end things more data coming to the second half.
So you got change any of your current strategy.
Well into the game.
For the upcoming Oh pit to read out Oh, why should we think as they put enough to do with their development.
In a competitive space. Thank you.
Thank you for the question as I mentioned earlier.
There's a fairly broad range of.
Efficacy measures again, just looking at phase two can bring phase two studies the phase two studies going to be as close to apples to apples as possible.
In looking changing from easy from baseline compared to placebo.
And we see that again that range from the high teens.
Into the low 40, so this really broad range. The JAK inhibitors in people talk about a crowded class.
Well, we're really seeing is just a few classes of drugs. You are seem to have a group of Jack's are going to compete for one segment, probably even more severe based on our market research.
Sub segment, just given the side effect profile. The JAK inhibitors, you've got a topical agents the existing PD fours and newly emerging PD for agents and those are often used for mild patients lean on of course of disease there.
The topicals tend to not do very well commercially as we've seen historically.
And then and then you've got the biologics and there you've got a couple of women the same class.
Being developed so you don't think in terms. The total number therapies you think in total number of classes and that really is only three classes of drugs. So in a market that substantially larger than.
Rheumatoid arthritis were all sort of collide us in terms of moderate to severe patients you're talking about only a few classes of drugs and none of them afford the balance of an oral agent with the safety profile of the TRASM odd you. If you move to the Orals you get the safety profile. The Jackson we have.
Longstanding.
In a large database of some of the the issues that the JAK inhibitors have.
Otherwise you are forced to move to the biologics so for moderate to severe patients. There are actually very few options and we think it tries mudflows a very very important.
Out of this market.
Thank you. So we had about four last question, though also to see our formula which indication do prioritizing pursuing.
Would you like consider making like New York inflammatory indications like Matt.
Thank you.
Yes, we we with the huge specifically speaking about the CR formulation of the TRASM on is that correct.
Yes.
Okay, Yes for the initial plan with the Crs to move that into.
Phase three surety topic term be successful move it into phase three in the Dermatologic indications and then bridge into the.
The G.I. indication so thats the game plan the new indications.
Whether it's a topic there are more LPG carrier eosinophilic esophagitis will all lined up nicely from a timing perspective to be will move.
It tries months here into the phase three as far as the Nooros concern weve.
We both the arena neuroscience portfolio and we have no intention right now taking it TRASM our order TRASM RCR Antony neuro indications.
Okay. Thank you.
Thank you.
Thank you.
Thank you. Our next question question comes from Joseph Schwartz with SBB Leerink. Your line is now open.
Thanks, very much so I wanted to ask about the dosing for TRASM Mark and.
It's understandable why you'd have higher dosing being studied in Crohns trial.
But I was just wondering if you could talk about the rationale to study a lower dose the one milligram dose in the 80 study.
Thanks.
Yeah, I think we did see.
Clinical activity with the one milligram dose in the ulcerative colitis trial.
So I think it's important in a phase two study too soon to support multiple doses and and eventually we may need to lower dose as we head into younger population. So.
With a topic derm, just having a different.
Age.
Distribution, having lower dose there may be important overtime for this initial study were of course studying adult moderate to severe atopic dermatitis.
And we're just looking for.
For that consistency in dose response.
We saw that across every measure.
Quantitative and qualitative in the in the you see study and we'll be looking for something similar in the top income study, Chris moving if is that right and we're looking for dose response and.
The FDA and other regulatory authorities are quite here to the minimally effective dose.
And again.
We believe the two milligrams or you're going to be the most effective don't think that a topic terms a place where we would go with a higher dose.
And the one milligram for that for the reason I mentioned.
It's an important thing for us understand, particularly as we think about some of the younger patient populations and future studies.
Okay that makes sense, thanks, and then.
As far as Cobot goes it seems like Theres been some really.
Disparate patterns of spread.
In different geographies so.
Given all of your clinical trial plans I was just wondering if you've been.
The wedding.
The possibility to to be more flexible and.
Open up sites in areas that hasn't been as hardest hit.
Essentially zigging and Zagging.
As things evolve.
Yes, we.
We haven't made any changes, but thats essentially how it's worked out any way for us.
Because with you see 12, and 52 and we have a broad numbers site.
Approaching 400 sites in approaching 40 countries and so the way, it's really worked for us and we did not uniformly shut the trial down at the beginning of the covert pandemic.
We we turn things off on a country by country side by side basis. So as.
Countries came back online insights came back online, where we were sort of standing first in line and.
And Thats worked out really really well for us in terms of continuing momentum in that study.
So in a sense, it's worked out exactly as you mentioned.
Just simply because we had a broad ranging clinical trial, we like to think of it is sort of a rolling blackout as opposed to turning the lights off entirely.
Chris any additional color, we'll try to and we and we are now making sure that we're just connecting with each and every site to understand sort of their capabilities relative to the good clinical practice and ensuring that we are able to.
Get the week 12 business most of our sales of a week 12 is it.
And that's really really critical and so just really how I guess more of that site by site level than anything else.
Great. Thanks for taking my questions.
Yes. Thank you.
Thank you.
Thank you. Our next question comes from Jason Gerberry with Bank of America airline is now open.
Hi, Good afternoon guesses Saatchi art, Jay Thanks for taking my questions I'll have some questions on Kronos looks like your provides an update on their trial design for the phase two or three so I guess the first one as a.
Am I understanding that.
The endoscopic score is the primary endpoint 40 face ongoing phase two it looks like a too.
For phase three or planning to do a co primary between the endoscopic score and the quality activities Kellogg CDAI score curious just thoughts on.
Why why there's a difference between the end point between the two programs.
Couple of qualified.
I could you guys I mean for phase three programs, obviously, there's room for guidance in terms of what's necessary for three phase three level registration type of endpoint. So the co primary of.
Endoscopy and CVI is expected be Fcs CD and cdti.
In a phase two study, we don't need to have that level of rigor in terms of having co primary so we wanted to focus on endoscopy as being the most objective.
CVI Im looking at other sub scores in terms of abdominal pain has to frequency. Those are all important secondary components and so we'll have all the making so being able to analyze that data, but we really wanted to focus from a dose finding making a decision on how we're going to handle things going into into the phase three portion of that protocol.
Based on the most objective measurement, which is the endoscopy.
Yes, I'll also bring up an important point is indeed, if you look historically and other.
S&P modulators theyve gone into crooms they.
The have not looked at more quantitative endpoints like like endoscopy.
And we've actually foot then on 10 looked at patient reported outcomes only and and that's that's dealt them. Some some complications. So we're taking a very stringent approach here because we think that.
The phase two doesn't need to yield.
A quantitative directional dose finding.
Analysis.
Got it and we will.
The C die part of your secondary analysis for phase two curious if we can get a look at that swell.
Three.
Yes of course, that's correct, yes, yes, and yes.
Okay.
I guess you had talked about that you know it somewhat out of programs are only looking at one of the our employees. So I'm curious your strategy going through more strain Jones I got two quick questions. Eight you know I mean does that potentially spell regulatory issues with some of the other programs competitive cohorts that only do is look at one but not both at the employee.
And I guess my second question is on the flip side of things does that make it more challenging to meet the regulatory hurdle.
If you choose to get that co primary endpoints.
Yes, I think.
Well in our consultation with regulatory authorities is probably not much different than their consultation with regulatory fees were talking to the scheme regulatory authority. So.
I'm sure the feedback Youre getting is I don't want to.
Speculate on what with the agencies are saying to them to other companies or they are working crohns disease.
We just know that the bar here is.
Important and stringent and we're going to begin to take the high road here and.
I've always said and you guys have heard me say this for for four years now there are no shortcuts. So every time someone trust pull a short cut through it just doesn't work.
The agencies are not supportive of short cuts there.
You know you can you can attempt to push a little bit on the agencies, but at the end of the day doing the doing the work.
Is the important thing and doing the work in a way that's.
Thats going to stand up this could be not just from a regulatory perspective, but from a market perspective.
We think a super important and across all of our programs.
The objective isn't.
Just satisfy a regulator the objectives eventually to launch the product successfully.
And make sure we've got the.
The data in hand, the full body of evidence.
To support the payers the physician and patient advocacy groups across the board. So we take a much more holistic view of our clinical programs across the board.
Got it maybe one last fall off from the is that.
Because you are pursuing a co primary endpoints for your phase two Statthree program.
Will you be able to use the ongoing phase two as a pivotal or what do you have to come.
Three SAP right.
Induction studies on top up and maintain study.
So let Chris handle I guess, that's a good question. So the phase two is.
Going to be conducted with rigor such that if those data were definitively positive from a core primary analysis standpoint, it could serve as a potential pivotal the issue is not powered to do that we're looking for a dose finding response that we can move into the basi.
So if the if we see the efficacy signal that is quite strong.
Could be considered part of the pivotal so just kind of depends on the us on the veracity of the data at the time.
Got it thank you.
Thank you. Our next question comes from Jim Birchenough with Wells Fargo Securities. Your line is now open.
Yes Hello.
Nicole the gym softening first question on a lower Nat.
No the primary endpoints for the phase two trial is this pain score is that a validated scoring system and could it be used to support product registration in a phase three.
Yes first of all thank you for asking by lower Nab.
We're incredibly excited about the program and we think Theres.
Tremendous unmet mark and medical need.
The phase two study and I'll provide all the right caveats here. The phase three study was a small open label exploratory trial. So I want to caveat anytime we talk about that trial is really designed for us to make a go no go decision to move to fail to be we did use a validated endpoint the PS 10 points.
Scale the average abdominal pain score is a validated news coming to see instrument has been used in multiple other agents.
In the IBX area.
To to facilitate approvals.
So it is a validated endpoint it does read through from phase two to one.
We'll read through from our fees to be into our phase three study.
Great. Thank you and then.
In terms of patient enrollment in that balance between IDFC Ana I B S. T to allow for separate analyses of those patients.
This study is empowered four separate analysis. So the initial topline data will be.
Tools Reid.
Between those two groups of overtime.
As we move toward.
Getting the data out there at major medical meetings will be providing additional color on different subsets of patients.
Okay, and then given tier the dosing this product amenable to a controlled release formulation.
It might be we did a lot of work again before we moved forward with the program and we asked is T. I'd commercially viable is should we move to less frequent dosing and in terms that in the pain setting.
Hey, the frequency of dosing is much less important. So if you just think about very simple analog is like.
You ask yourself is more ibuprofen sold or is more an approximate 30 sold for over the counter pain and you'll see it's ibuprofen it at.
Q I'd.
Versus once a day no broxton and.
So in the pain setting it turns out to be little less important. It does it's probably less of a CR or more of an XR formulation that would eventually get us to less frequent dosing, but right now the market research doesn't really.
Support that broadly.
So on the on the back of the phase two data those will be those will be conversations will have internally.
Great. Thank you very much.
Thank you.
Yes.
Thank you. Our next question comes from Roger song with Jefferies. Your line is now open.
Thank you. Thank you for taking a question maybe I have two questions. Maybe just one the first one is adding additional question for a d. So we saw a couple kind of a pivotal data readout from the JAK inhibitor and very interesting some of them are surely some and high H.
Perfect and just curious what you have that kind of measure this endpoint moving forward. Additionally, kind of Mechanistically, how do we believe kinda like how the market can address that pathophysiology.
Yes, So let me hand Africa, I mean pitch or provide us the super important part of understanding would have a great topic term perspective, it's not part of the clinical endpoint is important for registration, but the patient level, it's very important and insist on that we're going to be looking at quite carefully.
And we do believe that from a mechanistic standpoint.
When you look at impact on 200 excels and then also the clarity to access that.
The trust marketplace nicely into that obviously the date are going to be the data and we'll see what they were quite when they come through here later in the year.
Got it I just clarify your where we'll have that endpoint for the for the phase two.
Yes.
Part of the secondary endpoints.
Awesome great.
Another question I think.
You mentioned that it a bit but by by just you want to kind of clarify so in terms of the controlled release formulation can you just elaborate on the operational steps in order to get to the first clinical study.
Yes, absolutely. So as you know we've already conducted one set of clinical experiments looking at the PK PD.
And then the next step is to move to a solid gross formulation.
And we'll be exploring multiple solid dose formulation as I mentioned before.
Covered 19 dependent we'll be able to move into some additional clinical work.
To validate what we saw in the first study we now see with the second step, which was a cell dose formulation. So lot of work right now on the CMC side.
And then as soon as we have that we can we can begin to do the bridging work we need.
The bridge directly into the phase three programs, assuming the Durham indications and you you're successful so.
It's really it's really heavy lifting on the CMC side on the front end.
And then.
Some early clinical work that has to get done and then finally, some bridging work against US. There. So it's you don't want to go back and replicate phase two programs.
It's just.
It's just a bridging were tested get done both from a human perspective, as well from an animal Tox perspective.
And all that is in the plan and in the budget.
Great. Thank you, yes, thats off on the brick congrats great. Thank you.
Okay.
Thank you and our next question comes from Patrick trick here with H.C. Wainwright. Your line is now open.
Thanks.
Good afternoon, I'd follow up on our trough Marlim Hopper term.
The first half comes from following the advise outcome could you hold an end of phase two meeting with the FDA.
And so the over 19 pandemic have an impact on the timing and then secondly is your expectation that potential pivotal program would include both pediatric and adult patients from the start or was there. Some reason you would move forward and one patient reversal crms showing.
So.
Let me handle the phase two and then Chris can talk about the pivotal program, we haven't disclosed details on the pivotal program. So.
We want to be a bit cautious there into phase two.
We'll move as fast as we can move humanly internal to the company.
And then the rest is up to the agency.
We haven't seen.
Substantial regulatory delays in getting to type C meetings with the agency. So there's no reason at this point to believe that it would be any different.
In the code environment as opposed to the pre covered environment. So.
We've got teams already working we double our prep work ahead of the phase two data. So we can move as quickly as we can quickly as possible really.
On the back of the on the back of Phase two data do you want talk about the.
Correct.
As I mentioned, we haven't disclosed much about the overall plans for that pivotal trial.
As you know for most of the competitive products are often looking at adolescence.
So ages 12, and all in as well as adults so thats on the love to consider.
Have an overall pediatric plan that were.
Moving forward with whether you see program.
On that.
Action with the regulatory agency will influence kind of how we think about other patient populations.
So we're making those decisions as we come out of the phase to be data read out later this year.
Well that's helpful. And then just a follow up on a trough Marvin.
I'm wondering if you could well first if you can you just comment on what is it that you need to see what the covered by team situation that would enable this trial to move ahead on time or what what would happen there that would make it not move forward and then.
Can you discuss the expected you studying how at FDA guidance issued in 29 team including.
Preference for clinical outcome assessments logic response et cetera, how this is impacting the design of the trial and then finally.
What questions could you give your answer on the study.
Okay. So.
Let me hand off the Crystal go through that [laughter] sure no problem in terms of starting to study there is nothing about Kobin 19 in particular related to you. We that's a problem. It's what am I mentioned earlier in the call, which is all about initiating studies and it's really a site level issue about Ibiza going to take on a new study during this time.
Second health systems that type of things. So we're proceeding as planned so far the reception has been strong and have already size quite interested but it's just really dependent on an actual clinic hospitals and health care systems and their ability to take on new research during the epidemic pandemic.
The second question in terms of for you guys. It's a really interesting question that we've been working through because there's a lot of.
I guess I would say lack of alignment amongst you, we experts and and.
Some of the work is being done by another competitive products and the FDA in terms of that guidance documents. So we enter into very close discussions with the FDA to get their feedback on our programs.
Across all programs and then to make sure that the design of our phase two studies are going to be adequate to be able to give us information that will allow us to have a successful and today's too many moving into phase III and so weve. So thats just a general philosophy as a company that we make sure that we interact with the FDA prior to the comment.
Commencing those types of studies to ensure that we are in alignment with their current thinking but sometimes own reflected in the guidance documents that are released in previous years through he is a pretty dynamic situation right now.
Because of the intense interest in their disease. It's really now just becoming something that is routine. So nothing are routinely but is becoming more commonly diagnose. So it's a very dynamic development area.
And then your third question I'm, sorry, I'm blanking on the third part of their question.
Just in terms of what questions could you be working to answer in a study.
Yes, so we'll be looking obviously it at two coming components. So one of those patients symptoms and the other is going to be data that we get from biopsies to understand the impact of the TRASM odd relative to the kinds of things are going to be important in terms of eosinophilic reduction within tissues.
As well as patients symptoms such as those two kind of broad areas or refocusing on we have a belief that eosinophils and then on themselves or maybe not the most important thing so we'll be looking at a broad.
Array of other kind of pharmacodynamic measurements, including side of kinds and cell types and that type of thing to give us some.
Insight into the trust funds mechanism of action relative to this particular disease and obviously, we've done some animal work and things like that that give us a pretty good sense that we're we're going down the right path here and the the trial data for the quarter.
That's helpful. Thank you.
Thanks, Matt.
Thank you and I'm showing no further questions in the queue at this time I'd like to turn the call back to the speakers for any closing remarks.
Great. Thank you thanks, everyone for joining us today.
As you can see we remain highly focused on clinical trial execution, maintaining data integrity at the highest levels and progressing our key programs all while managing our timelines in spend.
We as our all you got the Companys arc are consistently monitoring the potential impacts recovered 19, and and provide updates as needed I'd like just take a moment here to think the investors in the analysts for your ongoing support.
And really the entire arena team for the tremendous work to maintain strong momentum during these difficult times, we look forward to updating you on our progress we continue to execute on key milestones and importantly look forward to topline phase two data for TRASM alternate topic Durham and Q4 this year and four important have in abdominal pain associated with.
Hi, BS early in the new year so.
With that everyone stay safe and take care and look forward to our next conversation. Thank you.
Ladies and gentlemen, thank you for your participation on today's conference. This does conclude your program and you may now disconnect.
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