Q4 2020 ChemoCentryx Inc Earnings Call
Good afternoon, and welcome to the chemo centric fourth quarter and full year 'twenty 'twenty financial results Conference call.
At this time all participants are in listen only mode. Later, we will conduct a question and answer session. As a reminder, this conference call will be recorded.
I'd now like to turn the call over to Mr. Lee Roth Burns Mcclellan.
Mr. Roth. Thank you go ahead.
Thank you, Jeff Good afternoon, and once again welcome to the chemo centric <unk> fourth quarter and full year 2020 financial results Conference call.
Earlier this afternoon the company issued a press release, providing an overview of its financial results for the fourth quarter and full year ended December 31, 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 Companys website at Www Dot chemo Centrex Dot com.
Joining me on the call today is Dr. Thomas Schall, President and Chief Executive Officer, <unk>, <unk>, who will review the company's recent business and clinical progress. Following his comments, Susan <unk> Executive Vice President Chief financial and administrative officer of Chemo contracts will provide an overview of the company's financial highlights for the quarter.
Before turning the call back over to Tom for his closing remarks.
During today's call, we will be making certain forward looking statements as explained on slide two.
These forward looking statements are based on current information assumptions and expectations that are <unk>.
Subject to change and involve a number of risks and uncertainties that may cause our actual results to differ materially from those contained in the forward looking statements.
These risks are described in the company's filings made with the SEC, including the company's annual report on form 10-K.
You are cautioned not to place undue reliance on these forward looking statements and chemo centrex disclaims any obligation to update such statements. In addition, this call contains time sensitive information.
When we as of the date of this live broadcast March one 2021, chemo <unk> undertakes no obligation to revise or update any forward looking statements to reflect events or circumstances. After the date on this live conference call with that said it is now my pleasure to turn the call over to Thomas Schall Thomas.
Thank you Lee and good afternoon, everyone listening. Thank you for joining us on our fourth quarter and full year 2020 conference call as I set out on slide three today I will review three areas first our vision for the future as we capitalize on a stellar year of execution in 2020.
Second our progress in making the vodka Pan a pipeline in a drug and third how we are pushing the frontiers of our science to broaden our scope into additional very high value areas with highly innovative approaches in for example oncology.
I'll start by reviewing progress on the goals, we set at the start of 2020 as shown on slide four.
The achievements of chemo centrex in 2020 were considerable.
Our NDA for <unk> was accepted for review with a <unk> date in July of this year.
We have made major advancements with debacle pan in two orphan diseases beyond anchor vasculitis and plan to start human trials and a third new indication.
Also we have promising in vivo data on our small molecule checkpoint inhibitor Ccs slide five nine.
And we have further strengthened our financial position to allow us to fully execute on our future plans as we scale up our organization and begin the transition to a commercial stage company.
Moving on to slide five let me articulate for you how we see chemo centrex as we enter a new era of growth.
We expect in 2021 to complete the transition to a fully integrated Biopharma company as we add a commercial launch in the U S to our already acknowledged expertise in discovery and development.
And our medical innovations, we always strive for landscape changing therapies, rather than incremental benefits.
Launching of Acapella ankle vasculitis will bring to fruition. The first example of this but others will follow as we continue our drive to create significantly better lives for patients and some of the most serious areas of unmet need and with <unk>.
Commensurate rewards for our investors.
Slide six explains the attractiveness of our orphan disease strategy for a company of our size why orphan disease as the graphic on the right indicates successful orphan drugs can become blockbusters with ivanka Pan and anchor vasculitis alone carrying the potential.
Of $1 billion per year plus in revenue.
In the U S alone before we even consider international sales by our partner VI Flor.
Secondly, clinical development and marketing in or orphan diseases are eminently tractable and scalable efforts for a company such as Chima centrex as already exemplified by our building a global clinical trial capability that is characterized by an uncompromising focus on rig.
And quality without requiring the level of investment associated with more prevalent disease areas are.
Our forays into orphan disease provide true innovation or otherwise neglected patient populations and provide a real springboard for ever more impressive valuations.
In short this is an area where everyone can win.
Now as I turn to slide seven and I'll talk about how we are turning our lead program a backup plan into a potential pipeline in a drug with the prospect of multiple orphan indications. There are a number of autoimmune diseases, where complement activation and C. Five a generation drives neutrophils through this.
<unk> five <unk> receptor to destroy the body's own tissues.
Such is the case with anti neutrophil cytoplasmic auto antibody associated or anchor associated vasculitis shown on slide eight this is an orphan disease affecting approximately 65000 people in the United States.
Which overtime progresses from vascular inflammation.
Vascular deaths to.
To the failure of such highly Vascularized.
<unk> Oregon's as the kidney.
Current therapy is inadequate even toxic and consists of daily doses of steroids, such as prednisone or glucocorticoid, coupled with another broad immunosuppressants, such as cyclophosphamide or Alternatively, prednisone combined with the anti B cell antibody rituximab the aim.
Of current prejudice zone based therapy is to attempt to stop the autoimmune process in the short term.
But the therapy itself causes other illnesses.
And can even lead to therapy related deaths for example from prednisone induced lethal infections.
By selectively targeting the C. Five day receptor to block the flow of inflammatory neutrophils and their activation of active of Aqua plan was designed to stop the autoimmune destruction without immunosuppression, Ken without the need for daily Prednisone.
Dosing.
Avoiding avoiding daily steroids and letting the immune system do the rest of its beneficial work offers big advantages for the patients, which should obviously translate into big pharma co economic benefits as well.
To illustrate this with an example, let's turn to slide nine.
One slice of the anchor vasculitis burden pie is represented here there are almost 14000 hospitalizations every year in the U S involving Inca basket lightness.
They are not short hospitalizations about nine to 11 days on average and even in this most closely monitored setting a hospital. There is an alarming incidence of serious infections approaching 40%. This is largely a consequence of the steroid therapy for anchor handler.
These all too often are lethal infections, depending on the type of thing because they have up to 7% of these anchor patients die in hospital.
Imagine the human burden here.
And imagine the costs to the health care system.
We believe of Alco pit.
Eliminating the need for daily prednisone therapy, and markedly reducing the need for glucocorticoid should anchor overall could revolutionize the treatment paradigm for anchor sufferers.
I will remind you that the advocate trial. Please see slide 10 demonstrated that <unk> achieved statistical superiority of sustained remission at 52 weeks over the traditional prednisone based therapy.
And did this while eliminating the need for daily oral prednisone.
And by thus eliminating the need for daily Prednisone therapy with a vehicle Pan of Aqua Pen therapy was also associated with a statistically significant reduction in steroid related toxicities referred to in the green box on that slide.
Moreover, as you can see from the light Blue box just below the Avago pen therapy actually led to a significant improvement in kidney function compared to the standard prednisone based therapy.
Finally, as alluded to in the Orange box patients themselves reported feeling and functioning better on <unk> than they did on standard credit zone based therapy, better able to live happy and productive lives.
Results of the advocate phase III pivotal clinical trial in Inc. Avascular as shown on Slide 11 were published in the February 18th edition of the New England Journal of medicine, highlighting the importance of Alco pans trailblazing role.
There was an accompanying editorial written by Doctor Warrington of the Mayo clinic entitled of Alco Pan.
<unk> to replace glucocorticoids.
That concluded with the following sentence.
The advocate trial is a milestone in the treatment of <unk> associated vasculitis.
Complement inhibition with Avago pad has glucocorticoid sparing effects and results in superior disease control.
The advocate data form the core of the regulatory submissions have been filed on three continents. Our <unk> goal date is July seven here in the United States and we are preparing for an FDA Advisory Committee meeting, which would create an important opportunity for patients voices to be heard.
[noise] decisions from the European Medicines agency and in Japan are expected by the end of the year.
So what does the prescribing market looked like and how are we preparing.
Slide 12 reveals that the market in the U S per acre is fairly concentrated our latest and updated primary research suggests fewer than 400 top prescribers right, 30% of the scripts in this country and fewer than 3000 health care professionals accounts for 80% of the two.
Prescriptions Accordingly, we calculate that a field force of some 75 individuals comprising both medical science liaisons as well as classic sales reps can cover more than 80% of this market opportunity in the U S and that is what we are building now.
We are on track to complete this effort and launch very soon after the July 7th <unk> date.
To contribute to that I'm delighted to say that Tushar <unk> task, but who most recently was that Astrazeneca has joined us as executive Vice President and Chief operating Officer.
She brings more than 20 years of operational management expertise enrolls with global pharmaceutical companies, such as GSK, Sanofi and Astrazeneca, you'll have the opportunity to hear from torsion other members of our team during our virtual R&D day on April 14th.
Outside the U S. Our partner by floor will pay us royalties in the teens to the mid Twenty's percent on net sales off one aggregate net sales line as well as potential milestones linked to anchor regulatory successive events in their territories. The first of these.
Milestone payments of $10 million was triggered by the filing of the Japanese new drug application, which has just taken place.
But the opportunity for Vogtle plant substantial as it is in acre vasculitis does not end there since we believe that <unk> is truly a pipeline in a drug.
Even with considering just other kidney diseases, the therapeutic and commercial potential of our backup plan is remarkable for.
For example, let's turn to slide 13 for the next stop in <unk> pipeline and a drug journey, the quite rare kidney disease of C. Three glum aerial apathy or C. Three G star.
Starting at Slide 14 lets briefly discuss <unk> and our recent results from the accolade clinical trial of <unk> in this disease of very high unmet need.
This disorder would more accurately be called complement dysregulation glum area, a lot Betsy because while complement fragment C. Three is present in the kidney it may merely be an upstream marker a signpost. If you will of the real problem ahead that of C. Five and <unk>, which are also clearly.
And the kidney in this disease.
We believe that <unk> binding to the <unk> receptor is the key driver of the kidney destruction and C. III G, which of course opens the therapeutic door for abacus Pan with its ability to block the <unk> receptor and so we launched the largest and longest randomized blinded control.
<unk> trial in <unk> to date, the accolade trial of <unk> in this very rare disease.
And accolade, we collected and measured kidney fine needle biopsy data with biopsies taken at baseline and after six months of therapy.
We also collected more routine clinical specimens and lab measurements to assess kidney function over the six month randomized blinded period of the accolade trial.
And we reported topline data from that period in December and the results of the trial to date are of note turning to slide 15, you see what most Nephrologist would say is the gold standard for measuring kidney function, which is the accumulated assessment of all $1 million or so glum area.
Ally functioning collecting collectively in the kidney as measured by Egfr or estimated preliminary Larry filtration rate.
Of Vacco Pan showed significant improvement in Egfr when compared to the background medications placebo group.
Finding which is never previously been shown in a randomized blinded controlled trial of <unk> reach.
Many consider this to be a remarkable finding in this disease area of <unk> and perhaps the most significant findings of this accolade trial.
We plan to discuss the evidence of <unk> clinical benefit and Egfr with the FDA.
It is also very important to note here that the Egfr data with <unk> and <unk> are consistent with what <unk> showed an income vasculitis patients as shown on slide 16, and anchor vasculitis as well renal function was improved in a way that was qualitatively and temporarily similar separation over 26 weeks and per.
Perhaps even similar in absolute magnitude of separation in both of these kidney diseases also this egfr improvement in C. <unk> correlated with some beneficial changes in the fine needle biopsy data histology readings, especially as assessed using the C. Three G histology.
Core for disease chronic city, turning now to slide 17, while on the left side of that slide you can see that on average there appeared to be a reduction that is a betterment with abaco pan using the histology activity score, which measures mostly acute inflammation in and around the <unk> variability prevented a key.
Clear statistically significant result by contrast on the right side of that slide the day to show significant improvements with Ivanka Pan in the C. Three HII disease, chronic fatigue score, which measures the progression of kidney fibrosis, and again with a lower score being better debt is lower.
Score, indicating less fibrosis avago Pan therapy seems clearly associated with slowing the progression of kidney fibrosis and see three G and experts speculate that this slowing of kidney glomerulus scarring may well be part of the cellular underpinning of abacus.
Beneficial clinical effect on kidney function.
So you May know note that we have two examples to date of improving egfr and renal function and anchor vasculitis and didn't see three G. <unk>.
And this may indeed, bode well for future indications for <unk> in diseases of the kidney where complement dysregulation has been firmly implicated in progressive kidney day decline.
One such example is referred to on Slide 18, Lupus Nephritis L. N is poorly controlled with broad immunosuppression reminiscent of anchor vasculitis. It is characterized by uncontrolled complement system activation is a progressive disease implicated ultimately in kidney distress.
<unk> in end stage renal disease does all that sounds familiar.
N is a major unmet need with a large commercial opportunity where innovation to date has been real but limited arguably two incremental improvements as opposed to transformational treatment.
We intend to initiate clinical development and definitive trials of Alco pendant L. N in the third quarter of this year and the belief that of Aqua pan could improve renal function rather than simply slowed the rate of decline.
Let's move to slide 19 to look at the data for today's last stop in the pipeline in a drug journey for about <unk> that of the dermatological indication of severe hidradenitis suppurativa or Hs.
As shown on that slide Hs is strikingly underserved area with enormous potential. This is a debilitating skin condition, where complement driven neutrophils attack hair follicles sweat glands in the skin with patients suffering from unremitting painful running sores and pustules in the growing.
On the arm pits and related areas of the body. This all approved therapy. The injectable anti TNF antibody at Liberum App is widely regarded as being on the marginally effective he added sales over $1 billion per year in Hs alone.
We can do better.
An orally active drug that actually blocks the tissue damaging effects of complement driven neutrophils could be of enormous value.
Slide 20 confirms that our in house research at Kemess Centrex in collaborations with leading academic centers such as the lab of Doctor Cavite Saran at Stanford show that complement is activated broadly across the Hs patient population.
It may increase as day disease severity score increases and that neutrophil activating <unk> is significantly higher NHS patients than in healthy people.
And in fact as shown on Slide 21 day Aurora trial of <unk> in Hs showed debt in the most severe form of hidradenitis suppurativa. The Hurley stage three patients for whom almost no effective therapies exist net of Aqua Pan could provide a significant improvement in clinical response at the primary.
<unk> time of 12 weeks of therapy and it did so with a clean safety profile.
In short the Aurora trial was successful, giving us in the Hs community three things one a clear evidence of the effective dose of about the pen in Hs to establishing safety and three defining precisely the phase III patient population that is the early stage III.
But some ask why early stage Street watch the biology behind that we have done a lot of new science on this question at Ccs Si slide.
Slide 22 helps us recall that with the more severe form of the disease, particularly the most severe form Hurley three debt puss filled tunnels are extensive these being an intense active subsurface inflammatory milieu that connects this surface boyles and lesions.
On the Orange bracket on that slate same slide 22, rather crudely shows that the area that is examined grossly in the clinic and witches success assessed rather using the so called Hidradenitis Suppurativa clinical response score or high score.
It's fairly straightforward to envision that the worse. The roiling Route foundation is under the skin the more of the surface will look corrupted.
Alternatively, if the puss tunnels were drained the surface two would be more healthy.
Accordingly, it is this true.
Super ratings Super Highway this postulating Pike way that we wish to drain divert our repair with a vehicle per unit and.
And our evidence indeed suggests that's where of eco Pan has its effect for example, slides 23 and 24 show some of our in house Histology work, where neutrophils, yes bearing the <unk> receptor, which is the target of abacus are found deepen the dermis lining the sides.
On the tunnels and within those tunnels that make up the puss tracks.
Moreover, new science shows that the dermal fibroblast can be activated and ITAR activated in Hs and express abundant C. Five day receptor as well.
These observations support John through and colleagues findings that Hurley three is more than just a shade of severity in Hs is a different very active immunological and inflammatory environment in constant stress between damage and scarring.
We believe of Aqua Pan columns that process overall by Inactivating. The C. Five day receptor on neutrophils and other cells that are most prevalent in early stage three Hs as summarized on slide 25.
And here also is a subtle but important point.
The presence of the <unk> receptor on the cells involved in the Hs lesions that are deep in the tissue.
<unk> a likely advantage.
To a small molecule such as of Aqua pad.
<unk> large molecules such as protein or potential antibody therapeutics.
In any case, we believe now that we have a clear clinical development path to registration via a phase III pivotal study in this most severe hurley stage III patient population population and the opportunity is large if we consider that there are some 50000 or so early.
Stage three Hs patients in the U S alone.
And we apply the same orphan drug pricing corridor as discussed in the previous slide and with only a modest market penetration. This leads to a striking potential return for investors as we fulfill our mission of providing patients with a groundbreaking new therapy.
I will finish now by very briefly turning to oncology. Please see slide 26, using our in house medicinal chemistry expertise and our deep expertise in pharmacology, we have created an entirely new class of orally administered small molecule checkpoint inhibitors for cancer indications checkpoint inhibitors of revenue.
Nice cancer care as.
Referred to on Slide 27, and we intend to take that revolution to the next level with Ccs Slide five night dispensing with the need for injections or infusions <unk> nine holds the promise of convenient oral dosing flexibility and control over drug levels in order to modulate potential on.
Auto immune complication as well as lower cost of goods and better penetration into the tumor microenvironment, thus with orally administered <unk> five five nights. We believed there was a real opportunity.
To open up anti checkpoint therapy for cancers that have been otherwise intractable to anti PD, one or anti PD. One antibody approaches we envision of <unk> being in use in combination with other therapies or even as monotherapy.
As shown on slide 28, preclinical data presented at ACR with CTX 559 showed marked inhibition of PD, one PD lone interaction consistently outperforming antibody therapy in tumor shrinking and tumor remission in our in vivo models, we plan to advance <unk> into the clinic in the first.
Half of this year.
This represents another step in our approach dedicated to maximizing patient value and maximizing shareholder value.
I will now turn the call over to Susan to outline financial results before coming back to summarize what we see ahead in this year of 2021 Susan.
Thank you Tom.
Fourth quarter and full year 2020 financial results were included in our press release today and are summarized on slide 29.
Revenue was $4 4 million for the fourth quarter of 2020 compared to $10 1 million for the same period in 2019.
For the full year revenue was $64 9 million compared to $36 1 million in 2019.
Revenue was recognized based on actual cost incurred as a percentage of total budgeted cost isn't complete our performance obligations under our alliance agreement.
The quarterly decrease in revenue was primarily attributable to lower costs incurred in 2020 due to the completion of the backup on advocate phase III pivotal trial.
Year over year revenue was higher in 2020, driven by the acceleration of revenue recognition associated with the Ccs 140 agreement with five four.
Following the decision to discontinue development of from CX, 140, <unk> and focal segmental glomerular sclerosis, $46 7 million net deferred revenue was recognized as revenue.
Partially.
Debt by the impact of companion backup on advocate trial in 2020.
Research and development expenses were $21 2 million for the fourth quarter of 2020 compared to $19 2 million for the same quarter in 2019.
Full year 2020, R&D expenses were $77 9 million compared to $17 3 million in 2019.
The increases from 2019 to 2020 were primarily attributable to professional fees associated with the preparation of our NDA submission for Osaka, Japan for the treatment of bank a bank of vasculitis and.
And higher research and drug discovery expenses, including those tied to the advancement of Ccs by five nine.
Orally administered checkpoint inhibitor.
These increases were partly offset by lower expenses due to the completion of the advocate trial and the Ccs once on zoom in a phase two trial in 2019.
General and administrative expenses were $12 7 million for the fourth quarter of 2020 compared to 7 million per the same quarter last year.
Full year 2020, G&A expenses were $42 2 million compared to $24 2 million in 2019 the.
The increases from 2019 to 2020 were primarily due to higher employee related expenses, including those associated with our commercialization planning efforts and higher professional fees.
These results produced a fourth quarter 2020 loss of $29 9 million compared to a net loss of $15 one quite the same carrying it in 2019.
Full year 2020, our reported net loss was $5 4 million in line with the 2019 net loss of $65 5 million.
Total shares outstanding at December 31, 2020, or approximately $69 5 million shares.
Lastly, we closed 2020 with $464 million on cash cash equivalents and investments and for 'twenty 'twenty, we expect to utilize cash and investments and the range of 145 to 155 million Tom.
Tom.
Thank you Susan.
To summarize 2020 was a year of very strong execution from <unk> centric.
We will build on that strong base in 2021 as you can see from slide 30.
We have the potential launch of Avago Pan for anchors this year in the U S.
We believe that we have identified a clear development path to making about co pay on a pipeline into drug via two additional orphan indications those of C. Three G and severe hidradenitis suppurativa as well as the imminent expansion of our scope from both a backup pan in lupus nephritis and onward to enter.
Tie early new efforts with orally administered checkpoint inhibitor <unk> 559 in cancer.
Our Cayman centric enterprise continues to make important advances at the very frontier of medical science.
With each of these advances we get closer to our long stated goal of becoming self sustaining indeed profitable fully integrated enterprise.
<unk> not only better lives for patients, but significant rewards for investors.
Our momentum at Kemess centrex growth stronger by the day, and we do not intend to slack and the pace until a better future is all.
Together.
Please all of you join us to hear more at our virtual R&D day next month April 14th.
And with that I will now turn the call back over to the operator and look forward to your questions operator.
At this time I would like to inform everyone in order to ask a question Press Star then the number one on your telephone keypad.
Again, Thats star one on your telephone keypad.
We'll pause for just a moment to compile the Q&A roster.
Your first question comes from the line of Ted <unk> from Piper Sandler Your line is open.
Great. Thank you very much.
The updated total Voka Pam.
V and looking forward to the preparations ahead of the SKU per day I wanted to pick up with respect to Q3 G and the data that you reported what are your plans in terms of communicating with the FDA regarding a potential registrational path. Thank you.
Thank you Ted Thank you for the question, Yes, as I mentioned in my remarks. This is really the largest and longest ever randomized controlled trial on <unk> three gene.
What we and obviously <unk> is a kidney disorder declining kidney function as the problem eventually leading to end stage renal disease dialysis or need for transplant, but even those are not.
Do not solve the problem obviously.
I will also stress again.
No I didn't mention it today there are no approved therapies for <unk>. So fundamentally I think we're going to go to the FDA and say, we believe we've improved kidney function as evidenced by the strongest.
Evidence that wanted to present, which is <unk> filtration rate.
And I think we're going to ask them, what they think about that data in and frankly see if we can get a conditional approval based on the data to date from the accolade trial, which again is the most extensive dataset in existence as far as I can tell.
Good. Thank you look forward to hearing more about that.
Thank you.
Your next question comes from the line of Steve say the house from Raymond James Your line is open.
Hey, good afternoon. Thank you.
There was a lot of data in the new England Journal paper, comparing steroid use between arms in the advocate study and the various reasons clarified for steroid use and you back then on them. So a couple of questions that ensue from that or.
First what do you anticipate is going to be specified in the <unk> label with respect to about other background or loading.
Dose use of steroids.
And then second with respect to just how this is going to play out in the real world versus how it played out on the clinical trial given you have the randomization.
Screening period, where patients were on steroids do you think the real world steroid use would be even lower than the clinical trial and are you going to work to gather any real world data et cetera.
Establish potentially even better safety on the real world.
Great Great questions. Thank you Steve.
Start from the basic message.
And what was accomplished.
And then everything kind of flows from there I think so we wanted to we wanted to totally get rid of what patients complained about most and what physicians tend to hit as well.
That daily oral prednisone, the need for daily oral prednisone is something that everyone hates.
We designed the trial to do just that and that was the double blind double dummy trial, one on one arm got a backup in the other arm got to active prednisone.
In their daily schedule right.
And so we showed really in its simplest incarnation that with Avago Pan you can eliminate the need for daily prednisone dosing upon which most of the therapy is centered and income vasculitis today. So I think that's major and I think that's the message that is sinking in now Youre right Theres al.
There, there's piggyback prednisone that comes in with concomitant dosing with right toxin Labs for example that was <unk>.
Not insignificant balance between the two arms of course.
When people come in and crisis, they can get bolus IV prednisone.
And they they did in our trial again balance between the two arms before they were randomized and so that had to be tapered because as most of you know.
You can't just give people prednisone and then the next day stop if it has to be tapered carefully. So you don't run into a free home insufficiency problems on other problems. So so there there.
There is piggyback prednisone, but again balance between both groups I think that.
The idea that again getting rid of this massive long term chronic daily prednisone at virtually <unk>.
Eliminating the need for oral prednisone to get not only equivalent of Fracs, but in fact better effects is the message that's really hit home in this community. So on the real World how will this play out.
I hear lots from both clinicians and patients how quickly they can get access to <unk>. So that they can avoid prednisone dosing as much as possible full stop so I think that that is a sentiment that we're hearing more and more.
Will we collect real world evidence, we've already started to collect evidence about prednisone use in the world.
It's actually oral prednisone is a lot more prevalent than than some of the literature might suggest and we think again that just creates a bigger opportunity for people to get away from that with a backup plan.
But lastly, while we collect real world evidence going forward. After the presumed license, yes of course, we will and we will try to to bring that evidence obviously into the <unk>.
The sphere in clinical practice by showing why the why the advantages of being on tobacco Pant exists and what those advantages are in fact, even as we speak now as.
As we look more closely at the data.
And in fact looked at inquiries coming as a consequence of questions from the New England Journal report.
We've learned new things important things that we were going to write up for subsequent public publications that show the power of <unk>.
Daily dosing on the Micropayments staying away from prednisone and indeed other immunosuppressants.
Okay. Thank you and just real quick.
Last question from me.
Dose selection in the Lupus study I just wanted to ask about your confidence on the read through that you have from.
Hey, good vasculitis in CPG, I guess on any necessary modeling that you've had to do.
With respect to the dose selection and lupus on pulp.
Off note with where youre at.
We're very confident in kidney disease that are the 30 Mig doses that worked in advocate should should really.
Be very similar on the lupus population and obviously with <unk>, we have additional confidence in that.
Every patient populations little bit difference in their PK profiles, but from what we can tell for lupus I think we're pretty optimistic that it's going to look a lot like the.
<unk> on its population in terms of the drug coverage.
Terrific. Thanks, so much.
Thank you Steve.
Your next question comes from the line of Michelle Gilson from Canaccord. Your line is open.
Hi, Thank you for taking my question.
I was hoping to dig a little bit more into the core data that you guys have on slide nine here.
We've spoken about this before.
But can you help us help us understand this 14000 hospitalizations annually.
Frank associated vasculitis or are those all on.
Patients with active disease or elsewhere.
On.
What patients in remission still be coded with a day.
Yeah, It's a really good question Michelle.
So the answer is this is anytime anchor showed up in the code.
I think the finer breakdown, which is.
Important we don't have access to.
Immediately, but we do have some some information that most of those folks.
<unk> hospitalized not just because they had they had a condition of anchor but anchor was part of the causative factors. So I would say that was the majority of these people but.
But I don't have the stats right here with me.
So, but I think what we see certainly most people had some sort of active disease, because the rate of infections and one land digs down into those those certainly look as infections as a consequence of immunosuppression.
Or as a consequence, obviously.
Of the prednisone, which is on board and most of these people that's what some of the data show. So I don't have a precise breakdown for you I would say that the majority of the folks and this is for data there.
They are in hospital at least in part because the anchor contributed to that.
They may well also include some people newly diagnosed now that they are hospitalized because as you know the first diagnosis, sometimes involves a very torturous journey.
And eventually ends up in hospital, where that first diagnosis is made so that may contribute to this as well, but I guess, it's a long way of me, saying anchor is not just incidental to their record and the large majority of the cases are reported on this chart.
Got it. Thank you and also if I can sneak in a follow up do you have any update on on the status around your expectation for an AD com are we past the point, where one will likely get called I guess on your view.
Yeah. Thank you. Thank you Michelle I think.
I started saying a little while ago debt.
We will have an ad com.
Repairing for an AD com and so yes, we we don't have any special topics for the AD com.
So all I can say is that we we are prepared for a wide ranging potential wide ranging set of discussions and the ability to make.
Patients view known as well its such a outcome. So I believe that that will happen and we're preparing very carefully for it.
Thank you Tom.
Thank you Michelle.
Your next question comes from the line of Yanan, Zhu from Wells Fargo Securities. Your line is open.
Hi, Thanks for taking my questions. So first I have a couple of question on the lupus nephritis trial.
Could you walk us through.
On the gating factors perhaps.
For initiating the trial.
And could you also talk about how long do you anticipate the roll off of.
<unk> in this indication would it be.
They're weighted sparing ROE and therefore, it will be on top of.
Other immunotherapy either.
<unk> therapies.
Versus steroid on top of other therapies or perhaps you're going to explore a different kind of a role for VAALCO Pan warranting a different.
Different combination approach and how long do you anticipate the trial.
Turan.
Thank you.
Yes, the N and these are very important questions.
It's on.
I will not divulge all the details today, but it will occur too many and I'm sure you're well versed in this as well that what's been shown so far.
Even with the most recent approvals.
They're real contributions to be sure, but they are adding their added two already significant.
Con medications and already use therapies, including fairly hefty doses of daily prednisone. So while great advances have been made in reducing prednisone. Most of these agents are used on top of prednisone based therapy. In addition to microsatellite and sell.
So on and so while the the ability to get responses and responses have been measured in different ways and lupus nephritis trials, usually combinatorial rich.
Our responses.
Our measured with different features weighing into the combinatorial response endpoints.
They are they they have really still topped out at maybe 44 zero percent or sell or low 40% response rates, even with today's very best therapy that includes things that had been approved in the last couple of months frankly.
So you've got two issues with lupus in my mind. One is yes. Good progress has been made real contributions.
As wonderful for patients, but they're still being used to these new combinations are against.
Heavy backgrounds of prednisone and other immuno suppressants, which are still rather limited by toxicity and and then even with all these combinations, we're still peaking out at what somewhere in the 40% of benefits for patients. So that's the backdrop against with with which we are working.
I fundamentally would like to do something a little bit more.
Progressive with the <unk> program in Lupus nephritis.
For example wouldn't it be wonderful if we could more mirror.
What we achieved in anchor vasculitis. So that is the crux of our plan and it's also may.
Reveal why it's not a terribly straightforward.
Way to describe it at the moment, because we're still working out some of the details, but let's face. It a vehicle Pan has shown some really interesting findings. It's notable that we can eliminate the need for daily prednisone in anchor vasculitis and I think very few people would have thought that was likely indeed, even possible a few short years ago.
And in so doing.
We've been able to not just stabilize egfr or indeed stabilization would be a great victory in most cases for most drugs are slow the rate of decline of Egfr has been the goal on kidney therapy, typically but not only been able to do that we've been able to improve egfr and it's been done in anchor vasculitis. It's also been done in <unk>.
<unk>. So I think those are all features.
That are playing into the design of our approach in lupus nephritis.
But as you know there's clinical there are entrenched practices in different fields of medicine and.
It is important to make sure that those in crunch practices are understood and valued for what they are and to try to see if we can get to it another step.
That might illuminate new areas of therapeutic benefit so I hope to be able to shed some more light on this and put a lot more details around the answer to your question soon but suffice it to say our aspiration is to try to do more for lupus.
And then just be incremental or additional to current therapies.
And if we model what we did in anchor vasculitis on what could be done in lupus.
That probably mirrors, our aspiration and that's what we're trying to to realize in the design of our developmental path for for Allen.
Great. Thanks, Tom.
For that detailed answer.
Maybe on the net.
One more question.
On the Aurora study.
Hs.
Thanks for the new interesting new science presented today.
The phase two study or are you still ongoing.
With a after the 12 weeks for the randomized.
Three arm data readout.
Data read out you still have.
Trial blinded and going for another six months. So just wondering what do you think we could learn could there be an opportunity for our findings that can join us and your.
Our theory of hydrogen the stage III.
Being on a.
Appropriate target population here.
In particular I'm thinking of the 10 Mig arm for example can serve as a placebo arm because they make us essentially placebo.
And so that can be compared with the 30 make arm for the longer term and also interestingly that placebo the older.
Previous placebo arm has now.
Random re randomized to 10 make for versus 30.
Could there be some kind of a signal coming out of it in the H stage III subset.
<unk> made the versus 10 day, because that can strengthen your your theory about that.
A lot from <unk> role in Hs. Thank you.
Yeah.
It's one of the reasons, we designed the trial the way we did John and then you summarized it beautifully it's kind of a complicated trial design, but.
The reason we did it the way we did is 212 very firmly establish dose and in dermatology, especially in younger people knowing the minimum effective dose.
It's just as important as finding the effective dose if you will.
Because the FDA certainly.
Insist on knowing what is the lowest effective dose and.
And they wanted to establish safety of course.
And you're absolutely right. So we have the advantage and then there's maybe a counter challenge, which I'll allude to in a moment, but the advantages yes, no one knew what they were originally on so no one knew their original dose <unk>.
Condition and still don't neither of the physicians the patients are frankly, the sponsor we don't either so one would love to see maybe a continuation on reinforcement of the high score.
Result, if you will and the people that were on the active 30 mcduffie from the outset, maybe a deepening would be great and youre absolutely right. Perhaps we can use the 10 Meg group as a de facto placebo control. If you will because it is essentially inert and we saw that clearly in.
The period, one the weaker the first 12 weeks of the study.
And you know it would be interesting if there were any kind of inflections or crossovers from those that were previous on placebo and then going over to say the 30 Mig so there's a rich possibility of of understanding additional data in the trial now.
The issue may well be on the.
<unk> and I wanted to just say at the outset here I have no additional data and I'm not unblinded to any additional data so I'm completely speculating at this point.
Other than knowing that the safety and the blinded safety database is still very pristine and I don't think we'll have any safety findings in the trial.
I have no additional information beyond what I reported.
And the.
Our late part of last year, but it would be interesting as I said to see if we get any kind of inflection or cross sheltered from that previous placebo pay per patient population of course. The challenges. We don't have the data integrity is not perfect anymore, because let's face. It high score is semi subjective maybe very subjective and there.
Is some word out I mean, obviously, we released the top line 12 week data results, So who knows people will either have made they may have made it.
Subjective judgment that they were either benefiting or not benefiting.
They were either.
<unk> had a two and three chance of not having been on the effective dose from the outset that could affect dropout rates et cetera, et cetera could affect the way. The physicians also look at the high score maybe theyre going to be more beneficial with the score. We just don't know so that's why that first 12 weeks of pure randomization of blinding.
So ultra important but I agree with you we ought to get some more information out of this follow on period of 24 weeks of active dosing and don't forget there was an additional.
There was an additional eight week off study drug period, as well that will tally up so I like to think there's lots of data richness to be yet had from that study. We will just have to see where it comes out and I don't have any of those day to yet so I don't know I can't make any predictions beyond what I just speculated.
Very helpful. Thank you Tom.
Thank you you're on it.
Okay.
Your next question comes from the line of Ed White from H C. Wainwright.
Your line is open.
Good evening, Thanks for taking my questions.
So Susan you had mentioned that.
With the Japanese new drug application being accepted a true.
The $10 million milestone payment.
On a dollar basis whats left for potential milestones from <unk> four and what are the triggers for.
Other milestone payments.
Hi, Ed Thanks, Chris.
I'm not sure if it was my telephone but you.
Wait it out partly on your question so I only have one.
Something in reference to the 10 million milestone, but I can answer the second half of your question first if you don't mind and that what would trigger additional milestones in the past we have reference too.
On co related regulatory milestones up to $75 million.
And today, we announced 10 of that.
The other 65 at the time.
Further regulatory successes at year end.
And at the other territories by force.
For territories.
So and I apologize I missed the other part of your question.
That you hit it Susan I was wondering how much is left and what are the triggers for the milestone payment.
On it.
Alrighty.
Thank you and Tom just a question on Ccs 559.
I was wondering if you could share with us.
Anything about the design and the size of the phase one trial, that's going to start in the first half of this year.
And then also.
With the potential for such a large market that could be addressed here.
Are you looking for partnering the drug for development down the road.
Thank you Ed.
We'll talk a lot more about the details of the design at our R&D day suffice it to say, it's a it's a Bayesian trial design. When we first look for Tolerability of our of our drug in people with active oncology conditions, although we wouldn't necessarily be looking at the oncology <unk>.
It comes we will definitely look at Tolerability as we dose up in a Bayesian design. So as you may well know that can start at a certain it's a range of folks that you will use based on the results of the first steps of the trial. So low end of a couple of dozen to the high end of.
Maybe six or seven fold that depending on how we step through the trial design.
More to say about that on April 14.
Partnering always open to the right kind of partnership with the right kind of economics, and the right doctrine guiding principles adhere to sell.
At this point we've developed this on our own we'll do our studies so far on our own but.
You know, we we don't necessarily need to shoulder all of the investment of the long term development on this yes, if we can find the right kind of structure for our partnership.
It is gratifying to know that because our balance sheet has been bolstered considerably.
And because we've already planned for the early phases of development.
Have the financial wherewithal to bring it to certainly the next value inflection point or perhaps even beyond but always open to the right deal with the right terms that's for certain.
Great. Thanks.
And perhaps just the last question from me.
You had mentioned debt.
Sure.
The launch is <unk>.
Regressing, and Youre building up and getting ready for the commercial launch.
And you would be ready by approval on the <unk> date of July 7th.
Just curious.
You ready beforehand in case, you have an early approval. Thank you.
Yes.
We've worked very hard are our head of commercial has worked very hard to make sure. She and her team are prepared in fact for potential of an early early approval. So I think that without.
Without saying too much we won't be caught flat footed.
And we will certainly our goal is to be absolutely ready by the <unk> date, but.
Obviously, it would be ready by the <unk> date means you've got to be absolutely prepared so I don't.
And while I don't necessarily anticipate in this era of an overwhelmed agency early approval if it happens we won't be delayed too much on getting our drug launched.
Great. Thanks for taking my questions.
Thank you Ed.
Your next question comes from the line of Joseph Schwartz from SBB Leerink. Your line is open.
Hi, Thanks very much.
I don't want to steal the Thunder from.
The flashes of insight that you might share with us at your upcoming R&D day, but I was hoping to just ask if you could.
Paraphrase.
Your hypothesis in lupus nephritis.
Given what is known.
In the state of the yard about complement various complement targets.
In that disease, it's my understanding that.
The classical pathway.
Components tend to be down regulated in lupus nephritis, although some alternative pathway.
<unk> might be up regulated so given where <unk> sits I was wondering if from.
If you could address this and I realize it might be simplistic I am sure you have some more thoughts so feel free to share those with us as well. Thank you.
Actually my my thoughts it becomes very complicated than simplistic, probably now to the point of care.
Theoretical and maybe therefore useless I'm not sure.
The more I look at all of these markers in these various diseases on tomorrow, we do our own.
Research and in our shop I, just I frankly don't I think the textbooks are grossly oversimplified.
And in fact, I think we tend to make.
Pathways artificially.
Where it's really more networks and more cycles. If you will so I I continue to be both in in vivo models and small animals, but even in the human data I'm just constantly shocked how little the classical ideas of what happens down the mannose binding pathway versus.
What happens on the classical versus what happens on the alternative.
If you really look at all of these markers supposedly all cleanly feed into reinforced and regulate all these different distinct pathways.
A complete mismatch and I think that probably we've created.
Diagrams in textbooks, which in the real world on that relative if you want on my absolutely honest opinion. So I think ultimately when you have disruption downstream of complement activation you'd have to ask.
What is what is the destroyer ultimately whats the terminal effector of destruction and time and time again, you come back to those cells that have the fragment receptors on them and they're usually granulocytes not always but usually granulocytes eosinophils basophils neutrophils, especially.
Certainly macrophages have these receptors, including C. Five day receptor so I don't know.
I just I've begun to.
About a year or two ago started to abandon hope that I could understand complement in terms of classical and lectin versus alternatives and I just started looking for the culprit.
That I think can do damage and weather that <unk> three a receptor on a macrophage or even on a neutrophil versus C. Five a receptor that ultimately activates. These things then I start there with the biology that work backwards and see if theres, a therapeutic intervention point and Thats kind of how we're thinking about lupus nephritis, we know you get distraction and others look.
It's just there's so many parallels with bank of Vasculitis, you have auto antibodies and lupus you have auto antibody snake, you've got deposition of complement and the kidney you have got kidney destruction, which looks up for all the world. When you get close looks inflammatory damage in and around the glomerulus, it's like Wow. It just really looks very similar.
And in fact for how many years should we treat those two diseases almost identically prednisone chronic prednisone plus cyclophosphamide.
So there's just so many parallels that I've stopped worrying about what part of complements going up and going down and if I see evidence of activated range.
On the sites and the presence of complement fragments anywhere down the <unk> pathway. However, they got there.
I'm all for it it's one of the reasons I also gave a kind of a little snapshot I mean preliminary as it was on.
On Hidradenitis Suppurativa.
People.
Just said it's come from early involved well you know you follow C. Five in hidradenitis, whether it's in the blood or at the site youre going to find it. So if <unk> five day is notoriously difficult to measure accurately, but not impossible, but if you find that then youre at you have to ask a question or is that driving neutrophils.
And the answer is it likely is so I think the same is true in lupus nephritis, sorry for that maybe less than precise answer but.
I really I really think that that's the culprit is a cell that does destruction in the presence of activated complement.
Fundamentally believe C. Five day is the most potent of debt that part of the destruction pathway.
That's very helpful. Thank you.
Thank you.
Your next question comes from the lineup on New Palm Rama from JP Morgan Your line is open.
Hey, guys. Thanks, so much for taking the question just two quick ones from me.
What is your position market research suggest about the types of AAV patients that might be early adopters of avago pan whether it is elderly patients or maybe patients with more severe.
Renal dysfunction at baseline.
And any pockets of patients that might be more.
Rapid adopters and then.
Second question, which is a little bit more confirmatory in nature.
To a previous question, which was around an AD com. So Tom you said that you are preparing for an AD com is that just.
You are preparing for an outcome because it may come or has it been confirm that you will have an AD com. Thanks, so much.
Sure.
I'll go to the first question first.
Anyone the early adopters.
On in theory in theory early adopters would be anyone who is oregon, threatening or life threatening disease.
Which is of the type of person we put in the advocate trial on that.
These are folks that has to be on some prednisone load or theyre going to be in jeopardy of losing their kidney.
Losing a long potentially or worse, losing their life. So that in theory that should be early adopters, but.
Our primary research out there with patients and physicians reveals that Theres, a theres a lot much larger population of people that never get off prednisone, and it's not just two and a half or five migs a day bad as that is and frankly, the literature tells us that could predispose, even those quote low doses or rheumatologists would say, it's a non dose.
Predisposed to people that cardiovascular disease is a three fold risk year on year anything above two and a half mix, even down to two and ethics and up to 20 makes a day is a sixfold increase in cardiovascular risk and that's some really interesting and good data is from published recently.
So anyway, we find.
<unk> you talk to the experts and they're like Oh very few people are on on greater than maybe just these whispering doses of two and a half or five megs not true. There's lots of people on 10, 15, 20 minutes, a day and they never get off so those folks when you talk to the patient on the patient groups. They are saying I cant tell me when this is available.
I won't we had for rare disease day. The other day, we had a patient representative in from one of the foundations.
Hum.
I guess I shouldn't quote someone but I'll paraphrase, but this person who is really well placed in the vasculitis community income community said this should take off like a rocket ship because we all hate we all hate practice now we gotta get off steroids. So.
Looking at it very conservatively and rationally first anyone with Oregon or life threatening disease for whom there is no choice youre on prednisone plus something.
But then there's this other pretty big population I think there is eager anyone who was on prednisone daily even if for whatever reason their quote on these.
Longer term doses or maintenance doses or their disease is quite under control.
There's a real demand from that sector to get them off and the health care professionals understand that as well.
<unk> no we talk now with the agency they had their mid cycle meeting and where they said, let's have an ad com.
Interestingly again, we don't have any topics so.
But we're preparing for that we think we understand generally what their interests might be and so.
We're planning for that AD com to occur and we'll keep you posted on on how that's proceeding and exactly when it will occur.
Thanks, so much for taking our question.
Thank you and if I'm going to talk to you.
Your next question comes from the line of Dae Gon Ha from Stifel. Your line is open.
Hey, good afternoon, guys. Thanks for taking the questions just wanted to follow up on the commercial question. One and then maybe for Richard Tonight is Super Tivo and the second question. So Tom sorry, if I missed this in your prepared remarks, but as we think about July 7th.
<unk> you mentioned your commercial team is getting ready for a potential early approval.
Best case scenario, but.
When you look at the market now I guess COVID-19 seems to be receding knock on wood, but how should we think about sort of the dynamic of people coming back in for a standard of care that requires immunosuppressive regimen.
So I guess any kind of sense as to it will be more of a sort of a gradual buildup towards the year end when more people would be COVID-19 vaccinated or could we anticipate more of a bolus even at the beginning part and then secondarily on the Hs part recognizing you've looked at these various histology just wondering.
Is there some kind of a per diagnostic or assay that you are kind of coming up with in preparation for your phase III such that you could perhaps enrich patient if that could be more likely to benefit from the biological mechanisms was identified.
Yeah, So let's first go to the.
The Paducah date launch and uptake et cetera.
Take on I'll stress that in the age of Covid, what people are freaked out about is their current regimen.
Reitox a map, which is widely used here in the United States about income.
In combination with steroids are typically about two thirds of the patient population will be on Reitox at some point and maybe even on long term Reitox theyre absolutely.
Upset about the idea that day.
They are on right track Smith.
<unk>, obviously, writeups and maps whole purpose is to have to shut down the b sales ability to make immunoglobulin.
Debt to make antibodies, so what how is that going to work on a vaccine era.
So that's one thing we hear a lot now you use the word immunosuppressants, yes, right dexamethasone immuno suppressant cyclophosphamide is prednisone, although people technically don't throw day name at this present class of course, it causes immuno suppression.
<unk> is not an immunosuppressive anti inflammatory.
<unk> fills that we inactivate with respect to <unk> receptor engaging C. Five day are fully functional so that is really a big point of differentiation with <unk> and in fact.
It was subtle at first but I think the patient community has understood. This fundamentally as well so there again, saying boy, we would love to maybe have an opportunity to get on a vehicle pan.
In this era of Covid, and maybe get protection against our disease and still be able to mount responses to.
Two to Corona virus, so I think that Thats actually a boost now the practicality of a launch in the era of Covid much more hybrid approach you're absolutely right as you alluded to in your remark.
Some of it will be electronical that'll be it will be in person from our field force but.
We're preparing for that as well and we're studying other drugs that are launching during this pandemic and its a mixed bag depending on.
Are they for orphan drug are they more specialty or they follow on drugs and it's all over the map some of the some of the marketing or launches almost entirely virtual and yet then there's others, where even recent launches from kidney disease. It seems like 80% of it is actually in person even in the pandemic here. So I think we will still be pretty.
Heavily in person, but we are absolutely preparing for a hybrid approach to virtual and in person.
Now you just talked about H H S. Harley free and how will we enriched patient population.
We'll be presenting more data that we're analyzing from the Aurora trial, I think it's pretty clear that we're going to be able to get the right patients.
Pretty readily in this trial and yes. He has developed some fairly straightforward ways of thinking about that in terms of baseline criteria.
Yeah.
Great. Thanks for taking the questions.
Sure thing thank you.
There are no more questions at this time, turning the call back over to Mr. Thomas Schall.
Well, thank you very much and thanks, everyone for participating in this call today. Thanks for all for the insightful questions and again I urge you all to Mark your calendar for April 14th and participate in our future virtual R&D day with that again, thanks, very much and wishing you all a pleasant afternoon, and a pleasant evening.
Goodbye now.
All right.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.
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