Q4 2021 Axcella Health Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to X that was fourth quarter and year end 'twenty 'twenty. One conference call. Please be advised that today's call is being recorded and that all participants will be in a listen only mode.
Good until the question and answer session.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your Touchtone phone to withdraw your question. Please press Star then two.
And now for opening remarks, I would now like to hand, the call over to Jason for debt Vice President of Investor Relations and corporate communications at <unk>. Please go ahead Sir.
Thank you very much operator, and good morning, everyone. We would like to advise that certain remarks, we will make on today's conference call such as those relating to our cash runway and our ongoing clinical trials. The acts of 11 25 and 16 65 include forward looking statements that are subject to various risks and uncertainties. These rich.
And uncertainties are detailed in our SEC filings, including our most recent Form 10-Q , and our 10-K, which we plan to file later today.
Filings can be accessed on our website <unk>, TX dot com or on the SEC's website.
All forward looking statements represent our views as of today March 32022, and should not be relied upon as representing our views as of any subsequent date.
We undertake no obligation to update these forward looking statements.
With that let me turn the call over to our President and CEO Bill Hinshaw to begin the discussion.
Thank you, Jason and good morning, everyone. It's a pleasure to be speaking with you again soon.
Today I plan to briefly recap what was the year of Foundation Lane and strong execution in 2021.
I'll then preview what we expect will be a transformative 2022 as we approach important clinical data readouts and other key milestones that are now on the near term horizon.
Following my opening remarks, our Chief Medical Officer Doctor Margaret Gazelle will share details about our ongoing phase II trials in lung COVID-19 .
Non alcoholic Seattle, hepatitis or Nash and overt hepatic encephalopathy R O a chi.
Our new Chief Financial Officer, Bob Crane will then update you on the financials before opening the call to your questions.
We began 2021 with several aggressive goals as we continued our mission to tackle a range of complex diseases like capitalizing fully on the therapeutic potential of endogenous metabolic modulators or E. M M.
Our goals included first to gain clearance from the FDA on our very first investigational new drug or IND filings.
Following this we saw the large global clinical trials in both Nash and the way Chi.
We are also intent on expanding our pipeline by leveraging key learnings on the research side of our business and emerging science.
Thanks to the enormous effort on the part of Rx Saelens, we achieved each of these goals in early 2021, we were able to get the I M. D is cleared for both Axa 11, 25 and acts of 16 65.
Shortly thereafter, we launched impact our global phase, two b and Nash and empower our global phase II clinical trial in OA Chi.
Now as we were preparing to get these trials in motion a core team within <unk> was focusing increasingly on a couple of key datasets that we're emerging from the Covid pandemic.
The first was the rapid increase in the number of long Covid cases that were being reported globally.
And the second was the implication of mitochondrial dysfunction as one of the likely drivers of the condition.
As most of you know long Covid also known as post acute sequela of Sars Covid two infection are passed.
As a condition in which patients experience a broad range of symptoms for weeks months and now literally years after their infection with COVID-19 .
Research has shown that long COVID-19 can be experienced regardless of vaccination variant or severity of the acute viral infection.
Overall, well estimates vary from publication publication, we believe that 20% to 30% of patients who contract Covid go onto experienced at least some long COVID-19 symptoms.
If you simply apply these numbers to all of the confirmed cases today. This equates to a long COVID-19 population in the range of 17 to 25 million people in the U S alone and.
And we're just now reaching the timeframe, where those who contracted omicron would be considered to have long COVID-19 12 weeks post infection.
Now while there are literally dozens of long COVID-19 symptoms. The most common is fatigue.
In fact, this symptom is experienced by the majority of long Covid patients.
Those impacted often describe the condition.
Crushing.
So crushing in fact that many are able to return to work or effectively care for their children.
It has been known for years that viruses trigger a cellular hijacking winner in a cascade of effects on the mitochondria, which is the powerhouse of ourselves Sars COVID-19 two like other viruses and switch the fuel source within ourselves the inefficient glycolysis as it seeks to.
Our replicate.
This in turn compromises bioenergetics increases oxidative stress in inflammation and can impair the immune response.
Most of the people who contract viruses recover from this cascade quickly and naturally.
What is this thinks about COVID-19 .
As the number of people who have persistent symptoms like long standing debilitating fatigue. These.
These individuals' literally have no treatment options today.
We believe that 11 25 holds the potential to offer a real difference by essentially recharging the mitochondria. This.
This belief stems both from our preclinical and clinical work pre.
Pre clinically we have seen 11, 20, five's ability to boost fatty acid oxidation and basal respiration in a statistically significant and dose dependent manner.
We have also seen its ability to shift the mitochondria back from an inefficient energy generating state to an efficient energy today.
These are some of the key mechanisms that underlie the strength of our data from two prior clinical studies of 11, 25 and subjects with presumed Nash or we've seen marked reductions in key markers of liver fat inflammation and fibrosis.
With the emerging long Covid findings and our past data in hand, we rapidly prepared for and successfully launched a phase Iia clinical trial of 11 25 in late 2021 with the University of Oxford in the UK.
A world leader in long Covid research and care to help patients with long obesity and muscle weakness.
All of these efforts set us up for what we expect will be a momentous 2022.
We are expecting to complete enrollment in our phase Iia long cobot trial in the second quarter at 22, setting us up for topline data readout in Q3.
Assuming all goes well, we will seek an end of phase II meeting with the FDA later in the year to discuss our plans to move as expeditiously as possible towards registration.
Our successful phase Iia would also serve as a strong mitochondrial proof of concept for $11 25, which could provide opportunity to address a range of other diseases that we will start considering in the back half of the year.
Following our phase Iia readout, we also plan to share 24 week interim data from our impact as to B trial in Nash in the third quarter of this year.
This will be the most robust data set we have generated to date for 11, 25 and will be progressive on our past 12, and 16 week Readouts from prior studies.
We also plan to complete enrollment and impact in the second half of 2022, setting us up for 2023 topline data readout.
We're happy to report that at the start of the year $11 45 has received FDA fast track designation for the treatment of Nash with liver fibrosis. This is useful as we prepare for our next set of regulatory discussions and a potential registration trial.
And finally in OE Chi we plan to provide an update on enrollment in our empower trial later this year.
The team here at <unk> is well prepared to continue its strong track record of execution.
We're thankful to have a strong leadership team to advance our cause.
That starts with our board, which currently includes nine directors with a broad and deep range of experiences.
At our upcoming annual meeting two of our longer tenured directors Gregory Bexar and Stephen home will be stepping down from the board.
We'd like to thank them for all the wisdom and guidance that they have provided to the company in the years past.
Our nominating and governance committee has already identified a number of candidates with fresh and well rounded experience and we expect to nominate at least one of these candidates at our annual meeting in May.
We've also added a couple of new members of our Executive Committee in recent months to maintain our strong track record.
Our new Chief Medical Officer, Dr. Margaret Gazelle, and our new Chief Financial Officer, Bob printing.
<unk> joined <unk> in 2019, and that's been instrumental and our clinical group's success ever since she has a wealth of experience in both Biopharma and academia and is the right leader to guide us through late stage development.
Oh, there's more recent edition, having joined EXL in February he brings to US 30, plus years of experience building and financing life Sciences companies.
Let me invite Margaret to provide a description of each of the trials we have in motion before Bob goes you in on the financials.
Margaret.
Thanks, very much bill So let me share a little further background on the three trials that we have in motion here at XOMA.
Let's start with the one that will be reading out first our phase Iia trial in lung Hogan.
40 subjects with long causes fatigue muscle weakness are being enrolled in this trial and are receiving either Axa 11, 25 or placebo for 28 days. The single Center study is enrolling very well at the University of Oxford, and the United Kingdom.
Expert was specifically chosen for two key reasons first it is one of the Premier long Covid research centers in the World and second the researchers we're working with our world leading experts in the measurement of mitochondrial function and muscle health.
As Bill said, we're seeking to restore mitochondrial function of 11 25.
We are using magnetic resonance based technique, which is the fastest creatine recovery time.
P. C. R is a very quantitative and precise measurement for our ability to improve.
Function you can think that PCR like the battery indicate on your smartphone and more damage. The battery is the longer it takes to recharge.
In normal healthy adults. It takes about 25 seconds for PCR to recharge in order to meet our inclusion criteria subjects. In this trial must have a PCR recovery time of it.
At least 50 seconds, so at least double the norm.
We are also looking at a range of other measures in the trial, including blood based markers like landscape, which is an easily accessible common measure of how our muscles are functioning. Additionally, we're monitoring functional measures like the six minute walk as it takes cores to help inform our next trial.
As background P. C. Our recovery time has been correlated to the six minute walk and certain other diseases and conditions.
To be clear about this phase Iia readout, what we are hoping to achieve is a statistically significant improvement in there.
P C. Our recovery time, and a positive trend and other measures this would be a big win in the short term trial.
Look forward to sharing news of enrollment completion, and our topline data in the months ahead.
Yeah, So our impact phase two b trial in Nash.
This of course is the most serious form of fatty liver disease and its also among the most prevalent impacting up to 40 million people in the U S alone.
Despite this there are no approved Nash medications today.
Lee and many others in the medical field believe that addressing the needs of this large heterogeneous population will require combination therapy approach.
At the same time, given the chronic nature of this disease potential short and long term safety must be taken into account.
Okay.
Consisting of five amino acids in the derivative of 11 25 is a combination therapy in and of itself.
It's multi targeted mechanism multifactorial activity, it's oral route of administration and its safety and Tolerability to date, we believe impact firmly established 11 25 is an ideal first line has candidate.
Relief is backed by feedback we have received directly from investigators regarding our modality and our clinical data to date.
[noise] impact will include approximately 270 subjects with biopsy confirmed F. Two or three Nash, who will receive one of two doses of 11 25 for placebo for 48 weeks.
We have activated nearly 60 sites globally and enrollment is progressing well.
The primary endpoint in the trial is the proportion of subjects achieving a biopsy confirmed two point improvement in the Nash score with secondary endpoints, focusing on Nash resolution and a one stage or greater improvement in fibrosis.
We will also extend a whole host of noninvasive biomarkers, such as MRI P. D. F F. A L T and Cypress game, which will further inform our development program and will serve as the basis for the 24 week interim analysis in Q3 that bill touched on.
Now, let's turn to overt hepatic encephalopathy or O a T and our.
Our empower trial.
She is a rare but devastating state.
Cognitive dysfunction that stems from cirrhosis.
Defense can result in the inability of patients to care for themselves and can ultimately lead to death.
Many of these same patients experienced stock opinion, where muscle wasting it severely with their quality of life.
Well there are only two approved medications in the market today, they focus on only one of the drivers that the condition, namely ammonia.
And do not address muscle wasting.
Which is a completely.
16, 65 seeks to address these shortcomings within multi targeted mechanism.
Oral route of administration and an endogenous approach.
Our empower phase II trial is enrolling 150 subjects, who are experienced at least one prior OAG event.
With each receiving either 16 65 or placebo for 24 week treatment duration.
The primary endpoint is the proportion of subjects to achieve at least a two point improvement in the psychometric hepatic encephalopathy score or ph, yes, which is a well validated measure of neurocognitive function in cirrhotic patients.
Secondary endpoints include the proportion of subjects experienced an OE cheap breakthrough event shines.
First of all a cheap breakthrough events, including time to hospitalization changes in physical function and patient reported outcomes.
We initiated enrollment in mid 2021 earlier this year, we implemented certain changes to ease the inclusion and exclusion criteria, while still maintaining a homogeneous well controlled patient population. We're now monitoring the success of these efforts and plan to provide an enrollment update later this year.
So as you might surmise. These are very busy and exciting times here at a salad as we gear up for the Readouts ahead with that let me turn the call over to our new CFO , Bob Crane to provide an update on the financials.
Thank you Margaret and good morning, everyone.
First I wanted to say, how very pleased I am to have joined the company about six weeks ago.
As I was considering a new opportunity my ideal vision was to find a platform company that has the potential to address patient needs and with multiple programs in the clinic.
One that was guided by a strong experienced management team and board.
And one that has the opportunity for tremendous value creation, both in the near term and long term.
<unk> fit all of those criteria and.
And with this with the closing of our recent registered direct offering.
We're even better positioned to execute our plans for 2022.
Turning to the financials.
We ended 2021 with approximately $55 million in cash and marketable securities, which compares to $107 million as of the end of 2020.
As I just touched on we recently closed a registered direct offering that yielded $25 million in gross proceeds which has helped to further bolster our balance sheet. We expect that our current cash balance will be sufficient to meet our operating needs into 2023.
Turning to the income statement.
Our research and development expenses were $12 5 million and $43 $1 million for the three and 12 months ended December 31 2021.
This compares to $10 six and $37 million for the comp.
Terrible periods of 2020.
With the year over year increase primarily related to the initiation of our long COVID-19 impact and empower clinical trials.
General and administrative expenses were $4 7 million and $18 7 million for the three and 12 months ended December 31 2021.
This compares to $3 9 million and $16 $8 million for the same periods of 2020.
These increases are primarily the result of greater noncash based compensation and benefit related costs.
<unk> net loss for the quarter and year ended December 31 2021.
With $17 $9 million or 46 cents per share.
And $64 $6 million or $1 70 per share respectively.
Our net loss for the fourth quarter and year ended December 31 2020.
Was $15 $2 million or <unk> 40 cents a share.
And 50, $56 $5 million or $1 78 per share.
That concludes our formal remarks, operator would you. Please open the line for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys.
If at any time. Your question has been addressed and you would like to withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
The first question.
From Ed.
Arce with H C Wainwright and company. Please go ahead.
Hello, Good morning. Thanks.
Thanks for taking my questions and congrats on <unk>.
Continued progress.
Wanted to ask about the long Covid trial.
I think.
As your.
Approaching the initial.
Initial readout.
As you mentioned in.
And Pcr.
Later this year wondering if you could and this question is.
Directed to to Margaret.
Just any.
Sense for.
How is the progression of the trial is going.
I would imagine that you have regular interaction with the.
With the investigators there in Oxford.
And.
Any sense for you know.
Evolving.
Or changes to the.
The.
Patients.
Additional.
Variance Oh of Covid emerge and then I have a follow up.
Hey, Thanks, and good morning, Ed.
We've had a fantastic partnership with Oxford.
We continue to enroll well into the study as Bill has said, we anticipate releasing those results in the third quarter that will be our first readout coming up.
To date, we have not seen any impact of the variance.
In terms of the subject disposition or they're presenting features again most of these individuals have had symptoms for a prolonged period of time and that's why they're particularly interested in this trial and as.
As you know I'm a crime has really only been on us since December or so at least in the United States and U K. It was a bit earlier. So we're just going to see the beginning of the impact of OMA crime. As Bill also said, we anticipate that the numbers of long covered well go up from here because of the large numbers of individuals who had COVID-19 .
During this past winter surge.
Right.
And then as a follow up Margaret the.
The primary endpoint as you mentioned is the PCR and you had stated that Youre looking for statistical significant improvement in that.
But only positive trends in some of the other measures are important measures that would help inform our future development.
I'm wondering if you could discuss.
Further that perspective.
In light of the relatively short treatment period, and other factors that go into that.
Expectation.
Alright, thank you.
So in designing the trial, we wanted to end early and precise readout in terms of the mitochondrial function and we believe that based on some of our other data generated to date that we would be able to see that signal within a short period of time.
So we did discuss the issue about how long it might take to see an improvement in six minute walk and that's why as you appropriately note. We're looking for trends, we're looking for a directional signals that moves in concordance with the primary endpoint, which is a precise measure mitochondrial function.
So looking for trends looking for trends and improvement in six minute walk.
And in the patient reported outcome of fatigue, which is the symptom that we're studying.
Right.
Okay and.
One last one and this is for your OE Chi study.
As you noted.
There has been a little bit of amendments to the inclusion exclusion criteria to.
Perhaps allow for a little bit easier enrollment there I'm wondering if you could give us some detail on exactly what was eased and you know if they've got.
Affect any other parts of the design of the study.
Sure. Thank you and thanks for asking that question. So what we did really was to minimize the burden on investigators I'll give you. The the biggest change in the most concrete one was about the documentation of Pryor overt hepatic encephalopathy or OE Chi So way we required this can be within.
The previous 24 weeks and the investigators were noting that while they were having individuals come in with clear cut history says Oh AG. They were simply unable to obtain that documentation I think he may know the medical has a system that's been under a little stress recently and it has been difficult to just get paperwork from other facilities.
So that's the kind of change that we made again, it's really aimed at decreasing the burden on investigators as they enroll subjects into this trial remembering that OAG and of itself is a rare condition.
So those are that's just.
An example of some of the changes we made.
Great. That's very helpful. Thank you Margaret.
The next question comes from Thomas Smith with SBB Leerink. Please go ahead.
Hey, guys. Good morning, Thanks for taking the questions a couple on our end first.
Long Covid looking forward to the data. This year can you just talk a little bit about some of the regulatory activities that you are tackling in the background as you think about trying to expand the scope of this program beyond the University of Oxford and then.
On the phase two B Nash study you talk a little bit more about how enrollment is going there I know we've heard from some other companies enrolling these paired biopsy studies that they've seen some slowdowns and so just wondering what steps you're taking to make sure you're on track to complete enrollment here in the second half. Thanks.
Yeah. So good morning, Tom and appreciate the questions here in terms of long Covid, Yes, we're very excited for closing enrollment and then the data in terms of regulatory activities as you're familiar we had an excellent interaction with the M. H R E, which allowed us to open the trial quickly and we are set up for.
Our end of phase two discussions with the M.
M H R E and the F D a.
We'll then be having robust discussions about the best way to move that program forward as expeditiously as possible and given the high unmet medical need the profile of the product that we have the amount of data that we have there we anticipate that that will be a very engaged discussion to support us in that effort. So mark.
Maybe comment on the impact study and the enrollment there yeah.
Good morning, Tom So, yes, it's going very well again, we've had good engagements.
Yes enrollment into these paired liver biopsy studies is always challenging but we continue to make good progress. We continue to help the investigators by providing the latest information about how to minimize the screen failure rate.
Which is always challenging and its trials and clinical characteristics, whether that comes from our own data or data reported in the literature, we continually providing feedback to those investigators about waste to that just makes it more efficient for everybody to to move on but we haven't really seen significant slowdowns in terms of the pace of them.
And over the last couple of months.
Okay, great great, Yes, I appreciate the color and congrats guys on the progress looking forward to the data.
Right.
Again, if you have a question. Please press Star then one on a touchtone phone.
The next question comes from Daniel Wolfe with J P. Morgan. Please go ahead.
Good morning, everyone and thanks for taking our question in your prepared remarks, you have commented that the study is enrolling very well quite a long corvid study. So what is driving the timeline for data readout to tier two when considering the number of available patients.
Well I'll ask the 28 day study.
Yeah. So good morning, Daniel Thanks for the question a couple of pieces here. So one is as you noted there is the actual enrollment period and dosing period. Then there is the data collection preparation and then communication of this now one of the other aspects that we have in this particular.
Study well I say, it's two aspects one is we're doing the very precise measure a PCR mrf's, which does require a sophisticated MRI machine and access to that the other piece is Margaret in the team worked with Oxford about these patients because they are quite fatigued.
Is there a baseline and so enabling and supporting their progress through the study is wherever we find you know measuring that appropriately so from that standpoint.
We're on track, we're doing well and we anticipate being able to share the data in the third quarter and communicated at that point, we're very excited for the results of what it means for this program as well as for other areas of mitochondrial disease or post viral infection.
Got it and then regarding the primary endpoint that you've mentioned.
The significant difference in recovery time is there a specific proportion of patients expected to have their PCI recovery time within the normal 24, plus or minus five seconds.
For you to consider advancing the product into late stage development.
Margaret Yeah.
Thanks for that question and no way I understand the.
The question in terms of you know, whether we will normalize mitochondrial function again going back to the comment I made earlier, we wanted to make this trial.
Relatively small and precise and so we powered it around the change in the endpoint as opposed to absolute normalization.
I think in all honesty again, we.
We didn't want to continue this trial for a long period of time and so we didn't want to continue to treat people until we saw that benchmark again, what we're really trying to do here is do we do we impact mitochondrial function and does the measure that we have correlate with functional measures as oppose to seen in nor.
Amortization around that MRI signal.
Yeah, Danielle I'll build on that and say you know this is exactly as Margaret outlined a clear study to demonstrate the mechanism and the direction of the impact in our statistical fashion than what we'll be working with and this bridges a little bit to one of ed's questions as well, there's obviously a large and.
Growing body of evidence out there for the long COVID-19 patients in terms of their baseline, where they start and and the opportunity to move them towards normal and then hopefully return a number of them to normal the timing of that is what will then be working on determining the next steps.
Okay got it and one last.
Financial question does the cash runway guidance take into account the recent 25 million equity raise.
Thank you Bob.
Bob.
Yes, it does so the.
With the cash at year end of 55 million plus the $25 million that we raised with the registered direct we have sufficient funds to get us into 2023.
Okay, great. Thank you very much.
Thank you.
Again, if you have a question. Please press Star then one.
Next question comes from Robert the Boyer with Noble capital markets. Please go ahead.
Good morning, just a question about the SBA and their current priorities in terms of Covid, a long call, but since we've seen.
The change over the last year from.
Approvals based on emergency use to shifting towards full trials.
And long Covid being a recent development.
Is there any.
Any details or four.
Anything you can discuss about the fda's priorities on long COVID-19 , how they're finding it or what kind of requirements.
Approval it would be since this is such an emerging.
Condition.
Yeah, Robert Good morning, and thanks for the question. So in general we don't speak in detail about our interactions with the regulatory authorities what I can share with you is that the FDA and other health authorities around the world they've obviously been exceptionally responsive to dealing with the pandemic working collaboratively.
With the companies, while maintaining a high standard of quality in the case of the focus obviously the mortality morbidity associated with acute infection allowed the prioritization of the vaccination and acute treatments. We have had excellent interactions with the MH are a in our initial discussion.
And we see focus and energy are expanding to include long Covid at this point in time and that's because of the size of the population you heard in our remarks, we're talking now getting close to half a billion confirmed infections around the world, which translates into long.
Covid numbers estimated 17 $25 million in the U S already and so the needs there are evolving as we've outlined in the past you have a clear a physiological mechanism measure in the PCR, we have functional measures, which will clearly be an important part of.
The long Covid approval in terms of fatigue score of six minute walk and those have regulatory precedent across a number of diseases. So we feel will have a very constructive in the phase III conversation post the data with the FDA and other regulators and I'm sure you have seen the continued growth in <unk>.
Stories and.
And in energy around long Covid. It is a huge issue that people are looking to deal with and we're excited to be able to help support that effort.
Okay, great. Thank you for taking the question.
This concludes our question and answer session I would like to turn the conference back over to CEO Bill Hinshaw for any closing remarks.
So thank you operator, and thanks to everyone who tuned in today, we're energized by the opportunity to help address the substantial needs that people with long Covid Nash and OE to you're facing today and we're looking forward to our upcoming data Readouts and other key milestones, we expect will help drive value for our.
<unk>.
We look forward to speaking with you again in the soon in the future that concludes our call. Operator, thanks, everyone have a great day.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
[music].
Great.
[music].