Q1 2022 Achieve Life Sciences Inc Earnings Call

May 12, 2022

Today's conference is scheduled to begin shortly please continue to standby. Thank you for your patience.

[music].

Good day and thank you for standing by welcome to the achieve life Sciences first quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. After the speaker presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your <unk>.

The phone please be advised that today's conference is being recorded if you require any further assistance. Please press star zero.

Now I'd like to hand, the conference over to your first speaker today to Nicole Jones. Please go ahead.

Thank you operator, and thanks, everyone for joining us on the call today from Steve We have John Benfits, Chief Executive Officer, Dr. Cindy Jacobs, President and Chief Medical Officer, and Gary <unk>.

<unk> principal accounting officer at.

<unk> management will be available for Q&A after the prepared remarks.

I'd like to remind everyone that todays conference call contains forward looking statements based on current expectations. These.

These statements are only predictions and actual results may vary materially from those projected please refer to achieve documents filed with the SEC concerning factors that could affect the company copies of which are available on our website I will now turn the call over to John .

Thank you Nicole and thank you everyone for joining us today.

As you've probably heard last month, we reported the highly successful outcome of the Orca two phase III clinical trial of slightest clinically and for smoking cessation.

So that is clinically demonstrated impressive efficacy across the primary and secondary endpoints for both the six and 12 weeks cited clinically and treatment arms.

Safety and Tolerability profile remains best in class with single digit rates of adverse events reported we could not be more excited that scientists clinically and succeeded in the challenge of helping many long term heavy smokers and whom previous treatments have failed successfully kick the habit.

And the timing could not be better to bring a new substation option forward for the first time in over 20 years cigarette sales increased during the COVID-19 pandemic, while calls to quit lines dropped by nearly 30%.

There is still more than 30 million smokers in the U S alone and over $1 billion globally, who have not been offered a new regulatory approved treatment in nearly two decades.

Smoking kills more people every year than alcohol AIDS car accidents illegal drugs and murders combined in the U S. It accounts for more than 480000 deaths and billions in health care dollars spent each year.

Yet despite these alarming statistics there've been very few clinical advances aiding smokers and healthcare providers to treat nicotine addiction.

Chantix, which was FDA approved in 2006 and withdrawn from the market last year was the leader in the smoking cessation category generating over $1 billion in peak sales before going generic with roughly 75% of those sales attributed to the U S market.

While it has been considered the most efficacious treatment currently available it was never able to reach its full potential of helping more people quit successfully due to its side effect profile.

In fact, when marketed only 4% of the U S. Smoking population were prescribed chantix each year and in the Orca two trial less than half of the participants had ever used chantix and there're multiple prior quit attempts.

Insights from our research and from smoking cessation of opinion leaders and prescribers suggest that the primary reason our majority of smokers avoids starting or completing a full 12 week course of Chantix is due to the high incidence of side effects, such as nausea, headaches and sleep disturbances.

Based on prior evidence we have always believed that slightest cynically and could offer a more tolerable alternative and we now have proof from a randomized phase III study of more than 800 smokers to support this belief.

The adverse event profile appears to be best in class with more headaches, and nausea, and the placebo arm than in the active treatment groups.

In addition, the odds ratios we observed an orca two are unprecedented with six to eight times higher odds of quitting at the end of treatment compared to placebo.

And our quit rates were impressive despite the highly addicted study population and the execution of the trial during a pandemic.

We are excited to see that both six and 12 week courses of <unk> therapy appeared to be highly effective for smokers. The six week therapy option provides flexibility for a shorter treatment to achieve abstinence and is half the duration of current treatments.

And finally quite simply it is a new option smokers and their doctors need new solutions. This is an indication that has not seen any new approved treatments and more than 15 years. We believe a new treatment option will provide hope to the millions of smokers, who are ready to finally quit we plan to offer that.

With <unk>.

Turning to the topline data readout I'd like to hand, it over to Cindy to review the key findings from the Orca two trial Cindy.

Thanks, John as John mentioned, we are pleased to report clinically robust and statistically significant results for both primary and secondary endpoints for six weeks and 12 weeks of cited Senate clean treatment compared to placebo in this trial.

<unk> two is the first of two multi center randomized phase III trials evaluating side, it's been clean for smoking cessation in adults in the U S. The trial was designed to evaluate the safety and smoking cessation effectiveness of three milligrams flat instead of clean taken.

Three times daily for either six or 12 weeks compared with placebo.

Study participants were randomized to one of three arms and we saw received either six week tightest cynically followed by six weeks.

All of our 12 weeks on site, it's going to clean or 12 weeks of placebo.

All subjects also received standard behavioral support for the duration of the study.

Dr continued study had two independent primary endpoints that evaluated the success of smoking asking for about six weeks and 12 weeks duration of <unk> treatment compared to placebo.

For both primary endpoints comparison smoking abstinence was defined as absence during the last four weeks of treatment.

This four week Biochemically verified absent measure remains the FDA approvable endpoint for smoking cessation medications.

The corresponding secondary endpoints evaluated for continuous abstinence.

Those who successfully quit smoking by week three through to week 24 or by week 932 week 24, depending on treatment duration.

Or could two completed enrollment of 810 smokers at 17 clinical trial locations in June of last year.

On average the study population was 54 years old had been smoking for 38 years had four prior quit attempts.

We are still smoking about a pack of cigarettes a day.

After 12 weeks of partisan a clean <unk>.

32, 6% of smokers had quit smoking compared to only 7% of smokers treated with placebo.

This resulted in an odds ratio of six three with a P value less standpoint 0001.

Meeting smokers treated with Cytosorb at clean had six times the odds are likelihood of quitting smoking compared to smokers treated with placebo and it was highly statistically significant.

For the secondary endpoint at 24 weeks 21, 1% treated with 12 weeks of <unk> clean where non smokers compared to only four 8% treated with placebo.

This gave an odds ratio of 534 remaining a non-smoker at 24 weeks after 12 weeks cytosine a clean treatment.

And also had a P value of less than 0001.

After six weeks of <unk> 25, 3% of smokers had quit smoking compared to only four 4% of smokers treated with placebo.

This resulted in an odds ratio of eight meaning that those smokers treated with cytosorb at clean has eight times, the likelihood of quitting smoking compared to smokers treated with placebo and.

And again, a P value of less than 0001 was observed.

For the secondary endpoint at 24 weeks eight 9% treated with six weeks of site is cynically remained non smokers compared to only two 6% treated with placebo. This gave an odds ratio of three seven for remaining a non smoker at 24 weeks after <unk>.

Weak citizen and clean treatment with a P value of 0.0016.

Turning to the topline safety and adverse events reported in <unk> two the frequency of treatment emergent adverse events was similar in all three arms.

We continue to see the tightest didn't clean is very well tolerated with the incidence of specific adverse events in the single digits. The most common adverse events occurring in 5% or more of study participants were only insomnia abnormal dreams headaches and.

<unk>.

As John mentioned, the frequency of nausea, and headaches for higher in the placebo arm than in the site is clinically treated arms the frequency of insomnia or abnormal dreams was only slightly higher than the site is going to clean treated arms compared to placebo.

We expect that Tolerability will remain a critical point of differentiation from currently available treatments and believe the tightest clinically when approved has the potential to become a new gold standard or preferred treatment for smoking cessation.

That concludes the overall view of results. We continue to review additional findings and look forward to submitting these data for publication in the near future.

Thanks, Cindy we are very excited about the strength of the Orca two results and the magnitude of effect seen with <unk> throughout the Orca program.

We continue to see strong efficacy, particularly when we consider the odds ratios that have been reported for available cessation treatments.

You can see for both the six and 12 week treatment arms of Orca two exceeded what was previously reported for cider cynically proving our hypothesis that the higher three milligram dose given for a longer duration has improved outcomes for smokers.

Our focus now turns to the enrollment and execution of the confirmatory phase III <unk> III trial and initiation of the phase III <unk> trial and E cigarette users.

Orca three is similar to orca too and that participants will be randomized to one of three study arms to evaluate three milligrams cytosine a clean dosed three times daily over a period of either six or 12 weeks compared to placebo.

<unk> three was initiated in January of this year and aims to enroll 750 smokers at 15 clinical sites in the U S.

Regarding <unk> one we continue to expect initiation of this study in the second quarter pending final release of grant funding from the NIH.

The phase II <unk> study will enroll approximately 150 adult nicotine E cigarette users in the U S and will be led by Dr. Nancy <unk> Professor of Medicine at Harvard Medical School, and director of the Tobacco Research and treatment Center at Massachusetts General Hospital.

As a reminder, we received the first tranche of the NIH Grant funding to complete critical regulatory and clinical operational activities, such as protocol Finalization clinical site identification and submission of the new IND to FDA for the E cigarettes cessation indication.

We have completed and submitted the documentation on these initial required activities and are awaiting the next tranche of the NIH grant funding to initiate the Orca one study.

The growing number of E cigarette users exceeds 11 million adults in the U S and there are currently no approved treatment options specifically indicated for this population.

We believe this is an ideal population to continue our exploration of <unk> ability to be safe and effective nicotine addiction treatment.

I would now like to turn the call over to Jerry for our financial update.

Thanks, John .

I'd like to provide an update on our cash position as of March 31, 2022, as well as review our operating expenses for the first quarter.

As of March 31, 2022, the company's cash cash equivalents short term investments.

Unrestricted cash was $36 4 million compared to $43 million as of December 31, 2021.

We believe our current cash balance is.

Fisher to provide runway into 2023.

In addition to the reported cash balance and in connection with the positive poker to results. We also received approval from Silicon Valley Bank to access the remaining capital under our $25 million debt facility put in place in December 2021.

Under the agreement, we now have access to an incremental $10 million of capital that can be drawn down at our discretion over the course of the next 12 months.

No amounts have been drawn down to date.

Turning to our statement of operations.

The company incurred a net loss of $7 6 million for the quarter ended March 31 2022.

Compared to a net loss of $8 million for the same quarter of 2021.

Total operating expenses in the first quarter of 2022 with.

$7 2 million as compared to $8 million for the same quarter of 2021.

Operating expenses decreased for the quarter ended March 31, 2022, due to lower costs associated with the completion of the Orca two trial.

This was partially offset with the initiation of the Orca three trial in January 2022.

We anticipate our operating expenses to increase in the second half of 2022.

As we further execute on both the Orca <unk> III and <unk> trials.

As a reminder, approximately half the costs from the Orca one trial are expected to be funded through a grant from the NIH.

That concludes a summary of our financial results I'll turn the call back over to John .

Thank you Jerry.

This is certainly a monumental time for achieve with overwhelmingly positive phase III <unk> results and the initiation of our second phase III study in January we are well on our way to bringing forward a long overdue new treatment for smoking cessation.

The nicotine addiction market continues to be significantly underserved and in need of new safe and effective treatment alternatives. We believe that <unk> differentiated safety profile shorter course of treatment and compelling efficacy positions us well to make a significant impact in this large market, we look forward to bringing.

You further updates on our continued progress. We appreciate you joining us today and for your continued support.

Now open the line for questions operator.

Thank you Sir.

As a reminder to ask a question you would need to press star one on your telephone.

Your question. Please press the pound key.

Please standby, while we compile the Q&A roster.

I show. Our first question comes from the line of Francois Brisk Boy from Oppenheimer. Please go ahead.

Hi, This is Dan on for Frank Thanks.

Thanks for taking the question.

Just a quick question on potential partnerships.

Given the strength of work.

Two and moving.

Moving forward as you start to look at three I'm wondering if you could add any color.

On what those partnership discussions.

It looked like how are they going any any color you want to add to that.

Yeah. Thanks, Dan Thanks for the question here, obviously important attribute as we as we roll along here so.

As we just discussed we're extremely excited about the top line results from the Orca two trial and we think this is really going to be instrumental in furthering the discussions with potential partners.

Potentially.

Acquisition partners. So this is still early days this is not something thats going to happen overnight, but we're.

We're encouraged by the response so far is we have had a chance to discuss the data to date. So I think more to come on that but again we're encouraged.

Thanks, Thats very helpful. Just a quick one on <unk>. One are you still on track to exceed the $2 5 million from the NIH in the second quarter.

Given NIH timelines and how they work are you still on track to achieve that ahead of starting.

Okay.

Yes, so on the Orca one study we will require the NIH grant funding to come through before we initiate that trial. This is our first grant that we're moving forward with so we are in the midst of that.

The logistics with NIH and Ida on this one but we do anticipate.

The things are on track. So we can initiate that trial by the end of this quarter.

Great. Thank you congrats on all the progress that's it for me.

Thanks, Dan.

Thank you I show. Our next question comes from the line of Thomas Flaten from Lake Street Capital. Please go ahead.

Yes, thanks for taking the questions.

Just out of curiosity on the FCB are there any hurdles.

You need to jump through to get that money or is it purely at your discretion.

So under the terms of the new agreement. Thanks, Thanks, Thomas for the question.

It is at our discretion to take amounts down.

If we were to take any down which we have not to date, there would be some liquidity requirements that come with it but we think having access to an incremental $10 million.

It's kind of a belt and suspenders.

Proposition was a good thing to put in place with the strength of the data.

Got it.

And.

When can we expect an enrollment update on orca three.

Good question. So we initiated orca three in January of this year.

So.

Yeah, I think we're encouraged with the enrollment to date.

Things are moving along well.

As we had indicated on the call here a couple of weeks ago.

We would anticipate enrollment to complete by the end of the third quarter of this year. So I think within that would probably won't be giving a lot of granular updates in terms of the number of patients, but just as a reminder, the target is 750 subjects in this trial across 15 centers all in the U S.

Yes.

Great I appreciate it thank you.

Thanks Thomas.

Thank you.

Sure. Our next question comes from the line of Michael Higgins from Ladenburg Thalmann. Please go ahead.

Thanks, operator, thanks, guys for taking the questions Hello again, it was two weeks ago, we spoke on the Orca two results congrats again on those.

I'm wondering if there's any investigator initiated studies that youre aware of or that are under way and do you think youll get inbound interest to study because its been a clean number or consumers out. Thanks.

Yeah, Hi, Michael Thanks, Thanks for the question.

So at.

At the moment, we're not actively involved in any new <unk> trials, we are aware of some that are.

<unk> that are ongoing.

There is and continues to be a.

A significant amount of interest around this compound. So I think as we do get inbounds and I think we will assess whether or not it's something that we would like to support and get involved with.

Thanks.

Any any planting or two out.

You mentioned in your prepared remarks.

You did two weeks ago to work towards publication it would make sense that Victor regarding would be part of those being the <unk> of course.

But any other trials.

We think you can get this out.

Yeah. Thanks, Thanks, Michael for the additional question there. So I think on an additional data points. We ourselves are still getting more data points out of or get to that will continue here over the.

The coming weeks and I think as we get more of that information out I think we will assess.

Other ways to get additional data points out into the market.

Cindy had articulated on the last call. We do see this as strong data and I think we want to work with Nancy to get this.

<unk>.

Swift manner. So we can get the full datasets out of there, but there will be a number of data points beyond the top line results that we announced a couple of weeks ago that we think could be quite interesting as we as we move along.

Yes, and look forward to those last one here just to confirm.

The filing assuming we've got very similar.

Review here in Orca, three where <unk> had strongly on both the six and 12 week end points as co primaries.

How does it work for the application do you found the same endpoint as for any clean which is a 12 week endpoint.

And it's supplemented then by six week data or do you file having 612 week, how does the language workout.

Yeah. Thanks, Michael hand, this one over to Cindy.

Yes, it would be both six week and 12 week as far as being approved for treatment durations.

Interesting. So you have the comparator to really clean but in terms of the labeling can show 612 uneven.

24 week data I would assume.

Yes.

So I mean, we're really trying to get flexibility for smokers as well as their positions.

As the <unk> showed if a smoker was very motivated and quit smoking by three weeks and continued non smoking to.

Six weeks.

I didn't want to take any more treatment that would be then the six week treatment I do think as Nancy pointed out we obviously had more individuals.

More success the longer they were on treatment and stop smoking. It took them five six week seven eight weeks and certainly by nine weeks than they had become a non smoker.

So it really gives us flexibility to smokers and their physicians on how long.

The individual wants to continue treatment.

That's really helpful see your comment on.

We heard this two weeks ago the longer that they're on the more success, we have and I think we're looking for some patient level data that will support that.

That is that is that the case and if so is that kind of a June July timing, yes.

Yes, so what we'll have is prevalence rates on each week. So you can see as each week, who was a non smoker and two lessons and so we do expect that to be higher as you get more treatment. It's very similar to varenicline in that in that regard.

But for those individuals that you stopped tree is stopped smoking within two to three weeks, it's not that they have to continue for another nine to 10 weeks of treatment.

What the data will show.

Is that there was no risk of relapse in those individuals' if they switched to placebo or they stayed on site is clinically.

Those those that kind of information.

And endpoints will be in the publication.

That's really helpful. Thanks, Andy.

Thank you.

I show. Our next question comes from the line of John <unk> from Zacks. Please go ahead.

Hey, good afternoon, everyone John from your entire it sounded like you were doing some commercialization research and I'm wondering what are the key factors that you think we are able to drive.

Yes.

Pfizer to get $1 billion in sales per year is there anything that they did that help.

Help them get there that you think is particularly important.

Yeah.

Yes, good question, John and thanks for calling in.

One of the things that we're seeing now which I think is.

Interesting.

Now that <unk> has been withdrawn from the market.

Lately.

And we do have at least a single generic that is now fully available I think one it hasn't taken over kind of where chantix has been historically.

But it is on a run rate to sell about $300 million over the ensuing 12 months. So I think that is encouraging for us because for all practical purposes. It looks like we have a better product on our hands.

Effectively hit inferior product is on pace, albeit at a lower price point than it has been historically to do a fair amount of sales.

I think that bodes well for the for the potential of <unk> <unk>.

Long term.

And I think the other piece to keep in mind is frankly, just having a new treatment option there hasnt been anything new in over 15 years since chantix.

Was originally launched in I know that was a big attribute originally for that product as well.

So I think.

Given the fact that we've got as Cindy just just just talked about a shorter course of treatment.

A significantly improved safety and Tolerability profile and very strong efficacy it should set up well.

To be a very compelling product on the market.

Okay. Thanks, and then do you think it takes a big pharma to get there.

$1 billion that we all kind of think about our kind of kind of smaller company do it too.

Yes.

Some sense you get in with what.

You get out what you put in to a lot of the marketing efforts I think with that being said I think there are ways to take this to market.

Without the same level of capital needs that are large pharma would do and I think just quite simply the size of the market is so large even going after a smaller percentage out of the gate should still result in really sizable revenues. So I think there is.

Range here.

As we continue partnering discussions and look at.

Kind of what our role might be as well.

That all into consideration.

Great. Thanks, John appreciate it yeah. Thank you.

Thank you.

There are no further questions in the queue at this time I would like to turn the call back over to John <unk> CEO for closing remarks.

Thank you and thanks again for joining US today. We appreciate your continued support and look forward to bringing you further updates on our continued progress as we move forward throughout 2022, thanks again for joining us today.

This concludes today's conference call. Thank you for participating you may now disconnect.

Okay.

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Okay.

Sure.

Yes.

Okay.

Yes.

[music].

Good day, and thank you for standing by and welcome to the achieve life Sciences first quarter 2022 earnings Conference call. At this time all participants are in a listen only mode. After the speaker presentation there'll be a question and answer session to ask a question. During this session you will need to press star one on your telephone please be advised.

Today's conference is being recorded if you require any further assistance. Please press star zero I would now like to hand, the conference over to your first speaker today to Nicole Jones. Please go ahead.

Thank you operator, and thanks, everyone for joining us on the call today from Keith We have Jon <unk>, Chief Executive Officer, Dr. Cindy Jacobs, our President and Chief Medical Officer, and Gary <unk>.

<unk> principal accounting officer acute.

Acute management will be available for Q&A after the prepared remarks.

I'd like to remind everyone that todays conference call contains forward looking statements based on current expectations.

Thank you Nicole and thank you everyone for joining us today.

As you've probably heard last month, we reported the highly successful outcome of the Orca two phase III clinical trial of <unk> for smoking cessation.

Scenically and demonstrated impressive efficacy across the primary and secondary endpoints for both the six and 12 weeks cited scenically and treatment arms.

The safety and Tolerability profile remains best in class with single digit rates of adverse events reported we could not be more excited the scientists clinically and succeeded in the challenge of helping many long term heavy smokers and whom previous treatments have failed successfully kick the habit.

And the timing could not be better to bring a new substation option forward.

For the first time in over 20 years cigarette sales increased during the COVID-19 pandemic, while calls to quit lines dropped by nearly 30%.

There is still more than 30 million smokers in the U S alone and over $1 billion globally, who have not been offered a new regulatory approved treatment in nearly two decades.

Smoking kills more people every year than alcohol AIDS car accident illegal drugs and murders combined in the U S. It accounts for more than 480000 deaths and billions in healthcare dollar spent each year.

Yet despite these alarming statistics there've been very few clinical advances aiding smokers and healthcare providers to treat nicotine addiction.

<unk>, which was FDA approved in 2006 and withdrawn from the market last year was the leader in the smoking cessation category generating over $1 billion in peak sales before going generic with roughly 75% of those sales attributed to the U S market.

While it has been considered the most efficacious treatment currently available it was never able to reach its full potential of helping more people quit successfully due to its side effect profile.

Insights from our research and from smoking cessation of opinion leaders and prescribers suggest that the primary reason our majority of smokers avoid starting or completing a full 12 week course of Chantix is due to the high incidence of side effects, such as nausea, headaches and sleep disturbances.

Based on prior evidence we have always believed that slightest clinically and could offer a more tolerable alternative and we now have proof from a randomized phase III study of more than 800 smokers to support disbelief.

The adverse event profile appears to be best in class with more headaches and nausea in the placebo arm than in the active treatment groups.

In addition, the odds ratios we observed an orca two are unprecedented with six to eight times higher odds of quitting at the end of treatment compared to placebo and.

And our quit rates were impressive despite the highly addicted study population and the execution of the trial during a pandemic.

We are excited to see that both six and 12 week courses a cytostatic clean therapy appeared to be highly effective for smokers. The six week therapy option provides flexibility for a shorter treatment to achieve abstinence and is half the duration of current treatments.

Finally quite simply it is a new option smokers and their doctors need new solutions. This is an indication that has not seen any new approved treatments and more than 15 years.

We believe a new treatment option will provide hope to the millions of smokers, who are ready to finally quit we plan to offer that hope with <unk>.

Turning to the top line data readout I'd like to hand, it over to Cindy to review the key findings from the Orca two trial Cindy thanks.

Thanks, John .

As John mentioned, we are pleased to report clinically robust and statistically significant results for both primary and secondary endpoints for six weeks and 12 weeks of cited Senate clean treatment compared to placebo in this trial.

<unk> two is the first of two multi center randomized phase III trials evaluating <unk> for smoking cessation in adults in the U S. The trial is designed to evaluate the safety and smoking cessation effectiveness of three milligrams flat instead of clean taken.

Three times daily for either six or 12 weeks compared with placebo.

Study participants were randomized to one of three arms and we saw received either six week titles cynically, followed by six weeks of placebo or 12 weeks of citizen clean or 12 weeks of placebo.

All subjects also received standard behavioral support for the duration of this study.

Dr. Continued study has two independent primary endpoints that evaluated the success of smoking asking for about six weeks and 12 weeks duration of <unk> treatment compared to placebo.

For both primary endpoints comparison smoking abstinence was defined as absence during the last four weeks of treatment.

This four week Biochemically verified absent measure remains the FDA approvable endpoint for smoking cessation medications.

The corresponding secondary endpoints evaluated for continuous adds codes and those who successfully quit smoking by week three through to week 24 or by week 932 week 24, depending on treatment duration.

Or could two completed enrollment of 810 smokers at 17 clinical trial locations in June of last year.

On average the study population was 54 years old had been smoking for 38 years had four prior credit Tam, but were still smoking about a pack of cigarettes a day.

After 12 weeks of datacenter clean.

32, 6% of smokers had quit smoking compared to only 7% of smokers treated with placebo.

This resulted in an odds ratio of six three with a P value less standpoint 0001.

Meaning of smokers treated with <unk> had six times, the odds or likelihood of quitting smoking compared to smokers treated with placebo and it was highly statistically significant.

For the secondary endpoint at 24 weeks 21, 1% treated with 12 weeks of cytosine clean where non smokers compared to only four 8% treated with placebo.

This gave an odds ratio of 534 remaining a non-smoker at 24 weeks.

After 12 weeks cytosine clean treatment and also had a P value of less than 0001.

After six weeks of <unk> 25, 3% of smokers had quit smoking compared to only four 4% of smokers treated with placebo.

This resulted in an odds ratio of eight <unk>.

Meaning that those smokers treated with Cytosorb at clean has eight times, the likelihood of quitting smoking compared to smokers treated with placebo.

And again, a P value of less than 0.0001 was observed.

For the secondary endpoint at 24 weeks eight 9% treated with six weeks of site is cynically remain non smokers compared to only two 6% treated with placebo.

This gave an odds ratio of three seven for remaining a nonsmoker at 24 weeks after six week cytosine clean treatment with a P value of 0.0016.

Turning to the top line safety and adverse events reported in <unk> two the frequency of treatment emergent adverse events was similar in all three arms.

Yes.

As John mentioned, the frequency of nausea, and headaches for higher in the placebo arm than in the <unk> treated arm the frequency of insomnia or abnormal dreams was only slightly higher than the site is clinically treated arms compared to placebo.

That concludes the overall view of results. We continue to review additional findings and look forward to submitting these data for publication in the near future.

Thanks, Cindy we are very excited about the strength of the Orca two results and the magnitude of effect seen with cider cynically throughout the Orca program.

We continue to see strong efficacy, particularly when we consider the odds ratios that have been reported for available cessation treatments.

Because <unk> for both the six and 12 week treatment arms of Orca two exceeded what was previously reported for cider cynically proving our hypothesis that the higher three milligram dose given for a longer duration has improved outcomes for smokers.

Our focus now turns to the enrollment and execution of the confirmatory phase III <unk> III trial and initiation of the phase III <unk>, one trial and E cigarette users.

<unk> 750 smokers at 15 clinical sites in the U S.

Regarding <unk> one we continue to expect initiation of this study in the second quarter pending final release of grant funding from the NIH.

The phase III <unk> study will enroll approximately 150 adult nicotine E cigarette users in the U S and will be led by Dr. Nancy regarding <unk> Professor of Medicine at Harvard Medical School, and director of the Tobacco Research and treatment Center at Massachusetts General Hospital.

We have completed and submitted the documentation on these initial required activities and are awaiting the next tranche of the NIH grant funding to initiate the Orca one study.

The growing number of E cigarette users exceeded 11 million adults in the U S. And there are currently no approved treatment options specifically indicated for this population.

We believe this is an ideal population to continue our exploration of <unk> ability to be safe and effective nicotine addiction treatment.

I would now like to turn the call over to Jerry for our financial update.

Thanks, John .

I'd like to provide an update on our cash position as of March 31, 2022, as well as review our operating expenses for the first quarter.

As of March 31, 2022, the company's cash cash equivalents short term investments.

Unrestricted cash was $36 4 million compared to $43 million as of December 31, 2021.

We believe our current cash balance is sufficient to provide runway into 2023.

In addition to the reported cash balance and in connection with the positive marker to results. We also received approval from Silicon Valley Bank to access our remaining capital under our $25 million debt facility put in place in December 2021.

Under the agreement, we now have access to an incremental $10 million of capital that can be drawn down at our discretion over the course of the next 12 months.

No amounts have been drawn down to date.

Turning to our statement of operations.

The company incurred a net loss of $7 6 million for the quarter ended March 31 2022.

As compared to a net loss of $8 million for the same quarter of 2021.

Total operating expenses in the first quarter of 2022 with $7 2 million as compared to $8 million for the same quarter of 2021.

Operating expenses decreased for the quarter ended March 31, 2022, due to lower costs associated with the completion of the Orca two trial.

This was partially offset with the initiation of the Orca three trial in January 2022.

We anticipate our operating expenses to increase in the second half of 2022 as.

As we further execute on both the <unk> III and <unk> trials.

As a reminder, approximately half the costs from the Orca one trial are expected to be funded through a grant from the NIH.

That concludes a summary of our financial results I'll turn the call back over to John .

Thank you Jerry.

The nicotine addiction market continues to be significantly underserved and in need of new safe and effective treatment alternatives. We believe that cider cynically differentiated safety profile shorter course of treatment and compelling efficacy positions us well to make a significant impact in this large market, we look forward to bringing.

You further updates on our continued progress. We appreciate you joining us today and for your continued support.

Now open the line for questions operator.

Thank you Sir.

As a reminder to ask a question you will need to press star one on your telephone.

Your question. Please press the pound key please.

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I show. Our first question comes from the line of Francois <unk> from Oppenheimer. Please go ahead.

Hi, This is Dan on for Frank Thanks.

Thanks for taking the question.

Just a quick question on potential partnerships.

Given the strength of work.

To end.

Moving forward as you start or CAD III I'm wondering if you could add any color.

What those partnership discussions.

Look like how are they going any any color you want to add to that.

Yes, Thanks, Dan Thanks for the question here obviously.

Attribute as we as we roll along here so.

As we just discussed we're extremely excited about the topline results from the Orca two trial.

Think this is really going to be instrumental in furthering the discussions with potential partners.

Potentially.

Acquisition partners so.

It is still early days this is not something thats going to happen overnight, but we're encouraged.

Encouraged by the response so far is we have had a chance to discuss the data.

So I think more to come on that but again, we're encouraged.

Thanks, that's very helpful. Just a quick one on <unk>. One are you still on track to exceed the $2 5 million from the NIH in the second quarter.

Given NIH timelines and how they work are you still on track to receive that ahead of starting.

<unk>.

Yes, so on the Orca one study we will require the NIH grant funding to come through before we initiate that trial. This is our first grant that we're moving forward with so we are in the midst of.

The logistics with NIH and Nader this one but we do anticipate.

But things are on track. So we can initiate that trial by the end of this quarter.

Great. Thank you congrats on all the progress that's it for me.

Thanks, Dan.

Thank you.

Our next question comes from the line of Thomas Flaten from Lake Street Capital. Please go ahead.

Yes, thanks for taking the questions.

Just out of curiosity on the SCB are there any hurdles.

You need to jump through to get that money or is it purely at your discretion.

So under the terms of the new agreement. Thanks, Thanks, Thomas for the question.

It is at our discretion to take amounts down.

If we were to take any down which we have not to date, there would be some liquidity requirements that come with it but we think having access to an incremental $10 million.

It's kind of a belt and suspenders.

Proposition was a good thing to put in place with the strength of the data.

Got it.

And.

When can we expect an enrollment update on orca three.

Good question. So we initiated orca three in January of this year and so.

Yeah, I think we're encouraged with the enrollment to date.

We are moving along well.

As we had indicated on the call here a couple of weeks ago.

We would anticipate enrollment to complete by the end of the third quarter of this year. So I think within that we probably won't be giving a lot of granular updates in terms of the number of patients, but just as a reminder, the target is 750 subjects in this trial across 15 centers all in the U S.

Yes.

Great I appreciate it thank you.

Thanks Thomas.

Thank you.

Our next question comes from the line of Michael Higgins from Ladenburg Thalmann. Please go ahead.

Thanks, operator, thanks, guys for taking the questions Hello again, it was two weeks ago, we spoke on the Orca two results congrats again on those.

Im wondering if theres any investigator initiated studies that youre aware of or that are under way and do you think you'll get inbound interest.

The study citizen, a clean number or could choose out thanks.

Yeah, Hi, Michael Thanks, Thanks for the question.

So at.

At the moment, we're not actively involved in any new <unk> trials. We are aware of some that have that are ongoing.

There is and continues to be a.

A significant amount of interest around this compound. So I think as we do get inbounds and I think we will assess whether or not it's something that we would like to support and get involved with.

Thanks.

Any any planting orca two out.

You mentioned in your prepared remarks.

Two weeks ago at work towards publication, it would make sense.

A doctor regarding we'd be part of those <unk> of course.

But any other trials.

Journals.

You can get this outbreak.

The coming weeks and I think as we get more of that information out I think we will assess.

Other ways to get additional data points out into the market I think as.

Cindy had articulated on the last call.

We do see this as strong data and I think we want to work with Nancy to get this published in.

In a swift manner. So we can get the full datasets out of there, but there will be a number of data points beyond the top line results that we announced a couple of weeks ago that we think could be quite interesting as we as we move along.

Yeah, and look forward to those last one here just to confirm.

The filing assuming we've got very similar.

Review here in Orca, three where <unk> had strongly on both the <unk> and the 12 week endpoints. These co primaries.

How does it work for the application do you file the same endpoint as for any clean which is a 12 week endpoint.

And it's supplemented then by six week data or do you fly all having 612 week, how does the language workout.

Yes, Thanks, Michael hand, this one over to Cindy.

Yes, it would be both six week and 12 week as far as being approved for treatment durations.

Interesting. So you have the comparator to run a clean but in terms of the labeling can show 612 uneven.

24 week data I would assume.

Yes.

So I mean, we're really trying to get flexibility for smokers as well as their physicians.

As the arc of two showed a smoker was very motivated and quit smoking by three weeks and continued non smoking to.

Six weeks.

I didn't want to take any more treatment that would be then the six week treatment I do think as Nancy pointed out we obviously had more individuals.

Get more success the longer they were on treatment and stop smoking. It took them five six week seven eight weeks and certainly by nine weeks then they have become a non smoker.

So it really gives that flexibility to smokers and their physicians on how long.

The individual wants to continue treatment.

That's really helpful see your comment on.

We heard this two weeks ago the longer that they're on the more success, we have and I think we're looking for some patient level data that will support that.

That is that is that the case and if so is that kind of a June July timing, yes.

So what we'll have is prevalence rates on each week. So you can see as each week, who was a non smoker and who wasn't and so we do expect that to be higher as you get more treatment. It's very similar to varenicline in that in that regard.

But for those individuals that stopped tree is stopped smoking within two to three weeks, it's not that they have to continue for another nine to 10 weeks of treatment.

What the data will show.

Is that there was no risk of relapse in those individuals' if they switched to placebo or they stayed on site as clinically so those those that kind of information.

And endpoints will be in the publication.

Well, that's really helpful. Thanks, Andy.

Thank you.

I show. Our next question comes from the line of John <unk> from Zacks. Please go ahead.

Hey, good afternoon, everyone John from your entire it sounded like you were doing some commercialization research and I'm wondering what are the key factors that you think we are able to drive.

Yes.

Pfizer to get $1 billion in sales per year is there anything that they did that help.

Help them get there that you think is particularly important.

Sure.

Yes. Good question, John Thanks for calling in I mean, I think one of the things that we're seeing now which I think is still.

Interesting.

Now that <unk> has been withdrawn from the market.

Lately and.

We do have at least a single generic that is now fully available I think one it hasnt taken over kind of where chantix has been historically.

Yes.

Actively had inferior product is on pace, albeit at a lower price point than it has been historically to do a fair amount of sales I think that bodes well for the for the potential upside of <unk> <unk>.

<unk> long term.

And I think the other piece to keep in mind is frankly, just having a new treatment option there hasnt been anything new in over 15 years since chantix.

It was originally launched in I know that was a big attribute originally for that product as well.

So I think.

Given the fact that we've got as Cindy just just just talked about a shorter course of treatment.

A significantly improved safety and Tolerability profile, and very strong efficacy that should set up well.

To be a very compelling product on the market.

Okay. Thanks, and then do you think it takes a big pharma to get.

Of that $1 billion that we all kind of think about our kind of kind of smaller company do it too.

Yes.

In some sense you get in with what.

You get out what you put in.

Out of the marketing efforts I think with that being said I think there are ways to take this to market.

Without the same level of capital needs that are large pharma would do I think just quite simply the size of the market is so large even going after a smaller percentage out of the gate should still result in really sizable revenues. So I think there is.

A range here.

I think as we continue partnering discussions and look at.

What our role might be as well, we'll take that all into consideration.

Great. Thanks, John appreciate it yes.

Yes. Thank you.

Thank you.

Im showing no further questions in the queue at this time I would like to turn the call back over to John <unk> CEO for closing remarks.

Thank you and thanks again for joining us today.

We appreciate your continued support and look forward to bringing you further updates on our continued progress as we move forward throughout 2022, thanks again for joining us today.

This concludes today's conference call. Thank you for participating you may now disconnect.

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