Q1 2022 DURECT Corp Earnings Call
Good afternoon, and welcome to our first quarter 2022 earnings Conference call. This is Matt Hogan from direct Corporation.
Before beginning I'd like to remind you of our safe Harbor statement.
During the course of this call we may make forward looking statements regarding direct products in development.
<unk> product benefits, our development plans future clinical trials or projected financial results.
These forward looking statements involve risks and uncertainties.
Cause actual results to differ materially from those in such forward looking statements.
Further information regarding these and other risks can be found in our SEC filings, including our 10-K and 10-Qs under the heading risk factors.
Let me now turn to our financials, which were pretty uneventful in the first quarter.
Total revenues in the first quarter, 2022, or $1 9 million compared to $2 2 million in the first quarter 2021.
R&D expense was $8 2 million in Q1, 2022 as compared to $8 million in Q1 2021.
The increase was primarily due to higher clinical trial expenses and higher contract manufacturing costs for <unk>.
SG&A expenses were $3 7 million in the first quarter 2022, as compared to $3 5 million in Q1 2021.
Primarily due to higher patent expenses and higher consulting and market research expenses.
At March 31, 2022, we had cash and investments of $64 4 million.
As compared to $17 million at December 31, 2021.
That decrease was only $5 6 million, but we benefited from receiving around $4 6 million from inter call related to the <unk> deal net of our feed in the investment bank that assisted in the transaction.
If you exclude this our underlying burn rate during the quarter was $10 2 million.
With that let me turn the call over to Jim for an update on certain of our programs.
Thank you, Matt Hello, everyone and thank you for joining us today for our first quarter 2022 update.
Our primary focus at direct is on the FERC trial of black students sterile for the treatment of alcohol associated hepatitis or H.
H is a lethal and costly disease that is an unmet medical need with no approved therapy that results in about 137000 hospitalizations per year in the United States and a 90 day mortality rate of approximately 30%.
Okay.
The average cost of trading in hospitalized a H patient can range from $56000 to $151000 with many patients requiring a liver transplant, which can cost upwards of $875000.
The FDA has granted our large eco sterile H program fast track designation.
A robust 90 day survival benefit in a firm could support an NDA filing and our <unk> still has the potential to be the first FDA approved treatment for H.
Now, let's move to our development program I'd Love sequels sterile for the treatment of H any firm trial.
Our firm is directed phase <unk> study of luxury sterile in patients with severe <unk>. It is a placebo controlled double blind multinational study targeting 300 patients.
We are pleased with the progress in enrollment in our trial, we dose more patients India firm trial during the first quarter of 2022 than in any prior quarter and if april's enrollment rate continues second quarter will be even better.
It's our belief that if a firm demonstrate that statistically significant improvement in 90 day survival. It could be the pivotal study for large circle sterile and the treatment of AAV and support an NDA submission.
We have now dosed patients in Australia, France and Belgium.
We made excellent progress in opening new clinical sites in the two months since our last earnings call.
We are constantly working to improve site performance since our last call. We've opened nine new sites and closed three nonperforming sites for a net of six we now have 57 sites open and are enrolling at leading hospitals in the United States, Australia, the UK and EU.
We are nearing the completion of our goal of approximately 70 sites for the trial.
We are expanding the number of sites for this trial because a handful of highly respected U S. Clinical sites became available due to the discontinuation of an NIH trial H.
At the pace of enrollment achieved in the first quarter of 2022 will be complete dosing the last patient in the <unk> trial in the mid of 2023.
We expect the pace of enrollment will improve through our clinical site expansion clinical trial management activity and the continued lessening of the impact of Covid on the hospitals participating in it for them.
Our firm is a placebo controlled trial that has three treatment arms.
30, milligrams, and 90 milligrams or placebo sterile and a placebo arm.
Asked what the phase Iia trial patients in the upfront trial receive an infusion of sequel sterile or placebo on day, one and if they are still in the hospital on day four they received a second infusion.
The primary endpoint for this trial is 90 day survival.
The main focus of the company is to execute this trial to the highest level of quality and in a timely fashion.
In 2019, it was reported that there were 137000 hospitalizations per year in the United States for a H.
What physicians have available to them today, primarily involved absolutes and supportive care, which includes nutrition and hydration.
Corticosteroids are used in some cases it has shown no survival benefit at 90 days or one year.
There is no approved treatment for H.
Global study published in December of 2021, which included 85 tertiary centers in 11 countries across three continents prospectively enrolled 2581, a H patients with a median meld score of $23 five.
This reported mortality rates of 20% and 28 days and 31% at 90 days.
H has a significant economic cost to the health care system.
The average hospital stay for on a H patients in the United States is approximately one week with many staying significantly longer.
The average hospitalization costs for an <unk> patient is approximately $56000 for patients who survived the first nine days and approximately $151000 for those who did not survive.
Yes.
Alcohol associated Liberty is becoming a leading cause of liver transplant in the United States with the average cost of a liver transplant exceeding $875000.
With this in mind, our sequel scale represents a potential multibillion dollar opportunity that could save the healthcare system substantial costs.
Direct medical affairs team has substantially increased our ADH market outreach and educational efforts to amplify the superstar all awareness and facilitate affirm enrollment efforts.
We recently hosted the first of multiple regional a French study update meetings with our investigators and site study coordinators. It was held in San Francisco and was attended by 14 individuals from eight hospitals.
Our upcoming meeting in Chicago is expected to have 25 individuals from 16 hospitals.
We recently exhibited at three liver focused congresses, including well attended meeting at the Scripps Institute and its Pascal Arizona.
We have also retained a medical communications agency to broaden awareness of Hgh <unk> trial and lock sequence Darryl.
Let's review why we are so optimistic about the use of box newco sterile and the treatment of patients with severe <unk>.
Ph patients stay for 90 day mortality rate of approximately 30% and there is no approved treatment.
In our phase Iia trial for lunch Juco sterile and AAV patients all 19 patients, including the 12 severe <unk> patients survived.
Additionally, 14 out of the 19 patients were discharged in less than four days after receiving only one IV infusion of lifecycle sterile.
Yeah.
The prognostic score from the age of patients in this trial, including Lille and meld scores bilirubin and other biomarkers were improved compared to baseline.
Our CECO sterile was well tolerated by all the patients at all the doses evaluated in the phase Iia trial, there were no serious drug related adverse events reported in this trial.
In addition to the clinical trial results.
We also have supporting data from numerous in vivo animal models that demonstrate our sequel sterols activity against multi organ failure, which can occur in <unk> patients.
Yeah.
Marsico sterile is an endogenous epigenetic regulator it binds to and inhibits the activity of DMT 138, and three D D.
TNMP epigenetic regulating enzymes that add methyl groups to DNA in a process called DNA methylation.
Treatment with our sequester all stressed liver cells can lead to decrease DNA hyperventilation and modulate the expression of more than a thousand genes that are associated with multiple crucial cellular signaling pathways.
In July of 2019, our journey at all published a study in nature Communications.
In this study the gene transcription patterns of patients with severe <unk> demonstrated DNA methylation, altra, transco to Alex and liver cell dysfunction.
Depression of DMT, one and DMT three eight were found to be profoundly increasing Z H patients, but not in control subjects or patients with other liver diseases that were studied.
Yeah.
Our soup sterile binds to and inhibits the <unk>. This adds to the strong rationale for evaluating <unk> as a therapeutic agent for patients with H.
In summary, there is a huge unmet need and a H.
There is no approved therapy today for H patients and the 90 day mortality rate is approximately 30%.
H cost the U S health care system billions of dollars per year.
We are optimistic regarding the potential for success of the firm trial due to results from our phase Iia study.
In vivo animal model results against multi organ damage and the association of large Super Sterols mechanism of action with the epigenetic Dysregulation Dean in patients with severe a H.
We have fast track designation for the Super sterile and the treatment of H.
Given the high unmet need for hospitalized H patients the lack of current treatment options and the high mortality rate, we believe our robust survival benefit in the firm trial would support an NDA filing.
Next an update on potential indications for <unk> Super sterile beyond age.
One of the indications we are considering is Nash.
We've completed a phase one <unk> and one b trial in more than 70, Nash patients that demonstrated reduced liver enzymes fibrosis markers and liver fat stiffness and elasticity.
We do circulating facts, including triglycerides, we do sell that markers improved insulin resistance and a good safety profile.
Other potential additional indication for helix juco sterile that are supported by the preclinical data are acute kidney injury.
Titus stroke sepsis and others.
We are currently carefully planning our next indication for our secret sterile.
Yeah.
Next deposit there.
<unk> is a novel non opioid sustained release local anesthetic.
Proved to produce post surgical analgesia for up to 72 hours following arthroscopic Subacromial decompression.
We license the development and commercialization rights for <unk> in the United States to Intercall Pharmaceuticals.
We selected <unk> as a commercial partner because of their strong commercial team and together we are focused on the post surgical pain market.
<unk> remains on track to launch polymer in the United States during the second quarter of this year.
Correct will receive a $2 million payment upon first commercial sale with a potential of up to a $130 million in additional commercial regulatory and intellectual property milestone payments as well as a tiered low to mid double digit royalties on net product sales in the United States.
In summary, we continue to make great strides with a firm we have 57 clinical sites up and running in the last two months, we've added a net of six sites.
We now have clinical sites opened in the United States, Australia, the UK and EU.
At the pace of enrollment achieved in the first quarter of 2022, we would complete dosing the last patient in the trial in the middle of 2023.
We expect the patient enrollment will improve through our clinical site expansion clinical trial engagement activities and with the continued lessening of the impact of Covid on the hospitals participating in the firm.
Our confidence that the FERC trial will be successful is driven by our compelling phase Iia study the mechanism of action of Marsico sterile was tied directly into a H <unk>.
And our multiple preclinical animal studies, where we saw a profound survival benefit and relevant acute organ injury models.
We have fast track designation by the FDA for our <unk> program.
We expect that if we achieve a robust survival benefit the study would support an NDA filing.
Beyond <unk> the mechanism of action for a superstar I'll provide further scientific rationale for developing treatments for other acute organ injury and chronic diseases.
We would now like to take any questions that you might have.
Okay, ladies and gentlemen, there are no people like to ask a question. Please press star.
One on your telephone keypad.
To ask a question press star one on your telephone keypad.
And I would just give me a few moments for the kit about.
Yeah.
Okay. Our first question is coming from Kristen <unk> with Cantor Fitzgerald.
Tim Your line is open.
Hello, everyone. This is Rick on for Kristen. Thank you for taking our questions. We've got two for you today a recent global study in the American Journal of Gastroenterology concluded that meld score was better at predicting mortality.
And <unk>.
H versus Mds with findings like this in mind, how are you thinking about how the field might assess the totality of data in the affirm trial, including endpoints such as meld.
For Laura Laura Sukkoth Darryl.
I think that's a that's a great question great. Thank you and I would note that in our.
Phase Iia trial be meld scores the average meld score medium meld score was $24 five but I think the best person from our team to answer that would be normal so.
Thanks, It is a great question.
They need that.
That is a very specific meaning increase the score at enrollment and you will recall that the study we're doing the endpoint is no longer.
A soft endpoint like Lille score meld score.
Police survival.
It's designed as a pivotal trial.
With a hard endpoint.
Most hard to include <unk>.
Yes.
Thats My view discriminant function as any enrollment criteria and because it is a pure measure, whereas meld score includes creatinine a number about the scores include other factors. So they all contribute to the tenant.
The ability of the school to predict survival.
From an acute episode, but really what we're interested in is the actual survival at the end of 90 days.
Yeah, I think it's also interesting from the from the literature Thats been published more recently <unk>.
Further affirmation that the relationship between any given meld and survival at 90 days as well, which is which is also I think a.
Good point to take it.
Excellent and maybe just one more you mentioned the activities ongoing with E Medical Communications agency that you've contracted.
Could you talk about the specific goals Youre looking at when it comes to education space do you view talking to physicians about sort of the lack of efficacy from steroids and HSN main goal do you plan on kind of talking about the clinical results for Laura Chico sterile to date or are you kind of looking at in all of the above approach.
<unk>.
I think we are definitely looking at all of the above to help kind of enhance awareness of <unk>.
Of this therapy as it approaches although.
I would from most of the partners. We've spoken to people are already has been awareness, but normally having in the not too distant past couple of years ago being one of those thought leaders out in practice.
Would you say to that yes.
Yes.
So the.
At the moment, our focus is actually on.
Getting patients enrolled so this is not an unknown.
Well recognized among herpetologist have among lipid doctors and transplant physicians. This is very well known.
What we are trying to do is educate people who refer to transplant centers and herpetologist. So that they seem to patients with these a lot of times. These people have seen is.
Patients with a poor prognosis.
Nothing to be done.
The old data on not be transplant candidates is still lingering. So a lot of people that are out of the field. Just view. These patients is ahead of us being hopeless.
May not consider transferring them. So we're trying to.
Reach out and say there is there is something that can be done. This trial is ongoing. Thank you have a patient factors. Please refer to one of our centers and as Jim mentioned, we have since it is essentially across the country.
So neely I think in nearly every major city, we have a center. So that's that's the focus of our education in terms of our in terms of our outreach to our investigators and they all vary.
Sophisticated are meeting.
Meetings with them are really focused on what are the best practices. What are the techniques that are helping them get patients enrolled in the study.
The enrollment in the study is always somewhat different from the actual number <unk> because the <unk>.
Entry criteria are quite strict and we're maintaining those for the clinical trial.
Okay. Our next question is going to come from.
Thanks, Bob pointed at Oppenheimer.
Your line is open.
Hi, Thanks for taking the question just in terms of enrollment here is it fair to say that this might be a little ahead of expectations based on the prior discussion about completing enrollment in mid 'twenty, three and now maybe having last patient dosed.
In mid 'twenty three if you do have last patient dosed in mid 'twenty three what can you just remind us what that means for potential timeline to read out.
Yes first off I'll start with the latter part first Jeffrey rollout last patient in the middle of the year from that last patient being dosed. There's a clock of 90 days and so was that it would be last patient last visit and then.
We will be cleaning up the data, which we are doing real time, right now, but there'll be a finalization of cleaning up of.
The database before locking and then an analysis, which will take some amount of time I don't want to project at this point in time, but I do know that normally and the team are working in real time to ensure that the time from that last visit to when we can break the code and analyze the data it's going to be as short as possible.
I don't want to to come out and project anything other than the middle of next year at this point in time, but just to have you know that we are.
Certainly.
Domestic and hoping that we can do better than that and the team is striving towards that every day.
And.
So far it looks like the ones might be going in that direction, but we'll have to wait and see.
No Amit would you add something to that.
No I think I think that's exactly right.
And the clinical the clinical team is working very hard.
Have a phenomenal completion rates in terms of paperwork for the patients.
We're trying to make sure that when we.
We get to the end there is a minimum delay between.
The data rep.
Data lock and the and the final analysis.
Okay, great. So just to be clear so the changing the language from complete enrollment in mid 'twenty three to last patient dosed in mid 'twenty three.
Pretty similar it's not necessarily too much ahead of it.
It's kind of in line, if anything maybe a little incremental but nothing major here.
But right now we're holding to our original.
Timeline, but with the potential of doing better.
Our next question is going to come from Edward Art.
C wainright.
Your line is open.
Hi, everyone. This is Thomas Yip, asking a couple of questions for Ed.
Perhaps first.
Fourth firm study in bromine.
As you outlined.
Last patient dosing expected net 23.
As I previously discussed.
Just on pace of enrollment in first quarter 2022.
It sounds quite.
Positive pace.
Wonder if you could provide specific more quantifiable and number of patients enrolled in the quarter and perhaps.
The rough percentage.
Congress.
Firm study enrollment so far.
We gave that update last time, saying, we get hit 100 patients because it was one third of the way through we don't wanted to beginning.
Such frequent level youre going to have changes.
The weekly or monthly rate, but that's why we tried to give as much color as we could within the bounds of what seemed reasonable and so.
We stated that that first quarter was our best quarter, yet in the second quarter is starting off to be even better. So that is what we can say at this point in time.
And Thats, what we consider our next major milestone.
Enrollment and I think we will make that announcement at that time.
I think that's the best we can do for clarity right now.
Got it.
We understand that.
Perhaps another question for enrollment.
That's new.
Sure.
Part of the the first patients have been enrolled in Australia, just one just wonder based on.
Your experience with the all of the sites so far.
The officers any seasonality trend.
New cases.
Of course.
I said closings patient enrollment.
Given Australia is approaching winter months.
Yes, it's a good question I don't know normally you're closer to it than I am are you seeing some seasonality or some things associated around holidays that kind of thing.
Yes.
Interesting question and we haven't.
See seasonality.
There is quite a lot of variation.
Weak to week and month to month, but I havent noticed that it's particularly seasonal.
So youre thinking people may drink more uncertain holidays that.
Certain times either lowest stressful.
We haven't really seen that.
We have seen a major effect of Covid.
Covid that seems to be easing up a little and so so we're.
There was a tremendous block in getting patients to hospital.
That seems to be easing. So I think that will have more of an effect in the seasonal.
The seasonal effects.
I think that's a very good point, yes, we know.
Our investigators to almost all of them have described circumstances, where the hospitals were challenged during during Covid, maybe Robert you can give a little more light as to what what it was like and what it's now how it changes.
So we had.
With Covid.
Especially early last year, a lot of hospitals wouldn't allow non essential staff in so the coordinators werent allowed to come in than when they came back.
What we noticed is that patients were delaying coming to the hospital. So if someone is drinking and saying I'm not feeling very good.
Maybe I should go to the hospital, but they're afraid they may stay home and drink longer and then by the time they come in there.
Much much more.
Outside of the criteria.
This study so we had a lot of that we had some hospitals that just block transfers for a while.
And so one of our really excellent sites.
For a while just couldnt accept any patients and a lot of this trial is driven a lot of herpetology for that matter is driven by referrals from peripheral hospitals through these major centers.
Next slide we have another question coming from.
At this point with Oppenheimer.
Your line is open.
Alright, Thanks for just an extra one here you talked about the goal maybe I think it was over 60 and now its around 70 based on the NIH trial that stops for ADH anything publicly.
Publicly disclosed there as to why it might have stopped has anything to do with enrollment difficulties or any color there no.
I don't want to give any additional information other than it was.
It was up it was unfortunately stopped for not being effective.
Okay perfect. Thank you.
Yes sure.
Our next question is going to come from Jeffrey.
Fiber with Keybanc advisors Jeffrey your line is open.
Thank you and gentlemen, thank you for taking my calls I have two questions.
Jim you told us that you might give us an update when the next major benchmark or hurdle might be reached on the trial you shared with us at the 100, the one third marker.
The next hurdle going to be at the halfway Mark.
[laughter].
Good question.
Question.
That's an excellent question, but I think I, just need to wait and see.
When we get there, but yes, youre not too far off thinking in those kind of terms.
If you look at our.
We're filling up your tank with gas or whatever.
Barry Thank Amit.
It's not unreasonable.
Alright.
Thank you.
Second question, a little more of an administrative one but one that impacts shareholders.
It's been a while since the direct share price has been under a dollar can you.
Remind us what your.
Timelines are in terms of happy to take some action.
Or to get the share price above $1 through reverse split or through market action before there would be any delisting issues.
Yes.
Unfortunately that we.
We saw it.
Reasonable market cap, but just the unfortunate thing is we have.
Because of the long.
The history of the company a great number of shares out there and so our price is where it is in this current market.
But we feel very comfortable where we are from a financial standpoint at this point in time with regard to the.
To theirs.
Appointed six months, which I think comes in the mid of this year, a little bit past the middle of the year and then and then you have another 180 day Grace period, I don't know, Matt do you want to speak to that.
Yes, just briefly I think.
If the stock price goes over $1 for 10 consecutive days before August stays then we're kind of out of the penalty box.
As Jim mentioned, we have another six months to get there and one other way of getting there would be to seek shareholder approval to do a reverse stock split.
NASDAQ would accept that if you have to go that route.
I can tell you.
Sure.
We are working on initiatives and things to hopefully not allow that to happen, but nevertheless.
Yes.
Right. So so August .
Steve I think you said is it.
Is kind of the first penalty box date, so we've got quite a bit of time between now and then.
Yes, yes, and even than theirs.
Solutions.
Okay. Thank you.
Yeah.
Okay and the question we are out of time for questions.
Okay, well, thank you Lisa and thank you.
For everyone listening and as always if you have additional questions. Please feel free to reach out and we look forward to talking to you all soon take care Bye bye.
Okay.
Client may now disconnect.
Yeah.