Q3 2022 Chimerix Inc Earnings Call
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Good morning, ladies and gentlemen, and welcome to the Tri marriage third quarter 2022 earnings conference call.
I would now like to introduce you to your host for today's call Michelle Ash Polito, Vice President of strategic planning and Investor Relations at Chime Eric. Please proceed.
Thank you good morning, everyone and welcome.
This morning, we issued a press release on our third quarter operating update you can access this press release in our investors section of the website.
With me on today's call are President and Chief Executive Officer, Mike Sherman, Chief Medical Officer, Alan Melamed, Chief Financial and business Officer, Mike Andriole, Chief Science Officer, Randall linear and our Chief Technology officer of an up or down Josh Allen before we begin I'd like to remind you that the statements made on today's call.
Forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 and are subject to risks and uncertainties and other factors. These risks and uncertainties and other factors could cause actual results to differ materially from those referred to in the forward looking statements. Please refer to our filings with the SEC for a more complete disclosure of these risks and uncertainties.
At this time I'd like to turn the call over to our President and Chief Executive Officer, Mike Sherman.
Good morning, everyone and thanks for joining the call.
Third quarter was really a watershed period for claim Eric's, we recorded the Companys first product revenues.
Cured substantial non dilutive funding for our oncology development and getting clarity with the FDA on the design of our all to all one phase III action study.
Together these milestones position <unk> as an oncology focused company with the financial resources to complete our late stage program, while progressing our pipeline of promising early stage assets.
This is precisely where this management team has deep expertise and a track record of creating value for both patients and shareholders.
Let me begin with a brief recap of our sale of Tim Baxter to emerging bio solutions.
As a result of some nimble in late stage negotiations with BARDA, we were able to improve contract terms and increase the aggregate size of the contract and our upfront payment.
<unk> benefits from having a sizable upfront payment while we're moving the downside risks that BARDA doesn't choose to stockpile comebacks of beyond the first procurement.
Emergent is.
The industry leader in delivering protections against public health threats through the execution of government procurement, so they're really the ideal partner to maximize the future potential ups and backs up and.
Importantly, <unk> will continue to benefit through milestones or double digit royalties should BARDA exercised future procurement options or additional international sales are recorded.
I'll focus the rest of my comments on all 201.
Well the alignment from the FDA on our planned study design, we're excited to be launching the phase III action study at the annual society for neuro oncology or Snow conference taking place later this month and Tampa, Florida.
This is an ideal forum to enhance engagement in this study with an audience of the worlds leading neuro oncologist. This is a small tightknit community of key opinion leaders, who are already aware of molecule, one and its potential and already creating momentum for the study of launch.
We collaborated with many of these physicians to design a trial with a high probability of success in multiple paths to achieve success quickly.
We view the probability of success for the action trial is higher than that of other phase III neuro oncology trials.
Our phase two data demonstrated single agent durable responses in the relapsed setting, which strictly follow the fda's guidance for patient selection.
That approach to patient selection allowed for the isolation of single single agent activity undoubtedly made this an even more challenging treatment setting to generate responses.
In that context, the durability of these responses even more compelling.
Among responders median time of eight months the declaration of tumor response, plus an additional median of 11 months durability meant that patients on average experienced more than 18 months of tumor regression in the disease, where life expectancy. Upon relapse is less than six months.
Likely driven by this durability. This compelling evidence of change in disease progression. Among responders included consistent and strong association with other clinical endpoints, including overall survival.
To be specific among responders no patients died within 24 months among non responders, none survive that long.
Again this is in a setting where median survival is less than six months following relapse.
As strong as this phase two data is there are a number of aspects of the phase III trial that we believe will actually enhance our ability to see a positive efficacy signal.
Typically there is an increase in heterogeneity among patients as you move to a larger trial for the action trial. This is controlled through the selection of the genetically defined target population.
Separately, we observed in the phase two relapse setting. The response rate was actually the highest among those patients whose disease was relatively less advance meaning their tumor burden tended to be lower and their performance status tended to be better when their recurrence was deferred.
In an earlier setting our phase three will focus on this very population, providing more time for the drug to have effect.
The safety profile of <unk> 201 has also opened the door for the inclusion of a more frequent dosing arm in the phase III trial, providing another opportunity for enhanced effect.
At the same time addressing the principles of the Fda's project Optimus.
While we launched this important phase III study will continue to work closely with the FDA to determine if there's a potential accelerated regulatory path based on these strong phase II results.
We have a meeting scheduled with the FDA for this discussion.
And in the event, we pursue that path and are successful we will use the action study as our post marketing confirmatory study in that filing.
[noise] combination drugs or insufficient wash out periods for onto a one the F. D. A specifically defined our inclusion criteria to ensure washouts and we confirmed responses too long two O one mono therapy through blinded independent central assessment.
Fourth they expressed uncertainty around dose optimization work of other programs.
In our case in addition to phase one work or inclusion of a second dose provides dose optimization in the phase three study.
And finally, they cited poor enrollment in phase three four other programs and in our case, we expect to have the actual trial, well underway and enrolling outside the U S. During the potential review period.
While each of these points speak to our positioning for accelerated approval. They also provide evidence for why we have more confidence in phase three success relative to other programs.
With all of that said, we know the F. D. A has raised the bar for accelerated approval and so that's why we're seeking additional clarity on their position now that they have more visibility into long two O. One safety and we're aligned on the phase three plan.
Will determine our regulatory paths following that meeting and share that with you before year end, whether we rely on the actual trial for first approval or have an opportunity for an accelerated path, we see tremendous value for patients and shareholders.
With that I'll turn the call over to Mike Andrey All for review of our financial results Mike.
Thanks, Mike and good morning, everyone as Mike mentioned earlier, we successfully executed product sales and amount of punishment Bucks. So during the third quarter <unk>.
<unk> $270 million amount dilutive capital to the organization an amendment cash balance that's September 30th of $285 million.
Our primary strategic focus remains the development of our lead program at two O. One.
Which under our current plan is fully funded through all clinical importance symptoms potential commercial launch. Nevertheless, we will continue to exercise discipline in our allocation of capital. For example, we are relying primarily on external mountain dilutive sources of capital to fund our earlier stage pipeline programs.
Such any acceleration of investment in those early programs will follow promising data in the meantime, we remained disciplined with spend across the organization as we complete the transition of 10 Bucks a support to emergency.
While the company is focusing its development pipeline on oncology may also be opportunities to capture value from our legacy anti viral library using external funding.
As part of the ongoing collaboration with the rapidly emerging anti viral drug development initiative or ready at the University of North Carolina Chapel Hill.
Ready anti marriage for recent co recipients of a 2 million dollar grant from the state of North Carolina to fund preclinical development C. M X 521.
Potential treatment for Sars, Kobe, too and or other novel Corona viruses.
This funding is sufficient to support development of the program towards next value inflection.
Let me now turn to the financial results for the third quarter ending September 30th 2022.
Farmers recorded net income of $241.4 million and will utilize our net operating losses to offset federal tax liability associated with this symptom.
I didn't come equates to earnings per share, both basic and diluted a $2.75 for the third quarter of 2022.
In comparison, we recorded a net loss for the third quarter for 21 of $18.6 million or a loss of 21 cents per basic and diluted share.
Research and development expenses increased $15.3 million for the third quarter of 2022 compared to 13.8 million for the same period in 2021. The main driver of this increase is the ongoing development related to <unk> two O. One.
General and administrative expenses increased to 5.3 million for the third quarter of 2022 compared to $4.9 million for the same period in 2021.
But <unk> two emergent was recorded as an approximate 230 million dollar gain on sale as mentioned earlier, we expect to utilize in our wells to offset any federal tax liability and will incur nominal state tax <unk>.
In closing aware in the strongest financial position come Eric's has been in for years will continue to invest in our clinical development programs with financial discipline and are confident that such investment will maximize value for both patients and our shareholders would that overview I'll turn the call back to Mike Sherman for closing remarks, Mike.
Thanks, Mike what we've described here is really unique risk reward opportunity. It starts with a durable single agent objected responses and a deadly disease and a very challenging relapsed setting.
Phase three trial that further derisks clinical outcomes.
A far lower commercial risk profile than most oncology programs have and without a financing overhang.
It is important this is a management team that's delivered on the same formula before and and and that was to the great benefit of both patients and investors.
Without operator will open the call to questions.
If you would like to ask a question simply press star followed by the one on your telephone keypad.
Your first question comes from the line at Mare right cost with Jaffray's. Your line is open.
Hi, Good morning. This is Kevin <unk>, thanks for taking our questions.
Just first question on the meeting with FDA. This quarter could you just talk about you know what's new since that you will discuss with them since your last meeting you mentioned.
New safety analyses progress on the phase three are there do you have any expectations on what the F. D. A might want in terms of.
Sparkle data are comparator data as well.
Sure I'll start that in and then I can have the Alan and Josh add Uhm recall that we had received some previous feedback just highlighting the risks of an accelerated approval process and we have reported that back in ne what was interesting at that point is we really hadn't shared.
We hadn't completed the analysis of of the 211 patient safety data set so it was really premature for any conclusions to be drawn about risk benefit and so what's and the other thing that was not in hand at that point really was a phase three design.
That was agreed upon with with the F. D. A so those are really the two primary <unk> <unk> <unk>.
Elements of new information that comprise this briefing document. This is the first briefing document that we put together essentially to make the case for accelerated approval and and and maybe I can.
Hand, it over to Alan to highlight a little bit of that safety data, which I think is really important contacts for hold I'll make that risk benefit tradeoff.
Yes. Thank you, it's a long moment.
<unk> one of the the data that we have said previously FTA was more high level SA data. We wanted to have more of a thorough evaluation of all address events and that was it.
Including a dose discontinuation dose modification then you can see the data that we shared it with us.
Part of the <unk>, Oh, sure that dose modification into us Redactions and just intuition I really rare. So safety is really not an issue of <unk>.
Furthermore.
F D. A did ask <unk>, how can a case studies in order to be supportive.
<unk>.
NDA submission.
And part of this will be an update of the profits being made.
With these trials to show that for you will be ready for Nfpa's mission to back to 18 Justice.
That's a good point Allen a lot of what you hear in these in these hodac meetings is a replay of the F. D. A sort of asking for things are making commentary that sometimes sponsors don't don't respond to and in our case <unk>.
Starting with the notion that it was the F D a that defined for us.
The way we look at responses in this in this efficacy analysis that we've provided and then as Allen said numerous preclinical experiments that had been all been ongoing over the last year and a half which are responsive to some of the early meetings we had.
Just after acquiring the the the the the product the company and and so being able to show them essentially that we're doing everything that they've asked us to do as as part of that part of that dialogue.
Okay. That's really helpful. Thank you, Mike and you know just as a follow up for for the Buffets. Three do you have alignment with the F. D. A on how many pediatric patients should be enrolled in any any general enrollment expectations in that population versus adults.
The the protocol includes both pediatric in adults. So we don't have specific parameters for for you know what's required for for each similarly, we have we have pediatric and adult data in the.
In the in the data set that that we have now from the phase two trial, but but again there there's not a specific requirement they're working with the F. D. A is now a S. As everyone is on on the sort of diversity.
Objectives for for all clinical trials, but that's that's it I think differentiate it from the pediatric adult split I would expect that trial to be predominantly adults that include a meaningful portion of pediatrics as well.
Hey, Mike if I can add one of the reasons why you expect this more to keep your dog with me, though is that we are specifically excluding a population.
D I T J.
Just cause serious intrinsic punching going on us, which is the predominant for the pediatric.
Pediatric space.
That is they are split it for several reasons one of them two of them is that there are several ongoing trials with the I P to you right now and therefore, we didn't want to be in competition with those trials that are going on with different groups.
Great. Thank you and I'll hop back in the queue.
Your next question comes from the line of Noreen <unk> with capital one.
Your line is open.
Thanks, Hi, good morning, So <unk> sticking to answer a line in that face reaction study I was just wondering can you remind us are you also including patients who have the mutation outside the midline.
Alan I'll go go ahead.
Yes, we are allowing patients with the mutation.
The main criteria to be is they need to have a mutation they need to have received radiation therapy and they needed a randomized two to six weeks from the staff or the radiation Supreme pretty open some of the exclusion criteria include as I mentioned before patients with a D.
P G as well as <unk> disease.
Mmm.
Mm mmm.
Mmm, Mike mentioned this in in the earlier comment about the heterogeneity of the peace and didn't need alea setting. So can you gauge you know who might be responders or necessarily resetting or not yet.
Yeah can you clarify your question.
I take questions or go ahead.
Oh I was just wondering if if you're able to day too which patients might actually be the responders.
Yeah, especially the data.
Right Yeah. The data suggest from our phase two trial that it is those patients who have better performance status have less.
<unk> disease burden at maybe fewer tumors smaller tumors all of those things characteristic of what you'd expect to see them in the population that were enrolling I think there were we we allowed performance status of below 70 on the scale that we use that and there were seven patients in the fifth.
<unk> the the phase two dataset, none of those patients respond to those are the lowest performance status that performance status is not included in the phase three trial and frankly, that's not gonna limit necessarily the the the enrollment much because for the earlier setting you would expect a performance status to be <unk>.
Fire anyway, so <unk> and any of that that we do believe that going to that earlier line, which essentially during the.
To watch and wait period following radiation gives the the best opportunity for two O one activity and as I say, we saw that translate to responses, which led to both survival performance status improvement and any of that.
And the ability to to see an increase the reduction in steroid use.
Mmk and can I add on that tour and this and this population we're gonna be doing a century review before they come on the status window evaluate this in random I seven one of the challenges are looking at the responses and a single Orange tabby and theater, so close to radiation, it's hard to identify.
Typically if the results you see is due to your childhood itself.
<unk> or a combination and therefore their criteria would you lie to the phase two study for our 50 group <unk> very strict to isolate the effect of this and a random I study now you can see did you have any additional effect due to the <unk> controller.
Okay. That's helpful and just one more I was just wondering.
Mentioned in the past that you know obviously this mutation is routinely tested for here in the U S would you say that also holds true X U S. You know would you assume they may be bottlenecks in terms of patient <unk> uhm, if if there if it's not.
It is widely maybe I can.
Yeah go ahead, it's true in Europe , as well, but uhm Allen, maybe speak to the enrollment window and and how we expect that to play out.
Yeah. So one of the advantage of the trial designs and we have a we actually met.
With several numerous doctors that's a <unk> European neurology meeting is since we're allowing a time to start screening patients. Upon the initial startup radiation therapy, you have a long time to get the test for that so.
Most patients.
All patients that are routinely tested.
What's the speed of when you get the tests back and if we had done the trial, where you randomize immediately at the after <unk> radiation.
Lost a lot of patients because they wouldn't have got essential.
<unk> since we have a longer window to randomize uhm everyone's here that this is gonna be very easy to do <unk> testing. This population in the country that we're going to standard.
Okay, but it also it.
It also will allow for for more referral.
The component of of the of the enrollment in other words.
Patients who might start at a community center, where they can easily administer the radiation following radiation than those physicians.
Will will more likely refer them on to a clinical trial anyway, and they were able to oversee their their initial treatment that'll that'll I think support enrollment as well.
Mmm alright, thank you I'll I'll call back in.
Okay.
Your next question comes from the line of add White with H C. Wainwright.
Your line is that correct.
Good morning, Thanks for taking my questions.
On the actual trial, you mentioned that there's going to be in term readouts.
I'm curious as to if these readouts would be made public.
And.
But the Readouts assess.
Assess the two different doses and perhaps discontinue one dose for fast results.
I'll speak to the the disclosures and then and then Alan maybe you can speak to the nature of the the the stopping points vs versus others, but we we we will only be unblinded to data when it is.
When it is final so for interim.
Really assessments over overall survival.
Obviously there'll be there'll be nothing to report I think that that uhm as it relates to progression free survival that could actually be the basically if it don't get accelerated approval based on the phase two data that is incorporated into the phase III design as an early end point for that read out so that that data will be a single read out and we will.
The final when when completed Mandy the basis for a submission whether we report that out publicly probably wouldn't but would report out the the the the the high level and point and and our intention to move forward with the regulators to review that.
And thanks, Mike I'll I'll address the question of topic. So we specifically we have built in safety analyses that if there is an issue and the only way unexpected with the the higher dose is not tolerable.
Stop that arm, yes.
Copay. According to your guidelines, we're getting to the D M C independent dancing.
Guarding the <unk> each arm. So we have six one decided they wanted a two 625 they won and then to control each independently powered against the controller.
You actually have multiple shop phone call. So you have.
The first.
Two interim analyses for survival, which if positive will claim significance of this we also have a full analysis for progressive with survival, which is one final which is also independently powered four H R.
Okay. Thanks Allen.
And just a question.
On the <unk> <unk>.
There's $136.5 million a potential milestones I'm just wondering if you can discuss watch.
Potentially triggers these milestones.
Sure I'll <unk> responded that one.
Sure there are four milestones of $31 million each add that are individually triggered by options in the procurement agreement.
Between <unk> and emergent so <unk> trigger the next option for additional procurement that would trigger a 31 million dollar milestone payment from emergent two <unk>.
Really at the time of of the option, regardless of when that products actually delivered until the stockpile that that payment would be triggered so that gets to $124 million and then the remaining 12 and a half million are associated with the development milestones of the <unk>.
<unk>.
Okay. Thanks, Mike those are all the questions I had her.
Your next question comes from the line of Joseph film with Carolyn.
Yeah good morning.
Good morning, and thank you for taking my questions. Maybe the first one just on if I know accelerated approval is the upside scenario here, but in the deck. It looks like your guiding two in H two twenty-three regulatory submission if that is possible. So I guess what will be needed outside of the green light from the F. D. A to prepare this package is it the P K info.
A nation that Ellen mentioned or is there anything else outstanding that would take some time.
Yeah. There's we had mentioned this before some of the the Colin farm work in particular, there's a little bit of C. M. C. That'll work ongoing that would wrap up in the first half of the year I think one of the just to give an example, I think.
<unk> Q T analysis is is one of the final steps in and and that Clinton farm work that is required. These <unk>. These are all requirements that we identified and documented in our in our initial meeting. So I guess it was like a year or more than a little bit more than a year ago with the with the F D a and I've been <unk>.
Doing that work ever since all of those all of that analysis has has gone very well, so far including and not the least of which was the healthy I'm healthy volunteer dose escalation, where we were able to it's pretty rare that you can do a healthy volunteer oncology safety assessment.
And and in that case I only saw grade one toxicity emerged so uhm that that worked we expect a wrap up in in the first half of the year and that is essentially gaining too two submission. We would expect if the conversation goes well with the F D. A uhm here.
This near Attorney and we would have a more specific PND a meeting where we would just finalize all of the elements that they expect to see on the idea that would happen.
And the first half of next year.
Perfect and then maybe now that you have the cash from 10 Bucks off as soon as great. The <unk> two of one trial, but are you thinking about doing any opportunistic V D to kind of expand your footprint oncology or how are you thinking about the pipeline.
Well I'd like to respond to that.
Yeah could you you know our our first priority is to make sure. We've got you know cash them and Ah capitalization through all the clinical importance for the action study you feel good about that and then potentially through a poodle commercialization and some scenarios profitability.
The company they're likely.
<unk> could be opportunities to invest further in the pipeline and roller evaluate any opportunity to enhance shareholder value or whether that's internal or external but our our priority right. Now is making sure. We've got two O. One fully funded and will will evaluate other opportunities.
<unk>.
Perfect. Thank you very much.
There are no further questions at this time I would like to turn the call back to Mike Sherman.
Thanks to Angela and thanks, everyone for your time today, we look forward to providing additional updates between now and the end of the year [noise] have a good day.
This concludes today's call you may now disconnect.
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