Q3 2022 Achieve Life Sciences Inc Earnings Call
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Good day, ladies and gentlemen, and welcome to achieve Lifesciences third quarter 2022 earnings conference call. All lines have been placed on a listen only mode and the floor will be opened for questions and comments following the presentation.
If you should require assistance throughout the conference. Please press star zero on your telephone keypad to reach a live operator.
At this time it is my pleasure to turn the floor over to your host Nicole Jones CG capital Investor Relations Ma'am the floor is yours.
Thank you operator on today's call from achieve we have John vintage Chief Executive Officer, and Jerry One principal accounting officer achieved 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 statements are only predictions and actual results may vary materially from those projected please refer to achieve a document.
Available on our website and filed with the SEC concerning factors that could affect the company.
I'll now turn the call over to John .
Thank you Nicole and thanks to everyone for joining us today.
Yet again, a busy and exciting quarter for achieve as we continue to advance <unk> through the clinic and closer to becoming the first new prescription treatment for nicotine dependence in nearly two decades.
In September we announced completion of target enrollment in our confirmatory phase III Orca three trial for smoking cessation and just last week, we announced the earlier than expected completion of enrollment in our phase II Orca, one trial for nicotine E cigarettes or vaping cessation.
As a reminder, the orca three trial as the second and final randomized phase III trial required for FDA submission and ultimately marketing authorization in the U S.
The design mirrors that of the previous orbit II trial that read out with overwhelmingly positive results earlier this year.
Both trials were designed to evaluate the smoking cessation efficacy safety and Tolerability of three milligram <unk> dose three times daily over a period of either six or 12 weeks compared to placebo.
The trials also share the same primary endpoint to evaluate smoking abstinence during the last four weeks of treatment, which is the FDA is approvable endpoint for smoking cessation medications.
The outcome of Orca to further enhance our belief that <unk>. If approved has strong potential to become the new gold standard for the treatment of nicotine dependence.
With single digit rates of adverse events cited scenically and side effect profile is substantially better than what has been seen in currently available treatments.
From an efficacy perspective, the odds ratios we observed an orca two were unprecedented was six to eight times higher odds of quitting at the end of treatment compared to placebo. Additionally.
Additionally, our quit rates were impressive despite the highly addictive study population and the execution of the trial during a pandemic.
We hope to see similar results for market three and look forward to sharing those with you.
In the second quarter of 2023.
They've been continues to be an important topic on a global scale, particularly with the alarming rate of adolescent users and new data reporting the potential harmful impacts to cardiovascular and respiratory health the.
The CDC release data last week, indicating more than $2 5 million High school and Middle School students were current users of E cigarettes in the U S alone.
There are also more than 11 million adult users of nicotine vape products in the U S and no treatments are currently approved specifically for vaping cessation.
We pursued the orca one trial with the expectation that <unk> would be of interest to this growing and underserved population.
The Swift recruitment of Orca V. One appears to reinforce our assumptions of the demand for treatment within this population.
Recruiting at only five clinical trial sites <unk> target enrollment of 150 subjects was completed in roughly four months.
Regarding the design or can be one will evaluate 12 weeks of situs ethylene versus placebo.
As with the other Orca trials, all participants will receive behavioral support throughout the study.
The primary objective will be to evaluate for successful nicotine vaping cessation defined as weekly abstinence for the last four weeks of treatment with Kootenay levels as biochemical confirmation of abstinence.
Topline data from market view, one is also expected to be reported in the second quarter of 2023.
But the two trial enrollment milestones behind us we turned our attention to three key priorities over the coming months.
First continuous engagement with the Orca three <unk>, one clinical trial sites and our third party clinical research research organization to ensure data reporting accuracy and adherence to timelines.
Second extensive preparations to support an NDA filing in the U S post successful Orca three trial results, including the completion of the remaining supportive trials required required for filing.
Third commercial readiness, including launch preparedness activities and partnering discussions with interested parties, who also believes in the immense potential of cider cynically.
Also as part of our commercial readiness objective, we continue to work closely with our manufacturing partner, so pharma to ensure adequate commercial capacity at launch as we announced today. So pharma recently invested more than 3 million euros to complete the build out of a new dedicated scientists and a clean API purification.
<unk> suite and its primary manufacturing plant in Sofia.
The new API suite complement so farmers capacity to produce nearly $3 billion tablets annually.
I would now like to turn the call over to Jerry for the third quarter financial update.
Thank you John .
I will be providing an update on our cash position as of September 32022.
Reviewing our operating expenses for the third quarter.
As of September 32022, the company's cash cash equivalents short term investments and restricted cash of $18 2 million.
Compared to $43 million as of December 31, 2021.
Our cash forecast includes reimbursement from the awarded $2 5 million Grant received from the NIH to support the phase II or could be one trial to evaluate the use of data clinically as a treatment for cessation of nicotine E cigarette use.
As a reminder, approximately half of the costs from the Orca one trial are funded through the grant from the NIH.
With respect to our statement of operations.
Net loss increased to $13 1 million for the quarter ended September 32022.
Compared to $6 7 million for the same quarter of 2021.
Net loss for the nine months ended September 32022.
Increased to $31 1 million compared to $26 million for the same period of 2021.
Operating expenses increased in the third quarter with the achievement of targeted enrollment in our <unk> III trial, and initiation and enrollment in our <unk> one trial.
We expect our quarterly operating expenses will remain elevated in the fourth quarter of this year before reducing in the first half of 2023 as you look at three <unk> one trial reached completion.
That concludes my financial remarks.
And I will now turn the call back over to John .
Thanks, Jeremy.
2022 has been a pivotal year for achieve with key highlights being successful phase III trial results and completing enrollment in two other important studies we.
We are pleased that we continued to deliver on our milestones and the commitments we have made to bringing forward. This important new treatment.
Smoking and nicotine addiction directly impacts more than 1 billion people around the globe.
In the U S alone there remain more than 30 million people, who smoke and nearly half a million people die each year due to smoking related illnesses.
Analysis, we recently conducted with current smokers, who want to quit 80% overall stated they would be interested in a new smoking cessation products.
In this segment, we believe will be most appropriate for cider cynically, 93% desired something new there.
The current treatments that are available to have a high dissatisfaction rating for both smokers and prescribers and new options are long overdue.
More needs to be done to help people, who want to quit and to improve and extend their lives. We believe we have a unique opportunity and responsibility to make a real difference with cytosine it clean.
Again, thanks, all for your continued support and joining US today I'd now like to turn the call over to the operator and open the line for questions.
Thank you the floor is now open for questions. If you do have a question you May press star one on your telephone keypad at this time. If your question has been answered you confirm move yourself from the queue by pressing one again, ladies and gentlemen that star one and our first question comes from Thomas Flaten from Lake Street Capital Go ahead Thomas.
Hey, guys. Thanks, so much for taking the questions and congrats on all the progress I was just curious John any insight into and I might've missed this I apologize publication of market too.
Thanks, Thomas I. Appreciate the question. So this is an activity that we are actively engaged in and particular with Dr. Nancy <unk>, who is the primary investigator on the Orca two trial.
So we currently have a draft manuscript that's being reviewed and we hope to get that submitted in the near future.
And then on the so pharma expansion was that done specifically to support your pending.
Pending approval and launch.
That's correct. So the new API suite that was just recently completed that is 100% dedicated to situs into claim and that was.
And further and so making sure that we've got appropriate throughput as we look to move this program forward to market.
And.
I'm, assuming you guys are going to do a.
Pre pre NDA meeting with FDA and if Thats incorrect. Please let me know and is it your intention to discuss with them the ability to squeeze them.
Making data into a potential label expansion. This early or do you think there's other steps that are required in the interim.
Now, let me hand that one over to Dr. Jacobs.
Hi.
Yes, we will be looking at including the Vaping study is safety data, we won't have enough efficacy because thats a small phase two but what we would be doing is discussing with the FDA. After we get approval for smoking cessation that we would only need to have one phase III study.
Eddie.
To add then vaping onto the indication in the label.
Excellent. Thanks, guys I appreciate you taking the questions.
Thanks Tavis.
Thank you and our next question comes from Bob <unk> from Oppenheimer go ahead Francois.
Thank you for taking the question here So just wondering how.
How are you seeing generic doing.
And it's doing pretty well, how do you see any read through.
For your product and then just any update on chantix being removed from the market.
Yes, thanks, Frank So we have been monitoring.
The first generic entrant, which has been from Endo pharma and.
They did put out their Q3 earnings and I think as we've indicated previously they look to be on a run rate to achieve $300 million in sales here in 2022.
Yes.
And that is roughly 50% of the script volume that we saw with Chantix before it was withdrawn from the market last year.
And keep in mind that endo doesn't have reps on the ground there not.
Marketing this in a way that our branded product would be so I think that's quite impressive to see.
Run rate like that with what we seem to be fairly disliked product in varenicline.
In terms of Chantix the brand coming back to the market, we haven't seen any new indications from Pfizer in terms of a timing for that so at the moment. It continues to be off the market in terms of the brand and well continue to monitor to see if that changes here in the future.
Okay, and I'm, just wondering any thoughts on the implication of the generic doing well for your product.
Yes, I think.
We obviously.
It helps solidify the size of the market that we're going into so I think seeing.
Generic out there.
Selling.
Healthy amount of scripts I think does provide a nice tailwind again, given the differentiation that we see with <unk> being <unk>.
Having single digit rates of adverse events strong efficacy as well as a shorter course of treatment option.
I think it bodes well that it will resonate well in what continues to be a very robust market.
One of the things that we are we will also continue to monitor for us.
Further generics entering but so far.
It looks to be on the endo.
Available today.
Yes.
Understood and then in terms of the E cigarettes here that would be one trial is there any can you just maybe compare and contrast, the study designs between Orca and Z one arguably one and any reasons that E cigarette cessation.
And you said it <unk> work as well for.
This type of nicotine addiction.
Yes. So if we just think about the mechanism of action for cytosine acclaim.
Specifically targeting the nicotine receptors in the brain and so we think it should have applicability on a broad basis for various forms of nicotine addiction.
The data we've seen historically has all been focused on cigarette cessation. So we've got a high degree of confidence it works there, but it should have applicability, whether it's vaping chewing tobacco snooze.
Any form of nicotine addiction.
We haven't tried it there so we've got to run the experiment.
And see if we can again show that that efficacy in this in this new segment and this is from a.
Our market perspective, the category that we're most excited about I think when you look at 30 plus million E cigarette.
Cigarette users here in the U S.
E cigarette market is the next largest segment behind it with more than 11 million users. So we think it's the right place to be we see that as a segment that will only grow.
Over time as <unk>.
Big tobacco continues to.
To redirect their marketing dollars, there and as we mentioned on the call today seeing more and more data points coming out around the harms associated with E cigarettes.
We do see more and more folks in this category looking for solutions to help them quit and we think we can be a viable solution there.
Alright, Thanks, John and congrats on the progress.
Yes, Thanks, Greg.
And our next question comes from Michael Higgins from Ladenburg Thalmann go ahead Michael.
Thanks, Debra Thanks, John for taking the questions.
Grants for me as well on <unk> enrollment and the progress in your development efforts.
Question is on the so a farmer construction of the API suite.
Trying to understand what are the next steps going forward here into gaining FDA approval of that supply.
And then the obligations that they additionally, mayhaps you guys. Thanks.
Okay.
Yes, Thanks, Michael.
So the API suite, we see as a nice milestone just in terms of our partnership with Dow pharma and getting a dedicated facility specifically for our products.
And I think having that in the same location as their tablet facility.
Sofia, which is.
Less than 10 year old facility really is state of the art computer controlled.
Put their best foot forward as we think about moving this.
Forward to an NDA submission.
So I think there will be a lot of efforts as we move ahead to an NDA filing continuing to work with so pharma to make sure that they are ready for an FDA inspection.
And so that is a high area of focus for us as we drive things forward in parallel in the clinic with Orca three data coming together in the second quarter of next year.
Just to follow up with that are you able to share with us when the FDA may be coming in to take a look at that facility.
Yeah in terms of timing it will be unlikely that the FDA makes any visits until after an NDA on file silver.
So we're still no more than a year out from from an anticipated NDA filing date.
Between now and then again, we will continue to be working with so far away to make sure. They are prepared for a future inspection.
Makes sense turning to arc is the one.
What can you share with us and you may not be able to but if you could share with us any makeup to the patients that have been enrolled.
Such as how many are dual users.
<unk> duration of smoking.
That sort of thing.
Yeah, I think for this one I'll hand, this over to Dr. Jacobs again.
For this study no one could be dual users that's just too complicated.
The subjects in the Vaping study, where vaping nicotine only.
And.
The demographics and we're seeing a younger crowd obviously.
There is there are in their twenty's and thirty's versus the smoking cessation mass where in their parties fifties and sixties.
So it will be a younger population in this study.
Okay.
Thanks Sandy.
If a patient to receiving any text messages or anything unique about the <unk>.
What's called standardize behavioral support.
Yes standard there is no really standard behavioral support for vaping cessation. So we basically took a lot of the materials for smoking and applied has been in a Vaping Association. We did this with our <unk>.
Dr. Nancy regard anr of.
Key opinion leaders in the area. So the study does have standardized.
<unk> cessation material there was no like elaborate text messaging for that.
We obviously have texting as far as taking mezz.
Three times a day, that's part of the study.
But everyone has the same counseling for stopping nicotine dependence basically we're focusing on that when they come into the clinic every week as well.
That's helpful and then one last one.
If you can help with yours.
I think it was Q1, we're looking for really impaired patient.
I will finish up in the phase <unk> study.
We're on track for those.
Just we'll be initiating those by the end of this year and so they will be completed.
Sometime.
Early to mid next year.
That's great I appreciate it thanks guys.
Thanks, Mike.
And our next question comes from Jon Vander Martin from Zacks Go ahead John .
Hey, Thank you and John Gerry Sandeep. Good afternoon to you guys I wanted to ask I extend the question on the demographics of the patients that were younger any other details you can give us on perhaps associated economic makeup or something else about them that perhaps is different than the normal smoker.
Yes, we did not collect any social economic information as they came in.
We do see the keno roughly.
You may all the males are coming in maybe a little more females, but.
Yeah.
It's pretty pretty average.
The younger age is probably the one that stood out the most.
Like I said in the Twenty's and Thirty's Ware.
PNR average on rocket two is about late fifties.
Okay.
And I think the papers are actually taking it.
Immaterial amount more of nicotine in smokers are.
Does that change the potential efficacy of citizen decline.
And anyway, maybe perhaps a longer duration treatment or something maybe more effective or shorter.
Wondering if you have any comments on that while we are collecting.
The amount of nicotine in their vaping, you know theres. So many different vaping devices. So we will have that information to do correlations to see if there is any difference right now the only stratification factor is whether they at one time.
Yes, where smokers.
It couldnt be smokers, obviously and vaping, but we do have history as far as their previous nicotine consumption, whether they were small quarters, they've always been vapors those kind of demographics, we will have to be able to then.
Look at the efficacy data in comparison with those demographics.
Okay and last question is just on the cash burn might be over the next 12 months now that you've completed the two completed enrollment for the two final trials that youre working on.
Sure Yeah on the cash burn side of things as Jerry mentioned earlier on the call.
We would expect the burn to remain elevated here.
The fourth quarter of this year, just given the heavy lift sale with orca three as well as orca one.
And then as we get into 2023, we would expect that to start to come down.
As those studies wrap up through the middle of the year.
Got it alright, Thank you John I appreciate it.
Again, ladies and gentlemen, Thats star one to ask a question and our next question comes from Jim Molloy from Alliance Global Partners go ahead.
Hey, John Thanks for taking my question I was wondering can you talk a little bit about how would you characterize sort of the partnership environment here as youre getting close to the finish line has it has the dynamic changed at all.
And then what what really do you think I know, it's hard to tell with partnerships with leading triggers the partnership someone pull the trigger and advanced after the data FDA approval.
See that playing out in Europe .
Okay.
Yes, thanks for the question Jim.
On the partnership side will say, we've seen some kind of increased momentum on the other side of the Orca two results. So that that has been encouraging to see more folks come to the table.
I think in terms of.
A trigger it's always hard to know and you got to put yourself in the other shoes in terms of.
Whats going to get them over the hurdle to go ahead and move forward with a term sheet.
But we have and continue to believe that orca three as well as orca would be one is going to be an important metric.
Moving those discussions along orchids.
<unk>, obviously sets the stage for the final product profile of this product in terms of the smoking cessation indication.
I think orca, the one from a potential market expansion opportunity into a category.
Frankly, it doesn't exist today, so we have heard strong receptivity.
In terms of having the ability to move forward in the vapor category as well. So I think it's a combination of things, but we do see the milestones.
They will expect to see in the second quarter of next year being important to those discussions.
Excellent I think I think in the past you've discussed attempting to synthetically create the API versus the current three grow.
Any updates on where that stands do you think thats something that eventually will come along.
The synthesis just.
Not worth the effort given the fact, you can get it all you want from the tree.
Yes. Good question. So on the synthetic side. This is an area that we've looked into over the past several years in terms of looking for alternative ways to produce this outside of getting more plants in the ground. So far that's that's proven elusive just given what nature produces.
Not something that's easily <unk>.
Replicated in vitro. So it's something we will continue to look into it is not something that we're actively.
Flooring are researching currently but we do continue to look for other other ways.
To solve for that but so far it looks like.
We will continue to focus on natural sourcing for the foreseeable future.
And final question for me Thank you for that.
Let's say you are scientists can have some free time coming up here second half 'twenty three or at least as Arthur three runs out.
Any thoughts to the next things to bring it in if anything else makes sense to bring in.
Yes, good question.
Often looked at what might be complementary to what we're working on I think for us the.
The most seamless expansion has been into the vaping indication and leveraging cytosine a clean across.
At the moment other nicotine addiction.
But as you may be aware there could be other addictions outside of nicotine that could be applicable for scientists and our claim.
But it's something that we're always kind of scanning the horizon to see if there's other assets that may make sense that are complementary.
If things continue to progress successfully.
Yes, it's something that we will continue to evaluate.
Great. Thank you for taking the questions.
Thanks, Jim.
And at this time I would now like to turn it back to management for any closing remarks. Thank you.
Thanks, operator, and thanks, everyone for joining us today.
We're excited about continuing to deliver on our milestones having both of our.
Current pivotal trials now fully enrolled with orca three as well as <unk> of the one and we look forward to continued progress in bringing forth the trial results.
To everyone in the second quarter of next year. So I appreciate everyones continued interest.
We look forward to providing further updates in the near future.
Thank you. This does conclude today's conference. We thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.
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