Q3 2023 Durect Corp Earnings Call
Good afternoon, everyone and welcome to the Durect Corporation third quarter earnings Conference call.
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I'd like to turn the floor over to Kim.
It's funny, it's all officer. Please go ahead.
Thank you.
Good afternoon, and welcome to direct Corporation's third quarter 2023 earnings conference call before we begin I would like to remind everyone of our forward looking statements. During the course of this call. We will make forward looking statements regarding our results and clinical data from the affirmed trial development plans for Lars who go sterile expected product benefits.
Market potential regulatory plans potential regulatory approval and the Companys financial projections.
These forward looking statements involve risks and uncertainties that can cause actual results to differ materially from those in such forward looking statements, including the risk that future trials of burst newco sterile do not confirm the results from the affirmed trial.
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.
To begin I would like to review, our third quarter 2023 financial results.
Our total revenues in the second quarter or third quarter were $1 7 million compared with 12 million for the third quarter of 2022.
This difference was largely due to the recognition of $10 million of milestone revenue related to our licensing deal with in a call that we recognized in 2022.
R&D expenses were $7 2 million compared with $9 9 million for the prior year. The decrease was primarily due to lower clinical trial and contract manufacturing expenses for luxury cars sterile and the elimination of feasibility programs up partially by an increase in spending on other R&D projects.
SG&A expenses were $3 8 million compared with $3 9 million for the prior year, so essentially unchanged year over year.
As of September 32023, we had cash and investments of $39 1 million compared with cash and investments of $43 6 million at December 31, 2022.
During the third quarter, we completed a registered direct offering raising $13 $9 million in net proceeds.
Our cash burn in the third quarter was approximately $9 $7 million, excluding proceeds from the offering.
We believe our cash on hand is sufficient to fund operations through at least the middle of 2024.
Now I would like to turn the call over to our CEO, Dr. Jim Brown for an update on our programs.
Thank you, Jim and Hello, everyone. Thank you for joining us today for our third quarter 2023 update.
Last week, we announced the unprecedented topline results from our affirmed phase <unk> clinical trial, which evaluated their serco sterile and alcohol associated hepatitis.
The affirmed results showed a clinically meaningful reduction in the key secondary endpoint of 90 day mortality from marsico sterile compared with standard of care.
To my knowledge no previously controlled trial has demonstrated an improvement in mortality of this magnitude in this devastating disease.
We also saw an encouraging safety profile part of our Sukkoth draw with a low number of adverse events for the active arms as compared with the standard of care.
We have reviewed the affirm data with many we're now in Herpetologist and Ah's thought leaders.
These physicians are excited by the compelling reduction in mortality at 90 days in the large eco sterile arms.
They were especially impressed with the data from the U S patients and the safety data from the trial.
Okay.
Okay.
Our phase <unk> trial was a placebo controlled double blind multinational study with two active arms dosing 30 milligrams and 90 milligrams of block Zuko sterile and the standard of care arm of approximately 100 patients each.
When comparing against the standard of care, we allowed the physicians to utilize their standard practice for treating <unk> patients.
Which allowed for the use of corticosteroids. In addition to supportive care such as fluids nutritional support and antibiotics for infection.
In total we randomized 307 patients with severe alcohol associated hepatitis.
These were patients with meld scores ranging from 21% to 30, and madry discriminate function scores greater than or equal to 32.
We enroll patients in our firm through a global network of clinical sites, including leading hospitals in the United States, Australia, EU and the U K.
Our sites included renowned liver centers and we had the honor of working with some of the world's preeminent thought leaders and a H.
The topline results and the key secondary endpoint of mortality at 90 days showed a 41% reduction with a 30 milligram dose of our CECO sterile and a 35% reduction, but the 90 milligram dose of <unk> as compared with the standard of care.
We also reported a numerical improvement in the primary endpoint of reduction in mortality or liver transplant at 90 days.
So neither the primary or secondary key secondary endpoints.
Endpoint achieved results that were statistically significant.
Impressive results were found in the U S population, which comprised three quarters of the total enrollment and a firm that was 232 out of 307 patients.
In the United States in the U S patients, we saw reductions of mortality.
At 57% and 58% for the 30, and 90 milligram arms, respectively, compared with the standard of care.
Although not a part of the original trials statistical analysis plan. The P values reduce these results were both approximately 0.01.
Very importantly, our Sukkoth journal exhibited an excellent safety profile with no serious adverse events in either arm and greater than 20 at greater than 20% reductions in the number of treatment emergent adverse events for both active arms.
The severely ill patients when compared with the standards of care.
Ultimately these clinically meaningful reductions in mortality coupled with the reduction in adverse events in the severely ill patients reinforce the compelling risk reward proposition for the continued advancement of our CECO sterile as the first approved treatment for H.
We look forward to meeting with the FDA in the first quarter of 2024 to discuss the FERC data and the path forward to seek approval of Villa Chico sterile.
H.
Including design for a potential registrational phase III trial.
Using mortality as the primary endpoint.
As a reminder, the FDA has granted our la Sukkoth Gerald H program fast track designation.
A H is a cause of more than 158000 hospitalizations each year in the United States with a 90 day mortality rate of approximately 30% and is responsible for tens of thousands of deaths each year.
Yeah.
There are no effective treatments for a H.
If we were able to gain approval for large eco sterile.
It would likely be the first FDA approved treatment for this disease.
In addition to its high mortality rate a H represents a significant cost to the U S health care system.
Hospitalizations attributed to a H incur costs of 62000 to 167000 each.
The total cost of hospitals of approximately $10 billion annually in the United States.
As a result, our CECO sterile represents a potential multibillion dollar opportunity in the U S alone and could simultaneously provide overall cost savings to the health care system.
We look forward to the possibility of bringing this potential lifesaving therapeutic to patients with no effective therapies available today.
We attended the <unk> conference in Boston. This is the U S deliver meeting over the weekend and had the opportunity to discuss the top line results with many of our investigators from our firm and with more than a dozen influential kols.
The reaction of this physician community has been overwhelmingly positive and enthusiastic about <unk> prospects.
These physicians expressed their frustration with the lack of effective treatment.
Recognize that the type of mortality benefit and safety profile suggested by Valukas Gerald from our firm data with potentially bring a major advancement in the standard of care for these severely ill patients.
We'd now like to take any questions you might have.
Ladies and gentlemen at this time, we'll begin the question and answer session to ask a question you May Press Star and then one using a touchtone telephone.
If you are using a speaker phone, we do ask that you. Please pick up the handset prior to pressing the keys to ensure the best sound quality.
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Once again that is star and then one to ask a question, we'll pause momentarily to assemble the roster.
Our first question today comes from.
<unk> Russo from Oppenheimer. Please go ahead with your question.
Hi, Thanks for taking the question I'm, just just a couple of years so in terms of the.
Mortality I missed what it was the mortality that was seen in the trial I know there was a fear.
But maybe the trial would not.
Or H patients did not have quite the mortality that than people expected can you just maybe remind us what what you saw in the trial and was it in line with what you thought.
Absolutely, yes for the overall trial the global problem, we saw about a 22.
25% mortality and we had powered it for about 30% mortality. So it was a little bit lower than we had expected and that was in all likelihood the price.
Primary reason why we slightly missed that endpoint or bio statisticians tell me if we'd had X number of 15, plus more patients or something we would've been able to possibly hit that endpoint.
It's interesting when we look at the subset of the data, which is three quarters of the data from the United States, We see a mortality endpoint.
<unk> of 28% in the United States as compared to 12% and the two active arms. So that certainly was almost 60% of that was in highly statistically significant.
So in the U S. It hit right when we look globally it didn't.
And unfortunately hits.
Yeah.
We moved from this small for patient for good steady to a 100 patient groups and in the <unk>. It was so.
So much information and to have a trial that has this kind of signal and when we spent the weekend.
As you know Frank and Boston with these investigators they were quite excited about the data we have.
Okay, Great now that's great and then in terms of me yes.
Speaking to a lot of physicians over the weekend and whatnot was there.
What are the thoughts in terms of their hypothesis, maybe there are differences in the EU and the U S versus the ex U S population or is it too early to see.
Anything you can share there or should we wait for more information about the potential differences. Thank you.
Yes, certainly there certainly were some some things that they focused on and we are investigating more thoroughly and the first thing that they focused on was the differences in age.
We saw the age of the U S population at 43 and to a person they were saying yes. These are the patients we're seeing they're younger I had a number of them.
Back to kind of numbers, we've been talking about 'twenty.
20, some odd percent of their patients are young women in their 2030.
Without cirrhosis, and we certainly saw that in our trials.
We saw younger people, 43% excuse me 43 was the.
The mean age in the United States and ex U S. It was 50.
Even higher in Europe, I think it was 52.
And there was a.
A physician from southern California from USC, who we spoke to who talked about some papers that he had written showing that if you were over the age of 44, you had a much greater chance of dying from this disease. So we know we don't in a lot of diseases. The older. You are the more susceptible you are to dying and certainly in this population thats the case and so that was one one component that we learned.
The other thing they.
Focused on both the amount of cirrhosis the U S population had 76% cirrhosis, which means.
Fits with being younger you would have left cirrhosis.
But the X U S population was especially for the EU with biopsy confirmed 90% cirrhosis, which means.
Much basically means much less delivery available to respond to the drug Unfortunately.
But we're still teasing out the differences could the other differences there were a much smaller population of patients and they were.
Divided and randomized across Australia, the UK and the EU and so you can also get into.
Mismatches.
<unk> of that as well, which can lead to greater variability.
Thank you.
Sure.
And our next question comes from Carl Byrnes.
Northland Capital markets. Please go ahead with your question.
Okay great.
Thanks for the question.
I'm wondering if there's any rationale for the FDA to not allow mortality as the primary endpoint in the phase III trial, considering the limited.
Limited number of liver.
Oregon's available for transplantation, the mortality benefit that you saw particularly in the U S population and then the safety profile, which was clearly better than the standard of care, which is something we simply don't see thanks.
First of all the FDA is happy.
The corresponding that I've been associated with them they would prefer mortality over anything else quite frankly in.
And that we.
We'll be.
If another trial is required for approval, we will do a trial looking at survival. So if you look at the secondary end point. If you look at the U S population that was would be good surrogate.
Populations and analyses that we would do if we were required to do another phase III or a phase III trial for this for this drug because you're right. The mortality is terrific.
And transplant, there's only there's less than 2% of these patients are going to be transplant in the U S are quoted liver transplants, but that's about 2000 livers and 158000 of these hospitalizations as of a couple of years ago, probably growing at about four 5% a year. So.
They always lag behind their actual data with the with what we can get from the government literature. So.
There are probably 98% of these patients in the United States and never have a chance to deliver.
Their only option then is what is out there today so their only option is to.
Potentially die at a rate of what we saw in this trial in the U S, 28% or 30% depending on how you look historically, so it's a horrible circumstance.
And these physicians were so excited about the data we have and the ones who are involved with the trial, we're telling our stories about patients.
It really it really after having the week, where we had to talk about the data that we had it was really heartening and really lifted up the spirit of everyone who is there really did.
Great job on that thought Dresden I'm wondering is there any possibility or do you think theres any possibility that the <unk> can be used on a compassionate basis, given the safety profile in the meantime.
I don't.
<unk> is a possibility, but what we'll do is we'll go have a conversation with them will talk about the potential for.
An accelerated review as a possibility as well so we're just going to have a conversation with the FDA about what we have this is certainly a highly lethal condition with no therapy. As you said, it's got a very clean profile if not.
I, just I would just say that that leave it at that.
<unk>.
Very nice profile from an adverse event standpoint, so we'll we'll have that conversation with the FDA in first quarter and find out what the next steps will be.
Got it thanks, and then just one one last question Theres been some concern about not seeing a dose response, but if we look at the U S. Only population again you explained some of the nuances with respect to the mismatch.
Clearly you did see a dose response I think it was like 58% of the 90 Meg dose versus 57, 1%.
And the 30 Meg dose so is that correct and then what's your thought on that.
Some of the comments are out there in terms of not seeing dose response and that's my final question. Thank you. Thank you. Thank you Karl I think what we can glean first from the fact that both doses showed very well is first of all both doses showed very well right. So that means you grab the population of 100 people dosing with the drug phenomenal result, almost 60% grabbing another one.
People check them get standard of care once again, another phenomenal response, almost 60% you can't really tease out the difference between.
57% 58, nor can you really between 35 and 41. These are what theyre showing as the drug is having an effect.
<unk>.
And so.
Most likely biologically we're probably if you think about a curve, we're probably at the asymptotic component of the curve, where we're just near the top so one dose versus another dose is not going to make it an appreciable difference there and so that'll be a conversation with the FDA. We certainly know a lot more about how the drug works in various animal models in other studies we've done.
We know, it's an inhibitor of Dmt's DNA metal transportation as we know it reduces hyperventilation. We know these patients have elevated levels of these enzymes.
So all of that is well understood from a scientific standpoint, and and that the final or the finer points of which dose to be selected will be a conversation we have with the agency at the end of the day and we're prepared to use either dose going forward.
Great. Thanks again.
Thank you.
Once again, if you would like to ask a question. Please press star and then one for me.
Move yourself from the question queue, you May press Star two.
Our next question comes from Ed Arce from H C. Wainwright. Please go ahead with your question.
Hi, everyone. This is Thomas Yip asking a couple of questions for Ed. Thank you for taking my questions.
First question.
Based on what you've learned from a firm so far.
Can you discuss what are some inherent favorability.
The liver transplant endpoint.
The study.
Well there.
When you look at transplant.
It's just inherently variable and thats the reality of it it's available as I said earlier to less than 2% of the patients who have this disease and the.
Administration of the transplant is very variable as well it depends on which center you are at it depends on what is your level of insurance coverage, whether or not you have a match how aggressive you're surgical.
You are.
Your surgical team is and it also depends on how sick you are there are a number of patients were too sick when they first come in to get a transplant. So we think about.
The use of our Sukkoth jerrell in this setting.
Yeah.
Certainly in a survival trial, a trial, where you're looking at mortality. There are a certain number of patients who would be in the standard of care group, who would get a transplant and survive and that's true.
But witness the fact that we had a safety Eric safety was signed but we had a mortality signal even considering those.
Believe from talking to some of the people and understanding the path for some of the patients in this trial, but what we're also seeing is.
For lack of a better term a bridge to transplant, where some of these patients are severely ill at the beginning may not.
Be alive long enough to get a transplant, but because they were dose with our soup of sterile. They would then potentially able to get a transplant six or 810 weeks later.
So thats another component of it all and the end rather than trying to separate that out and tease. It out would be very difficult to do we simply just kind of look at mortality and led transplants fall where they may.
So that's how we're going to deal with that because there are so many factors that influence transplant. That's a drug can influence joining the drug really can do towards transplant is keep you alive and make you a little healthier so that you might be still around if the liver by chance came up as rare as it is.
Understood that makes sense.
Perhaps just one more question from us.
So so you discuss a little bit earlier.
The U S operations.
Lower amine age and also a low percentage.
Cirrhosis.
I Wonder how do you look at.
Potential U S markets.
<unk> of the MAA is that on the table.
No I mean, we will be talking with the EMA is Gulf as we go forward. We're just now starting to take the additional cuts of the data and look at that and we will look at the data for a number of different reasons.
For all these different characteristics and try to understand how it responds because I'm.
Certain that both the FDA and the EMA will want to understand that.
My sense is it will be able to help patients.
We've doses in child Pugh C patients, who are dying or their livers are failing and for other indications orly.
And saw some nice improvements in these patients just single dose safety studies that saw some interesting biomarker changes and the like so I do think theres the potential to help these patients that.
That being said.
We're going to drive forward for approval in the U S based on the U S data and and then we'll we'll take on the rest of the world in these more severely ill patients as time.
It goes on.
That's right.
That will obviously go.
Early days and analysis.
Okay Yeah.
Thank you.
Questions.
Sure Judy.
So that they are meeting first.
First quarter.
As do we.
Thank you.
Ladies and gentlemen, with that we will conclude today's question and answer session I'd like to turn the floor back over to Jim Brown for any closing remarks.
Yes, I just would like to thank you all for your time today and for your support and as always if you have any further questions. Please reach out to him and myself for others on the team that you know and we're happy to to get on the phone and talk to you.
Thanks, a lot and take care.
Ladies and gentlemen, with that we'll conclude today's conference call and presentation. We thank you for joining you may now disconnect your lines.